SEC Filing | Fluence

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flnc-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


o			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 001-40978

Fluence Energy, Inc.

(Exact name of registrant as specified in its charter)


Delaware			87-1304612
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

4601 Fairfax Drive, Suite 600 Arlington, Virginia			22203
(Address of Principal Executive Offices)			(Zip Code)

(833) 358-3623

Registrant's telephone number, including area code

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.00001 par value	FLNC	The Nasdaq Global Select Market

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 x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o

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	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	o
		Emerging growth company	x

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. o

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

As of August 14, 2022, the registrant had 114,306,316 shares of Class A common stock outstanding and 58,586,695 shares of Class B-1 common stock outstanding.

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		Page
Part I - Financial Information		5
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss	6
	Condensed Consolidated Statements of Changes in Stockholders’ Equity, Members’ Deficit, and Mezzanine Equity	7
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42

Part II - Other Information		44
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibits	45
Signatures		47

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Cautionary Statement Regarding Forward-Looking Information

Certain statements in this Quarterly Report on Form 10-Q (this “Report”), excluding historical information, contain or may contain forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements regarding our future results of operations and financial position, business strategy and plans, and objectives of management for future operations, including, among others, statements regarding expected growth, future capital expenditures, and debt service obligations, are forward-looking statements. In some cases, you may identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “seeks,” “intends,” “targets,” “projects,” “contemplates,” “grows,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

Factors that could cause our actual results to differ materially from those indicated in any forward-looking statements, include, but are not limited to, the following:

•our future financial and operating performance, including our ability to achieve or maintain profitability;

•our ability to successfully execute our business plan and growth strategy;

•the sufficiency of our cash and cash equivalents to meet our liquidity needs;

•our ability to attract and retain customers;

•our ability to develop new offerings and services, including digital applications;

•our ability to optimize existing and future sales channels and market segmentation;

•our ability to compete with existing and new competitors in existing and future markets and offerings;

•our ability to manage our supply chains and distribution channels, including our ability to secure inventory from suppliers to meet customer demand and source materials in line with our expectations;

•risk associated with fluctuations in the market prices of commodity raw materials, including steel, aluminum, lithium carbonate, and cobalt, that are used in the components from suppliers, such as lithium-ion batteries, that are used in our energy storage products;

•our ability to attract and retain talent;

•the impact of economic, social, and political instability in the markets in which we operate and other regions of the world, including any impacts arising out of the ongoing conflict in Ukraine;

•changes in levels of inflation, interest rates, and foreign currency exchange rates and related actions taken by government authorities in connection therewith;

•our expectations regarding the size and growth of our existing and future markets in which we compete;

•the continued and potential future impact of the COVID-19 pandemic on our ground operations at project sites, our manufacturing facilities, our customers, our workforce, and our suppliers and our vendors;

•our ability to maintain customer contracts due to events and incidents relating to storage, delivery, installation, operation and shutdowns of our energy storage products, including events and incidents outside of our control;

•our ability to manage information technology related risks, including our ability to prevent defects, errors, or bugs in hardware or software of our products and technology as well as any defects that may give rise to claims of product liability or other potential legal claims;

•the impact of compliance with any existing and new applicable laws, regulations, sanctions, or tariffs on our business and operations;

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•the status and implementation of government and economic incentives for energy storage products and/or services;

•our assessment and expectations regarding our global growth;

•our ability to maintain, protect, and enhance our intellectual property;

•our ability to recognize anticipated synergies from strategic initiatives and/or acquisitions by the Company;

•the increased expenses associated with being a public company;

•the continued listing of our securities on the Nasdaq Global Select Market;

•the significant influence that Siemens AG and AES Grid Stability, LLC have over us, including control over decisions that require the approval of stockholders; and

•other factors described in Part I, Item 1A “Risk Factors” in our 2021 Annual Report for the fiscal year ended September 31, 2021 (the “2021 Annual Report”) and Item 1A “Risk Factors” in our Quarterly Reports on Form 10-Q for the periods ended December 31, 2021 and March 31, 2022.

The foregoing factors should not be construed as exhaustive. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Many of the important factors that will determine these results are beyond our ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements. We qualify all forward-looking statements contained in this Report by these cautionary statements. Any forward-looking statement contained in this Report speaks only as of the date on which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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Part I - Financial Information

Item 1. Financial Statements

FLUENCE ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. Dollars in Thousands, except share and per share amounts)


	June 30, 2022		September 30, 2021
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	676,951	$	36,829
Restricted cash	75,093		1,240
Trade receivables, net of allowances ($82 and $90 at June 30, 2022 and September 30, 2021, respectively)	93,196		46,664
Unbilled receivables	101,139		101,975
Receivables from related parties	49,318		33,362
Advances to suppliers	62,197		9,741
Inventory, net	453,713		389,787
Other current assets	39,140		41,917
Total current assets	1,550,747		661,515
Non-current assets
Property and equipment, net	9,292		8,206
Intangible assets, net	53,496		36,057
Goodwill	25,214		9,176
Deferred income tax asset	1,184		1,184
Advances to suppliers	17,500		—
Debt issuance cost	2,793		222
Other non-current assets	12,349		1,315
Total non-current assets	121,828		56,160
Total assets	$	1,672,575	$	717,675
Liabilities, Stockholders’ Equity, Members’ Deficit, and Mezzanine Equity
Current liabilities
Accounts payable	$	220,586	$	158,366
Deferred revenue	371,030		71,365
Borrowing from line of credit	—		50,000
Borrowing from related parties	—		50,000
Personnel related liabilities	17,462		12,861
Accruals and provisions	135,410		186,143
Payables and deferred revenue with related parties	233,433		227,925
Taxes payable	11,743		12,892
Other current liabilities	4,374		1,941
Total current liabilities	994,038		771,493
Non-current liabilities

