FTC Solar, Inc.

Previous wording

We are a global provider of solar tracker systems, supported by proprietary software and value-added engineering services. Solar tracker systems move solar panels throughout the day to maintain an optimal orientation relative to the sun, thereby increasing the amount of solar energy produced at a solar installation. Our original two modules-in-portrait solar tracker system is marketed under the Voyager brand name and our one module-in-portrait solar tracker system is marketed under the Pioneer brand name. We also have a mounting solution to support the installation and use of U.S.-manufactured thin-film modules. Our primary software offerings include SUNPATH which helps customers optimize solar tracking for increased energy production and our SUNOPS real-time operations management platform. In addition, we have a team of renewable energy professionals available to assist our U.S. and worldwide clients in site layout, structural design, pile testing and other needs across the solar project development and construction cycle. Our products and services provide an easy to install and safe tracker solution for large utility-scale solar and distributed generation projects around the world. Our customers are primarily engineering, procurement and construction companies ("EPCs") and we also contract with developers and owners. The Company is headquartered in Austin, Texas, and has international subsidiaries in Australia, China, India, South Africa and Spain.

Current wording

We are a global provider of solar tracker systems, supported by proprietary software and value-added engineering services. Solar tracker systems move solar panels throughout the day to maintain an optimal orientation relative to the sun, thereby increasing the amount of solar energy produced at a solar installation. Our one module-in-portrait solar tracker system is marketed under the Pioneer brand name, and our original two modules-in-portrait solar tracker system is marketed under the Voyager brand name. We also have a mounting solution to support the installation and use of U.S.-manufactured thin-film modules. Our primary software offerings include SUNPATH, which helps customers optimize solar tracking for increased energy production, and our SUNOPS real-time operations management platform. In addition, we have a team of renewable energy professionals available to assist our U.S. and worldwide clients in site layout, structural design, pile testing and other needs across the solar project development and construction cycle. Our products and services provide tracker solutions for large utility-scale solar and distributed generation projects around the world. Our customers are primarily engineering, procurement and construction companies and we also contract with developers and owners. The Company is headquartered in Austin, Texas, and has international subsidiaries in Australia, China, India, South Africa and Spain.

Previous wording

Government Regulations. Changes in the U.S. trade environment, including the imposition of import tariffs, AD/CVD investigations and the UFLPA, which became effective in June 2022, can have an impact on the timing of developer projects. The UFLPA resulted in new rules for module importers and reviews by CBP. There continues to be some uncertainty in the market around achieving full compliance with UFLPA, whether related to sufficient traceability of materials or other factors. Escalating trade tensions, particularly between the United States and China, have led to increased tariffs and trade restrictions, including tariffs applicable to certain raw materials and components for our products. We have taken measures with the intention of mitigating the effect of tariffs and the impact of AD/CVD and UFLPA on our business by reducing our reliance on China and enhancing our U.S.-based supply chain, including through our investment in Alpha Steel, as described further in Note 11, "Equity method investment" included in our consolidated financial statements in Part II, Item 8 of this Annual Report. In 2019, 90% of our supply chain was sourced from China. As of December 31, 2024, we have qualified suppliers outside of China for certain of our commodities and we continue to work to have second-source capability for all Chinese-manufactured components to help reduce the extent to which our supply chain for U.S.-based projects is subject to existing tariffs and to be able to quickly address potential future regulatory and governmental policy changes. We have entered into partnerships with manufacturers based in the United States, India, South Africa, Spain, Turkey, Thailand and Vietnam to diversify our supply chain and optimize costs. On June 6, 2022, President Biden issued an Executive Order allowing U.S. solar deployers to import solar modules and cells from Cambodia, Malaysia, Thailand and Vietnam free from certain duties for 24 months, along with other incentives designed to accelerate U.S. domestic production of clean energy technologies. This moratorium ended in June 2024 and China-wide anti-dumping duties are now nearly 240% and countervailing duties for all other countries are over 15%. Additionally, on December 29, 2023, Auxin and Concept Clean Energy, Inc. filed suit in the U.S. Court of International Trade challenging the legal basis for the moratorium and implementing regulations. Several motions have been filed to date, including a motion to dismiss by the U.S. government, which the court rejected. If the suit proves successful, solar module importers could owe retroactive duties on goods that have already cleared customs. In addition, the U.S. Department of Commerce is currently conducting an antidumping and countervailing duty investigation into imports of Crystalline Silicon Photovoltaic Cells from Vietnam, Malaysia, Thailand and Cambodia, which may result in additional duties imposed on imports from those nations.

