FTC Solar(FTCI) - 2025 Q2 - Quarterly Report

Forward-Looking Statements Nature of Forward-Looking Statements This section clarifies that the report contains forward-looking statements, which are predictions based on current expectations and projections about future events and financial trends - All statements other than historical or current facts in this Quarterly Report may be forward-looking statements, identifiable by words like 'believe,' 'plan,' 'expect,' etc[8] - Forward-looking statements are predictions based on current expectations and projections about future events and financial trends, but involve known and unknown risks, uncertainties, and other important factors[9] - Investors should not unduly rely on these statements as predictions of future events, as actual results could differ materially[9][10][11] PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents unaudited condensed consolidated financial statements, including balance sheets, comprehensive loss, equity, cash flows, and notes Condensed Consolidated Balance Sheets The condensed consolidated balance sheets provide a snapshot of the company's financial position, showing a decrease in total assets and stockholders' equity, while total liabilities increased from December 31, 2024, to June 30, 2025 | (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Cash and cash equivalents | $3,519 | $11,247 | | Accounts receivable, net | $45,648 | $39,709 | | Inventories | $7,316 | $10,144 | | Total current assets | $70,296 | $76,128 | | Total assets | $82,955 | $89,928 | | Total current liabilities | $60,633 | $49,073 | | Long-term debt | $10,895 | $9,466 | | Warrant liability | $— | $9,520 | | Total liabilities | $73,913 | $70,892 | | Total stockholders' equity | $9,042 | $19,036 | Condensed Consolidated Statements of Comprehensive Loss The statements of comprehensive loss indicate a significant increase in total revenue for both the three and six months ended June 30, 2025, compared to the prior year, but the company continued to report a net loss, which also increased for the three-month period | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $19,993 | $11,430 | $40,796 | $24,017 | | Total cost of revenue | $23,912 | $13,773 | $48,162 | $28,468 | | Gross loss | $(3,919) | $(2,343) | $(7,366) | $(4,451) | | Loss from operations | $(11,499) | $(11,924) | $(22,059) | $(24,426) | | Net loss | $(15,430) | $(12,241) | $(19,249) | $(21,012) | | Basic and diluted net loss per share | $(1.18) | $(0.97) | $(1.49) | $(1.67) | - Total revenue increased by 74.9% for the three months ended June 30, 2025, and by 69.9% for the six months ended June 30, 2025, compared to the respective prior year periods[16][197][219] - Net loss increased to $(15,430) thousand for the three months ended June 30, 2025, from $(12,241) thousand in the prior year, while for the six months, net loss decreased to $(19,249) thousand from $(21,012) thousand[16] Condensed Consolidated Statements of Changes in Stockholders' Equity The statements of changes in stockholders' equity show a decrease in total stockholders' equity from $19,036 thousand at December 31, 2024, to $9,042 thousand at June 30, 2025, primarily due to net losses and the exercise of warrants | (in thousands) | Balance as of Dec 31, 2024 | Balance as of June 30, 2025 | | :--------------- | :------------------------- | :-------------------------- | | Additional paid-in capital | $367,318 | $376,464 | | Accumulated deficit | $(347,741) | $(366,990) | | Total stockholders' equity | $19,036 | $9,042 | - Exercise of warrants resulted in an increase of $7,927 thousand in additional paid-in capital during the six months ended June 30, 2025[19] - Accumulated deficit increased by $19,249 thousand during the six months ended June 30, 2025, reflecting the net loss for the period[19][16] Condensed Consolidated Statements of Cash Flows The cash flow statements reveal that the company continued to use cash in operating activities, but at a reduced rate compared to the prior year | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :----------------------------- | :----------------------------- | | Net cash used in operations | $(10,780) | $(15,635) | | Net cash provided by investing activities | $2,989 | $1,154 | | Net cash provided by financing activities | $3 | $3 | | Decrease in cash and cash equivalents | $(7,728) | $(14,456) | | Cash and cash equivalents at end of period | $3,519 | $10,779 | - Net cash used in operations decreased