Annual Report for Fiscal Year Ending June 30, 2023 (Form 20-F)

The following discussion and analysis provides information which the Company's management believes is relevant to an assessment and understanding of the Company's consolidated results of operations and financial condition. This discussion and analysis should also be read together with Item 4 of this Report and financial statements and notes included in Item 18 of this Report. This discussion and analysis contains forward-looking statements based upon current expectations that are subject to known and unknown risks, uncertainties and assumptions. Actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements due to a number of factors, including those set forth in the section entitled "Risk Factors" under Item 3 of this Report and elsewhere in this Report. You should read the following discussion in conjunction with the sections entitled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors".

The financial information reported herein has been derived from the financial statements which have been prepared in accordance with IFRS or the underlying accounting records of the Company and is presented in Euros unless otherwise stated.

This discussion and analysis focuses on information and key statistics from the audited consolidated financial statements and considers known risks and uncertainties relating to the automotive sector. This discussion should not be considered all-inclusive, as it excludes possible future changes that may occur in general economic, political, and environmental conditions. Additionally, other elements may or may not occur which could affect industry conditions and/or the Company in the future.

Company Overview

The Company had no operations prior to entering into the Scheme Implementation Deed and Business Combination Agreement, including on June 30, 2023, the date of the financial statements of the Company included in this Report. The Company's sole purpose was to become a holding company following the Business Combination. Upon the closing of the Business Combination, the Company became the direct parent of, and conducts its business through, Carbon Revolution.

New Debt Program

In May 2023 Carbon Revolution PL entered into a debt program (the "New Debt Program" or "USD term loan") arranged by PIUS Limited LLC and its affiliates ("PIUS") under which Carbon Revolution Operations issued Series 2023-A notes in exchange for US$60 million. UMB Bank, National Association, a trust company (the "Trustee") acts as trustee and as disbursing agent under the New Debt Program on behalf of the noteholders and Gallaher IP Solutions LLC, a Delaware limited liability company as successor to Newlight Capital LLC, a North Carolina limited liability company, an affiliate of PIUS and the servicer and collateral agent under the various loan documents (the "Servicer").

Impact of Business Combination and Related Financing Transactions

Closing of the Business Combination

On November 3, 2023, Twin Ridge, the Company, Carbon Revolution PL and MergerSub, consummated the business combination pursuant to the terms of the BCA, dated November 29, 2022, as amended or supplemented from time to time, pursuant to which, among other things, Twin Ridge merged with and into MergerSub, with MergerSub surviving as a wholly-owned subsidiary of the Company, with shareholders of Twin Ridge receiving Ordinary Shares, in exchange for their existing Twin Ridge ordinary shares and existing Twin Ridge warrant holders having their warrants automatically exchanged by assumption by the Company of the obligations under such warrants, including to become exercisable for one-tenth of an Ordinary Share instead of one Twin Ridge ordinary share, in proportion to the exchange ratio. In addition, Twin Ridge, Carbon Revolution PL and the Company implemented a scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Cth) and a capital reduction under Part 2J.1 of the Corporations Act 2001 (Cth) in accordance with the Scheme Implementation Deed, which resulted in all shares of Carbon Revolution PL being canceled in return for consideration, with Carbon Revolution PL issuing one share to the Company (resulting in Carbon Revolution PL becoming a wholly-owned subsidiary of the Company) and the Company issuing Ordinary Shares to the shareholders of Carbon Revolution PL.

The Company had no operations prior to entering into the Scheme Implementation Deed and BCA, including as of June 30, 2023. The Company's sole purpose was to become a holding company following the Business Combination. Upon the closing of the Business Combination, the Company became the direct parent of Carbon Revolution PL.

On November 3, 2023, the Company completed the Business Combination and Carbon Revolution PL became a wholly owned subsidiary of the Company. Upon consummation of the Transactions, the Company became publicly traded on Nasdaq under the ticker symbol "CREV" and Public Warrants trading under the ticker symbol "CREVW."

