VivoPower International (VVPR) Risk Analysis

Digital assets are relatively novel and are subject to significant uncertainty, which could adversely impact their price. The application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, and it is possible that regulators in the United States or foreign countries may interpret or apply existing laws and regulations in a manner that adversely affects the price of XRP or the ability of individuals or institutions such as us to own or transfer XRP. The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, which could materially impact the price of XRP or the ability of individuals or institutions such as us to own or transfer XRP. For example, within the past several years: - President Trump signed an executive order instructing a working group comprised of representatives from key federal agencies to evaluate measures that can be taken to provide regulatory clarity and certainty built on technology-neutral regulations for individuals and firms involved in digital assets, including through well-defined jurisdictional regulatory boundaries;- the European Union adopted Markets in Crypto Assets Regulation ("MiCA"), a comprehensive digital asset regulatory framework for the issuance and use of digital assets, like XRP;- in June 2023, the SEC filed complaints against Binance Holdings Ltd. and Coinbase, Inc., and their respective affiliated entities, relating to, among other claims, that each party was operating as an unregistered securities exchange, broker, dealer, and clearing agency;- in November 2023, the SEC filed a complaint against Payward Inc. and Payward Ventures Inc., together known as Kraken, alleging, among other claims, that Kraken's crypto trading platform was operating as an unregistered securities exchange, broker, dealer, and clearing agency;- in June 2023, the United Kingdom adopted and implemented the Financial Services and Markets Act 2023 ("FSMA 2023"), which regulates market activities in "cryptoassets;"- in November 2023, Binance Holdings Ltd. and its then chief executive officer reached a settlement with the U.S. Department of Justice, CFTC, the U.S. Department of Treasury's Office of Foreign Asset Control, and the Financial Crimes Enforcement Network to resolve a multi-year investigation by the agencies and a civil suit brought by the CFTC, pursuant to which Binance Holdings Ltd. agreed to, among other things, pay $4.3 billion in penalties across the four agencies and to exit the U.S. market; and - in China, the People's Bank of China and the National Development and Reform Commission have outlawed cryptocurrency mining and declared all cryptocurrency transactions illegal within the country. It is not possible to predict whether, or when, new laws will be enacted that change the legal framework governing digital assets or provide additional authorities to the SEC or other regulators, or whether, or when, any other federal, state or foreign legislative bodies will take any similar actions. It is also not possible to predict the nature of any such additional laws or authorities, how additional legislation or regulatory oversight might impact the ability of digital asset markets to function, the willingness of financial and other institutions to continue to provide services to the digital assets industry, or how any new laws or regulations, or changes to existing laws or regulations, might impact the value of digital assets generally and XRP specifically. The consequences of any new law or regulation relating to digital assets and digital asset activities could adversely affect the market price of XRP, as well as our ability to hold or transact in XRP, and in turn adversely affect the market price of our listed securities. Moreover, the risks of engaging in a digital asset treasury strategy are relatively novel and have created, and could continue to create, complications due to the lack of experience that third parties have with companies engaging in such a strategy, such as increased costs of director and officer liability insurance or the potential inability to obtain such coverage on acceptable terms in the future. The growth of the digital assets industry in general, and the use and acceptance of XRP in particular, may also impact on the price of XRP and will be subject to a high degree of uncertainty. The pace of worldwide growth in the adoption and use of XRP may depend, for instance, on public familiarity with digital assets, ease of buying, accessing or gaining exposure to XRP, institutional demand for XRP as an investment asset, the participation of traditional financial institutions in the digital assets industry, consumer demand for XRP as a store of value or means of payment, and the availability and popularity of alternatives to XRP. Even if growth in XRP adoption occurs in the near or medium-term, there is no assurance that XRP usage will continue to grow over the long-term. Because XRP has no physical existence beyond the record of transactions on the XRP Ledger (the "XRPL"), a variety of technical factors related to the XRPL could also impact the price of XRP. For example, XRPL does not use "mining" or pay "mining fees"; transactions are validated by a network of independent validators using a consensus protocol, with network fees that are not mining rewards. Risks include validator misconfiguration or failures, consensus bugs, or contentious protocol amendments that could lead to a temporary network split. Advances in cryptanalysis or quantum computing that weaken currently used signature schemes could also jeopardize ledger security. The liquidity of XRP may also be reduced and damage to the public perception of XRP may occur if financial institutions were to deny or limit banking services to businesses that hold XRP, provide XRP-related services or accept XRP as payment, which could also decrease the price of XRP. Actions by U.S. banking regulators, such as the issuance in February 2023 by Federal banking agencies of the "Interagency Liquidity Risk Statement," which cautioned banks on contagion risks posed by providing services to digital assets customers, and similar actions, have in the past resulted in or contributed to reductions in access to banking services for XRP-related customers and service providers, or the willingness of traditional financial institutions to participate in markets for digital assets. The liquidity of XRP may also be impacted to the extent that changes in applicable laws and regulatory requirements negatively impact the ability of exchanges and trading venues to provide services for XRP and other digital assets.

