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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q


☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended June 30, 2025
		OR
☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________

Commission File Number 001-40350

FTC SOLAR, INC.
(Exact name of registrant as specified in its charter)


Delaware		81-4816270
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
9020 N Capital of Texas Hwy, Suite I-260, Austin, Texas 78759		78759
(Address of principal executive offices)		(Zip Code)

(737) 787-7906

Registrant's telephone number, including area code

Not Applicable

Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	FTCI	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer,’’ ‘‘smaller reporting company,’’ and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act.


Large accelerated filer		Accelerated filer		Non-accelerated filer		Smaller reporting company	

Emerging growth company		

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  No

As of July 25, 2025, 14,874,797 shares of the registrant's common stock were outstanding.

TABLE OF CONTENTS


			Page
PART I - FINANCIAL INFORMATION
		Forward-looking statements	1
	Item 1.	Financial Statements (Unaudited)	2
		Condensed Consolidated Balance Sheets	2
		Condensed Consolidated Statements of Comprehensive Loss	3
		Condensed Consolidated Statements of Changes in Stockholders’ Equity	4
		Condensed Consolidated Statements of Cash Flows	6
		Notes to Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

	Item 4.	Controls and Procedures	46

PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	47
	Item 1A.	Risk Factors	48
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
	Item 3.	Defaults Upon Senior Securities	50
	Item 4.	Mine Safety Disclosures	50
	Item 5.	Other Information	50
	Item 6.	Exhibits	51
SIGNATURE			53

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking statements. All statements other than statements of historical or current facts contained in this Quarterly Report may be forward-looking statements. Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, liquidity, growth and profitability strategies and factors and trends affecting our business are forward-looking statements. Forward-looking statements can be identified in some cases by the use of words such as “believe,” “can,” “could,” “potential,” “plan,” “predict,” “goals,” “seek,” “should,” “may,” “may have,” “would,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” the negative of these words, other similar expressions or by discussions of strategy, plans or intentions.

The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We believe that these factors include, but are not limited to, the factors set forth under Part II, Item 1A. "Risk Factors" of this Quarterly Report, and more comprehensively in Part I, Item 1A "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Annual Report"). Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report with the understanding that our actual future results may be materially different from what we expect. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.

These forward-looking statements speak only as of the date of this Quarterly Report. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report, whether as a result of any new information, future events or otherwise.

ITEM 1. FINANCIAL STATEMENTS

FTC Solar, Inc.

Condensed Consolidated Balance Sheets

(unaudited)


(in thousands, except shares and per share data)	June 30, 2025			December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	3,519		$	11,247
Accounts receivable, net of allowance for credit losses of $1,909 and $1,717 at June 30, 2025 and December 31, 2024, respectively		45,648			39,709
Inventories		7,316			10,144
Prepaid and other current assets		13,813			15,028
Total current assets		70,296			76,128
Operating lease right-of-use assets		930			1,149
Property and equipment, net		1,931			2,217
Goodwill		7,268			7,139
Equity method investment		391			954
Other assets		2,139			2,341
Total assets	$	82,955		$	89,928
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	17,867		$	12,995
Accrued expenses		30,410			20,134
Income taxes payable		408			325
Deferred revenue		1,492			5,306
Other current liabilities		10,456			10,313
Total current liabilities		60,633			49,073
Long-term debt		10,895			9,466
Operating lease liability, net of current portion		436			411
Warrant liability		—			9,520
Other non-current liabilities		1,949			2,422
Total liabilities		73,913			70,892
Commitments and contingencies (Note 13)
Stockholders’ equity
Preferred stock par value of $0.0001 per share, 10,000,000 shares authorized; none issued as of June 30, 2025 and December 31, 2024		—			—
Common stock par value of $0.0001 per share, 850,000,000 shares authorized; 14,872,017 and 12,853,823 shares issued and outstanding as of June 30, 2025 and December 31, 2024		1			1
Treasury stock, at cost; 1,076,257 shares as of June 30, 2025 and December 31, 2024		—			—
Additional paid-in capital		376,464			367,318
Accumulated other comprehensive loss		(433	)		(542	)
Accumulated deficit		(366,990	)		(347,741	)
Total stockholders’ equity		9,042			19,036
Total liabilities and stockholders’ equity	$	82,955		$	89,928

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

FTC Solar, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)


	Three months ended June 30,						Six months ended June 30,
(in thousands, except shares and per share data)	2025			2024			2025			2024
Revenue:
Product	$	15,867		$	8,776		$	34,069		$	19,681
Service		4,126			2,654			6,727			4,336
Total revenue		19,993			11,430			40,796			24,017
Cost of revenue:
Product		18,876			10,467			38,987			22,834
Service		5,036			3,306			9,175			5,634
Total cost of revenue		23,912			13,773			48,162			28,468
Gross loss		(3,919	)		(2,343	)		(7,366	)		(4,451	)
Operating expenses
Research and development		1,129			1,535			2,053			2,974
Selling and marketing		1,291			2,036			2,427			4,424
General and administrative		5,160			6,010			10,213			12,577
Total operating expenses		7,580			9,581			14,693			19,975
Loss from operations		(11,499	)		(11,924	)		(22,059	)		(24,426	)
Interest expense		(731	)		(117	)		(1,442	)		(434	)
Interest income		5			118			11			299
Gain from disposal of investment in unconsolidated subsidiary		—			—			3,204			4,085
Gain on sale of Atlas		50			—			50			—
Gain (loss) from change in fair value of warrant liability		(2,836	)		—			1,768			—
Other income (expense), net		71			(7	)		75			29
Loss from unconsolidated subsidiary		(451	)		(246	)		(563	)		(511	)
Loss before income taxes		(15,391	)		(12,176	)		(18,956	)		(20,958	)
Provision for income taxes		(39	)		(65	)		(293	)		(54	)
Net loss		(15,430	)		(12,241	)		(19,249	)		(21,012	)
Other comprehensive income (loss):
Foreign currency translation adjustments		81			36			109			(145	)
Comprehensive loss	$	(15,349	)	$	(12,205	)	$	(19,140	)	$	(21,157	)
Net loss per share:
Basic and diluted(*)	$	(1.18	)	$	(0.97	)	$	(1.49	)	$	(1.67	)
Weighted-average common shares outstanding:
Basic and diluted(*)		13,098,825			12,617,128			12,948,189			12,581,608