Accounting Treatment

The Business Combination was accounted for as a capital reorganization. Under this method of accounting, the Company was treated as the "acquired" company for financial reporting purposes. For accounting purposes, Carbon Revolution PL is deemed to be the accounting acquirer in the Transaction and, consequently, the Transaction is treated as a capital reorganization. Accordingly, the Business Combination is treated as the equivalent of Carbon Revolution PL issuing shares at the closing for the net assets of the Company (including the net assets of Twin Ridge) as of the closing date, accompanied by a recapitalization as Carbon Revolution PL was not the legal acquiror. Carbon Revolution PL is, consequently, deemed to be the accounting predecessor meaning that Carbon Revolution PL's consolidated assets, liabilities and results of operations will become the historical financial statements of the Company. Under IFRS2, the difference between the fair value of the Ordinary Shares issued to Twin Ridge shareholders compared to the net liabilities of Twin Ridge is recognized in the profit and loss statement as a listing expense. The shares issued by the accounting acquirer are recognized at fair value and recorded as consideration for the acquisition of the public shell company, Twin Ridge. The net assets of Twin Ridge are stated at historical cost, with no goodwill or other intangible assets recorded. This is expected to be consistent with carrying value. The Transaction, which is not within the scope of IFRS 3 since Twin Ridge does not meet the definition of a business in accordance with IFRS 3, is accounted for within the scope of IFRS 2.

OIC Class A Preferred Shares and OIC Warrants

² Foreign exchange rate is as of May 23, 2023 at a rate of $1 USD = $1.501 AUD.

Concurrently with the execution of the Business Combination, the Company consummated a securities purchase agreement with OIC Structured Equity Fund I Range, LLC and affiliated entities ("OIC") on November 3, 2023, together with a number of related documents, collectively comprising the "OIC Financing". Pursuant to the original agreement:

OIC Class B preferred shares, Series 2024-A Notes and Amendments to the New Debt Program

Between April 2024 and October 2024, under amendments to the OIC Financing and the New Debt Program (such amendments collectively referred to herein as the "Escrow Tranche Amendments"), the Company issued a series of loan notes (via Carbon Revolution Operations) and Class B Preferred Shares, and additional warrants, to OIC for consideration of US$35 million, replacing an original commitment to issue further preferred equity upon completion of certain milestones. The terms of the issuance are:

The Company has determined that the Series 2024-A notes should be accounted for as financial liabilities at amortized cost to be accreted over the term up to the minimum return amount at maturity. Proceeds from the Series 2024-A notes have been allocated between the amortized cost liability and the fair value of the warrants issued concurrently. Transaction costs were allocated on a relative fair value basis.

OIC Series 2025-A Notes and Amendment to the New Debt Program

In December 2024, the Company and the OIC Investors agreed to further amendments to the Securities Purchase Agreement, to facilitate funding US$25 million of the remaining $40 million (from the original US$110 million) upon satisfaction of certain conditions, agreed upon and set forth in such amendment, in exchange for interest thereon payable at a rate of 12% per annum, of which 8.5% is payable in cash and 3.5% is payable in-kind and the issuance by Carbon Revolution Operations of Fixed Rate Senior Notes, Series 2025-A Notes (the "Series 2025-A Notes") pursuant to the Indenture, and the Indenture and related documents under the New Debt Program were also amended to facilitate the release to Carbon Revolution Operations of an aggregate of US$2 million from the payment reserve fund established under the New Debt Program, in equal instalments of US$400,000 with each $5 million tranche of funding under the above-mentioned amendments to the Securities Purchase Agreement, in exchange for interest thereon payable at a rate of 12% per annum, of which 8.5% is payable in cash and 3.5% is payable in-kind and the issuance by Carbon Revolution Operations of an equivalent amount of additional Series-2023 A Notes. Upon redemption or maturity of the Series 2025-A Notes and additional Series-2023 A Notes, Carbon Revolution Operations is required to pay the holders thereof an exit premium equal to 2.0 times the amount funded or released in exchange for such notes minus any cash interest or principal payments or fee payments thereon. In connection with the funding of each of the five tranches of US$5 million, the Company will issue to the OIC Investors and the Existing Lenders, pro rata in proportion to the amount of their investment relative to the total amount invested by the OIC Investors and the Existing Lenders (between them on a pro-rata basis) in each tranche, penny warrants to purchase an aggregate number of shares equal to 5.0% of the Company's shares outstanding, determined on a "Fully-Diluted Basis" in the same manner as applicable to the existing warrants previously issued to the OIC Investors. Additionally, after the issuance by Carbon Revolution Operations of the Series 2025-A Notes in the amount of US$25 million to the OIC Investors and release of the US$2 million from the payment reserve fund as described above, each holder of Series 2023-A Notes agrees to waive cash interest not to exceed an aggregate of US$3 million (the "Cash Interest Suspension Period") in exchange for the Trustee receiving payment in kind in an amount equal to such waived cash interest plus interest thereon payable at a rate of 12% per annum, of which 8.5% is payable in cash and 3.5% is payable in-kind for the benefit of the holders of the Series 2023-A Notes, and the OIC Investors also agree to waive cash interest on the Series 2024-A Notes and the Series 2025-A Notes, on the same terms, for the same period. Such amendments collectively are referred to herein as the "December 2024 Amendments". The Escrow Tranche Amendments and the December 2024 Amendments are referred to herein as the "2024 Amendments". The Series 2024-A notes and Series 2025-A notes are collectively referred to herein as the "OIC Notes".