by $4,855 thousand (31%) from $15,635 thousand in 2024 to $10,780 thousand in 2025 for the six-month period[25] - Investing activities provided $2,989 thousand in cash for the six months ended June 30, 2025, primarily from a $3,204 thousand earnout payment from the disposal of an unconsolidated subsidiary[25][258] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations and disclosures integral to understanding the condensed consolidated financial statements, covering business description, accounting policies, liquidity, specific balance sheet and income statement items, and subsequent events Description of Business FTC Solar, Inc. is a Delaware-incorporated global provider of solar tracker systems, proprietary software, and engineering services, serving utility-scale and distributed generation projects worldwide with products like Pioneer (1P) and Voyager (2P) trackers, and software such as SUNPATH and SUNOPS - FTC Solar, Inc. is a global provider of solar tracker systems, proprietary software (SUNPATH, SUNOPS), and value-added engineering services[28] - The company offers 1P (Pioneer) and 2P (Voyager) solar tracker systems and mounting solutions for U.S.-manufactured thin-film modules[28] - Customers are primarily engineering, procurement and construction companies (EPCs), developers, and owners, with international subsidiaries in Australia, China, India, South Africa, and Spain[28] Summary of Significant Accounting Policies Outlines significant accounting policies for unaudited condensed consolidated financial statements, covering basis, consolidation, liquidity, and key asset/liability treatments - The financial statements are prepared under U.S. GAAP, assuming the company will continue as a going concern, despite management's conclusion of substantial doubt about this ability[30] - Revenue from solar tracker systems and customized components is recognized over time using a cost-to-cost input measure, while individual part sales and term-based software licenses are recognized at a point in time[69][83][85] - The company accounts for warrants as liabilities if they could require cash settlement and adjusts them to fair value each period, with changes reflected in results of operations[63][64] Liquidity and Going Concern The company has incurred cumulative losses and cash outflows from operations, leading management to conclude there is substantial doubt about its ability to continue as a going concern within the next year, despite a new $75 million senior secured term facility and available ATM program capacity - The company has incurred cumulative losses and utilized $10.8 million in cash from operations during the six months ended June 30, 2025[34] - Liquidity and Going Concern | Metric | Amount (as of June 30, 2025) | | :----- | :--------------------------- | | Cash on hand | $3.5 million | | Working capital | $9.7 million | | ATM program capacity | ~$13.8 million | | Initial Term Loans (funded July 2, 2025) | $14.3 million (net proceeds ~$13.0 million) | - Substantial doubt exists about the company's ability to continue as a going concern within the next year, due to operating losses and the conditional nature of additional financing under the Credit Agreement[37] Accounts Receivable, Net Accounts receivable, net, increased to $45,648 thousand at June 30, 2025, from $39,709 thousand at December 31, 2024, driven by higher trade receivables and revenue recognized in excess of billings | (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 | | Total | $47,557 | $41,426 | | Allowance for credit losses | $(1,909) | $(1,717) | | Accounts receivable, net | $45,648 | $39,709 | - The allowance for credit losses increased from $1,717 thousand at December 31, 2024, to $1,909 thousand at June 30, 2025, with $192 thousand charged to earnings during the six months ended June 30, 2025[99][101] Inventories Inventories decreased to $7,316 thousand at June 30, 2025, from $10,144 thousand at December 31, 2024, primarily due to a reduction in finished goods, while the allowance for slow-moving and obsolete inventory remained constant | (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 | Prepaid and Other Current Assets Prepaid and other current assets decreased to $13,813 thousand at June 30, 2025, from $15,028 thousand at December 31, 2024, mainly due to a reduction in vendor deposits | (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 | | Other current assets | $3,655 | $3,969 | | Total | $13,813 | $15,028 | Leases The