* -	Prior year per-share amounts and number of shares, as applicable, have been revised to reflect the Reverse Stock Split effective November 29, 2024.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

FTC Solar, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

For the three and six months ended June 30, 2025:


	Preferred stock				Common stock				Treasury stock
(in thousands, except shares)	Shares		Amount		Shares		Amount		Shares		Amount		Additional paid-In capital		Accumulated other comprehensive loss			Accumulated deficit			Total stockholders' equity
Balance as of December 31, 2024		—	$	—		12,853,823	$	1		1,076,257	$	—	$	367,318	$	(542	)	$	(347,741	)	$	19,036
Shares issued during the period for vested restricted stock awards		—		—		209,486		—		—		—		—		—			—			—
Issuance of common stock upon exercise of stock options		—		—		5,000		—		—		—		3		—			—			3
Stock-based compensation		—		—		—		—		—		—		280		—			—			280
Net loss		—		—		—		—		—		—		—		—			(3,819	)		(3,819	)
Other comprehensive gain		—		—		—		—		—		—		—		28			—			28
Balance as of March 31, 2025		—		—		13,068,309		1		1,076,257		—		367,601		(514	)		(351,560	)		15,528
Shares issued during the period for vested restricted stock awards		—		—		53,708		—		—		—		—		—			—			—
Exercise of warrants		—		—		1,750,000		—		—		—		7,927		—			—			7,927
Stock-based compensation		—		—		—		—		—		—		936		—			—			936
Net loss		—		—		—		—		—		—		—		—			(15,430	)		(15,430	)
Other comprehensive gain		—		—		—		—		—		—		—		81			—			81
Balance as of June 30, 2025		—	$	—		14,872,017	$	1		1,076,257	$	—	$	376,464	$	(433	)	$	(366,990	)	$	9,042

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

FTC Solar, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Continued)

(unaudited)

For the three and six months ended June 30, 2024:


	Preferred stock				Common stock				Treasury stock
(in thousands, except shares)	Shares		Amount		Shares(*)		Amount(*)		Shares(*)		Amount		Additional paid-In capital(*)		Accumulated other comprehensive loss			Accumulated deficit			Total stockholders' equity
Balance as of December 31, 2023		—	$	—		12,544,533	$	1		1,076,257	$	—	$	361,898	$	(293	)	$	(299,135	)	$	62,471
Shares issued during the period for vested restricted stock awards		—		—		50,693		—		—		—		—		—			—			—
Stock-based compensation		—		—		—		—		—		—		1,639		—			—			1,639
Net loss		—		—		—		—		—		—		—		—			(8,771	)		(8,771	)
Other comprehensive loss		—		—		—		—		—		—		—		(181	)		—			(181	)
Balance as of March 31, 2024		—		—		12,595,226		1		1,076,257		—		363,537		(474	)		(307,906	)		55,158
Shares issued during the period for vested restricted stock awards		—		—		100,908		—		—		—		—		—			—			—
Issuance of common stock upon exercise of stock options		—		—		4,124		—		—		—		3		—			—			3
Stock-based compensation		—		—		—		—		—		—		1,285		—			—			1,285
Net loss		—		—		—		—		—		—		—		—			(12,241	)		(12,241	)
Other comprehensive gain		—		—		—		—		—		—		—		36			—			36
Balance as of June 30, 2024		—	$	—		12,700,258	$	1		1,076,257	$	—	$	364,825	$	(438	)	$	(320,147	)	$	44,241


* -	Prior year shares and amounts, as applicable, have been revised to reflect the Reverse Stock Split effective November 29, 2024.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

FTC Solar, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Six months ended June 30,
(in thousands)	2025			2024
Cash flows from operating activities
Net loss	$	(19,249	)	$	(21,012	)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation		1,216			2,924
Depreciation and amortization		607			812
Gain from change in fair value of warrant liability		(1,768	)		—
Gain from sale of property and equipment		(3	)		—
Amortization of debt discount and issue costs		427			236
Paid-in-kind non-cash interest		1,001			—
Provision for obsolete and slow-moving inventory		—			177
Loss from unconsolidated subsidiary		563			511
Gain from disposal of investment in unconsolidated subsidiary		(3,204	)		(4,085	)
Gain on sale of Atlas		(50	)		—
Warranties issued and remediation added		1,614			1,639
Warranty recoverable from manufacturer		191			238
Credit loss provisions		192			587
Deferred income taxes		425			223
Lease expense and other		594			609
Impact on cash from changes in operating assets and liabilities:
Accounts receivable		(5,956	)		23,181
Inventories		2,828			(13,333	)
Prepaid and other current assets		1,193			(864	)
Other assets		(392	)		(562	)
Accounts payable		4,819			9,483
Accruals and other current liabilities		9,507			(13,463	)
Deferred revenue		(3,814	)		(1,017	)
Other non-current liabilities		(830	)		(1,331	)
Lease payments and other, net		(691	)		(588	)
Net cash used in operations		(10,780	)		(15,635	)
Cash flows from investing activities:
Purchases of property and equipment		(268	)		(1,131	)
Proceeds from sale of Atlas software platform		50			—
Proceeds from sale of property and equipment		3			—
Equity method investment in Alpha Steel		—			(1,800	)
Proceeds from disposal of investment in unconsolidated subsidiary		3,204			4,085
Net cash provided by investing activities		2,989			1,154
Cash flows from financing activities:
Proceeds from stock option exercises		3			3
Net cash provided by financing activities		3			3
Effect of exchange rate changes on cash and cash equivalents		60			22
Decrease in cash and cash equivalents		(7,728	)		(14,456	)
Cash and cash equivalents at beginning of period		11,247			25,235
Cash and cash equivalents at end of period	$	3,519		$	10,779