Pursuant to the December 2024 Amendments, on each of December 20, 2024 January 21, 2025, March 7, 2025 and May 9, 2025, US$5 million was funded in exchange for interest payable thereon and the issuance to the OIC Investors of US$5 million aggregate principal amount of Series 2025-A Notes and the release from the payment reserve fund for the Existing Lenders of US$400,000 in exchange for interest payable thereon and the issuance to the of US$400,000 aggregate principal amount of additional Series 2023-A Notes, and the OIC Investors (4.63%) and the Existing Lenders (0.37%) were issued penny warrants to purchase an aggregate number of shares equal to 5.0% of the Company's shares outstanding, determined on a "Fully-Diluted Basis".

As of the date of this Annual Report, warrants to purchase ordinary shares equivalent to a total of 56.36% of ordinary shares issued calculated on a fully diluted basis, have now been issued to the OIC Investors and vested, and warrants to purchase ordinary shares equivalent to a total of 1.48% of ordinary shares issued calculated on a fully diluted basis, have now been issued to Existing Lenders and vested.

Key Factors Affecting Operating Results in Future Periods

2025 Business Outlook

The initial Mega-line commissioning is a significant milestone and, combined with our ongoing capacity expansion program, positions us to meet the expected demand from global OEMs.

The Company's key operational focus areas for the upcoming 12 months include:

Short term company liquidity measures include:

As of April 24, 2025, the Company has eleven active awarded programs with five global OEMs (seven of which programs are currently in the serial production phase and four of which are in the development phase). The Company expects all of these four programs to complete development and enter the production stage during CY25. The Company is also in discussions with customers and potential new customers about new wheel programs and expects that it will win new customer program awards. The ability to secure award of new customer programs and the timing, size and profitability of such programs, the launch timing for new programs entering production, and the demand, and rate of production volumes for new and ongoing programs will be key factors affecting operating results. The launch timing of new programs by OEM customers is largely outside the control of the Company and can impact operating results. When a program is awarded, the OEMs do not provide volume commitments and the contracts are not take or pay by nature. The Company has experienced delays in orders for wheels in the past, including where commencement of production is later than expected as a result of the OEM delaying the release of the relevant vehicle. Average pricing will be driven by sales mix as well as being impacted by the outcome of price negotiations or working capital initiatives.