company leases office and warehouse space, with total lease costs decreasing for both the three and six months ended June 30, 2025, compared to the prior year | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $267 | $300 | $594 | $609 | | Short-term lease cost | $82 | $111 | $148 | $204 | | Total lease cost | $349 | $411 | $742 | $813 | | (in thousands) | June 30, 2025 | | :--------------- | :------------ | | Total lease payments | $1,065 | | Present value of operating lease liabilities | $929 | | Current portion of operating lease liability | $493 | | Operating lease liability, net of current portion | $436 | Property and Equipment, Net Property and equipment, net, decreased to $1,931 thousand at June 30, 2025, from $2,217 thousand at December 31, 2024, primarily due to accumulated depreciation | (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Total property and equipment | $5,280 | $4,963 | | Accumulated depreciation | $(3,349) | $(2,746) | | Property and equipment, net | $1,931 | $2,217 | - Depreciation expense for the six months ended June 30, 2025, totaled $0.6 million, up from $0.5 million in the prior year[107] Goodwill Goodwill increased slightly to $7,268 thousand at June 30, 2025, from $7,139 thousand at December 31, 2024, primarily due to translation adjustments, with no impairment recognized | (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $7,139 | $7,538 | | Translation | $129 | $(369) | | Balance at end of period | $7,268 | $7,169 | - No impairment of goodwill was recognized as of June 30, 2025, or during 2024[57] Equity Method Investment The company holds a 45% interest in Alpha Steel LLC, recognizing losses of $0.6 million for the six months ended June 30, 2025 - The company has a 45% equity interest in Alpha Steel LLC, a steel component producer for utility-scale solar projects[109] - Recognized losses from Alpha Steel were $0.6 million for the six months ended June 30, 2025, and $0.5 million for the same period in 2024[110] - The company is committed to minimum purchase orders from Alpha Steel, with a potential cash payment of up to $4.0 million if commitments are not met for the period from July 1, 2025, to June 30, 2026[111] Accrued Expenses and Other Current Liabilities Total accrued expenses increased significantly to $30,410 thousand at June 30, 2025, from $20,134 thousand at December 31, 2024, driven by higher accrued cost of revenue, including related party amounts | (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 | | Total accrued expenses | $30,410 | $20,134 | | Warranty reserves | $9,861 | $9,482 | | Total other current liabilities | $10,456 | $10,313 | - Warranty accruals increased to $11,810 thousand at June 30, 2025, from $11,904 thousand at December 31, 2024, with $1,614 thousand added and $1,241 thousand settled during the six-month period[114] Income Taxes The company recorded income tax expense of $0.29 million for the six months ended June 30, 2025, lower than the statutory rate due to a valuation allowance against U.S. deferred tax assets | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax expense | $39 | $65 | $293 | $54 | - Income tax expense is lower than the statutory rate primarily due to a valuation allowance against U.S. deferred tax assets[115] - The One Big Beautiful Bill Act, signed July 4, 2025, is not expected to materially impact income tax expense or liability due to the existing valuation allowance[117] Debt Long-term debt, net, increased to $10,895 thousand at June 30, 2025. The company's Senior Notes, with an effective interest rate of approximately 18%, were amended on July 2, 2025, to subordinate them to a new $75 million Credit Agreement and reduce their interest rate | (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Senior notes | $16,147 | $15,146 | | Less: discount and deferred loan costs | $(5,252) | $(5,680) | | Long-term debt, net | $10,895 | $9,466 | - The Senior Notes have an effective interest rate of approximately 18%, including paid-in-kind interest and amortization of discount/costs[120] - On July 2, 2025, the Senior Notes were amended and subordinated to a new $75 million Credit Agreement, with their interest rate reduced to 5% cash and 7% paid-in-kind[123][124][125] Commitments and Contingencies The company is involved in legal proceedings, including U.S. Customs and Border Protection (CBP) tariff assessments totaling approximately $4.85 million, which the company disputes and has not accrued - CBP issued tariff