Supplemental disclosures of cash flow information:
Purchases of property and equipment included in ending accounts payable and accruals	$	104		$	202
Fair value of common stock issued upon warrant exercise	$	7,927		$	—
Right-of-use asset and lease liability recognition for new leases	$	165		$	500
Paid-in-kind non-cash interest added to Senior Notes principal	$	1,001		$	—
Cash paid during the period for interest	$	14		$	189
Cash paid during the period for taxes, net of refunds	$	12		$	78

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

FTC Solar, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Description of business

FTC Solar, Inc. (the “Company”, “we”, “our”, or “us”) was founded in 2017 and is incorporated in the state of Delaware. In April 2021, we completed an initial public offering ("IPO"), and our common stock currently trades on the Nasdaq Capital Market ("Nasdaq") under the symbol “FTCI”.

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 ("1P") solar tracker system is marketed under the Pioneer brand name ("Pioneer") and our original two modules-in-portrait ("2P") solar tracker system is marketed under the Voyager brand name (“Voyager”). 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 ("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.

We are an emerging growth company, as defined in the Jumpstart Our Business Startups (JOBS) Act. Under the JOBS Act, we elected to use the allowed extended transition period to delay adopting new or revised accounting standards until such time as those standards apply to private companies.

2. Summary of significant accounting policies

Basis of presentation and principles of consolidation

The accompanying unaudited Condensed Consolidated Financial Statements include the results of the Company and its wholly owned subsidiaries and have been prepared based on the assumption that the Company will continue as a going concern and are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and pursuant to Form 10-Q and Article 10 of Regulation S-X. As discussed further in "Liquidity and Going Concern" below, given the Company's current cash balances and recurring losses from operations, management has concluded that there is substantial doubt about the Company's ability to continue as a going concern during the next year.

In the opinion of management, all adjustments of a normal recurring nature have been made that are considered necessary for a fair statement of our financial position as of June 30, 2025 and December 31, 2024, and our results of operations for the three and six months ended June 30, 2025 and cash flows for the six months ended June 30, 2025 and 2024. The Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from the Company’s audited Consolidated Financial Statements but does not include all disclosures required by U.S. GAAP. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. Intercompany balances and transactions have been eliminated in consolidation.

Certain information and disclosures normally included in the notes to our annual Consolidated Financial Statements prepared in accordance with U.S. GAAP have been omitted from these interim Condensed Consolidated Financial Statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Therefore, these unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

We currently operate in one business segment, the manufacturing and servicing of solar tracker systems. See Note 18, "Segment information" below for further discussion.

Liquidity and Going Concern

We have incurred cumulative losses since inception and have a history of cash outflows from operations, inclusive of $10.8 million in cash utilized in our operating activities during the six months ended June 30, 2025. As of June 30, 2025, we had cash on hand of $3.5 million and $9.7 million of working capital.

As of June 30, 2025, in addition to our cash on hand and working capital, we had nearly $13.8 million of capacity available for future sales of our common stock under our ATM program as defined and described further in Note 14, "ATM Program" below. 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.

As described further in Note 19, "Subsequent events", on July 2, 2025 (the "Closing Date"), we entered into a Credit Agreement (the "Credit Agreement") by and among the Company, as borrower, each lender party thereto from time to time (the "Lenders"), and Acquiom Agency Services LLC, as administrative agent for the Lenders. The Credit Agreement provides for a senior secured term facility of up to $75 million, consisting of (i) $14.3 million principal amount of Initial Term Loans that were funded on the Closing Date; (ii) $23.2 million principal amount of First Delayed Draw Term Loans that may be funded during the 90-day period following the Closing Date, subject to Company stockholder approval of the issuance of all of the shares of the Company's common stock issuable upon the full exercise of the warrants issued to the Lenders on the Closing Date in connection with the transaction under the Credit Agreement; and (iii) up to $37.5 million principal amount of Second Delayed Draw Term Loans that may be requested by the Company and approved by the Lenders in their sole discretion. After deductions for certain fees and expenses, the net proceeds received by the Company on the Closing Date from the funding of the Initial Term Loans totaled approximately $13.0 million.

Based on our cash position at June 30, 2025, including consideration of the $13.0 million of net proceeds from the initial funding received on July 2, 2025 under the Credit Agreement, and in view of our recent operating losses and due to the availability of additional financing provided by the Credit Agreement following the Closing Date in the form of the First Delayed Draw Term Loans and Second Delayed Draw Term Loans not being completely within our control, we have concluded that substantial doubt exists as to our ability to continue as a going concern within the next year.

We also have a contractual obligation that could require us to make additional capital contributions of up to $0.8 million to Alpha Steel, as well as make a minimum level of purchases from Alpha Steel, as described further in Note 9, "Equity method investment" below. In the event we were to fail to meet our minimum required purchase commitments during a specified period, including the period from July 1, 2025 to June 30, 2026, we may be required to make a cash payment for the net profit attributable to any unfilled requirements, calculated as specified in the agreement, in an amount not to exceed $4.0 million in the aggregate.