The Company expects to continue to expand production capacity at the Australian facility through 2025 and early 2026 in line with expected demand from awarded programs. The Company expects demand to increase over that period and in particular from around late 2025 as new programs are expected to have largely entered production (noting that demand fluctuates from month to month and quarter to quarter). The Company's ability to deliver program volumes also depends on its ability to ensure that the production facility has sufficient capacity to produce expected wheel volumes. Our future operating results also depend upon our ability to manage expenses, including our initiatives to improve our production efficiency and reduce labor costs per wheel, as well as the costs of raw materials. Direct labor costs will be driven largely by production volumes, the plant efficiency initiatives and the introduction of new productive equipment and hourly labor rates. Hourly labor rates are driven by negotiated outcomes in the production site's enterprise bargaining agreement as well as shift structure and overtime premiums paid to deliver required production output, and the extent of the use of labor hire. Raw material costs will be impacted by the spot price of raw materials, the outcome of negotiations with certain suppliers, volume increases, and the success of initiatives to substitute for lower cost materials for certain materials, source certain materials from lower cost providers, shift certain supply arrangements from spot purchases to long term contracts, consolidate consumables suppliers, and implement production processes and designs which utilize less material and production consumables, as well as freight costs.

As the Company is an early-stage business, fixed costs are relatively high proportionally, and a delay or reduction in wheel sales can have a significant impact on the financial results. Research and Development costs will be incurred to deliver the programs currently in development as well as any ongoing development on production programs and research to expand the Company's technology. Fixed costs will also be driven by full year US-listed company and other compliance costs.

Available liquidity for the future periods is likely to be impacted by a number of factors, including the outcome of the above-mentioned short-term liquidity measures.

Refer to the section entitled "Risk Factors" in Item 3 of this Report.

Financial Overview

The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Report.

Comparison of Years Ended June 30, 2023 and June 30, 2022

Since the Company's inception in 2017 through June 30, 2023, the date of the financial statements, the Company did not conduct operations and did not generate any revenue. In the fiscal year ended June 30, 2023, the Company had a profit of €0 compared to €0 in net profit in the fiscal year ended June 30, 2022. The Company did not generate any operating revenues until the closing of the Business Combination following the date of the financial statements when Carbon Revolution became a wholly owned subsidiary of the Company.

Comparison of Years Ended June 30, 2022 and June 30, 2021

For the years ended June 30, 2022 and June 30, 2021, the Company did not conduct operations and did not generate any revenue or expenses.

Overview

The Company, prior to the Business Combination and as of the date of the financial statements included in this Report, did not conduct operations. As of June 30, 2023, the Company had no cash and cash equivalents. The Company did not have any cash as of June 30, 2023 and therefore did not have any cash used in operating, investing or financing activities.

Share Capital Reduction

Following the Initial Closing, the Company applied to the High Court of Ireland for an order to confirm the Share Capital Reduction, and obtained the required Share Capital Reduction Order on January 18, 2024. The Share Capital Reduction is intended to create a level of distributable profits which are available to cover, in part, the amount of any cash dividend or redemption amount payable to the holders of the Preferred Shares. The funds included in the Company's reserves will be permitted to be used for paying dividends and redeeming the Preferred Shares, which may reduce the Company's funds available to fund operations and the Company's growth without any amounts expended in such dividends or redemptions being paid to holders of Ordinary Shares.

Subsidiary Restrictions

In connection with the New Debt Program, under the Proceeds Disbursing and Security Agreement ("PDSA") entered into on or about May 23, 2023, the Company's Australian subsidiaries are restricted from paying dividends or making any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, or permitting any of their subsidiaries to do so outside the Carbon Revolution Group, subject to certain exceptions, such as (i) the repurchase of stock of former employees as long as no event of default exists prior to such repurchase and/or would occur after giving effect to such repurchase, and provided that the aggregate amount of all repurchases by all Australian subsidiaries does not exceed US$250,000.00 per fiscal year; and (ii) cash payments in lieu of issuing fractional shares of its stock, provided that the cash payments do not exceed US$25,000.00 in aggregate in any fiscal year. In addition, Carbon Revolution USA LLC, the Company's United States subsidiary, must not provide intercompany indebtedness, loans and advances or pay dividends to the Company and is excluded from the definition of "Co-Obligor" under the PDSA, and so this entity does not benefit from the permitted provisions or exceptions under the PDSA.