Other non-current liabilities	7,454		2,381


Total non-current liabilities	7,454		2,381
Total liabilities	1,001,492		773,874
Commitments and contingencies (See Note 12)
Mezzanine equity (0 and 18,493,275 units issued and outstanding as of June 30, 2022 and September 30, 2021, respectively)	—		117,235
Stockholders’ Equity / Members’ Deficit
Members’ capital contributions	—		106,152
Preferred stock, $0.00001 per share, 10,000,000 shares authorized; no shares issued and outstanding as of June 30, 2022	—		—
Class A common stock, $0.00001 par value per share, 1,200,000,000 shares authorized; 114,112,407 shares issued and outstanding as of June 30, 2022.	1		—
Class B-1 common stock, $0.00001 par value per share, 200,000,000 shares authorized; 58,586,695 shares issued and outstanding as of June 30, 2022	—		—
Class B-2 common stock, $0.00001 par value per share, 200,000,000 shares authorized; no shares issued and outstanding as of June 30, 2022	—		—
Treasury stock, at cost	(4,991)		—
Additional paid-in capital	530,747		—
Accumulated other comprehensive income (loss)	515		(285)
Accumulated deficit	(67,337)		(279,301)
Total stockholders’ equity attributable to Fluence Energy, Inc./ Members’ deficit	458,935		(173,434)
Non-controlling interest	212,148		—
Total stockholders’ equity and members’ deficit	671,083		(173,434)
Total liabilities, stockholders’ equity, members’ deficit, and mezzanine equity	$	1,672,575	$	717,675

The accompanying notes are an integral part of these statements

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FLUENCE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS (UNAUDITED)

(U.S. Dollars in Thousands, except share and per share amounts)


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	115,999	$	264,683	$	258,850	$	430,397
Revenue from related parties	123,011		13,512		497,771		62,164
Total revenue	239,010		278,195		756,621		492,561
Cost of goods and services	244,207		293,150		829,714		501,702
Gross (loss) profit	(5,197)		(14,955)		(73,093)		(9,141)
Operating expenses:
Research and development	18,129		4,740		42,227		17,251
Sales and marketing	8,398		6,826		27,647		16,747
General and administrative	27,334		9,238		83,771		24,236
Depreciation and amortization	1,972		1,262		4,892		3,494
Interest expense	573		424		1,938		899
Other income (expense), net	(205)		349		83		(162)
Loss before income taxes	(61,808)		(37,096)		(233,485)		(71,930)
Income tax expense (benefit)	(979)		1,680		(493)		2,874
Net loss	(60,829)		(38,776)		(232,992)		(74,804)
Net loss attributable to non-controlling interest	$	(41,482)	$	(38,776)	$	(165,656)	$	(74,804)
Net loss attributable to Fluence Energy, Inc.	$	(19,347)	n/a		$	(67,336)	n/a

Weighted average number of Class A common shares outstanding
Basic and diluted	55,625,566		n/a		54,637,372		n/a
Loss per share of Class A common stock
Basic and diluted	$	(0.35)	n/a		$	(1.23)	n/a

Foreign currency translation gain (loss), net of income tax (expense) benefit of $0 in each period	1,631		19		1,910		(710)

Total other comprehensive income (loss)	1,631		19		1,910		(710)
Total comprehensive loss	(59,198)		(38,757)		(231,082)		(75,514)
Comprehensive loss attributable to non-controlling interest	$	(40,367)	$	(38,757)	$	(164,470)	$	(75,514)
Total comprehensive loss attributable to Fluence Energy, Inc.	$	(18,831)	n/a		$	(66,611)	n/a

The accompanying notes are an integral part of these statements

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FLUENCE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY, MEMBERS’

DEFICIT, AND MEZZANINE EQUITY (UNAUDITED)

(U.S. Dollars in Thousands, except share/unit amounts)


	Mezzanine Equity	Members’ capital contributions	Class A Common Stock		Class B-1 Common Stock		Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Treasury Stock		Non-Controlling interest	Total stockholders’ equity and members’ deficit
			Shares	Amount	Shares	Amount				Shares	Amount
Balance at March 31, 2022	$—	$—	54,143,275	$—	117,173,390	$1	$289,428	$(47,990)	$(2)	—	$—	$484,020	$725,457
Net loss	—	—	—	$—	—	$—	$—	$(19,347)	$—			$(41,482)	$(60,829)
Stock-based compensation expense and related vesting	—	—	1,427,662	$—	—	$—	$8,581	$—	$—			$—	$8,581
Repurchase of class A common stock placed into treasury	—	—	(548,445)	$—	—	$—	$—	$—	$—	548,445	$(4,991)	$—	$(4,991)
Effect of Siemens Industry redemption of class B-1 common stock for class A common stock	—	—	58,586,695	$1	(58,586,695)	$(1)	$227,699	$—	$—			$(227,699)	$—
Effect of remeasurement of non-controlling interest due to other share transactions	—	—	—	$—	—	$—	$3,806					$(3,805)	$1
Proceeds from exercise of stock options	—	—	503,220	$—	—	$—	$1,233						$1,233

Other comprehensive loss, net of income tax benefit of $0	—	—	—	$—	—	$—	$—	$—	$517			$1,114	$1,631
Balance at June 30, 2022	$—	$—	114,112,407	$1	58,586,695	$—	$530,747	$(67,337)	$515	548,445	$(4,991)	$212,148	$671,083