Our ability to meet our liquidity needs over the next year is dependent upon (i) our cash on hand (subject to a $20.0 million minimum unrestricted cash covenant under the Credit Agreement effective for the quarter ended September 30, 2025 (such minimum cash covenant and the other financial covenants under the Credit Agreement as described further in Note 19, "Subsequent events")), (ii) our expectations of increased project activity and cash flow during the twelve-month period following issuance of these Condensed Consolidated Financial Statements, (iii) the availability of expected additional proceeds in the form of First Delayed Draw Term Loans under the Credit Agreement during September 2025, the funding of which is subject to Company stockholder approval of the issuance of all of the shares of the Company's common stock issuable upon the full exercise of the warrants issued, and the potential availability of the Second Delayed Draw Term Loans that may be requested by the Company and approved by the Lenders in their sole discretion, and (iv) utilization, as appropriate, of the capacity available for future sales of our common stock under the ATM program, which is currently constrained to a degree 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, the location of our headcount and the level of services currently provided by third parties.

Use of estimates

Preparation of condensed 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.

Concentration of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk are primarily cash and accounts receivable.

We regularly maintain cash balances with various financial institutions that exceed federally insured amounts, but we have experienced no losses associated with these amounts to date. We periodically evaluate the financial health of the financial institutions we use and may take action in future periods, similar to past actions, to reallocate cash balances between financial institutions based on our evaluation.

We extend credit to customers in the normal course of business, often without requiring collateral. We also perform credit analyses and monitor the financial health of our customers to reduce credit risk.

The Company’s accounts receivables are derived from revenue earned from customers primarily located in the United States and Australia. For the periods included in this Quarterly Report, no company locations other than those in the United States and Australia accounted for more than 10% of our consolidated revenue. Most of our customers are project developers, solar asset owners and engineering, procurement and construction (“EPC”) contractors that design and build solar energy projects. We typically rely on a small number of customers that account for a large portion of our revenue each period and our outstanding receivables at each period end.

Cash and cash equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Certain of our cash equivalents include deposits in money market funds that invest primarily in short-term securities issued or guaranteed by the U.S. government or its agencies or instrumentalities and contain no restrictions on immediate redemption. These deposits totaled $0.5 million at both June 30, 2025 and December 31, 2024. Interest earned on cash equivalents is included in interest income in our Condensed Consolidated Statements of Comprehensive Loss.

Accounts receivable, net

Trade receivables are recorded at invoiced amounts, net of allowances for credit losses, and do not bear interest. We generally do not require collateral from our customers; however, in certain circumstances, we may require letters of credit, other collateral, additional guarantees or advance payments.

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. Provisions for credit losses are included as a component of our selling and marketing expenses.

Receivables arising from revenue recognized in excess of billings represent our unconditional right to consideration before customers are invoiced due to the level of progress obtained as of period end on our contracts to procure and deliver tracker systems and related equipment. Further information may be found below in our revenue recognition policy.

Inventories

Inventories are stated at the lower of cost or net realizable value, with costs computed on a first-in, first-out basis. The Company periodically reviews its inventories for excess and obsolete items and adjusts carrying costs to estimated net realizable values when they are determined to be less than cost.

Impairment

We review our long-lived assets that are held for use for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable or that its useful life may be shorter than previously expected. If such impairment

indicators are present or other factors exist that indicate the carrying amount of the asset may not be recoverable, we determine whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. If an impairment has occurred, we recognize a loss for the difference between the carrying amount and the fair value of the asset, which in most cases is estimated based upon Level 3 unobservable inputs. If the asset is determined to have a remaining useful life shorter than previously expected, an adjustment for the shorter remaining life will be made for purposes of recognizing future depreciation expense. Assets are classified as held for sale when we have a plan, approved by the appropriate levels of management, for disposal of such assets, as well as other considerations, and those assets are stated at the lower of carrying value or estimated fair value less estimated costs to sell.

Goodwill

We recognize goodwill as the excess of the purchase price over the estimated fair value of the identified assets and liabilities acquired in a business combination accounted for using the acquisition method. Goodwill is not amortized but is subject to a periodic assessment for impairment at least annually, or whenever events and circumstances indicate an impairment may exist. Our assessments may include qualitative factors such as current or expected industry and market conditions, our overall financial performance, share price trends, market capitalization and other company-specific events.

We operate in one segment, being the consolidated entity, which we have also determined is the reporting unit for goodwill impairment.

No impairment of goodwill was recognized as of June 30, 2025 or during 2024.

Equity method investment

We use the equity method of accounting for investments in which we have the ability to exercise significant influence, but not control, over operating and financial policies of the investee. Our proportionate share of the net income or loss of these investees is included in our Condensed Consolidated Statements of Comprehensive Loss. Judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest, legal form of the investee, representation on the board of directors or managers, participation in policy-making decisions and material intra-entity transactions.

We account for distributions received from equity method investees under the “nature of the distribution” approach based on the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities).

We evaluate equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time and the extent to which the fair value of the equity method investment has been less than its cost, the investee’s financial condition and near-term prospects and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other than temporary is recognized in the period identified.

We made an accounting policy election that, upon the sale of our equity method investments, we will recognize contractual contingent gains arising from earnout provisions and project escrow releases when such amounts are realizable in periods subsequent to the disposal date.