assessments totaling approximately $2.84 million (625 Assessment) and $2.01 million (Revised 939 Assessment) for imported torque beams[128][129] - The company believes the CBP assessments are incorrect, particularly regarding Section 301 tariffs and Section 232 duties, and has filed formal protests, thus making no accrual as of June 30, 2025[130][131] - FTC Solar, Inc. filed a lawsuit against BayWa r.e. Power Solutions, Inc. for breach of contract related to the purported cancellation of a large equipment supply agreement[132] ATM Program The company has an At-the-Market (ATM) offering program with capacity for nearly $13.8 million in common stock sales for general corporate purposes, though no shares were sold under the program during the three or six months ended June 30, 2025 or 2024 - The ATM program allows for the sale of up to approximately $13.8 million of common stock[134] - No shares were sold under the ATM program during the three and six months ended June 30, 2025, or 2024[137] Stock-based Compensation Total stock-based compensation expense decreased for both the three and six months ended June 30, 2025, compared to the prior year, reflecting cost reduction initiatives and executive award forfeitures | (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $248 | $240 | $491 | $456 | | Research and development | $58 | $93 | $118 | $174 | | Selling and marketing | $34 | $114 | $50 | $158 | | General and administrative | $596 | $838 | $557 | $2,136 | | Total stock compensation expense | $936 | $1,285 | $1,216 | $2,924 | - The decrease in general and administrative stock-based compensation for the six months ended June 30, 2025, was largely due to executive award forfeitures[227][228] Related Party Transactions The company has significant related party transactions with Alpha Steel, including receivables for future material cost discounts and liabilities for accrued cost of revenue and minimum purchase commitments - Related party receivables from Alpha Steel totaled $4.0 million at June 30, 2025, for future material cost discounts related to manufacturing incentives under the Inflation Reduction Act[139] - Related party liabilities to Alpha Steel totaled $5.9 million at June 30, 2025, for accrued cost of revenue and $4.0 million in incurred contractual obligations for minimum purchase commitments[140] - Purchases from Alpha Steel totaled $7.6 million for the six months ended June 30, 2025[141] Net Loss Per Share Basic and diluted net loss per share for the three months ended June 30, 2025, was $(1.18), compared to $(0.97) in the prior year | ($ in thousands, except shares and per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss for basic and diluted calculation | $(15,430) | $(12,241) | $(19,249) | $(21,012) | | Weighted average shares outstanding | 13,098,825 | 12,617,128 | 12,948,189 | 12,581,608 | | Basic and diluted loss per share | $(1.18) | $(0.97) | $(1.49) | $(1.67) | - Potentially dilutive securities, including stock options and RSUs, were excluded from diluted loss per share calculation as they were anti-dilutive[143][144] Segment Information The company operates in a single business segment: the manufacturing and servicing of solar tracker systems - The company operates in one business segment: manufacturing and servicing of solar tracker systems[33][145] - Product revenue includes sales of solar tracker systems, customized components, individual parts, and term-based software licenses[146] - Service revenue includes shipping and handling, engineering consulting, pile testing, subscription-based enterprise licensing, and maintenance/support services[146] Subsequent Events On July 2, 2025, the company entered into a Credit Agreement for a senior secured term facility of up to $75 million, with an initial funding of $14.3 million - On July 2, 2025, the company entered into a Credit Agreement for a senior secured term facility of up to $75 million, with $14.3 million in Initial Term Loans funded, yielding approximately $13.0 million net proceeds[36][149] - The Credit Agreement includes financial covenants such as minimum unrestricted cash ($20.0 million by September 30, 2025), minimum revenue, product margin, EBITDA, and purchase order targets[153] - The company issued New Warrants to lenders for up to 5,418,292 shares of common stock, with additional Delayed Draw Term Loans subject to stockholder approval for warrant exercise[149][159][246] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and