We are a holding company whose material assets consist of our holdings in our subsidiaries. We do not have independent sources of revenue generation. Although we intend to cause our subsidiaries to make distributions to us in an amount necessary to cover our obligations, expenses, taxes and any dividends we may declare, if one or more of our operating subsidiaries become restricted from making distributions under the provisions of any debt or other agreements or applicable laws to which it is subject, or is otherwise unable to make such distributions, it could have a material adverse effect on our financial condition and liquidity.

We have not paid any cash dividends on our Ordinary Shares to date. The payment of cash dividends on our Ordinary Shares in the future will be dependent upon our revenue and earnings, if any, capital requirements, and general financial condition, as well as the limitations on dividends and distributions that exist under the applicable laws and regulations of England and Wales and will be within the discretion of our board of directors (the "Board"). It is the present intention of our Board to retain all earnings, if any, for use in our business operations and, accordingly, our Board does not anticipate declaring any dividends on our Ordinary Shares in the foreseeable future. As a result, any gain you will realize on our Ordinary Shares will result solely from the appreciation of such shares.

Under IFRS, we are required to test the carrying value of long-term assets or cash-generating units for impairment at least annually and more frequently if we have reason to believe that our expectations for the future cash flows generated by these assets may no longer be valid. If the results of operations and cash flows generated by Tembo are not in line with our expectations, we may be required to write-down the carrying value of the investment. Any write-down could materially affect our business, financial condition and results of operations.

We report on our financial statements under IFRS. There have been and there may be in the future certain significant differences between IFRS and U.S. GAAP, including but not limited to differences related to revenue recognition, share-based compensation expense, income tax, impairment of long-lived assets and loss per share. As a result, our financial information and reported earnings for historical or future periods could be significantly different if they were prepared in accordance with U.S. GAAP. As a result, you may not be able to meaningfully compare our financial statements under IFRS with those companies that prepare financial statements under U.S. GAAP.

In connection with the preparation of our consolidated financial statements included in this report, we used certain estimates and assumptions, which are more fully described in Notes 2 and 3 of the financial statements. The estimates and assumptions we use in the preparation of our consolidated financial statements affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Changes in accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from our estimates. While we believe that these estimates and assumptions are reasonable under the circumstances, they are subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material adverse effect on our financial statement presentation, financial condition, results of operations and cash flows, any of which could cause our stock price to decline.

We experienced a loss of $12.8 million, $46.7 million and $24.4 million for the years ended June 30, 2025, 2024 and 2023, respectively. If we are unable to generate sufficient revenue from the operation of our businesses, or if we are unable to reduce our expenses sufficiently, we may continue to experience substantial losses. As of June 30, 2025, we had a net current asset position of $19.3 million which indicates that our available resources exceed our short-term obligations. The accompanying consolidated financial statements are prepared on a going concern basis and do not include any adjustments that result from uncertainty about our ability to continue as a going concern. However, if losses continue, and if we are unable to raise additional financing on sufficiently attractive terms or renegotiate with our creditors and lenders on favorable terms, or generate cash through sales, then we may not have sufficient liquidity to sustain our operations or meet our financial obligations?and may not be able to continue as a going concern. Similarly, the report of our independent registered public accounting firm on our consolidated financial statements as of and for the year ended June 30, 2025 includes an explanatory paragraph indicating that a material uncertainty exists which may cast material doubt on the group's ability to continue as a going concern if it is unable to secure sufficient funding. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