Deferred debt discount and issue costs

Legal, consulting, accounting and other fees that are incremental and directly related to issuances of long-term debt, including any discounts on the debt, are capitalized and reflected as a reduction to the principal amount of our outstanding debt. These costs are amortized to interest expense over the term of the debt using the interest method.

Warrants

Warrants issued for the purchase of our common stock are evaluated for liability or equity classification and recorded at fair value upon issuance. Fair value may be determined using a Black-Scholes model or other valuation technique depending on the terms of the warrants. Warrants containing clauses that could require settlement in cash or with other assets are reflected as liabilities whereas warrants

that may only be settled with the issuance of our common stock are reflected as a component of our equity. Warrants classified as liabilities are adjusted to current fair value at the end of each reporting period with changes reflected in our results of operations. Legal, consulting, accounting and other fees that are incremental and directly related to the issuance of warrants are expensed as incurred for warrants classified as liabilities or shown as a reduction to the value of our warrants as reflected in our equity.

Warranty

Typically, the sale of solar tracker projects includes parts warranties to customers as part of the overall price of the product. We provide standard assurance type warranties for our products for periods generally ranging from five to ten years. We also accrue for costs relating to remediation efforts involving product issues we believe require correction. We record a provision for estimated warranty and remediation expenses in cost of sales, net of amounts recoverable from manufacturers under their warranty obligations to us. When historical claims information relating to our equipment is not sufficient, we will base our estimates 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. We do not maintain general or unspecified reserves; all warranty reserves are related to specific projects. All actual or estimated material costs incurred for warranty or remediation services in subsequent periods are charged to those established reserves.

While we periodically monitor our warranty activities and claims, if actual costs incurred were to be different from our estimates, we would recognize adjustments to our warranty reserves in the period in which those differences arise or are identified.

Stock-based compensation

We recognize compensation expense for all share-based payment awards made, including stock options and restricted stock units ("RSUs"), based on the estimated fair value of the award on the grant date. We calculate the fair value of stock options using the Black-Scholes option pricing model for awards with service-based vesting or through use of a lattice model or a Monte Carlo simulation for stock option and RSU awards with market conditions. The fair value of RSUs with service or performance-based vesting is based on the estimated fair value of the Company's common stock on the date of grant. We consider the closing price of our stock, as reported on Nasdaq, to be the fair value of our stock on the grant date.

Forfeitures are accounted for as they occur. For service-based awards, stock-based compensation is recognized using the straight-line attribution approach over the requisite service period. For performance-based awards, stock-based compensation is recognized based on graded vesting over the requisite service period when the performance condition is probable of being achieved. Stock compensation expense for market-based awards is recognized over the derived service period determined in the valuation model, inclusive of any vesting conditions.

Revenue recognition

Product revenue is derived from the sale of solar tracker systems and customized components for those systems, individual part sales for certain specific transactions and the sale of term-based software licenses. Term-based licensed software is deployed on the customers’ own servers and has significant standalone functionality.

Service revenue includes revenue from shipping and handling services, engineering consulting and pile testing services, our subscription-based enterprise licensing model and maintenance and support services in connection with the term-based software licenses. Our subscription-based enterprise licensing model typically has contract terms ranging from one to two years and consists of subscription fees from the licensing of subscription services. Our hosted on-demand service arrangements do not provide customers with the right to take possession of the software supporting the hosted services. Support services include ongoing security updates, upgrades, bug fixes, and maintenance.

We recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below.

Identify the contract with a customer: A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the products and services to be transferred and identifies the payment terms related

to these products and services, (ii) the contract has commercial substance, and (iii) the Company determines that collection of substantially all consideration for products and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. In assessing the recognition of revenue, we also evaluate whether two or more contracts should be combined and accounted for as one contract and if the combined or single contract should be accounted for as multiple performance obligations which could change the amount of revenue and profit (loss) recorded in a period. Change orders may include changes in specifications or design, manner of performance, equipment, materials, scope of work, and/or the period of completion of the project. We analyze change orders to determine if they should be accounted for as a modification to an existing contract or a new stand-alone contract.

Contracts we enter into with our customers for sale of solar tracker systems are generally under two different types of arrangements: (1) purchase agreements and equipment supply contracts (“Purchase Agreements”), and (2) sale of individual parts for those systems.

Change orders from our customers that are deemed to be modifications to existing contracts are included in the total estimated contract revenue when it is probable that the change order will result in additional value that can be reliably estimated and realized.

Identify the performance obligations in the contract: We enter into contracts that can include various combinations of products and services, which are either capable of being distinct and accounted for as separate performance obligations or as one performance obligation since the majority of tasks and services are part of a single project or capability. However, determining whether products or services are considered distinct performance obligations that should be accounted for separately versus together may sometimes require significant judgment.

Our Purchase Agreements typically include two performance obligations: 1) our solar tracker systems or customized components of those systems, and 2) shipping and handling services. The deliverables included as part of our solar tracker systems are predominantly accounted for as one performance obligation, as these deliverables are part of a combined promise to deliver a project.

The revenue for shipping and handling services will be recognized over time based on progress in meeting shipping terms of the arrangements, as this faithfully depicts the Company’s performance in transferring control. Revenue for stand-alone engineering consulting and pile testing services is recognized at a point in time upon completion of the services performed.

Sales of individual parts of our solar tracker systems for certain specific transactions include multiple performance obligations consisting of individual parts of those systems. Revenue is recognized for parts sales at a point in time when the obligations under the terms of the contract with our customer are satisfied. Generally, this occurs with the transfer of control of the asset, which is in line with shipping terms.