results, analyzing revenue, expenses, liquidity, critical accounting policies, and non-GAAP measures Overview FTC Solar, Inc. is a global provider of solar tracker systems and related software, headquartered in Austin, Texas, with international subsidiaries - FTC Solar, Inc. is a global provider of solar tracker systems, proprietary software (SUNPATH, SUNOPS), and value-added engineering services[166] - The company's main products are the Pioneer (1P) and Voyager (2P) solar tracker systems, designed to optimize solar energy production[166] - FTC Solar serves large utility-scale and distributed generation projects globally, with headquarters in Austin, Texas, and international subsidiaries[166] Key Factors Affecting Our Performance The company's performance is significantly influenced by project timing delays, evolving government regulations (tariffs, IRA changes), supply chain disruptions, strategic investments in technology and personnel, and the impact of climate change on demand and operations - Project timing is significantly impacted by customer delays due to interconnection issues, permit delays, equipment shortages, financing, and regulatory uncertainty[168] - Government regulations, including U.S. tariffs (e.g., universal 10% tariff, doubled steel/aluminum tariffs) and changes to the Inflation Reduction Act (IRA) via the One Big Beautiful Bill Act, can impact profitability and demand[169][171][173] - The company invests in technology (e.g., SUNOPS, Automated Hail Stow Solution, Pioneer dual-row configuration) and personnel to enhance products and expand capabilities[179][180] Key Components of Our Results of Operations Details components of results of operations, including revenue, cost of revenue, gross profit/loss, and operating expenses, influenced by volume, ASP, and government incentives - Revenue is generated from product sales (solar tracker systems, components, software licenses) and service sales (shipping, engineering, subscriptions, maintenance)[186] - Cost of revenue includes raw materials, manufacturing, freight, tariffs, product warranty, remediation, and personnel costs[190] - Operating expenses consist of research and development, selling and marketing, and general and administrative expenses, with personnel-related costs being the most significant component[192] Results of Operations - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024 For the three months ended June 30, 2025, total revenue increased by 74.9% to $19,993 thousand, driven by a 147% increase in MW produced | (in thousands) | 2025 | 2024 | $ Change | % Change | | :--------------- | :--- | :--- | :------- | :------- | | Product Revenue | $15,867 | $8,776 | $7,091 | 80.8% | | Service Revenue | $4,126 | $2,654 | $1,472 | 55.5% | | Total Revenue | $19,993 | $11,430 | $8,563 | 74.9% | | Total Cost of Revenue | $23,912 | $13,773 | $10,139 | 73.6% | | Gross Loss | $(3,919) | $(2,343) | $(1,576) | (67.3)% | | Research and Development | $1,129 | $1,535 | $(406) | (26.4)% | | Selling and Marketing | $1,291 | $2,036 | $(745) | (36.6)% | | General and Administrative | $5,160 | $6,010 | $(850) | (14.1)% | | Net Loss | $(15,430) | $(12,241) | $(3,189) | (26.0)% | - Product revenue increased by 80.8% due to a 147% increase in MW produced, partially offset by a 27% decrease in ASP[198] - A non-cash loss of $(2,836) thousand was recognized from the change in fair value of warrant liability due to an increase in common stock price[215] Results of Operations - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 For the six months ended June 30, 2025, total revenue increased by 69.9% to $40,796 thousand, driven by a 147% increase in MW produced | (in thousands) | 2025 | 2024 | $ Change | % Change | | :--------------- | :--- | :--- | :------- | :------- | | Product Revenue | $34,069 | $19,681 | $14,388 | 73.1% | | Service Revenue | $6,727 | $4,336 | $2,391 | 55.1% | | Total Revenue | $40,796 | $24,017 | $16,779 | 69.9% | | Total Cost of Revenue | $48,162 | $28,468 | $19,694 | 69.2% | | Gross Loss | $(7,366) | $(4,451) | $(2,915) | (65.5)% | | Research and Development | $2,053 | $2,974 | $(921) | (31.0)% | | Selling and Marketing | $2,427 | $4,424 | $(1,997) | (45.1)% | | General and Administrative | $10,213 | $12,577 | $(2,364) | (18.8)% | | Net Loss | $(19,249) | $(21,012) | $1,763 | 8.4% | - Product revenue increased by 73.1% due to a 147% increase in MW produced, partially offset by a 30% decrease in ASP[220] - A non-cash gain of $1,768 thousand was