Current wording

Government Regulations. Changes in the U.S. trade environment, including the imposition of import tariffs, AD/CVD investigations and the UFLPA, which became effective in June 2022, can have an impact on the timing of developer projects. The UFLPA resulted in new rules for module importers and reviews by CBP. There continues to be challenges in achieving full compliance with UFLPA, whether related to sufficient traceability of materials or other factors. Escalating trade tensions, particularly between the United States and China, have led to increased tariffs and trade restrictions, including tariffs applicable to certain raw materials and components for our products. We have taken measures with the intention of mitigating the effect of tariffs and the impact of AD/CVD and UFLPA on our business by reducing our reliance on China and enhancing our U.S.-based supply chain, including through our acquisition of Alpha Steel.

Previous wording

The most notable incentive program impacting our U.S. business has historically been the ITC for solar energy projects, which allows taxpayers to offset their U.S. federal income tax liability by a certain percentage of their cost basis in solar energy systems placed in service for commercial use. The IRA, passed by the U.S. Congress and signed into law by President Biden on August 16, 2022, expanded and extended the tax credits and other tax benefits available to solar energy projects and the solar energy supply chain. ITCs are currently available at a base rate of 30% for projects that begin construction by the end of 2032, and decline to 26% and 22% for projects beginning construction in 2033 and 2034, respectively. Bonus credits are additionally available for projects that meet applicable domestic content and prevailing wage and apprenticeship rules. U.S. manufacturers of specific solar components are now eligible to claim production tax credits under Section 45X of the Internal Revenue Code of 1986, as amended, which was established as part of the IRA and is a per-unit tax credit earned for each clean energy component manufactured domestically and sold by a manufacturer. Our investment in, and commitments made to Alpha Steel allow us to obtain benefits of lower product costs from Alpha Steel as a result of the production tax credit program, subject to our level of purchases from Alpha Steel.

Current wording

The most notable incentive program impacting our U.S. business has historically been the ITC for solar energy projects, which allows taxpayers to offset their U.S. federal income tax liability by a certain percentage of their cost basis in solar energy systems placed in service for commercial use, subject to compliance with applicable prevailing wage and apprenticeship requirements. The Inflation Reduction Act of 2022 ("IRA"), passed by the U.S. Congress and signed into law by then-President Biden on August 16, 2022, expanded and extended the tax credits and other tax benefits available to solar energy projects and the solar energy supply chain. U.S. manufacturers of specific solar components also became eligible to claim production tax credits under Section 45X of the Internal Revenue Code of 1986, as amended, which was established as part of the IRA and is a per-unit tax credit earned for each clean energy component manufactured domestically and sold by a manufacturer. Our acquisition of Alpha Steel allows us to continue for a longer period of time to obtain benefits of lower product costs as a result of the production tax credit program.

Previous wording

Disruptions in Transportation and Supply Chain. Our costs are affected by the costs of certain components and materials, such as steel, motors and micro-chips, as well as transportation costs. Current market conditions and international conflicts that constrain the supply of materials and disrupt the flow of materials from international vendors can impact the cost of our products and services, along with overall rates of inflation in the global economy, which have been higher than pre-COVID 19 pandemic historical rates. While certain costs have moderated compared to pre-pandemic rates, domestic fuel prices continue to be elevated. Although we don't believe inflation has had a material impact on our results as presented in this report, such cost increases and decreases could impact our future operating margins, if material.

Current wording

Disruptions in Transportation and Supply Chain. Our costs are affected by the costs of certain components and materials, such as steel, motors and micro-chips, as well as transportation costs. Capacity constraints, particularly with regard to U.S. manufactured steel output, current market conditions, extreme adverse weather events and international conflicts may constrain the supply of materials and disrupt the flow of materials from international vendors, which could impact the cost of our products and services, along with overall rates of inflation in the global economy. While inflation rates and certain costs have moderated recently, the overall level of various other costs continues to be elevated. Although we don't believe inflation has had a material impact on our results as presented in this report, such cost increases and decreases could impact our future operating margins, if material.

Previous wording

We have taken steps to expand and diversify our manufacturing partnerships and have adjusted our modes of transportation to mitigate the impact of headwinds that might arise in the global supply chain and logistics markets. As an example, we modified our ocean freight from previously using charter shipments to now using containerized shipments as costs in the container market began to decrease starting in 2022, but more recently have begun to increase. However, we have been able to mitigate some of this increase as a result of increasing our domestic production capabilities. We continue to monitor the logistics markets and will continue to evaluate our use of various modes of transportation when warranted to optimize our transportation costs. Additionally, from February 2022 to September 2023, we utilized a related-party consulting firm to support us in making improvements to our processes and performance in various areas, including design, sourcing, logistics, pricing, software and our distributed generation business. For further information regarding this consulting firm, see Note 18 "Related party transactions" included in our consolidated financial statements in Part II, Item 8 of this Annual Report. We also intend to maintain a sharp focus on our design-to-value initiative to continue to improve margins by reducing manufacturing and material costs of our products.

Current wording

We have taken steps to expand and diversify our manufacturing partnerships and have adjusted our modes of transportation to mitigate the impact of headwinds that might arise in the global supply chain and logistics markets. We continue to monitor the logistics markets and will continue to evaluate our use of various modes of transportation when warranted to optimize our transportation costs. We also intend to maintain a sharp focus on our design-to-value initiative to continue to improve margins by reducing manufacturing and material costs of our products.