Determine the transaction price: The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring services to the customer. Such amounts are typically stated in the customer contract, and to the extent that we identify variable consideration, we will estimate the variable consideration at the onset of the arrangement as long as it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Other than with respect to the impact of changes in tariff rates, the majority of our contracts do not contain variable consideration provisions as a continuation of the original contract. None of our contracts contain a significant financing component. Taxes collected from customers and remitted to governmental authorities are not included in revenue.

Allocate the transaction price to performance obligations in the contract: Once we have determined the transaction price, we allocate the total transaction price to each performance obligation in a manner depicting the amount of consideration to which we expect to be entitled in exchange for transferring the good(s) or service(s) to the customer. We allocate the transaction price to each performance obligation identified in the contract on a relative standalone selling price basis.

We use the expected cost-plus margin approach based on hardware, labor, and related overhead cost to estimate the standalone selling price of our solar tracker systems, customized components of those systems, and individual parts for certain specific transactions. We also use the expected cost-plus margin approach based on expected third-party shipping and transportation costs to estimate the standalone selling price of our shipping, handling and logistics performance obligations. We use the adjusted market assessment approach for all other performance obligations.

Recognize revenue when or as the Company satisfies a performance obligation: For each performance obligation identified, we determine at contract inception whether we satisfy the performance obligation over time or at a point in time. The performance obligations in the contracts for our solar tracker systems and customized components of those systems are satisfied over time as work progresses,

utilizing an input measure of progress determined by cost-to-cost measures on these projects as this faithfully depicts our performance in transferring control. Additionally, our performance does not create an asset with an alternative use, due to the highly customized nature of the product, and we have an enforceable right to payment for performance completed to date. Our performance obligations for individual part sales for certain specific transactions are recognized at a point in time as and when control transfers based on the terms for the contract. Our performance obligations for engineering consulting and pile testing services are recognized at a point in time upon completion of the services. Our performance obligations for term-based software licenses are recognized at a point in time as and when control transfers, either upon delivery to the customer or the software license start date, whichever is later. Our performance obligations for shipping and handling services are satisfied over time as the services are delivered over the term of the contract. We recognize revenue for subscription and other services on a straight-line basis over the contract period. With regard to support revenue, a time-elapsed method is used to measure progress because we transfer control evenly over the contractual period. Accordingly, the fixed consideration related to support revenue is generally recognized on a straight-line basis over the contract term.

Impact of changes in tariffs on our revenue recognition: In cases where our existing contracts have legally enforceable terms that allow us to pass the increased cost of tariffs to our customers automatically, any change in the transaction price will be accounted for as a change in our estimate of variable consideration and allocated to our performance obligations on the same basis as our initial allocation at contract inception. Where price changes resulting from tariffs need to be separately negotiated and agreed to with our customers, we will apply the contract modification guidance in Accounting Standards Codification 606, Revenue from Contracts with Customers, once the modification is enforceable. We will also take into account tariff rates in effect at each period end in measuring our progress toward satisfaction of our performance obligations in recognizing revenue.

Contract assets and liabilities: The timing of revenue recognition, billing, and cash collection results in the recognition of accounts receivable, unbilled receivables for revenue recognized in excess of billings, and deferred revenue in the Condensed Consolidated Balance Sheets. We have elected to use the practical expedient of expensing incremental costs of obtaining a contract for our contracts of less than one year in duration. We may receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities, which are reflected as “deferred revenue” in our Condensed Consolidated Balance Sheets. Customer deposits are short term as the related performance obligations are typically fulfilled within 12 months. Changes in deferred revenue relate to fluctuations in the timing of customer deposits and completion of performance obligations. Revenue recognized during the three and six months ended June 30, 2025, from amounts included in deferred revenue at December 31, 2024, totaled $1.2 million and $5.3 million, respectively. Approximately, $0.2 million and $2.5 million of revenue was recognized during the three and six months ended June 30, 2024, respectively, from amounts included in deferred revenue at December 31, 2023, which totaled $3.6 million.

Cost of revenue consists primarily of costs related to raw materials, equipment manufacturing activities, net of incentives earned, freight and delivery, tariffs, product warranty, remediation and personnel costs (salaries, bonuses, benefits, and stock-based compensation). Personnel costs in cost of revenue include both direct labor costs, as well as costs attributable to any individuals whose activities relate to the procurement, installment and delivery of the finished product and services. Cost of revenue owed but not yet paid is recorded as accrued cost of revenue in the accompanying Condensed Consolidated Balance Sheets. Deferred cost of revenue, a component of our prepaid and other current assets, results from the timing differences between the costs incurred in advance of the satisfaction of all revenue recognition criteria consistent with our revenue recognition policy.

Inflation Reduction Act of 2022 (“IRA”)

The IRA was enacted into law on August 16, 2022, and provides for various clean energy credits, including an Advanced Manufacturing Production Credit under Section 45X (“45X Credit”) for eligible parts, including torque tubes and structural fasteners, that we purchase from Alpha Steel. Our agreements with Alpha Steel allow for us to receive benefit of the 45X Credits earned by Alpha Steel in the form of reductions to the purchase price of the products manufactured for us on a per-unit basis. Utilizing guidance in IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, we recognize the benefits of these reductions as they are earned during the manufacturing process and reflect them as related party receivables and a reduction of our cost of revenue.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which accelerates the phase-outs and terminations of various eligible tax credits enacted as part of the IRA and places restrictions on continued receipt of tax credits by specified foreign entities and foreign influenced entities.

Recent accounting and regulatory pronouncements not yet adopted

In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires companies to disclose (i) additional categories of information about federal, state and foreign income taxes above a quantitative threshold in their rate reconciliation table and (ii) income

taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual periods, as well as other disclosure changes. As an emerging growth company, we are not required to adopt ASU 2023-09 prior to 2026, although earlier adoption is permitted. We are currently evaluating the impact of ASU 2023-09 on our existing income tax disclosures.