Liquidity and Capital Resources

The Company did not undertake any trading activities during the years ended June 30, 2023 and June 30, 2022 and did not hold any assets at June 30, 2023 and June 30, 2022. As disclosed in note 1(ix) to the financial statements in Item 18, the Company expects to continue to incur net losses and negative cash flows from operating activities in accordance with its operating plan over the next twelve months from the date of the filing of this Annual Report, but it expects that both capital expenditure (in relation to the Australian manufacturing facility) and unit production costs will reduce in the next 12 months from the date of the filing of this Annual Report as the capacity expansion at the Australian plant will be substantially completed by that stage.

As an early-stage growth company, the Company's ability to access additional capital is critical to fund operating losses, finalize the development and launch of awarded wheel programs and complete the incremental capacity expansion to scale up production capacity to support projected demand. As the Company's current level of cash and cash equivalents and other committed funding sources are not sufficient to execute our business plan, failure to obtain additional financing will have a material, adverse impact on our business operations including developing, launching and producing new wheel programs and satisfying obligations as they become due.

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potential repurposing of the remaining US$15 million (EUR 13.9 million) of the up to US$110 million (EUR 101.6 million) contemplated under the original OIC Financing. The final US$40 million (EUR 37.0 million) of the up to US$110 million (EUR 101.6 million) OIC Financing was intended to be for the purpose of funding towards a new manufacturing facility. Assuming OIC releases the final US$5 million (EUR 4.6 million) tranche of the US$25 million (EUR 23.1 million) of OIC funding agreed pursuant to the December 2024 Amendments, a further US$15 million (EUR 13.8 million) of the up to US$110 million (EUR 101.6 million) contemplated under the original OIC Financing will remain. If the Company did require near term assistance after exhausting all other reasonable sources of liquidity, OIC may consider repurposing these funds to support the Company's existing operations in Australia; its unrestricted cash balance of A$1.5 million (EUR 0.84 million) at April 30, 2025; and

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potential access to capital through the potential issuance of other debt or equity securities via public or private placement and under the Committed Equity Facility ("CEF").

In addition to successfully achieving these initiatives, it is also important that the Company complies with the New Debt Program loan covenants and the OIC Notes and conditions of the Class A Preferred Shares and Class B Preferred Shares. The Company will also need to obtain the consent of the Servicer under the New Debt Program, and of OIC, prior to entering any new debt funding arrangements that are not classified as permitted indebtedness under the agreements with those parties respectively, and the consent of OIC prior to entering into certain equity funding arrangements.

There is significant doubt that the Company will be successful in achieving these initiatives.

There can be no assurance that the Company will be able to obtain the financing or customer or supplier support needed to achieve its goals on acceptable terms or at all. Additionally, any equity or equity linked financings would likely have a dilutive effect on the holdings of existing stockholders.

Contractual Obligations

Borrowings

Supplier finance arrangement

In 2021, Carbon Revolution PL entered into a supply chain finance agreement with a logistics company. Under the arrangement the logistics company agrees to pay amounts to the participating supplier in respect of invoices owed by Carbon Revolution PL and receives settlement from Carbon Revolution PL at a later date. The principal purpose of this arrangement is to facilitate efficient ordering, importation, warehousing, invoice management and payment processing. The arrangement is only for a limited number of suppliers and specific materials. As the arrangement results in extended payment terms beyond the terms agreed with those suppliers the agreement is disclosed as a current borrowing. The facility has a fixed interest rate of 6% + RBA cash rate from June 28, 2023 onwards.

New Debt Program

In May 2023, Carbon Revolution Operations entered into New Debt Program arranged by PIUS under which Carbon Revolution Operations issued Series 2023-A notes in exchange for US$60 million. Pursuant to the Escrow Tranche Amendments, Carbon Revolution Operations issued Series 2024-A notes to the OIC Investors. The Series 2024-A notes are pari passu with the Series 2023-A notes subject to limited exceptions. The loan is denominated in U.S. Dollar and is translated to Australian dollars at each reporting period. The program includes certain reserves in an amount of A$7.2 million (as of June 30, 2024), that are not available at Carbon Revolution's discretion and disclosed as restricted trust funds. A$1.6 million of this reserve has subsequently been released to the Company. Costs of A$20.7 million incurred in regard to the establishment of the term loan have been netted off with the loan amount and are being amortized over the term of the loan through the effective interest rate method.