Balance at September 30, 2021	$117,235	$106,152	—	$—	—	$—	$—	$(279,301)	$(285)	—	$—	$—	$(173,434)
Net loss prior to the Transactions												$(20,317)	$(20,317)
Other comprehensive income prior to the Transactions, net of income tax benefit of $0									$175				$175
Effect of the transactions related to the IPO	$(117,235)	$(106,152)	18,493,275	$—			$(24,091)	$279,301	$75			$(31,899)	$117,234
Issuance of class A common stock in IPO, net of issuance costs			35,650,000	$—			$295,740					$640,021	$935,761
Founders stock issuance					117,173,390	$1							$1
Net loss subsequent to the Transactions								$(67,337)				$(145,339)	$(212,676)
Stock-based compensation expense and related vesting			1,427,662	$—			$26,360						$26,360
Repurchase of Class A common stock placed into treasury			(548,445)	$—						548,445	$(4,991)		$(4,991)
Effect of Siemens Industry redemption of class B-1 common stock for class A common stock			58,586,695	$1	(58,586,695)	$(1)	$227,699					$(227,699)	$—

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Effect of remeasurement of non-controlling interest due to other share transactions										3,806,000					(3,805,000)	1,000
Proceeds from exercise of stock options					503,220					1,233,000						1,233,000

Other comprehensive gain subsequent to the Transactions, net of income tax benefit of $0												$550			1,186,000	1,736,000

Balance at June 30, 2022	$	—	$	—	114,112,407	$1	58,586,695	$	—	$530,747	$(67,337)	$515	548,445	$(4,991)	$212,148	$671,083


	Mezzanine Equity			Limited Members’ Capital			Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Members’ Deficit
	Units	Amount		Units	Amount
Balance at March 31, 2021	—	—		7,920,000	$	99,872	$	(528)	$	(153,326)	$	(53,982)
Capital contribution					$	6,280					$	6,280
Issuance of class B membership units, net	1,250,000	$	117,272								$	—
Net loss									$	(38,776)	$	(38,776)
Other comprehensive loss, net of income tax benefit of $0							$	19			$	19
Balance at June 30, 2021	1,250,000	$	117,272	7,920,000	$	106,152	$	(509)	$	(192,102)	$	(86,459)

Balance at September 30, 2020	—	—		7,920,000	$	99,872	$	201	$	(117,298)	$	(17,225)
Capital contribution				—	$	6,280					$	6,280
Issuance of class B membership units, net	1,250,000	$	117,272								$	—
Net loss									$	(78,804)	$	(74,804)
Other comprehensive loss, net of income tax benefit of $0							$	(710)			$	(710)
Balance at June 30, 2021	1,250,000	$	117,272	7,920,000	$	106,152	$	(509)	$	(192,102)	$	(86,459)

The accompanying notes are an integral part of these statements

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FLUENCE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(U.S. Dollars in Thousands)


	Nine Months Ended June 30,
	2022		2021
Operating activities
Net loss	$	(232,992)	$	(74,804)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,892		3,494
Amortization of debt issuance costs	550		—
Inventory provision	13,329		23,839
Stock-based compensation expense	26,360		—
Deferred income taxes	—		—
Provision (Benefit) on loss contracts	2,282		3,004
Changes in operating assets and liabilities:
Trade receivables	(46,343)		(29,359)
Unbilled receivables	836		(22,957)
Receivables from related parties	(15,956)		24,689
Advances to suppliers	(52,456)		(11,259)
Inventory	(77,255)		(319,946)
Other current assets	(118)		(13,885)
Other non-current assets	(17,556)		(2)
Accounts payable	68,154		(9,928)
Payables and deferred revenue with related parties	5,507		144,038
Deferred revenue	298,986		16,545
Current accruals and provisions	(53,016)		126,123
Taxes payable	(1,150)		60
Other current liabilities	(1,669)		(41)
Other non-current liabilities	(2,031)		1,112
Cash settled for stock based compensation	8,703		—
Insurance proceeds received	10,000		—
Net cash used in operating activities	(60,943)		(139,277)
Investing activities
Purchase of equity securities	(1,124)		—
Payments for acquisition of businesses, net of cash acquired	(29,215)		(18,000)
Purchase of property and equipment	(2,675)		(2,999)
Net cash used in investing activities	(33,014)		(20,999)
Financing activities
Capital contributions from founders	—		6,280
Proceeds from issuance of Class B membership units	—		125,000
Repurchase of class A common stock placed into treasury	(4,991)		—
Proceeds from exercise of stock options	1,233		—
Payment of transaction cost related to issuance of Class B membership units	(6,320)		(7,728)
Payment of debt issuance costs	(3,120)
Borrowing from promissory notes – related parties	—		75,000
Repayment of promissory notes – related parties	(50,000)		(75,000)
Borrowing from line of credit	—		50,000
Repayment to line of credit	(50,000)		(50,000)
Proceeds from issuance of Class A common stock sold in an IPO, net of underwriting discounts and commissions	935,761		—
Payments of deferred equity issuance costs	(7,103)		(1,012)
Other	—		3,189
Net cash provided by financing activities	815,460		125,729

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Effect of exchange rate changes on cash and cash equivalents	2,473		(763)
Net increase (decrease) in cash and cash equivalents	723,976		(35,310)
Cash, cash equivalents, and restricted cash as of the beginning of the period	38,068		95,051
Cash, cash equivalents, and restricted cash as of the end of the period	$	762,044	$	59,741
Supplemental Cash Flows Information

Cash paid for income taxes	$	1,298	$	5,433

The accompanying notes are an integral part of these statements

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FLUENCE ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Organization and Operations

Fluence Energy, Inc., a Delaware corporation (“the Company”), was formed on June 21, 2021. We conduct our business operations through Fluence Energy, LLC and its direct and indirect subsidiaries. Fluence Energy, LLC was formed on June 30, 2017 as a joint venture between Siemens Industry, Inc. (“Siemens Industry”), an indirect subsidiary of Siemens AG (“Siemens”), and AES Grid Stability, LLC (“AES Grid Stability”), an indirect subsidiary of the AES Corporation (“AES”), and commenced operations on January 1, 2018. We refer to Siemens Industry and AES Grid Stability as the “Founders” in this Quarterly Report on Form 10-Q (this “Report”).

