Risk Factors Update Summary

• The IRA introduced a new ITC for standalone energy storage technology with a minimum capacity of 5 kWh. This could significantly enhance project viability and funding.
• Our order intake and results of operations may fluctuate significantly, impacting stock price and financial performance.
• Violation of laws by our manufacturers or suppliers could expose us to litigation and monetary liability, including fines, which may have a material adverse effect on our business.
• The tariff on lithium-ion non-EV batteries imported from China will increase from 7.5% to **25%**, effective January 1, 2026, significantly raising costs.
• A significant portion of our revenues comes from a small number of customers. In 2024, our two largest customers accounted for approximately 50% of our annual revenue.
• BloombergNEF estimates that the global utility scale market will add approximately 2,529 GWh between 2024 and 2035, indicating substantial growth opportunities for energy storage solutions.
• We achieved approximately $30.3 million of net income in fiscal year 2024, contrasting with historical net losses.
• Governments may not continue to provide sufficient incentives, impacting our growth expectations and competitive position.
• A material weakness in internal control over financial reporting could result in increased fraud probability and loss of investor confidence.
• The company did not consistently apply controls in its revenue recognition process, potentially affecting financial statement accuracy.
• Increased scrutiny from the SEC regarding our financial reporting could divert management's time and resources, adversely affecting operations.
• The OECD's global minimum corporate tax rate of **15%** under Pillar Two will affect our tax obligations starting after January 2024.
• We initiated production of Fluence-made battery modules in September 2024, which may introduce unique defects and errors not yet identified.
• The ABL Credit Agreement imposes certain restrictions that may affect our ability to incur additional indebtedness, potentially limiting future financing options.
• We anticipate increasing expenses as we continue to invest heavily in operations, affecting profitability.
• Enhanced controls over contract term evaluations are being implemented, but remediation timing remains uncertain, impacting operations.
• We face risks related to maintaining manufacturing capacity and establishing expected full commercial scale in the future.
• Changes in export and import laws may create delays in introducing new products internationally, adversely impacting our business and financial condition.
• We recorded **$1.5 million** of Tax Receivable Agreement payment to related party expense for the 2024 tax year, impacting future cash flow.
• Our ability to issue letters of credit and surety bonds for projects may be negatively impacted by compliance with financial covenants, affecting liquidity and project performance.
• Significant changes in the cost and availability of raw materials could adversely affect our financial condition.
• The lengthy sales cycle for our energy storage solutions may adversely affect our business and financial condition if we fail to close sales regularly.
• The reduction or expiration of government incentives could significantly reduce customer demand for energy storage solutions, leading to adverse effects on our business and cash flows.
• Our reliance on a limited number of suppliers may result in insufficient inventory and operational disruptions.