In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule would require registrants to disclose certain climate-related information in registration statements and annual reports. In April 2024, the SEC issued a stay of the final rules pending a judicial review of the validity of the rules by the Eighth Circuit Court of Appeals. In March 2025, the SEC sent a letter to the Eighth Circuit stating that they were withdrawing their defense of the rules and would no longer advance the arguments in the brief they had filed. In April 2025, the Eighth Circuit issued an order to hold the case in abeyance, as requested by a group of intervening states and the District of Columbia, pending the SEC filing a status report as to whether it intends to review or reconsider the rules at issue in the case or enforce them if the Eight Circuit upholds the climate disclosure rule. On July 23, 2025, the SEC responded to the order of the Eighth Circuit by issuing a status report stating it had no intention of reviewing or reconsidering the rules at this time and asked the Court to decide the case before the SEC commits to a course of action. The rules remain stayed by the SEC. We continue to monitor developments in the case to determine if there will ultimately be any impact on our disclosures.

In November 2024, the FASB issued ASU 2024-03 - Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-04). ASU 2024-03 requires companies to disclose additional specific information including, among other things, (a) purchases of inventory, (b) employee compensation, (c) depreciation, and (d) intangible asset amortization included in each of its expense captions disclosed on the face of its results of operations statement, as well as total selling expenses. As clarified in ASU 2025-01, we are required to adopt ASU 2024-03 for our annual reporting effective December 31, 2027 and in our quarterly reporting beginning in 2028.

In May 2025, the FASB issued ASU 2025-04, Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606). This new guidance applies to all entities that issue share-based consideration to a customer that is within the scope of Topic 606. The guidance revises the definition of a performance condition to include conditions based on a customer's purchases and eliminates the policy election allowing grantors to account for forfeitures of customer awards as they occur. It also clarifies that the guidance on constraining estimates of variable consideration does not apply to share-based consideration payable to a customer. We are required to adopt this new standard on either a modified retrospective or a retrospective basis beginning in the first quarter of 2027. We are currently evaluating the impact, if any, on the Company upon adoption and have made no determination at this time regarding the method of adoption to be used.

Other standards or regulatory requirements that have been issued but not yet adopted as of June 30, 2025, are either not applicable to us or are not expected to have any material impact upon adoption.

Reclassifications

Prior year amounts relating to interest income in our Condensed Consolidated Statements of Comprehensive Loss have been reclassified to conform to the current year presentation. There was no impact on our financial condition or results of operations as a result of the reclassification.

3. Accounts receivable, net

Accounts receivable consisted of the following:


(in thousands)	June 30, 2025			December 31, 2024
Trade receivables	$	23,239		$	22,369
Related party receivables		4,005			3,121
Revenue recognized in excess of billings		20,133			15,936
Other receivables		180			—
Total		47,557			41,426
Allowance for credit losses		(1,909	)		(1,717	)
Accounts receivable, net	$	45,648		$	39,709

Information about our related party receivables at June 30, 2025, may be found below in Note 16, "Related party transactions".

Activity in the allowance for credit losses during the three and six months ended June 30, 2025 and 2024 was as follows:


	Three months ended June 30,					Six months ended June 30,
(in thousands)	2025		2024			2025		2024
Balance at beginning of period	$	1,625	$	9,227		$	1,717	$	8,557
Amounts charged to earnings during the period		284		(83	)		192		587
Write-offs of accounts		—		(8,912	)		—		(8,912	)
Balance at end of period	$	1,909	$	232		$	1,909	$	232

4. Inventories

Inventories consisted of the following:


(in thousands)	June 30, 2025			December 31, 2024
Finished goods	$	7,832		$	10,660
Allowance for slow-moving and obsolete inventory		(516	)		(516	)
Total	$	7,316		$	10,144

5. Prepaid and other current assets

Prepaid and other current assets consisted of the following:


(in thousands)	June 30, 2025		December 31, 2024
Vendor deposits	$	6,344	$	7,184
Vendor deposits with related party		2,029		2,005
Prepaid expenses		763		842
Prepaid taxes		685		595
Deferred cost of revenue		337		433
Other current assets		3,655		3,969
Total	$	13,813	$	15,028

At June 30, 2025 and December 31, 2024, other current assets included $2.0 million for a non-interest-bearing customer advance related to pre-project construction financing activities. This advance is secured by certain customer assets.

6. Leases

We lease office and warehouse space in various locations, including our corporate headquarters in Austin, Texas. Additionally, we lease space for an applications laboratory in Austin, Texas and research and development facilities in Seguin, Texas and India. All of our manufacturing is outsourced to contract manufacturing partners, and we currently do not own or lease any manufacturing facilities.

Our expense for our operating leases consisted of the following:


	Three months ended June 30,				Six months ended June 30,
(in thousands)	2025		2024		2025		2024
Operating lease cost	$	267	$	300	$	594	$	609
Short-term lease cost		82		111		148		204
Total lease cost	$	349	$	411	$	742	$	813

Reported in:
Cost of revenue	$	188	$	259	$	371	$	495
Research and development		26		14		33		28
Selling and marketing		20		39		47		87
General and administrative		115		99		291		203
Total lease cost	$	349	$	411	$	742	$	813

Future remaining operating lease payment obligations were as follows:


(in thousands)	June 30, 2025
Remainder of 2025	$	398
2026		274
2027		242
2028		70
2029		57
Thereafter		24
Total lease payments		1,065
Less: imputed interest		(136	)
Present value of operating lease liabilities	$	929

Current portion of operating lease liability	$	493
Operating lease liability, net of current portion		436
Present value of operating lease liabilities	$	929

7. Property and equipment, net

Property and equipment consisted of the following:


(in thousands)	June 30, 2025			December 31, 2024
Leasehold improvements	$	337		$	338
Field equipment		1,117			1,108
Information technology equipment		721			659
Tooling		2,109			1,847
Capitalized software		996			1,011
Total		5,280			4,963
Accumulated depreciation		(3,349	)		(2,746	)
Property and equipment, net	$	1,931		$	2,217

Depreciation expense for the three months ended June 30, 2025 and 2024, totaled $0.3 million in each period. Depreciation expense for the six months ended June 30, 2025 and 2024, totaled $0.6 million and $0.5 million, respectively.