As a result of amendments to the New Debt Program agreed in May 2024, under the New Debt Program:

Under the original terms of the New Debt Program, the Company was required to complete a qualified capital raise of at least US$45 million by December 31, 2023. The Company did not achieve this, and as a result, the Company is required to pay US$1.5 million and issue 50,000 ordinary shares to the Servicer upon the earlier of the refinancing or payoff of the loan or its maturity in May 2027.

OIC Financing

OIC Class A Preferred Shares

In connection with the OIC Financing, in November 2023, the Company issued 350 Class A Preferred Shares to the OIC Investors with a 12% fixed accumulating distribution and warrants for aggregate gross proceeds of US$35 million (equivalent to A$54.7 million) less transaction costs.

These Class A Preferred Shares are recognized as a financial liability at amortized cost as they must be redeemed by November 2028. The Company may elect to redeem Class A Preferred Shares on issue at an earlier date at its discretion subject to a minimum return of the greater of a 12% internal rate of return or 1.75x return on face value, in all circumstances, to the holders of the Preferred Shares.

The OIC Investors have also received warrants in exchange for the funding released to the Company under the OIC Financing ("OIC Warrants"). As at the date of this document, the OIC Investors have received OIC Warrants entitling them to up to approximately 56.36% of the fully diluted Company Ordinary Shares on issue. The OIC Warrants may be exercised, in whole or in part, at the discretion of the holders. The initial OIC Warrants included a 'cashless' exercise feature which was subsequently removed in June 2024 by way of the then existing OIC Warrants being reissued with amended terms. Due to the OIC Warrants initially including that feature, the initial OIC Warrants were treated as derivative liabilities at fair value through profit and loss between issuance in November 2023 and June 2024, resulting in a gain of A$5.8 million for the 2024 financial year. In June 2024 the warrants were reclassified to equity as the Company considered them to now meet the fixed for fixed criteria in IAS32 upon the removal of the cashless exercise feature.

Under the original terms of the OIC Financing, OIC retained the right to subscribe for further Class A Preferred Shares after November 2023 in exchange for further releases of funding from escrow to the Company, subject to the Company achieving certain milestones. The Company has not recognized any financial liability or allocation of proceeds in November 2023 or during the 2024 financial year for these preferred shares as the associated escrow deposit was not considered to be within the control of the Company. These commitments and escrow arrangements were subsequently modified from April 2024.

OIC Class B Preferred Shares and Series 2024-A notes and Amendment to the New Debt Program

Between April 2024 and October 2024, under amendments to the OIC Financing and the New Debt Program, the Company issued a series of loan notes (via Carbon Revolution Operations) and Class B Preferred Shares, and additional warrants, to OIC for consideration of US$35 million, replacing an original commitment to issue further preferred equity upon completion of certain milestones. The terms of the issuance are:

The Company has determined that the Series 2024-A notes should be accounted for as financial liabilities at amortized cost to be accreted over the term up to the minimum return amount at maturity. Proceeds from the Series 2024-A notes have been allocated between the amortized cost liability and the fair value of the warrants issued concurrently. Transaction costs were allocated on a relative fair value basis.