recognized from the change in fair value of warrant liability due to a decrease in common stock price[235] - Operating expenses decreased across all categories, with General and Administrative expenses seeing the largest reduction of $2,364 thousand, partly due to lower stock-based compensation from executive award forfeitures[225][226][227][228] Liquidity and Capital Resources The company's liquidity is constrained by cumulative losses and cash outflows from operations, leading to substantial doubt about its going concern ability - The company had $3.5 million cash on hand and $9.7 million working capital as of June 30, 2025, with $10.8 million cash used in operations during the six months[238] - A new $75 million senior secured term facility was entered into on July 2, 2025, with $14.3 million (net $13.0 million) funded initially[240] - The ability to meet liquidity needs depends on cash on hand, increased project activity, additional Credit Agreement proceeds (subject to stockholder approval for warrants), and ATM program utilization, alongside cost-saving measures[243] Critical Accounting Policies and Significant Management Estimates Details critical accounting policies and significant management estimates for revenue, accounts receivable, warranty, stock-based compensation, warrants, and impairment assessments - Revenue recognition involves significant judgment in identifying performance obligations, estimating total project costs, and measuring progress, which can be impacted by external factors like supply chain disruptions and tariffs[266][267] - The allowance for credit losses for accounts receivable is based on lifetime expected credit loss, utilizing historical experience and current economic conditions, which may lead to fluctuations in expense[268][269] - Warranty obligations are estimated based on industry data and historical experience, with inherent uncertainties that could lead to material adjustments in future periods[272][273][274] - Valuation of stock-based compensation and warrants relies on assumptions for expected term, volatility, risk-free interest rate, and dividend yield, with changes in these assumptions or stock price potentially impacting fair value and expense[275][276][277][278][279][281][282] - Impairment assessments for long-lived assets and goodwill involve judgments on triggering events, future cash flow estimates, and fair value determination, with no impairments identified in the current periods[283][284][285] Non-GAAP Financial Measures The company uses non-GAAP financial measures, Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS, to provide supplemental insight into operational performance by excluding certain non-recurring or non-cash items - Adjusted EBITDA is defined as net loss plus provision for income taxes, interest expense (less income), depreciation, amortization of intangibles, stock-based compensation, loss from warrant liability changes, and certain non-routine costs, less contingent gains from disposals[289] - Adjusted Net Loss includes adjustments for amortization of debt discount/issue costs, intangibles, stock-based compensation, warrant liability changes, CEO transition costs, non-routine legal fees, Reverse Stock Split costs, and severance, along with related tax impacts[289] - Non-GAAP Financial Measures | (in thousands, except shares and per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss per U.S. GAAP | $(15,430) | $(12,241) | $(19,249) | $(21,012) | | Adjusted Non-GAAP amounts (Adjusted EBITDA) | $(10,360) | $(10,451) | $(20,110) | $(21,106) | | Adjusted Non-GAAP amounts (Adjusted Net Loss) | $(11,213) | $(10,730) | $(22,014) | $(21,603) | | U.S. GAAP net loss per share (Basic and diluted) | $(1.18) | $(0.97) | $(1.49) | $(1.67) | | Adjusted Non-GAAP net loss per share (Basic and diluted) | $(0.86) | $(0.85) | $(1.70) | $(1.72) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks primarily from customer concentrations, fluctuations in commodity prices (steel, aluminum, logistics), and changes in the trading price of its common stock affecting warrant valuations - Market risk exposure primarily stems from customer concentrations and fluctuations in steel, aluminum, and logistics/transportation prices[301] - The fair value of warrants is estimated using a Black-Scholes model, impacted by common stock price, expected holding period, volatility, risk-free interest rate, and dividend yield[302] - The company relies on a small number of customers for a large