Fluence Energy, LLC, along with its wholly owned subsidiaries, is primarily engaged in the construction and sale of battery-based energy storage products and providing operational services and artificial intelligence (AI)-enabled digital applications (“Fluence IQ”) for renewables and storage throughout the world, including the Americas, EMEA, and Asia Pacific regions. Except where the context clearly indicates otherwise, “Fluence,” “we,” “us,” “our” or the “Company” refers to Fluence Energy, Inc. and its wholly owned subsidiaries.

The Company’s chief operating decision maker (“CODM”) is its Chief Executive Officer. The Company’s CODM reviews financial information on a condensed consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates in one operating segment, which corresponds to one reportable segment.

QFH’s Investment in Fluence Energy, LLC

On December 27, 2020, Fluence Energy, LLC entered into an agreement with QIA Florence Holdings LLC (“QFH” or the “Blocker Company”) for a $125.0 million investment. QFH was issued 18,493,275 Class B units of Fluence Energy, LLC. QFH is an affiliate of the Qatar Investment Authority (“QIA”), the sovereign wealth fund of Qatar, and its subsidiaries and affiliates. At September 30, 2021, the investment was recognized at carrying value within mezzanine equity on the consolidated balance sheets. As part of the transactions related to our initial public offering closed on November 1, 2021, QFH elected to convert their Class B units to the common stock of Fluence Energy, Inc., which was a conversion available to all of the holders of Fluence Energy, LLC Class A and Class B units. Accordingly, as of June 30, 2022, no mezzanine equity is recorded on the condensed consolidated balance sheets.

Initial Public Offering and Related Transactions

On November 1, 2021, the Company completed an initial public offering (the “IPO”) and a series of organization transactions (collectively with the IPO, the “Transactions”), in which the Company issued and sold 35,650,000 shares of its Class A common stock, par value $0.00001 per share (the “Class A common stock”), at the public offering price of $28.00 per share, which includes the exercise by the underwriters of their option to purchase an additional 4,650,000 shares of the Class A common stock. The net proceeds to the Company from the IPO were $935.8 million, after deducting underwriting discounts and offering expenses paid by the Company.

Immediately following the consummation of the Transactions:

•Fluence Energy, Inc. became a holding company. As the sole managing member of Fluence Energy, LLC, Fluence Energy, Inc. controls the business and affairs of Fluence Energy, LLC and its direct and indirect subsidiaries;

•Fluence Energy, Inc. owned, directly or indirectly, 54,143,275 limited liability company interests in Fluence Energy, LLC (the “LLC Interests”), representing approximately 31.6% of the economic interest in Fluence Energy, LLC;

•the Founders owned 117,173,390 LLC Interests in Fluence Energy, LLC, representing approximately 68.4% of the economic interest in Fluence Energy, LLC;

•the investors in our IPO owned 35,650,000 shares of Class A common stock of Fluence Energy, Inc., representing approximately 65.8% of the economic interest in Fluence Energy, Inc.;

•Qatar Holding LLC, the owner of the original Blocker Company, owned 18,493,275 shares of Class A common stock of Fluence Energy, Inc., representing approximately 34.2% of the economic interest in Fluence Energy, Inc.; and

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•the Founders owned 117,173,390 shares of Class B-1 common stock of Fluence Energy, Inc.

Refer to Note 19 - Subsequent Events to the audited consolidated financial statements included in our 2021 Annual Report for a detailed discussion on the IPO and related Transactions.

Siemens Industry Redemption

On June 30, 2022, Siemens Industry, Inc. exercised its redemption right pursuant to the terms of the Third Amended and Restated Limited Liability Company Agreement of Fluence Energy, LLC (the “LLC Agreement”) with respect to its entire holding of 58,586,695 LLC Interests of Fluence Energy, LLC, together with the corresponding cancellation of an equivalent number of shares of Class B-1 common stock of Fluence Energy, Inc., par value $0.00001 per share (the “Redemption”).

The Company elected to settle the Redemption through the issuance of 58,586,695 shares of the Company’s Class A common stock (the “Shares”). The Redemption settled on July 7, 2022. Siemens Industry, Inc. effected an internal transfer of its interest in the Shares to Siemens AG at the time of Redemption and as of June 30, 2022, Siemens AG is the beneficial owner of 58,586,695 shares of Class A common stock.

The transaction increased the beneficial ownership interest of the Company in Fluence Energy, LLC to 66.08% as of June 30, 2022. The impact of the change in ownership interest did not result in a change in control. The transaction has been accounted for as an equity transaction and the carrying amount of non-controlling interest has been adjusted. Refer to Condensed consolidated statements of changes in stockholders’ equity, members’ deficit and mezzanine equity included herein.

2. Summary of Significant Accounting Policies and Estimates

Principles of Accounting and Consolidation

As the sole managing member of Fluence Energy, LLC, Fluence Energy, Inc. operates and controls all the business and affairs of Fluence Energy, LLC and, through Fluence Energy, LLC and its direct and indirect subsidiaries, conducts the Company’s business. Fluence Energy, LLC is a variable interest entity, of which the Fluence Energy, Inc. beneficially owns a 66.08% interest as of June 30, 2022. For accounting purposes, Fluence Energy, Inc. is considered the primary beneficiary and therefore consolidates the results of Fluence Energy, LLC and its direct and indirect subsidiaries. Prior to the IPO, Fluence Energy, Inc. had no operations and had no assets or liabilities. Accordingly, financial results, balances, and other information included herein for periods prior to the IPO are reflective of Fluence Energy, LLC.

