12. Commitments and contingencies

We may become involved in various claims, lawsuits, investigations, and other proceedings arising in the normal course of business. We accrue a liability when information available prior to the issuance of our Condensed Consolidated Financial Statements indicates it is probable that a loss has been incurred as of the date of the Condensed Consolidated Financial Statements, and the amount of loss can be reasonably estimated. If the reasonable estimate of the probable loss is a range, we record an accrual for the most likely estimate of the loss, or the low end of the range if there is no one best estimate. We adjust our accruals to reflect the impact of negotiation, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Legal costs are expensed as incurred.

United States Customs and Border Protection assessment

In March of 2023, United States Customs and Border Protection ("CBP") issued notices of tariff assessment that indicated an action taken at the Import Specialist (i.e., the port) level with respect to merchandise imported from Thailand under entry number 004-1058562-5 (the “625 Assessment”) and entry number 004-1063793-9 (the “Original 939 Assessment”, and collectively with the 625 Assessment, the “Original CBP Assessments”). The Original CBP Assessments related to certain torque beams that are used in our Voyager+ product that were imported in 2022. In the Original CBP Assessments, CBP asserted that Section 301 China tariffs, Section 232 steel and aluminum tariffs, and antidumping and countervailing duties applied to the merchandise. Based on correspondence received to date from CBP, including a recent partial acceptance by CBP of our protest on the 625 Assessment as described below, and our calculations based on applicable duty and tariff rates, the 625 Assessment is currently estimated at approximately $0.07 million. In September of 2023, CBP informed us that the amount owed under the Original 939 Assessment was being revised downward to approximately $2.01 million (the "Revised 939 Assessment", and together with the 625 Assessment, the "Revised CBP Assessments"). In particular, CBP accepted our position that the Section 301 tariffs of 25% or 7.5% of the value of the merchandise, depending on tariff classification, as well as the antidumping and countervailing duties, previously assessed under the Original 939 Assessment are not applicable as they are only applicable to articles that are products of China and that, in this case, the finished goods are products of Thailand.

CBP legally finalized both Revised CBP Assessments. We filed a formal protest for the 625 Assessment in September of 2023 and for the Revised 939 Assessment in March of 2024. On February 11, 2026, CBP partially approved our protest of the 625 Assessment, which resulted in a $131,000 refund of duties and fees. We were notified on March 18, 2026, that CBP had denied our protest of the Revised 939 Assessment. Based on the denial by CBP, we accrued approximately $2.7 million, inclusive of interest, in our consolidated financial results for the year ended December 31, 2025. Through September 30, 2026, we had tendered approximately $1.5 million of the claimed liability to CBP and currently are operating under an informal arrangement with CBP to make weekly payments of at least $50,000 through the end of the first quarter of 2027, with a final payment due afterwards to fully settle the remaining obligation.

Customer litigation

On June 11, 2025, FTC Solar, Inc. filed a lawsuit against BayWa r.e. Power Solutions, Inc. ("BayWa") in the United States District Court for the Western District of Texas (Civil Action No. 25-cv-00905-DAE). The complaint alleges breach of contract arising from BayWa’s purported cancellation of a large equipment supply agreement and purchase order for custom solar tracking systems intended for a Texas-based solar energy project. The parties engaged in a formal dispute resolution process, including pre-suit mediation without success. On August 25, 2025, BayWa filed an answer to FTC's complaint and asserted certain counterclaims against FTC. On September 15, 2025, FTC filed a response to BayWa's counterclaims. Discovery is now complete. While FTC believes it has meritorious claims and intends to vigorously pursue recovery, the outcome of litigation is inherently uncertain, and it is unclear at this time whether FTC or BayWa will recover the amounts sought in their respective claims or whether the outcome would materially affect FTC's financial condition or results of operations.

Pending arbitration

On or about April 3, 2026, FTC Solar, Inc. was named as one of several respondents in an arbitration pending before the American Arbitration Association commenced by CO Buffalo Flats, LLC and GC Solar TE 2020 Holdings LLC (the “Claimants”) relating to a utility-scale solar project (the “Project”). The proceeding was originally brought against the Project’s engineering, procurement and construction contractor, Depcom Power, Inc., and its surety, Travelers Casualty and Surety Company of America; the Claimants subsequently added claims against FTC, which supplied tracker systems for the Project, and against the Project’s module supplier, HT Solar Enerji Anonim Sirketi. The Claimants allege that defects in the Project’s solar arrays resulted in damage to photovoltaic ("PV") modules and structural failure of tracker systems and seek damages from the respondents collectively in excess of $30 million. The Claimants have not allocated the alleged damages among the respondents.

FTC disputes that its products were defective or caused the alleged damage, believes it has meritorious defenses, and intends to defend the matter vigorously. The proceeding is at an early stage, and FTC is unable at this time to estimate the amount or range of any reasonably possible loss.