Previous wording

Investment in technology and personnel. We invest in both the people and technology behind our products. We intend to continue making investments in the technology for our products and expansion of our patent portfolio to attract and retain customers, expand the capabilities and scope of our products, and enhance user experience. As an example, in August 2023, we introduced SUNOPS, a cloud-based solar asset monitoring solution, allowing asset owners and managers to evaluate the operation and performance of their solar deployments. Additionally, in May 2024, we announced the launch of our Automated Hail Stow Solution, aimed at minimizing solar panel damage caused by hailstorms. This solution integrates advanced technology with meteorological data to automatically adjust the positioning of solar panels, reducing the risk of hail-related damage.

Current wording

Investment in technology and personnel. We invest in both the people and technology behind our products. We intend to continue making investments in the technology for our products and expansion of our patent portfolio to attract and retain customers, expand the capabilities and scope of our products, and enhance user experience. As an example, during 2025, we (i) introduced a dual row configuration for our 1P Pioneer tracker for improved slope tolerance and working with complex project landscapes, (ii) released our Pioneer+ High Wind tracker, which is engineered to withstand wind speeds up to 150 miles per hour, and (iii) launched an automated 80° high angle stow capability in our Pioneer trackers to provide improved protection in hail-prone regions.

Previous wording

During 2024, we added to our executive leadership team. In August 2024, Yann Brandt joined the Company as President and Chief Executive Officer, and he is a member of our Board of Directors. Further, Cathy Behnen was appointed as our Chief Financial Officer in February 2024; we hired Alberto Echeverria, a former CEO and Executive Member of the Board of STI Norland, as our Senior Vice President of International Sales in May 2024; and Kent James joined us in January 2025 as our Chief Commercial Officer for North America. These executives each have extensive solar industry experience and deep solar relationships.

Current wording

During 2025, we added Kent James to our executive leadership team as our Chief Commercial Officer for North America. We also added Tony Alvarez, Anthony Carroll, Darrell Jackson and Maximillian Sultan to our Board of Directors. These executives each have extensive solar industry experience and deep solar relationships.

Previous wording

Impact of Climate Change. Climate change has primarily impacted our business operations by increasing demand for solar power generation and, as a result, for use of our products. The U.S. Energy Information Administration, in its January 2025 Short-Term Energy Outlook, estimates that solar generation, as a result of capacity additions, will increase in the United States by 34% in 2025 and 17% in 2026 and will supply most of the increase in electrical generation during those years.

Current wording

Impact of Climate Change. Climate change has primarily impacted our business operations by increasing demand for solar power generation and, as a result, for use of our products. The U.S. Energy Information Administration, in its January 2026 Short-Term Energy Outlook, estimates that solar generation will lead total electricity generation growth in 2026 and 2027, by increasing more than 20% each year, after increasing 33% in 2025.

Previous wording

While climate change has not resulted in any material negative impact to our operations to date, we recognize the risk of disruptions to our supply chain due to extreme weather events. This, among other things, has led us to expand the diversity of our supplier base and to partner with more local suppliers to reduce shipping and transportation needs. We are also increasingly partnering with larger scale steel producers rather than smaller suppliers to facilitate scaling of our operations while remaining conscious of the environmental impacts of steel manufacturing as the regulatory landscape around these high-emitting industries evolves. An example of this strategy is our investment in Alpha Steel, a U.S.-based manufacturing partnership with a leading steel fabricator.

Current wording

While climate change has not resulted in any material negative impact to our operations to date, we recognize the risk of disruptions to our supply chain due to extreme weather events. This, among other things, has led us to expand the diversity of our supplier base and to partner with more local suppliers to reduce shipping and transportation needs. We are also increasingly partnering with larger scale steel producers rather than smaller suppliers to facilitate scaling of our operations while remaining conscious of the environmental impacts of steel manufacturing as the regulatory landscape around these high-emitting industries evolves. An example of this strategy is our acquisition of Alpha Steel.

Previous wording

Liquidity. See "Liquidity and Capital Resources" below for a discussion of the impact of the items above on our liquidity position. As included in such discussion, our management has concluded that there is substantial doubt about our ability to continue as a going concern for one year after the date that this Annual Report is issued.

Current wording

Liquidity. See "Liquidity and Capital Resources" below for a discussion of the impact of our liquidity position, including the requirements under the Credit Agreement, on our business and financial performance. As included in such discussion, our management has concluded that there is substantial doubt about our ability to continue as a going concern for one year after the date that this Annual Report is issued.