In connection with our products and services, we may provide various system warranties and/or performance guarantees. While we generally are able to pass through manufacturer warranties we receive from our suppliers to our customers, in some circumstances, our warranty period may exceed the manufacturer's warranty period, or the manufacturer warranties may not otherwise fully compensate for losses associated with customer claims pursuant to a warranty or performance guarantee we provided. For example, most manufacturer warranties exclude many losses that may result from a system component's failure or defect, such as the cost of de-installation, re-installation, shipping, lost electricity, lost renewable energy credits or other solar incentives, personal injury, property damage, and other losses. In addition, in the event we seek recourse through manufacturer warranties, we will also be dependent on the creditworthiness and continued existence of these suppliers. These risks are exacerbated in the event such manufacturers cease operations or fail to honor their warranties. As a result, warranty or other performance guarantee claims against us that exceed reserves could cause us to incur substantial expense to repair or replace defective products. Warranty reserves include management's best estimates of the projected costs to repair or to replace items under warranty, which are based on actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. Such estimates are inherently uncertain and subject to change based on our historical or projected experience. Significant repair and replacement costs could materially and negatively impact on our financial condition or results of operations, as well divert employee time to remedying such issues. In addition, quality issues can have various other ramifications, including delays in the recognition of revenue, loss of revenue, loss of future sales opportunities, increased costs associated with repairing or replacing products, and a negative impact on our reputation, any of which could also adversely affect our business or operating results.

We may be subject, in the ordinary course of business, to losses resulting from products liability, accidents, acts of God and other claims against us, for which we may have no insurance coverage. Additionally, the policies that we do have may include significant deductibles or self-insured retentions, policy limitations and exclusions, and we cannot be certain that our insurance coverage will be sufficient to cover all future losses or claims against us. A loss that is uninsured or which exceeds policy limits may require us to pay substantial amounts, which may harm our business, operating results and financial condition.

We continue to require working capital and credit facilities to fund the growth of our critical power services businesses, and we may require additional working capital and credit facilities to fund the growth of the electric vehicles business and the up-front costs associated with the development and sale of sustainable energy solutions projects. Without access to sufficient and appropriate financing, or if such financing is not available at desirable rates or on terms we deem appropriate, we would be unable to grow our business. Our ability to obtain financing in the future depends on banks' and other financing sources' continued confidence in our business model and the industries in which we operate as a whole. In addition, wholesale regulatory changes within financial services markets within specific jurisdictions in which we operate can affect the availability of financing for our businesses resulting from capital availability in the market and appetite of the market for certain industries, risks, or businesses. Changes to our business, the business of our lenders, or the financing market in a region or as a whole could result in us being unable to obtain new financing or maintain existing credit facilities. Failure to obtain the necessary financing to fund our operations would materially adversely affect our business, financial condition and results of operations. To date, we have obtained financing for our business from a limited number of financial parties. If any of these financial parties decided not to continue financing our business or to materially change the terms under which they are willing to provide financing, we could be required to identify new financial parties and negotiate new financing documentation. The process of identifying new financing partners and agreeing on all relevant business and legal terms could be lengthy and could require us to reduce the rate of growth of our business until such new financing arrangements are in place. In addition, there can be no assurance that the terms of the financing provided by a new financial party would compare favorably with the terms available from our current financing partners. In any such case, our borrowing costs could increase, which could have a material adverse effect on our business, financial condition, and results of operations.

In addition to obtaining financing from certain financial parties, we have also historically utilized financing from our vendors and suppliers through customary trade payables or account payables. At times, we have increased the number of days' payables outstanding. There can be no assurance that our vendors and suppliers will continue to allow us to maintain existing or planned payables balances, and if we were forced to reduce our payables balances below our planned level without obtaining alternative financing, our inability to fund our operations would materially adversely affect our business, financial condition and results of operations. We could also face substantial liquidity problems and might be required to dispose of material assets or enter into economically unfavorable financing arrangements to meet creditor demands or risk not being able to continue as a going concern.

For the audited year ended June 30, 2025, debt obligations amounted to $29.2 million compared to June 30, 2024, where we had an aggregate of $29.1 million in debt obligations. This has been reduced post balance date through cash payments as well as debt to equity swaps, but there still remains material debt obligations outstanding. Our ability to make scheduled payments on or to refinance our debt obligations and to fund our ongoing liquidity needs depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. There can be no assurance that we will maintain a level of cash flow from operating activities or that future borrowings will be available to us in an amount or on terms sufficient to permit us to pay the principal and interest on our indebtedness. If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, sell material assets, or to seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. We could also face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations or risk not being able to continue as a going concern. In addition, we may be able to incur additional indebtedness in the future. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations or prospects.