The accompanying condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and under the rules of the U.S. Securities and Exchange Commission (the “SEC”). The accompanying condensed consolidated financial statements include the accounts of Fluence Energy Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Non-Controlling Interest

The non-controlling interest on the condensed consolidated statements of operations and comprehensive loss represents the portion of earnings or loss attributable to the economic interest in Fluence Energy, LLC, held by the Founders. For the nine months ended June 30, 2022, the net loss of Fluence Energy, LLC prior to the date of the Transactions has been attributed to the non-controlling interest, and the net loss of Fluence Energy, LLC subsequent to the date of the Transactions has been allocated between Fluence Energy, Inc. and the non-controlling interest based on the respective ownership percentages of Fluence Energy, LLC held by Fluence Energy, Inc. and the Founders. Non-controlling interest on the condensed consolidated balance sheets represents the portion of net assets of the Fluence Energy, LLC attributable to the Founders, based on the portion of the LLC Interests owned by such shareholders. As of June 30, 2022, the non-controlling interest was 33.92%.

Unaudited Interim Financial Information

The accompanying condensed consolidated financial statements as of June 30, 2022, and for the three and nine months ended June 30, 2022 and 2021 are unaudited. These financial statements should be read in conjunction with the Company’s audited financial statements included in our 2021 Annual Report. In our opinion, such unaudited financial statements reflect all adjustments, including normal recurring items, that are necessary for the fair statement of the Company’s financial position as of June 30, 2022, the results of its operations for the three and nine months ended June 30, 2022 and 2021, and its cash flows for the nine months ended June 30, 2022 and 2021. The financial data and other information

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disclosed in these notes related to the three and nine months ended June 30, 2022 and 2021 are also unaudited. The results for the three and nine months ended June 30, 2022 and 2021 are not necessarily indicative of results for the full year ending September 30, 2022 and 2021, any other interim periods, or any future year or period. The balance sheet as of September 30, 2021 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim financial statements.

For a complete description of our significant accounting policies, refer to Note 2 - Summary of Significant Accounting Policies and Estimates to the audited consolidated financial statements included in our 2021 Annual Report. We include herein certain updates to those policies.

Reclassification

Certain prior year amounts have been reclassified from “Cost of goods and services” to “Sales and marketing” and “General and administrative” to conform to current period presentation on the condensed consolidated statements of operations and comprehensive loss.

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents include cash on-hand and highly liquid investments readily convertible to cash, with an original maturity of 90 days or less when purchased.

Cash restricted for use as a result of financing or other obligations is classified separately as restricted cash. If the purpose of restricted cash relates to acquiring a long-term asset, liquidating a long-term liability, or is otherwise unavailable for a period longer than one year from the balance sheet date, the restricted cash is included in other long-term assets. Otherwise, restricted cash is included as a separate line item on the Company’s consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash as shown in the Company’s condensed consolidated balance sheets.


in thousands	June 30, 2022		June 30, 2021
Cash and cash equivalents	$	676,951	$	58,497
Restricted cash	75,093		1,244
Restricted cash included in “Other non-current assets”	$	10,000	—
Total cash, cash equivalents and restricted cash shown in the statements of cash flows	$	762,044	$	59,741

Restricted cash consisted of the following:


in thousands	June 30, 2022		June 30, 2021
Collateral for credit card program	$	1,410	$	923
Collateral for outstanding bank guarantees	73,683		321
Collateral for surety program included in “Other non-current assets”	10,000		—
Total restricted cash	$	85,093	$	1,244

Fair Value Measurements

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs and to minimize the use of unobservable inputs. The following fair value hierarchy, defined by ASC 820, Fair Value Measurements, is used to classify assets and liabilities based on the observable inputs and unobservable inputs used to value the assets and liabilities:

Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 inputs include those financial instruments that are valued using

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models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted prices, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3—Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant. The Company does not have significant recurring Level 3 fair value measurements.

The Company’s cash equivalents include term deposits with original maturity of less than three months and are recorded at amortized cost. Fair value of cash equivalents approximates the carrying amount using Level 2 inputs. The carrying amounts of trade receivables, accounts payable and short-term debt obligations approximate fair values due to their short maturities using Level 2 inputs.

Tax Receivable Agreement

In connection with the IPO, we entered into the Tax Receivable Agreement with Fluence Energy, LLC and the Founders which obligates the Company to make payments to the Founders of 85% of the amount of certain tax benefits that Fluence Energy, Inc. actually realizes, or in some circumstances is deemed to realize, arising from the Basis Adjustments (as defined below) and certain other tax benefits arising from payments made under the Tax Receivable Agreement. Fluence Energy, LLC will have in effect an election under Section 754 of the Internal Revenue Code (the “Code”) effective for each taxable year in which a redemption or exchange (including deemed exchange) of LLC Interests for Class A common stock or cash occurs or when Fluence Energy, LLC makes (or is deemed to make) certain distributions. These Tax Receivable Agreement payments are not conditioned upon one or more of the Founders maintaining a continued ownership interest in Fluence Energy, LLC. If a Founder transfers LLC Interests but does not assign to the transferee of such units its rights under the Tax Receivable Agreement, such Founder generally will continue to be entitled to receive payments under the Tax Receivable Agreement arising in respect of a subsequent exchange of such LLC Interests. In general, the Founders’ rights under the Tax Receivable Agreement may not be assigned, sold, pledged, or otherwise alienated or transferred to any person, other than certain permitted transferees, without our prior written consent (not to be unreasonably withheld) and such person’s becoming a party to the Tax Receivable Agreement and agreeing to succeed to the applicable Founder’s interest therein.