Previous wording

We subcontract with third-party manufacturers to manufacture and deliver our products directly to our customers. Our product costs are affected by the underlying cost of raw materials procured by these contract manufacturers, including steel and aluminum; component costs, including electric motors and gearboxes; technological innovation in manufacturing processes; and our ability to achieve economies of scale resulting in lower component costs. We do not currently hedge against changes in the price of raw materials, but we continue to explore opportunities to mitigate the risks of foreign currency and commodity fluctuations through the use of hedges and foreign exchange lines of credit. Some of these costs, primarily personnel, are not directly affected by sales volume.

Current wording

In certain cases, we subcontract with third-party manufacturers to manufacture and deliver our products directly to our customers, although with our acquisition of Alpha Steel, we now have the ability to manufacture and deliver certain products to our domestic customers seeking U.S.-based content. Our product costs are affected by the underlying cost of raw materials procured by Alpha Steel and our other contract manufacturing partners, including steel and aluminum; component costs, including electric motors and gearboxes; technological innovation in manufacturing processes; and our ability to achieve economies of scale resulting in lower component costs. We do not currently hedge against changes in the price of raw materials, but we continue to explore opportunities to mitigate the risks of foreign currency and commodity fluctuations through the use of hedges and foreign exchange lines of credit. Some of these costs, primarily personnel, are not directly affected by sales volume.

Previous wording

Although we continue to add new employees in certain areas, we have also reduced our total headcount over the last two years as we made adjustments during the fourth quarter of 2024 and in August 2023, in response to current project activity levels and process efficiencies we have gained in the last few years due to our design-to-value and cost reduction efforts. Certain of our changes also reflect a shift of our employee base to more cost-effective markets with exceptional talent. Our gross profit may vary period-to-period due to changes in our headcount, ASP, product costs, product versus service mix, customer mix, geographical mix, shipping methods, warranty costs and seasonality.

Current wording

During 2025, we added new employees in certain areas in response to current project activity levels. Certain of our headcount changes also reflect a shift of our employee base to more cost-effective markets with exceptional talent. Our gross profit may vary period-to-period due to changes in our headcount, ASP, product costs, product versus service mix, customer mix, geographical mix, shipping methods, warranty costs and seasonality.

Previous wording

The decrease in product revenue in 2024, as compared to 2023, was primarily due to a decrease of 69% in MW produced as manufacturing activity during 2024 was adversely impacted by customer project delays. This was partially offset by an increase of 17% in ASP resulting from better pricing and project mix changes during 2024 as compared to 2023.

Current wording

The increase in product revenue in 2025, as compared to 2024, was primarily due to an increase of 168% in MW produced as manufacturing activity during 2025 has been positively impacted by recent project wins, mainly associated with our 1P solar tracker solution. Partially offsetting this impact was a decrease of 20% in ASP resulting from project mix changes during 2025 as compared to 2024.

Previous wording

The decrease in service revenue in 2024, as compared to 2023, primarily resulted from (i) a decrease of 50% in the amount of MW delivered resulting from a lower volume of projects available for delivery and timing of shipments related to customer project delays, (ii) a decrease of 21% in ASP, and (iii) lower engineering consulting and software revenues in 2024, as compared to 2023.

Current wording

The increase in service revenue in 2025, as compared to 2024, primarily resulted from (i) an increase of 76% in the logistics activity levels, (ii) an increase of 12% in ASP as a result of project size and pricing, and (iii) higher engineering consulting revenue in 2025, as compared to 2024.

Previous wording

Cost of revenue and gross (loss) profit

Current wording

Cost of revenue and gross loss

Previous wording

Gross profit may vary from period-to-period and is primarily affected by our ASP, product costs, product mix, customer mix, geographical mix, shipping method, logistics costs, warranty costs and potentially, seasonality.

Current wording

Gross loss may vary from period-to-period and is primarily affected by our ASP, product costs, product mix, customer mix, geographical mix, shipping method, logistics costs, warranty costs and potentially, seasonality.

Previous wording

Our gross profit (loss) percentage of revenue for 2024 was a negative 26.6%, as compared to a positive 6.5% in 2023.

Current wording

Our gross loss percentage of revenue for 2025 was a negative 0.9%, as compared to a negative 26.6% in 2024.

Previous wording

We had negative gross margin for the year ended December 31, 2024 largely due to (i) our revenue for both products and services being insufficient to fully cover our indirect and warehousing costs (ii) higher remediation costs, and (iii) changes in project mix and cost of freight.

Current wording

We had negative gross margin for the year ended December 31, 2024 largely due to (i) our revenue for both products and services being insufficient to fully cover our indirect and warehousing costs, (ii) higher remediation costs, and (iii) the impact of project mix and cost of freight.

Previous wording

The decrease in selling and marketing expenses in 2024, as compared to 2023, was primarily attributable to (i) lower credit loss provisions totaling $5.3 million, primarily associated with certain specific customer accounts and (ii) lower stock-based compensation expense of $0.4 million. Selling and marketing expenses as a percentage of revenue were 18.8% for the year ended December 31, 2024, compared to 11.7% for the year ended December 31, 2023.