portion of its revenue and receivables, exposing it to industry-specific credit risks[308] - Indirect commodity price risk from steel and aluminum, procured by contract manufacturers, could reduce operating margins if cost increases cannot be recovered from customers[309][310] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness identified in the fourth quarter of 2024 related to accounting for contract change orders, which resulted in an overstatement of revenue on specific projects - Disclosure controls and procedures were not effective as of June 30, 2025[311] - A material weakness was identified in the fourth quarter of 2024 regarding accounting for contract change orders, leading to an overstatement of revenue on certain projects[313][314] - The company is enhancing internal accounting processes and management review controls to prevent and detect such errors more timely in the future[314] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in legal proceedings, including ongoing disputes with U.S. Customs and Border Protection (CBP) over tariff assessments totaling approximately $4.85 million, which the company believes are incorrect and has not accrued - CBP issued tariff assessments of approximately $2.84 million (625 Assessment) and $2.01 million (Revised 939 Assessment) for imported torque beams[318] - The company disputes the CBP assessments, believing Section 301 tariffs and Section 232 duties are not applicable, and has not accrued these amounts as probable obligations[319][320] - FTC Solar, Inc. filed a lawsuit against BayWa r.e. Power Solutions, Inc. for breach of contract related to the alleged cancellation of a large equipment supply agreement[321] Item 1A. Risk Factors The company faces significant risks, including adverse impacts from evolving international trade policies (tariffs), changes in solar energy regulations (e.g., IRA tax credit phase-outs), restrictive covenants and potential default under the new Credit Agreement, and the dilutive effect of a substantial number of shares issuable under New Warrants - Recent developments in international trade policy, including new universal and reciprocal tariffs, may impact expected profitability under existing contracts and future revenue[323] - Changes in solar energy regulations, such as the acceleration of IRA tax credit phase-outs by the One Big Beautiful Bill Act, could reduce demand for solar energy systems[324][325] - The Credit Agreement contains restrictive financial covenants (minimum cash, revenue, margin, EBITDA, purchase orders) and events of default, which, if breached, could lead to foreclosure on company assets[326][327][329] - The issuance of New Warrants for up to 6,836,237 shares of common stock (approximately 31.5% of outstanding shares) will have a dilutive impact on existing stockholders and could adversely affect the stock price[331] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds occurred during the period[332][333] Item 3. Defaults Upon Senior Securities This section indicates that there are no defaults upon senior securities to report - Not applicable; no defaults upon senior securities to report[335] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Not applicable; no mine safety disclosures to report[336] Item 5. Other Information This section confirms that no other information required to be disclosed in a Form 8-K was unreported, and no directors or officers adopted, amended, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No information required by Form 8-K was unreported during the period[337] - No directors or officers adopted, amended, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[337] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including various corporate documents, agreements, and certifications - The exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Specimen Common Stock Certificate, Amended and Restated Promissory Note, Form of Warrant to Purchase Common Stock, At the Market Offering Agreement, Credit Agreement, Guarantee and Collateral Agreement, Patent Security Agreement, Trademark Security Agreement, Subordination Agreement, Amendment No. 1 to Securities Purchase Agreement, Form of Registration Rights Agreement, and various certifications[338][339] SIGNATURE Report Signature The report was duly signed on behalf of FTC Solar, Inc. by Cathy Behnen, Chief Financial Officer, on August 5, 2025 - The report was signed by Cathy Behnen, Chief Financial Officer, on August 5, 2025[344]