Subsequent redemptions or exchanges of LLC Interests are expected to result in increases in the tax basis of the assets of Fluence Energy, LLC and certain of its subsidiaries. Increases in tax basis and tax basis adjustments generated over time may increase (for tax purposes) the depreciation and amortization deductions available to Fluence Energy, Inc. and, therefore, may reduce the amount of U.S. federal, state, and local tax that Fluence Energy, Inc. would otherwise be required to pay in the future, although the Internal Revenue Service (“IRS”) may challenge all or part of the validity of that tax basis, and a court could sustain such a challenge. Fluence Energy, Inc.’s allocable share of tax basis and the anticipated tax basis adjustments upon redemptions or exchanges of LLC Interests may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets. Actual tax benefits realized by Fluence Energy, Inc. may differ from tax benefits calculated under the Tax Receivable Agreement as a result of the use of certain assumptions in the Tax Receivable Agreement, including the use of an assumed state and local income tax rate to calculate tax benefits. The payment obligation under the Tax Receivable Agreement is an obligation of Fluence Energy, Inc. and not of Fluence Energy, LLC. We expect to use distributions from Fluence Energy, LLC to fund any payments that we will be required to make under the Tax Receivable Agreement. To the extent we are unable to make timely payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement resulting in the acceleration of payments due under the Tax Receivable Agreement. Fluence Energy, Inc. expects to benefit from the remaining 15% of cash tax benefits, if any, it realizes from such tax benefits. For purposes of the Tax Receivable Agreement, the cash tax benefits will be computed by comparing the actual income tax liability of Fluence Energy, Inc. to the amount of such taxes that Fluence Energy, Inc. would have been required to pay had there been no such tax basis adjustments of the assets of Fluence Energy, LLC or its subsidiaries as a result of redemptions or exchanges and had Fluence Energy, Inc. not entered into the Tax Receivable Agreement. The actual and hypothetical tax liabilities determined in the Tax Receivable Agreement will be calculated using the actual U.S. federal income tax rate in effect for the applicable period and an assumed state and local income tax rate (along with the use of certain other assumptions). The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired, unless Fluence Energy, Inc. exercises its right to terminate the Tax Receivable Agreement early, certain changes of control occur or Fluence Energy, Inc. breaches any of its material obligations under the Tax Receivable Agreement, in which case, all obligations generally (and in the case of such a change of control or such breach, only if the Founders elect)

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will be accelerated and due as if Fluence Energy, Inc. had exercised its right to terminate the Tax Receivable Agreement. The payment to be made upon an early termination of the Tax Receivable Agreement will generally equal the present value of payments to be made under the Tax Receivable Agreement using certain assumptions. Estimating the amount of payments that may be made under the Tax Receivable Agreement is by its nature imprecise, insofar as the calculation of amounts payable depends on a variety of factors. The tax basis adjustments upon the redemption or exchange of LLC Interests, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of purchases or exchanges, the price of shares of our Class A common stock at the time of the purchase or exchange, the extent to which such purchases or exchanges do not result in a basis adjustment, the amount of tax attributes, changes in tax rates and the amount and timing of our income.

The redemption of LLC Interests by Siemens Industry, Inc. on June 30, 2022, results in increases in the tax basis of the assets of Fluence Energy, LLC and certain of its subsidiaries. The increases in tax basis and tax basis adjustments increases (for tax purposes) the depreciation and amortization deductions available to Fluence Energy, Inc. and, therefore, may reduce the amount of U.S. federal, state, and local tax that Fluence Energy, Inc. would otherwise be required to pay in the future, although the IRS may challenge all or part of the validity of that tax basis, and a court could sustain such a challenge.

We expect that as a result of the tax basis adjustment of the assets of Fluence Energy, LLC and its subsidiaries upon the Redemption and our possible utilization of certain tax attributes, the payments that we may make under the Tax Receivable Agreement will be substantial. As a result of the Redemption, we estimate tax savings of approximately $113.6 million. Siemens AG will be entitled to receive payments under the Tax Receivable Agreement equaling 85% of such amount, or $96.5 million; assuming, among other factors, (i) we will have sufficient taxable income to fully utilize the tax benefits; (ii) Fluence Energy, LLC is able to fully depreciate or amortize its assets; and (iii) no material changes in applicable tax law. The payments under the Tax Receivable Agreement are not conditioned upon continued ownership of us by the Founders. Although the timing and extent of future payments could vary significantly under the Tax Receivable Agreement for the factors discussed above, we anticipate funding payments from the Tax Receivable Agreement from cash flow from operations of our subsidiaries, available cash or available borrowings under any future debt agreements, and such payments are not anticipated to be dependent upon the availability of proceeds of the IPO.

Prior to the Redemption, we determined it was not probable payments under the Tax Receivable Agreement would be made, given there was not sufficient taxable income over the term of the agreement to utilize deductions in the future. Therefore, the Company did not initially recognize the liability against equity. Upon the Redemption, the Company still determines that it is not probable payment under the agreement would be made and has not recognized the change in the liability against equity during the quarter. Should we determine that the Tax Receivable Agreement payment is probable, a corresponding liability will be recorded. As a result, our future results of operations and earnings could be impacted as results of these matters.