Current wording

The decrease in selling and marketing expenses in 2025, as compared to 2024, was primarily attributable to (i) lower credit loss provisions totaling $0.7 million, primarily associated with the level of provisions in each year for certain specific customer accounts, (ii) lower payroll-related costs of $1.3 million associated with lower salary, commission, incentive compensation and severance costs, (iii) lower travel and professional service costs of $0.4 million, and (iv) lower stock-based compensation expense of $0.2 million. Selling and marketing expenses as a percentage of revenue were 6.2% for the year ended December 31, 2025, compared to 18.8% for the year ended December 31, 2024.

Previous wording

During the years ended December 31, 2024 and 2023, we received escrow release payments of $8.8 million and $1.3 million, respectively, that were recognized in accordance with our policy election of recording such gains when realized. We also received a final earnout payment during the first quarter of 2025 of approximately $3.2 million attributable to performance by Dimension as of December 31, 2024.

Current wording

During the years ended December 31, 2025 and 2024, we received earnout payments of $3.2 million and $8.8 million, respectively, that were recognized in accordance with our policy election of recording such gains when realized.

Previous wording

In December 2024, we sold certain assets, including intellectual property, associated with our Atlas web-based software platform, used by customers to organize and manage their solar project portfolios. We recognized a gain of $0.9 million associated with the sale. If future contingent consideration is received related to the sale, such amounts will be recognized as a gain upon realization.

Current wording

In December 2024, we sold certain assets, including intellectual property, associated with our Atlas web-based software platform, used by customers to organize and manage their solar project portfolios, recognizing a gain on the sale of $0.9 million. In connection with the sale, the purchaser agreed to future potential earnout payments based on annual license renewals during 2025 by certain existing customers. During 2025, we received such earnout payments from the purchaser totaling $0.1 million, which we recognized as a gain in accordance with our accounting policy to recognize such gains when realized.

Previous wording

On December 4, 2024, we completed an offering of Senior Notes and Warrants. The Warrants, which have been reflected as a liability in our Consolidated Balance Sheets, were initially valued at $5.2 million at the time of issuance. Due largely to a significant increase in the price of our common stock as reported on Nasdaq between December 4, 2024 and December 31, 2024, the fair value of the Warrants increased to $9.5 million, resulting in the recognition of a non-cash loss in our Consolidated Statements of Comprehensive Loss for the change in fair value.

Current wording

In connection with our entry into the Credit Agreement on July 2, 2025, we issued New Warrants at a fair value of approximately $32.1 million. The New Warrants are also accounted for as a long-term liability. Due largely to a significant increase in the price of our common stock as reported on Nasdaq between July 2, 2025 and December 31, 2025, the fair value of the New Warrants increased to approximately $74.5 million, resulting in a loss during the period from July 2, 2025 to December 31, 2025 of nearly $42.5 million.

Previous wording

We anticipate further gains and losses will be recognized in future periods during which the Warrants are outstanding as a result of changes in the trading price of our common stock, some of which may be material to our consolidated financial position and results of operations.

Current wording

We anticipate that further gains and losses will be recognized in future periods during which the New Warrants are outstanding as a result of changes in the trading price of our common stock, some of which may be material to our consolidated financial position and results of operations.

Previous wording

We have incurred cumulative losses since inception and have a history of cash outflows from operations, inclusive of $34.7 million in cash utilized for our operating activities during the year ended December 31, 2024. As of December 31, 2024, we had $11.2 million of cash on hand and $27.1 million of working capital.

Current wording

We have incurred cumulative losses since inception and have a history of cash outflows from operations, inclusive of $33.4 million in cash utilized for our operating activities during the year ended December 31, 2025. As of December 31, 2025, we had cash on hand of $21.1 million, $29.5 million of working capital, $22.6 million of net total debt and an accumulated deficit of $427.3 million.

Previous wording

As of December 31, 2024, in addition to our cash on hand and working capital, we had approximately $64.9 million of remaining capacity available for future sales of our common stock under our ATM program as defined and described further in Note 16, "Stockholders' equity" in Part II, Item 8 of this Annual Report. Our ability to use the ATM program may be constrained by the size of our non-affiliate market capitalization, our trading volume and other factors, and there can be no assurance regarding the price at which we will be able to sell such shares, and any sales of our common stock under the ATM program may be at prices that result in additional dilution to our existing stockholders.

Current wording

As of December 31, 2025, in addition to our cash on hand and working capital, we had approximately $9.0 million of remaining capacity available for future sales of our common stock under an effective prospectus supplement to our at the market facility under the At the Market Offering Agreement dated May 1, 2025 with H.C. Wainwright & Co. LLC and the related prospectus covering the offering, issuance and sale of up to a maximum aggregate offering price of approximately $13.75 million of our common stock that may be sold under such At the Market Offering Agreement in at the market offerings (the "ATM program"). There can be no assurance regarding the price at which we will be able to sell such shares in the future, whether under the ATM program or other securities offerings, and any sales of our common stock under the ATM program or other securities offerings may be at prices that result in additional dilution to our existing stockholders.