OIC Series 2025-A Notes and Amendment to the New Debt Program

In December 2024, the Company and the OIC Investors agreed to further amendments to the Securities Purchase Agreement, to facilitate funding US$25 million of the remaining $40 million (from the original US$110 million) upon satisfaction of certain conditions, agreed upon and set forth in such amendment, in exchange for interest thereon payable at a rate of 12% per annum, of which 8.5% is payable in cash and 3.5% is payable in-kind and the issuance by Carbon Revolution Operations of Fixed Rate Senior Notes, Series 2025-A Notes (the "Series 2025-A Notes") pursuant to the Indenture, and the Indenture and related documents under the New Debt Program were also amended to facilitate the release to Carbon Revolution Operations of an aggregate of US$2 million from the payment reserve fund established under the New Debt Program, in equal instalments of US$400,000 with each $5 million tranche of funding under the above-mentioned amendments to the Securities Purchase Agreement, in exchange for interest thereon payable at a rate of 12% per annum, of which 8.5% is payable in cash and 3.5% is payable in-kind and the issuance by Carbon Revolution Operations of an equivalent amount of additional Series-2023 A Notes. Upon redemption or maturity of the Series 2025-A Notes and additional Series-2023 A Notes, Carbon Revolution Operations is required to pay the holders thereof an exit premium equal to 2.0 times the amount funded or released in exchange for such notes minus any cash interest or principal payments or fee payments thereon. In connection with the funding of each of the five tranches of US$5 million, the Company will issue to the OIC Investors and the Existing Lenders, pro rata in proportion to the amount of their investment relative to the total amount invested by the OIC Investors and the Existing Lenders (between them on a pro-rata basis) in each tranche, penny warrants to purchase an aggregate number of shares equal to 5.0% of the Company's shares outstanding, determined on a "Fully-Diluted Basis" in the same manner as applicable to the existing warrants previously issued to the OIC Investors. Additionally, after the issuance by Carbon Revolution Operations of the Series 2025-A Notes in the amount of US$25 million to the OIC Investors and release of the US$2 million from the payment reserve fund as described above, each holder of Series 2023-A Notes agrees to waive cash interest not to exceed an aggregate of US$3 million (the "Cash Interest Suspension Period") in exchange for the Trustee receiving payment in kind in an amount equal to such waived cash interest plus interest thereon payable at a rate of 12% per annum, of which 8.5% is payable in cash and 3.5% is payable in-kind for the benefit of the holders of the Series 2023-A Notes, and the OIC Investors also agree to waive cash interest on the Series 2024-A Notes and the Series 2025-A Notes, on the same terms, for the same period.

Pursuant to the December 2024 Amendments, on each of December 20, 2024, January 21, 2025, March 7, 2025 and May 9, 2025, US$5 million was funded in exchange for interest payable thereon and the issuance to the OIC Investors of US$5 million aggregate principal amount of Series 2025-A Notes and the release from the payment reserve fund for the Existing Lenders of US$400,000 in exchange for interest payable thereon and the issuance to the of US$400,000 aggregate principal amount of additional Series 2023-A Notes, and the OIC Investors (4.63%) and the Existing Lenders (0.37%) were issued penny warrants to purchase an aggregate number of shares equal to 5.0% of the Company's shares outstanding, determined on a "Fully-Diluted Basis".

As of the date of this Annual Report, warrants to purchase ordinary shares equivalent to a total of 56.36% of ordinary shares issued calculated on a fully diluted basis, have now been issued to the OIC Investors and vested, and warrants to purchase ordinary shares equivalent to a total of 1.48% of ordinary shares issued calculated on a fully diluted basis, have now been issued to Existing Lenders and vested.

See "Item 4. Information on the Company-Business Overview-Research and Development."

See "Item 5. Operating and Financial Review and Prospects-A. Operating Results."

Overview

Our consolidated financial statements are prepared in accordance with IFRS, which require us to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Critical Accounting Policies and Estimates

Standard and Interpretation	Effective for annual reporting periods beginning on or after	Expected to be initially applied in the financial year ending
Narrow scope amendments to IAS 1, Practice statement 2 and IAS 8	January 1, 2023	June 30, 2024
Amendment to IAS 12 - deferred tax related to assets and liabilities arising from a single transaction	January 1, 2023	June 30, 2024
Amendment to IFRS 16 - Leases on sale and leaseback	January 1, 2024	June 30, 2025
Amendments to IAS 1 - Non-current liabilities with covenants	January 1, 2024	June 30, 2025
Amendments to IAS 7 and IFRS 7 on Supplier finance arrangements	January 1, 2024	June 30, 2025
Amendments to IAS 8 - Definition of Accounting Estimates	January 1, 2023	June 30, 2024