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REDEEMABLE PREFERRED STOCK, ANTI-DILUTION RIGHTS, AND SHARE PURCHASE AGREEMENT | 9 Months Ended
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Sep. 30, 2025
Equity [Abstract] |
REDEEMABLE PREFERRED STOCK, ANTI-DILUTION RIGHTS, AND SHARE PURCHASE AGREEMENT | REDEEMABLE PREFERRED STOCK, ANTI-DILUTION RIGHTS, AND SHARE PURCHASE AGREEMENT Redeemable Preferred Stock As of September 30, 2025, 5.0 million shares of non-voting Convertible Series A Preferred Stock (“Series A Preferred Stock”) were issued and outstanding. Each share of Series A Preferred Stock had a stated value of $10.00, for an aggregate value of $50.0 million. The Series A Preferred Stock was issued to certain funds and accounts managed by Encompass Capital Advisors LLC (“Encompass”), a related party, and had a term of 3 years from December 23, 2024. If not converted by the holder into the Company’s common stock, we were required to redeem the Series A Preferred Stock at maturity at par value plus any accrued and unpaid dividends. The Series A Preferred Stock ranked senior to the Common Stock but junior to all debt obligations of the Company and had a liquidation preference equal to $10.00 per share of Series A Preferred Stock plus accrued but unpaid dividends. The Series A Preferred Stock carried 6% cash dividends, accruing on the funding of the first tranche and payable in arrears (i) on the dividend date 18 months after the first tranche funding and (ii) every six months after such dividend payment date. For the nine months ended September 30, 2025, we recognized $2.3 million of accumulated and unpaid dividends. At our sole discretion upon proceeding to a final investment decision on a solar cell manufacturing facility, we initially had the right to issue an additional second tranche of 5.0 million shares of Series A Preferred Stock to the holders in exchange for $50.0 million (“Tranche Right”). The Series A Preferred Stock had a conversion price of $2.50 per share of Common Stock, however if we elected not to utilize the Tranche Right on the date that the Company proceeded with its final investment decision with respect to a solar cell manufacturing facility, the conversion price would be reduced to $1.79 per share of Common Stock. The conversion rights were held by the holder of the Series A Preferred Stock. On August 14, 2025, we signed an amendment to the Preferred Stock Purchase Agreement between T1 and Encompass, pursuant to which Encompass agreed, among other things, to provide the $50.0 million of financing to purchase 5.0 million shares of non-voting Series A Preferred Stock of the Company for purposes other than construction of the G2 facility with issuance of such Series A Preferred Stock to occur 10 days after the Company provides notice of its decision to exercise the second tranche. The conversion price for the first tranche was $1.70 per share of common stock, while the conversion price for the second tranche would have been $1.90 per share if the 10-day average trading price of our common stock before the conversion date is $2.50 or higher, and $1.70 per share if the 10-day average trading price is below $2.50. The amendment to the Preferred Stock Purchase Agreement was treated as an extinguishment of the original instrument. In the third quarter of 2025 the Company derecognized the carrying value of the Series A Preferred Stock of $50.6 million in equity and recognized a new Series A Preferred Stock instrument of $58.4 million with the difference of $7.8 million recorded as a deemed dividend through a reduction to additional paid-in capital. The fair value of the new Series A Preferred Stock was estimated using a bond plus call approach, considering the amended conversion price of $1.70 per share, the Company's volatility as well as the Company's credit risks associated with the bond component. Dividends will continue to be accrued on the Series A Preferred Stock in accordance with the Preferred Stock Purchase Agreement. Additionally, the Tranche Right was revalued immediately before and immediately after amendment with the difference in fair value of $1.7 million recorded as a deemed dividend through a reduction to additional paid-in capital. The fair value of the Tranche Right was estimated using a Monte Carlo simulation within a risk-neutral framework, considering the draw right, the penalty if not drawn, and the terms if drawn. On October 31, 2025, the Company entered into an Amended and Restated Stock Purchase Agreement (the “Encompass Stock Purchase Agreement”) with Encompass. Pursuant to the terms and subject to the conditions of the Encompass Stock Purchase Agreement, in partial consideration for the redemption and cancellation of all then-issued and outstanding shares of the Series A Preferred Stock, Encompass purchased (i) 21.5 million shares of Common Stock and (ii) 1.6 million shares of the Company’s Series B Convertible Non-Voting Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”). The Encompass Stock Purchase Agreement amends and restates the Preferred Stock Purchase Agreement by and between the Company and the purchasers thereto, dated as of November 6, 2024, as amended on March 21, 2025, April 29, 2025 and August 13, 2025. In addition, under the Encompass Stock Purchase Agreement, Encompass purchased 5.0 million shares of the Company’s Series B-1 Convertible Non-Voting Preferred