Previous wording

Based on our cash position at December 31, 2024 and our recent operating losses, we have concluded that substantial doubt exists as to our ability to continue as a going concern within the next year.

Current wording

In view of the requirements for quarterly cash interest payments and certain specified principal payments under the Credit Agreement (including the required prepayments summarized above) and Amended and Restated Promissory Note and subsequent waiver agreement, principal and interest payments for the Acquisition Notes, as well as our prior default on the purchase order covenant under the Credit Agreement for the period ended December 31, 2025, recent financial performance, including our history of operating losses and cash outflows, and considering that the availability of additional financing provided by the Credit Agreement in the form of Second Delayed Draw Term Loans is not completely within our control, we believe these factors create uncertainty as to our ability to fully meet the financial covenant requirements under the Credit Agreement during the twelve months following issuance of this Annual Report. Therefore, we have concluded that substantial doubt exists as to our ability to continue as a going concern within the next year.

Previous wording

Our ability to meet our liquidity needs over the next year is dependent upon (i) our cash on hand (subject to a quarter-end minimum balance covenant of $5 million under the terms of our Senior Notes offering), (ii) our expectations of increased project activity and cash flow during the twelve-month period following issuance of our consolidated financial statements, (iii) expected proceeds of up to $10 million from an additional private placement of debt based on a term sheet executed on March 4, 2025, and (iv) utilization, as appropriate, of the capacity available for future sales of our common stock under the ATM program, which may be constrained by the size of our non-affiliate market capitalization, our trading volume and other factors. In addition, we continue to remain focused on implementing additional cost savings steps, which could impact, among other things, location of our headcount and the level of services currently provided by third parties, and we continue to evaluate further opportunities to obtain additional financing, although the ability to ultimately obtain such additional financing is not entirely within our control. Additional information regarding the term sheet described above may be found in Note 23, "Subsequent events" in Part II, Item 8 of this Annual Report.

Current wording

Our ability to meet our liquidity needs over the next year is dependent upon (i) our cash on hand (subject to (x) required principal repayments of $2.5 million and $5.0 million during May 2026 and September 2026, respectively, under the Credit Agreement and (y) a $15.0 million minimum unrestricted cash covenant under the Credit Agreement effective for the quarter ending June 30, 2026 and as further reduced by required principal repayments under the Credit Agreement thereafter) and our compliance with the financial covenants under the Credit Agreement, (ii) our current expectations of increased project activity and cash flow during the twelve-month period following issuance of our consolidated financial statements, (iii) the availability of additional proceeds in the form of Second Delayed Draw Term Loans that may be requested by the Company and approved by the Lenders in their sole discretion, (iv) utilization, as appropriate, of the capacity available for future sales of our common stock under the ATM program, and (v) if we determine necessary, our ability to raise additional capital through other securities offerings. In addition, we continue to remain focused on implementing additional cost savings steps, which could impact, among other things, the location of our headcount and the level of services currently provided by third parties.

Previous wording

During the year ended December 31, 2024, we used approximately $34.2 million of cash to fund a portion of our expenditures for personnel and facilities, legal and professional fees, insurance, research and development and various other operating activities. This compares to approximately $27.0 million used in 2023 to fund similar expenditures.

Current wording

During the year ended December 31, 2025, we used approximately $21.1 million of cash to fund a portion of our expenditures for personnel and facilities, legal and professional fees, insurance, research and development and various other operating activities. This compares to approximately $34.2 million used in 2024 to fund similar expenditures.

Previous wording

We also used approximately $0.5 million of cash in 2024 for working capital and other items, which were primarily impacted by the timing of customer receipts and vendor payments, inventory utilization and lower activity levels. In 2023, we used $25.7 million of cash for increases in working capital and other items, primarily due to timing of customer receipts and payments and higher project activity levels, net of inventory utilization.

Current wording

We also used approximately $12.3 million of cash in 2025 for working capital and other items, which were primarily impacted by increased activity levels, which affected the timing of customer receipts and vendor payments. In 2024, we used $0.5 million of cash for working capital and other items, which were primarily impacted by the timing of customer receipts and payments and higher project activity levels, net of inventory utilization.

Previous wording

During the year ended December 31, 2024, we received $8.8 million of contingent earnout payments in connection with the June 2021 sale of our equity interest in Dimension and we received $0.9 million in proceeds from the December 2024 sale of our Atlas software platform. We also made additional equity investments of $1.8 million in Alpha Steel. Pursuant to our agreement with Alpha Steel, we could be required to make up to $0.8 million in future additional capital contributions if needed for expanded production. Finally, we spent approximately $1.6 million in 2024 primarily for tooling, leasehold improvements, software, and new computers and IT equipment.