Loss per Share

Basic net loss per share of Class A common stock is computed by dividing net loss attributable to Class A common stockholders by the weighted average number of shares of Class A common stock outstanding during the period. Diluted net loss per share of Class A common stock is computed by adjusting the net loss available to Class A common stockholders and the weighted average shares of Class A common stock outstanding to give effect to potentially dilutive securities. Shares of our Class B-1 and Class B-2 common stock are not entitled to receive any distributions or dividends. When a common unit of Fluence Energy, LLC is redeemed, at the Company’s election, for cash or Class A common stock by a Founder who holds shares of our Class B-1 or Class B-2 common stock, such Founder will be required to surrender a share of Class B-1 or Class B-2 common stock, as the case may be, which we will cancel for no consideration. In the event of cash settlement, the Company is required to issue new shares of Class A common stock and use the proceeds from the sale of these newly-issued shares of Class A common stock to fully fund the cash settlement. Therefore, we did not include shares of our Class B-1 or Class B-2 common stock in the computation of basic loss per share. As we have incurred losses for all periods presented, diluted loss per share is equal to basic loss per share because the effect of potentially dilutive securities would be antidilutive. The potentially dilutive securities that were excluded consist of 58,586,695 shares of Class B-1 common stock, 10,205,593 outstanding stock options, 605,591 outstanding phantom units, and 1,584,196 outstanding restricted stock units as of June 30, 2022.

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All earnings prior to and up to November 1, 2021, the date of completion of the IPO, were entirely allocable to non-controlling interest and, as a result, loss per share information is not applicable for reporting periods prior to this date. Consequently, only the net loss allocable to Fluence Energy, Inc. from the period subsequent to November 1, 2021 is included in the net loss attributable to the stockholders of Class A common stock for the nine months ended June 30, 2022. Basic and diluted net loss per share of Class A common stock for the three and nine months ended June 30, 2022, respectively, have been computed as follows:


In thousands, except share and per share amounts	Three Months Ended June 30, 2022		Nine Months Ended June 30, 2022
Net loss	(60,829)		(232,992)
Less: Net loss attributable to the non-controlling interest	$	(41,482)	$	(165,656)
Net loss attributable to Fluence Energy, Inc.	$	(19,347)	$	(67,336)

Weighted average number of Class A common shares outstanding, basic and diluted	55,625,566		54,637,372
Loss per share of Class A common stock, basic and diluted	$	(0.35)	$	(1.23)

Recent Accounting Standards Adopted

No new accounting standards were adopted during the nine months ended June 30, 2022.

Recent Accounting Standards Not Yet Adopted

The following table presents accounting standards not yet adopted:


Standard	Description	Required date of adoption	Effect on the financial statements and other significant matters
ASU 2016-02, Leases (Topic 842)	In February 2016, the Financial Accounting Standard Board (“FASB”) issued ASU 2016-02, which supersedes existing guidance on accounting for leases in ASC 840, Leases. This standard requires all leases to be recognized on the consolidated balance sheet. FASB has issued several amendments to ASU 2016-02, including ASU 2018-11, Leases (Topic 842): Targeted Improvements that introduced an additional transition method permitting an entity to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. ASU 2016-02 includes optional practical expedients intended to reduce the cost and complexity to implement the new lease standard, such as an option to maintain the current lease classification for all existing lease arrangements and the option to use hindsight in evaluating lessee options to extend or terminate a lease. Early application is permitted.	As an emerging growth company (an “EGC”), the Company is permitted to defer adoption until the non-public company adoption date, i.e., annual periods starting after December 15, 2021.	The Company’s existing lease population is mainly comprised of operating leases for office space. The Company is currently evaluating the impact of adoption on its consolidated financial statements.

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Standard	Description	Required date of adoption	Effect on the financial statements and other significant matters
ASU 2016-13, Financial Instruments—Credit Losses (Topic 326)	In February 2016, FASB issued ASU 2016-13, which updates the impairment model for financial assets measured at amortized cost, known as the Current Expected Credit Loss (“CECL”) model. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. There are various transition methods available upon adoption. Early adoption is permitted.	As an EGC, the Company is permitted to defer adoption until the non-public company adoption date, i.e., annual periods starting after December 15, 2022.	The Company is currently evaluating the impact of adoption on its consolidated financial statements.
ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes	In December 2019, FASB issued ASU 2019-12, which removes certain exceptions related to the approach for intraperiod tax allocations, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The guidance also clarifies and simplifies other areas of ASC 740. Certain amendments must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings/(deficit) in the period of adoption. Early adoption is permitted.	As an EGC, the Company is permitted to defer adoption until the non-public company adoption date, i.e., annual periods starting December 15, 2021, and for interim periods beginning after December 15, 2022.	The Company is currently evaluating the impact of adoption on its consolidated financial statements.
ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)	In March 2020, FASB issued ASU 2020-04, which provides optional expedients and exceptions for applying U.S. GAAP to transactions affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.	The ASU is effective as of March 12, 2020 through December 31, 2022.	The ASU is currently not expected to have a material impact on our consolidated financial statements.

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3. Revenue from Contracts with Customers

Our revenue is primarily derived from sales of our energy storage products. The following table presents the Company’s revenue disaggregated by geographical region. Revenues are attributed to regions based on location of customers.


In thousands	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Americas (North, Central and South America)	$	142,872	$	246,023	$	542,197	$	358,140
APAC (Asia Pacific)	77,289		14,804		115,348		102,742
EMEA (Europe, Middle-East and Africa)	18,849		17,368		99,076		31,679
Total	$	239,010	$	278,195	$	756,621	$	492,561

Deferred Revenue

Deferred revenue represents the excess billings over the amount of revenue recognized to date. Deferred revenue from related parties is included in payables and deferred revenue with related parties on the Company’s condensed consolidated balance sheets. The following table provides information about deferred revenue from contracts with customers:


In thousands	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Deferred revenue beginning of period	$	222,815	$	208,901	$	71,365	$	123,841
Additions	194,398		—		369,679		128,963
Revenue recognized related to amounts that were included in beginning balance of deferred revenue	(46,183)		(68,515)		(70,014)		(112,418)
Deferred revenue end of period	$	371,030	$	140,386	$	371,030	$	140,386


In thousands	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Deferred revenue from related parties beginning of period	$	171,466	$	112,079	$	220,122	$	11,425
Additions	130,563		46,927		226,330		150,758
Revenue recognized related to amounts that were included in beginning balance of deferred revenue	(74,198)		(62)		(218,621)		(3,239)
Deferred revenue from related parties end of period	$	227,831	$	158,944	$	227,831	$	158,944

Customer and Supplier Concentration

For the nine months ended June 30, 2022, our top three customers, in the aggregate, accounted for approximately 80% of total revenue.