Stock, par value $0.01 per share (the “Series B-1 Preferred Stock”), at a price of $10.00 per share of Series B-1 Preferred Stock, for aggregate gross proceeds to the Company of $50.0 million. The Encompass Stock Purchase Agreement contains customary representations and warranties and agreements of the Company and Encompass and customary indemnification rights and obligations of the parties. The closing of the transactions occurred on October 31, 2025. Anti-dilution Rights In connection with the Trina Business Combination, we provided Trina Solar (Schweiz) AG the right (“Anti-dilution Right”), but not the obligation, to acquire a number of shares of our common stock so that Trina Solar (Schweiz) AG’s proportionate ownership of our common stock after the conversion of the Preferred Stock will be the same as before the conversion at a price equal to $1.70 per share of our common stock or otherwise equal to the price for the conversion of Preferred Stock. We determined that the Anti-dilution Right was a freestanding financial instrument and classified it as an other long term liability on our condensed consolidated balance sheets, initially recorded at fair value. The Anti-dilution Right is subsequently revalued until anti-dilution shares are issued or when the Anti-dilution Right expires on December 23, 2027, with changes in fair value for each reporting period recognized in derivative liabilities fair value adjustment. In addition, under the Trina Business Combination, we provided Trina Solar (Schweiz) AG the right (the “Capital Raising Anti-Dilution Right”), but not the obligation, to acquire a number of shares of our common stock so that Trina Solar (Schweiz) AG’s proportionate ownership of voting securities will be the same as before new voting securities are issued following a Capital Raising Transaction (as defined in the agreement). The Capital Raising Anti-Dilution Right is exercisable no later than fifteen business days following written notice from the Company, after which the Company has certain rights to sell the voting securities not elected to be purchased by Trina Solar (Schweiz) AG. In connection with the issuance of the Common Stock on October 31, 2025 to Encompass pursuant to the Encompass Stock Purchase Agreement, the Company provided notice of the Anti-dilution Right to Trina Solar (Schweiz) AG as provided for under the Transaction Agreement. Further, in connection with the issuance of Common Stock on October 24, 2025 to the Purchasers pursuant to the Securities Purchase Agreement, the Company provided notice of the Capital Raising Anti-Dilution Right as provided for under the Cooperation Agreement. If Trina Solar (Schweiz) AG exercises its anti-dilution rights under both transactions, its shareholding will be approximately 17% of the Company's shares outstanding, based on the number of shares outstanding as of November 7, 2025. Share Purchase Agreement Termination and Issuance of Penny Warrants On November 6, 2024, the Company and an investor who is a significant shareholder of Trina Solar, entered into a share purchase agreement (“Share Purchase Agreement”) pursuant to which the investor subscribed to purchase a total of $14.8 million of common stock for $1.05 per share. On September 10, 2025, the Company and the investor entered into a termination letter agreement (“Termination Letter”) pursuant to which the Share Purchase Agreement was terminated in exchange for $5.0 million and the issuance of 7.0 million penny warrants (the “Penny Warrants”). The consideration payment of $5.0 million is due no later than 90 days following the date of the Termination Letter and is recorded as accounts payable and accrued liabilities to related parties on our condensed consolidated balance sheet. Each Penny Warrant entitles the investor to one share of our common stock at a purchase price of $0.01 per share (the “Warrant Price”). The warrants fully vest and become exercisable on March 10, 2026, in whole or in part, and expire on September 10, 2030. The Penny Warrants may be exercised in cash or in a cashless exercise that requires the investor to surrender a number of Penny Warrants that have a fair market value equal to the aggregate of the Warrant Price. We determined that the Penny Warrants are equity classified as they are indexed to our common stock and qualify for classification within stockholders’ equity. As such, the Penny Warrants are presented as part of additional paid-in capital on the condensed consolidated balance sheets. The Penny Warrants were valued as an equity forward based on the Company’s closing stock price immediately prior to the date of the Termination Letter. Upon termination of the Share Purchase Agreement the Company recognized a loss of $5.8 million on settlement of derivatives for the three and nine months ended September 30, 2025, on the condensed consolidated statements of operations and comprehensive loss. The loss was primarily due to the excess of the consideration payment above the recorded fair value of the Share Purchase Agreement. The Share Purchase Agreement derivative liabilities fair value adjustment recorded on the condensed consolidated statements of operations and comprehensive loss for the three months ended September 30, 2025 was a loss of $11.9 million, and for the nine months ended September 30, 2025, a gain of $2.2 million.

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