Current wording

During the year ended December 31, 2024, we received proceeds of $8.8 million in contingent earnout payments from the sale of our equity investment in Dimension and $0.9 million in proceeds from the sale of our Atlas software platform. We also made additional capital contributions to Alpha Steel totaling $1.8 million, and paid approximately $1.6 million in cash for new tooling, leasehold improvements, software and new computers and IT equipment.

Previous wording

During the year ended December 31, 2024, we sold $15.0 million principal amount of Senior Notes for proceeds, net of lender fees withheld, of approximately $14.6 million. We also paid third-party financing costs of approximately $0.1 million associated with the sale of the Senior Notes.

Current wording

During the year ended December 31, 2024, we sold $15.0 million principal amount of Senior Notes receiving proceeds, net of lender fees withheld or paid, of approximately $14.5 million.

Previous wording

Preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenue and expenses during the period. Estimates are used for calculating the measure of progress of our solar tracker projects and deriving the standalone selling prices of the individual performance obligations when determining amounts to recognize for revenue, estimating allowances for credit losses and slow-moving and obsolete inventory, determining useful lives of long-lived assets and the estimated fair value of those assets for impairment assessments, and estimating the fair value of investments, warrants, stock compensation awards, warranty liabilities and federal and state taxes, including tax valuation allowances, as well as other contingencies. We base our estimates on historical experience and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates due to risks and uncertainties. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

Current wording

Preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenue and expenses during the period. Estimates are used for calculating the measure of progress of our solar tracker projects and deriving the standalone selling prices of the individual performance obligations when determining amounts to recognize for revenue, estimating allowances for credit losses and slow-moving and obsolete inventory, determining useful lives of long-lived assets and the estimated fair value of those assets for impairment assessments, and estimating the fair value of assets and liabilities acquired in business combinations, investments, warrants, stock compensation awards, warranty liabilities and federal and state taxes, including tax valuation allowances, as well as other contingencies. We base our estimates on historical experience and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates due to risks and uncertainties. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

Previous wording

The timing and amounts of revenue and cost of revenue recognition, as well as recording of related receivables and deferred revenue, is highly dependent on our identification of performance obligations in each contract and our estimates by contract of total project cost and our progress toward project completion as of each period end. Certain estimates are subject to factors outside of our control that may impact our suppliers and the global supply chain. As an example, regulatory, tariff and import concerns such as those caused by the UFLPA and the Solar Circumvention Investigation and delays customers have experienced with permitting and securing interconnection agreements have in the past, and may continue to, affect our ability to obtain project materials or may delay the timing of customer project activity which has had in the past, and may continue to have, an adverse impact on our results of operations, including the expected timing of the recognition of revenue needed to cover our relatively fixed overhead costs. We base our estimates on the best information available at each period end, but future events and their effects cannot be determined with certainty, and actual results could differ materially from our assumptions and estimates.

Current wording

The timing and amounts of revenue and cost of revenue recognition, as well as recording of related receivables and deferred revenue, is highly dependent on our identification of performance obligations in each contract and our estimates by contract of total project cost and our progress toward project completion as of each period end. Certain estimates are subject to factors outside of our control that may impact our suppliers and the global supply chain. As an example, we began to experience increases in steel prices and shipping and logistics costs, as well as delays in delivery of our products to customers during 2021, which negatively impacted our results of operations as we were not able to recover all of the additional costs under certain of our fixed fee contracts. In addition, regulatory, tariff and import concerns such as those caused by the UFLPA and an AD/CVD investigation begun in April 2022 by the U.S. Department of Commerce in response to a petition by Auxin Solar, Inc. have in the past, and may continue to, affect our ability to obtain project materials and may delay the timing of customer project activity which has had in the past, and may continue to have, an adverse impact on our results of operations, including the expected timing of the recognition of revenue needed to cover our relatively fixed overhead costs. Further information on recent developments with tariffs may be found under "Key Factors Affecting Our Performance" above. We base our estimates on the best information available at each period end, but future events and their effects cannot be determined with certainty, and actual results could differ materially from our assumptions and estimates.

Previous wording

The allowance for credit losses is based on the lifetime expected credit loss of our customer accounts. To assess the lifetime expected credit loss, we utilize a loss rate method that takes into consideration historical experience and certain other factors, as appropriate, such as credit quality, current economic or other conditions and changes in project status that may affect a customer's ability to pay. This method accelerates the recognition of expected credit losses as compared to the incurred loss model used prior to 2023 and may result in material differences between our estimates and actual collection results. We may also have greater fluctuations in our credit loss expense over time based on changes in our historical experience or changes in estimates of future economic conditions, or other factors, which may not adequately reflect future actual customer payment activity. As an example, our credit loss expense for the year ended December 31, 2024, totaled approximately $2.1 million compared to $7.4 million during the year ended December 31, 2023. The change was due primarily to our collectibility assessments at each period end involving certain specific customers.