For the nine months ended June 30, 2021, our top three customers, in the aggregate, accounted for approximately 80% of total revenue.

The Company has a limited number of suppliers of batteries, which is a major component of energy storage products.

Remaining Performance Obligations

The Company’s remaining performance obligations (“backlog”) represent the unrecognized revenue value of its contract commitments, which include deferred revenue and amounts that will be billed and recognized as revenue in future periods. The Company’s backlog may vary significantly each reporting period based on the timing of major new contract commitments and the backlog may fluctuate with currency movements. In addition, the Company’s customers have the right, under some circumstances, to terminate contracts or defer the timing of its services and their payments to the Company.

As of June 30, 2022, the Company had a total of $2,130.2 million of remaining performance obligations related to our contractual commitments, of which we expect to recognize 91% in revenue in the next five years and the remainder after five years.

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Variable Consideration

As of June 30, 2022 and September 30, 2021, the transaction prices of our active energy solution contracts have been reduced to reflect variable consideration of $56.7 million and $52.8 million, respectively.

4. Business Combinations

During April 2022, the Company entered into a share sale purchase agreement and acquired all outstanding shares, the assets and assumed the liabilities of Nispera AG (“Nispera”), a Zurich based provider of artificial intelligence (AI) and machine learning-enabled software-as-a-service (SaaS) targeting the renewable energy sector. Nispera’s advanced technology helps customers monitor, analyze, forecast, and optimize the performance and value of renewable energy assets. The preliminary base purchase price for the acquisition was $33.4 million, of which $27.1 million was paid in cash to investors, $2.6 million was paid to debt holders at the purchase date, and $3.7 million will be paid to investors 18 months from date of purchase. In addition, Fluence issued 0.5 million shares of restricted stock to Nispera’s management team that vest ratably over three years for retention purposes. The acquisition represents a business combination under ASC 805 Business Combinations. The Company has included the financial results of the acquisition in its consolidated financial statements from the date of acquisition. Transaction costs associated with the acquisition were not significant and were expensed as incurred. The following table summarizes the preliminary aggregate fair values and estimated useful lives of the assets acquired and liabilities assumed, as of the date of the acquisition.


Fair Value of consideration transferred	$	33,446
Recognized amounts of identifiable assets and liabilities assumed:
Cash	489
Accounts receivables and other assets	189
Trademark (11 years life)	750
Developed technology (12 years life)	16,500
Customer relationships (6 years life)	3,500
Accounts payable and other liabilities	(386)
Deferred revenue	(679)
Deferred tax liabilities	(3,454)
Total net identifiable assets acquired and liabilities assumed	$	16,909
Goodwill	$	16,536

The fair value of developed technology was determined using the multi-period excess earnings method as developed technology is considered to be the primary revenue-generating identifiable intangible asset acquired in the acquisition. The fair value assigned to assets acquired and liabilities assumed are based on management’s estimates and assumptions.

The goodwill is primarily attributed to the expanded market opportunities when integrating the acquired entity’s technology with the Company’s technology and the assembled workforce. The excess of the acquisition price over the fair value of assets acquired and liabilities assumed was recorded to goodwill.

The valuation was complex due to the significant estimation uncertainty in certain assumptions used to determine the fair value of intangible assets acquired. The primary area that remains preliminary relate to the fair value of intangible assets acquired. The preliminary estimated fair values of identifiable intangible assets may be subject to change as additional information is received. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

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5. Inventory, Net

Inventory consisted of the following:


In thousands	June 30, 2022						September 30, 2021
	Cost		Provision		Net		Cost		Provision		Net
Cubes, batteries, and other equipment (a)	$	447,222	$	(29)	$	447,193	$	402,157	$	(12,980)	$	389,177
Shipping containers and spare parts	7,390		(870)		6,520		1,857		(1,247)		610
Total	$	454,612	$	(899)	$	453,713	$	404,014	$	(14,227)	$	389,787

(a) Provision at September 30, 2021 included a $13.0 million loss recognized during fiscal year 2021 for inventory damaged in transit related to the 2021 cargo loss incident. During the nine months ended June 30, 2022, $13.0 million of inventory was written off against the provision. Refer to Note 12 - Commitments and Contingencies for a detailed discussion of the 2021 cargo loss incident.

6. Other Current Assets

Other current assets consisted of the following amounts:


In thousands	June 30, 2022		September 30, 2021
Taxes recoverable	22,115		14,049
Prepaid expenses	3,263		2,480
Advance payments	2,962		3,601
Receivable from insurance (a)	—		10,000
Deferred equity issuance costs	—		7,103
Prepaid insurance	3,755		—

Other	7,045		4,684
Total	$	39,140	$	41,917

(a) Receivable from insurance represents insurance recoveries that are probable of collection related to the 2021 cargo loss incident. The Company collected $10.0 million receivable from insurance during the nine months ended June 30, 2022. Refer to Note 12 - Commitments and Contingencies for a detailed discussion of the 2021 cargo loss incident.