If we implement our XRP Treasury Strategy, such reserve model would expose us to various risks, including the following: - Regulatory changes could impact our ability to operate validators or receive rewards;         - Regulatory scrutiny of our activities may increase, potentially limiting our operations;         - Potential litigation risks exist related to smart contract vulnerabilities, validator operations, or other business activities;         - We could be subject to lawsuits alleging violations of securities laws if any XRP we hold is deemed a security;         - If XRP is deemed a "security" for purposes of the Investment Company Act of 1940, as amended (the "Investment Company Act") and our holdings of XRP and related activities cause us to be deemed an "investment company" under the Investment Company Act, we could be required to register as an investment company and comply with enhanced regulatory requirements or could subject us to potential enforcement actions;         - Our operations may be subject to enhanced scrutiny and compliance requirements if the XRP we hold are classified as securities in the future;         - Uncertainty around the regulatory status of digital assets may impact on our ability to list on certain exchanges;         - Changes in political administration may not guarantee a favorable regulatory environment for digital assets;         - Future SEC actions or court decisions could retroactively classify certain digital assets as securities, potentially leading to penalties or forced unwinding of transactions; and         - Increased regulatory focus on Layer-1 blockchains beyond Bitcoin and Ethereum could result in new compliance requirements.

Our XRP strategy exposes us to various risks, including the following: XRP is a highly volatile asset. XRP is a highly volatile asset that has been traded between approximately $0.4936 and $3.65 per XRP on the Coinbase exchange in the 12 months preceding the date of this Annual Report. The trading price of XRP has significantly decreased during prior periods, and such declines may occur again in the future. XRP does not pay interest or other returns, and we can only generate cash from our XRP holdings if we sell our XRP or implement strategies to create income streams or otherwise generate cash by using our XRP holdings. Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our XRP holdings, and any such strategies may subject us to additional risks. Our XRP holdings can significantly impact on our financial results and the market price of our listed securities, and if we continue to increase our overall holdings of XRP in the future, they will have an even greater impact on our financial results and the market price of our listed securities. The vast majority of our digital assets will be concentrated in our XRP holdings. The concentration of our assets in XRP will limit our ability to mitigate risk that could otherwise be achieved by holding a more diversified portfolio of treasury assets. We will purchase XRP using proceeds from equity and debt financing. Our ability to achieve the objectives of our XRP strategy depends in significant part on our ability to obtain equity and debt financing. If we are unable to obtain equity or debt financing on favorable terms or at all, we may not be able to successfully execute on our XRP strategy. Our XRP strategy has not been tested over an extended period of time or under different market conditions. We are continually examining the risks and rewards of our strategy to acquire and hold XRP. This strategy has not been tested over an extended period of time or under different market conditions. For example, although we believe XRP has the potential to serve as a widely used digital asset for payments and liquidity management, the price of XRP has at times declined in periods where adoption and usage of digital assets were expected to increase. If XRP prices were to decrease, or if our XRP strategy otherwise proves unsuccessful, our financial condition, results of operations, and the market price of our listed securities would be materially adversely impacted. We are subject to counterparty risks, including in particular risks relating to our custodians. Although we have implemented various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the XRP we own in custody accounts at U.S.-based, institutional-grade custodians and negotiating contractual arrangements intended to establish that our property interest in custodially-held XRP is not subject to claims of our custodians' creditors, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts. If our custodially-held XRP were nevertheless considered to be the property of our custodians' estates in the event that any such custodians were to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership rights with respect to such XRP, or delaying or hindering our access to our XRP holdings, and this may ultimately result in the loss of the value related to some or all of such XRP, which could have a material adverse effect on our financial condition as well as the market price of our listed securities. The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of XRP. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry have highlighted the counterparty risks applicable to owning and transacting in digital assets. Although these bankruptcies, closures, liquidation and other events have not resulted in any loss or misappropriation of our XRP, nor have such events adversely impacted our access to our XRP, they have, in the short term, likely negatively impacted the adoption rate and use of XRP. Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of XRP, limit the availability to us of financing collateralized by XRP, or create or expose additional counterparty risks. The broader digital assets industry, including the technology associated with digital assets, the rate of adoption and development of, and use cases for, digital assets, market perception of digital assets, and the legal, regulatory, and accounting treatment of digital assets are constantly developing and changing, and there may be additional risks in the future that are not possible to predict.