8. Goodwill

During the six months ended June 30, 2025 and 2024, activity in our goodwill balance was as follows:


	Six months ended June 30,
(in thousands)	2025		2024
Balance at beginning of period	$	7,139	$	7,538
Translation		129		(369	)
Balance at end of period	$	7,268	$	7,169

9. Equity method investment

We have a 45% interest in Alpha Steel LLC ("Alpha Steel"), which is accounted for under the equity method of accounting. Alpha Steel, located in Sealy, Texas, is dedicated to producing steel components, including torque tubes, for utility-scale solar projects. Taihua New Energy (Thailand) Co., LTD ("Taihua") has a 51% interest in Alpha Steel and DAYV LLC, an entity owned by members of the Board of Managers of Alpha Steel and a related party with the parent company of Taihua, has a 4% interest in Alpha Steel. The Chief Executive

Officer of Taihua is the General Manager of Alpha Steel. We have equal voting representation with Taihua and DAYV LLC, combined, on Alpha Steel's Board of Managers which is responsible, through majority vote, for making certain "major decisions" involving Alpha Steel, as specified in the limited liability company agreement ("LLC Agreement"), including, among other things, approval of an annual business plan. Pursuant to the LLC Agreement, we could be required to make up to $0.8 million in future additional capital contributions as Alpha Steel continues to expand production. For the six months ended June 30, 2025 and 2024, we recognized losses of $0.6 million and $0.5 million, respectively, which represent our share of the net operating losses incurred by Alpha Steel during each period. Losses recognized for the three months ended June 30, 2025 and 2024, were $0.5 million and $0.2 million, respectively.

In connection with the creation of Alpha Steel, we also entered into an equipment supply agreement with Alpha Steel, as amended, (the "Supply Agreement"), effective through June 30, 2027, the terms of which apply to our equipment purchase orders. Pursuant to the Supply Agreement, we committed to placing a minimum level of purchase orders for torque tubes with Alpha Steel during the period from July 1, 2025 to June 30, 2026 and for the subsequent annual period. In the event we fail to meet our minimum required purchase commitments in any period, we may be required to make a cash payment for the net profit attributable to any unfilled requirements, calculated as specified in the agreement, in an amount not to exceed $4.0 million in the aggregate in each measurement period. The Supply Agreement may be terminated early in accordance with its provisions or may be extended beyond the initial term if mutually agreed to by the parties.

10. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following:


(in thousands)	June 30, 2025		December 31, 2024
Accrued cost of revenue	$	19,885	$	13,033
Related party accrued cost of revenue		5,915		1,718
Accrued compensation		2,699		3,687
Other accrued expenses		1,911		1,696
Total accrued expenses	$	30,410	$	20,134

Warranty reserves	$	9,861	$	9,482
Current portion of operating lease liability		493		755
Non-federal tax obligations		102		76
Total other current liabilities	$	10,456	$	10,313

Information relating to our related party accrued cost of revenue at June 30, 2025 and December 31, 2024 may be found below in Note 16, "Related party transactions".

Other accrued expenses primarily include amounts due for (i) legal costs associated with outstanding corporate or legal matters and (ii) other professional services.

Activity by period in the Company's warranty accruals was as follows:


	Three months ended June 30,						Six months ended June 30,
(in thousands)	2025			2024			2025			2024
Balance at beginning of period	$	11,851		$	10,472		$	11,904		$	11,002
Warranties issued and remediation added during the period		569			801			1,614			1,639
Settlements made during the period		(585	)		(443	)		(1,241	)		(1,292	)
Changes in liability for pre-existing warranties		(25	)		(415	)		(467	)		(934	)
Balance at end of period	$	11,810		$	10,415		$	11,810		$	10,415

							As of
							June 30, 2025			June 30, 2024
Warranty accruals are reported in:
Other current liabilities							$	9,861		$	7,264
Other non-current liabilities								1,949			3,151
Balance at end of period							$	11,810		$	10,415

11. Income taxes

For the three months ended June 30, 2025 and 2024, we recorded income tax expense of $0.04 million and $0.07 million, respectively, and for the six months ended June 30, 2025 and 2024, we recorded income tax expense of $0.29 million and $0.05 million, respectively. These amounts for each period were lower than the statutory rate of 21%, primarily due to a valuation allowance established against the U.S. deferred tax assets.

We have had no material change in our unrecognized tax benefits since December 31, 2024. We recognize accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of June 30, 2025, and December 31, 2024, we had no accrued interest or penalties related to unrecognized tax benefits.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act, which includes a broad range of tax reform provisions affecting businesses, including extending and modifying certain key Tax Cuts & Jobs Act provisions and expanding certain IRA incentives, while accelerating the phase-out of others. We do not anticipate this new law will have a material impact on our income tax expense or liability due to the valuation allowance against our U.S. deferred tax assets.

12. Debt

FTC Solar, Inc. 10-Q