Current wording

The allowance for credit losses is based on the lifetime expected credit loss of our customer accounts. To assess the lifetime expected credit loss, we utilize a loss rate method that takes into consideration historical experience and certain other factors, as appropriate, such as credit quality, current economic or other conditions and changes in project status that may affect a customer's ability to pay. This method accelerates the recognition of expected credit losses as compared to the incurred loss model used prior to 2023 and may result in material differences between our estimates and actual collection results. We may also have greater fluctuations in our credit loss expense over time based on changes in our historical experience or changes in estimates of future economic conditions, or other factors, which may not adequately reflect future actual customer payment activity.

Previous wording

We base our estimated warranty obligations on available industry data relating to the nature and frequency of product failure rates and, where possible, on our historical experience, to make estimates of costs to address future claims. These estimates are inherently uncertain given our relatively short history of sales in relation to the warranty terms, and changes to our historical or projected warranty experience or fluctuations in available industry data may result in material changes to our warranty reserves in the future. Additionally, we make estimates of what costs we believe will be recoverable from the manufacturers of our products that we use to offset our obligations to our customers.

Current wording

When historical claims information relating to our equipment is not sufficient, we will base our estimates of our expected warranty obligations on industry studies involving the nature and frequency of product failure rates for similar parts used by our competitors, as well as other related businesses. These estimates are inherently uncertain given our relatively short history of sales, and changes to our historical or projected warranty experience or fluctuations in available industry data may result in material changes to our warranty reserves in the future. Additionally, we make estimates of what costs we believe will be recoverable from the manufacturers of our products that we use to offset our obligations to our customers.

Previous wording

Expected Term: The expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is calculated as the average of the option vesting and contractual terms, based on the simplified method, when we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for options granted. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. The contractual life of an option may be up to 10 years. Monte Carlo simulations estimate the derived service period of awards with market conditions.

Current wording

Expected Term: The expected term represents the period that the Company’s stock-based awards and warrants are expected to be outstanding and is calculated for option grants as the average of the option vesting and contractual terms, based on the simplified method, when we did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for options at the dates granted. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. The contractual life of an option may be up to 10 years. Monte Carlo simulations, as described below, estimate the derived service period of awards with market conditions.

Previous wording

Expected Volatility: Since the Company did not have a trading history of its common stock prior to our IPO and since such trading history subsequent to our IPO has been limited and may be less than the expected term of an award, the expected volatility may be derived from (i) our actual historical stock volatility with respect to certain more recent awards or (ii) the average historical stock volatilities of several public companies within the Company’s industry that it considers to be comparable to its business over a period equivalent to the expected term of the stock option grants or (iii) a combination of each method such as with recent awards granted with market conditions.

Current wording

Expected Volatility: Since the Company did not have a trading history of its common stock prior to our IPO and since such trading history subsequent to our IPO is limited and may be less than the expected term of an award or our warrants, the expected volatility is derived from a weighted average of (i) our historical volatility over our entire trading history, with respect to certain more recent awards, and, if needed, (ii) the average historical stock volatilities of several public companies within the Company’s industry that it considers to be comparable to its business over a period equivalent to the expected term of the stock option grants, or awards granted with market conditions.

Previous wording

Expected Dividend: The Company has not issued any dividends in its history and does not expect to issue dividends over the life of the options and, therefore, has estimated the dividend yield to be zero.

Current wording

Expected Dividend Yield: The Company has not issued any dividends in its history and does not expect to issue dividends over the life of the options or warrants and, therefore, has estimated the dividend yield to be zero.

Previous wording

Our use of the simplified method for estimating the expected outstanding term our options may differ significantly from future actual exercise patterns of our option holders. Estimates of the outstanding term of our options that are less than the actual exercise patterns of our option holders, may result in lower recognized expense than required. Alternatively, our recognized expense may be higher than required if our option holders exercise their options sooner than our estimates project.

Current wording

Our use of the simplified method for estimating the expected outstanding term of our options may differ significantly from future actual exercise patterns of our option holders. Estimates of the outstanding terms of our options, which are less than the actual exercise patterns of our option holders, may result in lower recognized expense. Alternatively, our recognized expense may be higher if our option holders exercise their options sooner than our estimates project.

Previous wording

Similarly, our use of a volatility estimate based on historical stock volatilities of the Company, as well as a peer group of other public companies, may differ significantly from the actual future volatility of our stock over the term options are held. Higher estimated volatility compared to actual results may result in higher recognized expense than required and alternatively, lower expected volatility compared to actual results may result in lower recognized expense than required.

Current wording

Similarly, our estimate of volatility is based on our historical stock volatility or the historical stock volatilities of a peer group of other public companies and may differ significantly from the actual future volatility of our stock over the term our warrants and our options or awards with market conditions are held. Higher estimated volatility compared to future actual results may result in higher recognized expense or fair value of our warrants and alternatively, lower expected volatility compared to future actual results may result in lower recognized expense or fair value of our warrants.