Our XRP strategy exposes us to the risk of non-performance by counterparties, whether contractual or otherwise. Risk of non-performance includes inability or refusal of a counterparty to perform because of a deterioration in the counterparty's financial condition and liquidity or for any other reason. For example, our execution partners, custodians, or other counterparties might fail to perform in accordance with the terms of our agreements with them, which could result in a loss of XRP, a loss of the opportunity to generate funds, or other losses. Our primary counterparty risk with respect to our XRP is custodian performance obligations under the various custody arrangements we have entered into. A series of recent high-profile bankruptcies, closures, liquidations, regulatory enforcement actions, and other events relating to companies operating in the digital asset industry - including the filings for bankruptcy protection by Three Arrows Capital, Celsius Network, Voyager Digital, FTX Trading, and Genesis Global Capital; the closure or liquidation of certain financial institutions that provided lending and other services to the digital assets industry, including Signature Bank and Silvergate Bank; SEC enforcement actions against Coinbase, Inc., Binance Holdings Ltd., and Kraken; the placement of Prime Trust, LLC into receivership following a cease-and-desist order issued by Nevada's Department of Business and Industry; and the filing and subsequent settlement of a civil fraud lawsuit by the New York Attorney General against Genesis Global Capital, its parent company Digital Currency Group, Inc., and former partner Gemini Trust Company - have highlighted the perceived and actual counterparty risk applicable to digital asset ownership and trading. Although these bankruptcies, closures, and liquidations have not resulted in any loss or misappropriation of our XRP, nor have such events adversely impacted our access to our XRP, legal precedent created in these bankruptcy and other proceedings may increase the risk of future rulings adverse to our interests in the event one or more of our custodians becomes a debtor in a bankruptcy case or is the subject of other liquidation, insolvency, or similar proceedings. While all of our custodians are subject to regulatory regimes intended to protect customers in the event of a custodial bankruptcy, receivership, or similar insolvency proceeding, no assurance can be provided that our custodially-held XRP will not become part of the custodian's insolvency estate if one or more of our custodians enters bankruptcy, receivership, or similar insolvency proceedings. Additionally, if we pursue any strategies to create income streams or otherwise generate funds using our XRP holdings, we would become subject to additional counterparty risks. Any significant non-performance by counterparties, including in particular the custodians with which we custody substantially all of our XRP, could have a material adverse effect on our business, prospects, financial condition, and operating results.

As a result of our XRP strategy, our investments will be concentrated in our XRP holdings. Accordingly, the emergence or growth of digital assets other than XRP may have a material adverse effect on our financial condition. As of June 30, 2025, XRP was one of the largest digital assets by market capitalization. However, there are numerous alternative digital assets, and many entities, including consortiums and financial institutions, are researching and investing resources into private or permissioned blockchain platforms or digital assets that may compete directly or indirectly with XRP. For example, Ethereum and other smart contract–enabled blockchains have developed broad ecosystems of decentralized applications that could limit the adoption of XRP for certain use cases. Other alternative digital assets that compete with XRP in certain ways include "stablecoins," which are designed to maintain a constant price because of, for instance, their issuers' promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown rapidly as an alternative to XRP and other digital assets as a medium of exchange and store of value, particularly on digital asset trading platforms and in cross-border payments. As of June 30, 2025, two of the eight largest digital assets by market capitalization were U.S. dollar–pegged stablecoins. Additionally, central banks in some countries have started to introduce digital forms of legal tender. For example, China's CBDC project was made available to consumers in January 2022, and governments including the United States, the United Kingdom, the European Union, and Israel have been discussing the potential creation of new CBDCs. Whether or not they incorporate blockchain or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could also compete with, or replace, XRP and other digital assets as a medium of exchange or store of value. As a result, the emergence or growth of these or other digital assets could cause the market price of XRP to decrease, which could have a material adverse effect on our business, prospects, financial condition, and operating results.

We are targeting significant growth across our businesses over the next 5 years, underpinned by strong industry tailwinds including the electrification of fleet vehicles, the adoption and acceleration of net zero carbon goals by corporate customers, and growth of the renewable and infrastructure sectors in our key geographic markets. We expect that this significant growth in activity will place significant stress on our operations, management, employee base and ability to meet working capital requirements sufficient to support this growth over the next 12 to 36 months. Any failure to address the needs of our growing business successfully could have a material adverse effect on our business, operating results and financial condition.