EOSE 10-K & 10-Q changes, risk factors and insider trading

In addition to the factors discussed elsewhere in this Report, the following risks and uncertainties could materially and adversely affect the Company’s business, financial condition, results of operations,operations and cash flows.

•We have aOur history of losses thatputs caststhe substantialonus doubton asus to our ability to continue as a going concern. We must deliver on our potential for significant business growth and improvedto improve our manufacturing processes to achieve sustained, long-term profitability and long-term commercial success.

•Compared to traditional Li-ion energy storage technologies, our cells and modules have less power density and round trip efficiency and may be considered inferior to competitors’ products.

•Defects or performance problems in our products could result in loss of customers, reputational damage,damage and decreased revenue, facing warranty, indemnity,indemnity and product liability claims that may arise from defective products.

•If we elect to expand our production capacity by constructing additionalone or more new manufacturing facilities, we may encounter challenges relating to the construction, management and operation of such facilities.

•A substantial number of shares of the Company’s common stock that are issuable upon the exercise or conversion of securities issued or issuable under the Credit Agreement and the SPA are subject to a contractual lockup.

•Third parties may assert that we are infringing, misappropriating or otherwise violating their intellectual property rights, which could divert management’s attention, cause us to incur significant costs,costs and prevent us from selling or using the technology to which such rights relate.

We have aOur history of losses thatputs caststhe substantialonus doubton asus to our ability to continue as a going concern. We must deliver on our potential for significant business growth and improvedto improve our manufacturing processes to achieve sustained, long-term profitability and long-term commercial success.

We have had net losses and negative operating cash flows each fiscal quarteryear since inception of our business. For the years ended December 31, 20242025 and 2023,2024, we had $685.9$969.6 million and $229.5$685.9 million in net losses, respectively. We expect to continue to incur losses and experience negative operating cash flows for the foreseeable future, as we anticipate continued investment in the development and launch of product with outside capital at the expense of short-term profitability. For the fiscal year ended December 31, 2024, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of these Consolidated Financial Statements.

Although our available capital has increased substantially since our Merger through the issuance of convertible notes and other financing, we continue to have limited resources relative to certain of our competitors, especially certain Li-ion manufacturers that have a longer history, are part of large multinational corporations and are already operating at a profit. To achieve profitability as well as long-term commercial success, we must continue to execute our plan to expand our business, which will require us to deliver on our existing global sales pipeline in a timely manner, increase our production capacity, improve our cost profile, grow demand for our products,products and seize new market opportunities by leveraging our proprietary technology and its manufacturing processes for novel solutions. Failure to do one or more of these things could prevent us from achieving sustained, long-term commercial success.

InWhile, in order to execute our development strategy, we have historically relied on outside capital through the issuance of equity, debt, and borrowings under financing arrangements (collectively “outside capital”) to fund our cost structurestructure. andMoving expectforward, our primary objective is to continue to rely on outside capital for the foreseeable future. While we believe we will eventually reachachieve a scale of profitabilityoperations that generates sufficient internal cash flow to sustain our operations,business and eliminate our historical reliance on outside capital. While we intend to reach and maintain profitability, there can be no assurance we will be able to achieve such profitability or do so in a manner that does not require our continued reliance on outside capital. Moreover, while we have historically been successful in raising outside capital, there can be no assurance we will be able to continue to obtain outside capital in the future or do so on terms that are acceptable to us.

We continue to invest in the design and development of the next generation product, the Z3™ battery which builds off the same electrochemistry that has not fundamentally changed for the better part of a decade. The Z3 battery is designed to reduce cost and weight and improve manufacturability and system performance. The Eos Z3 transition is fully underway, and the first semi-automated battery manufacturing line is installed and has started commercial production. The Company started delivery of its Z3 battery modules in the third quarter of 2023.

The rates at which electricity is available from a customer’s local electric utility company is subject to change and any changes in such rates may affect the relative benefits of our energy storage systems. Further, if our manufacturing costs do not decrease to the extent we intend, or if our expectations regarding the operation, performance, maintenance and disposal of our products are not realized, we could have difficulty marketing our products as a superior alternative to already-established technologies and impact the market reputation and adaptability of our products. Developments of existing and new technologies could improve their cost and usability profile, reducing any relative benefits currently offered by our products which would negatively impact the likelihood of our products gaining market acceptance. Additionally, our competitors may lower their sales prices in response to market competition. Some competitors, particularly in China, may have lower operating expenses due to greater vertical integration and supportive regulatory frameworks, allowing them to operate with minimal or even negative margins over time. This has hindered and may in the future hinder our ability to compete in certain markets, which may lead to reduced net sales and negatively impact our operating results. In response to such competitive pressures, we may also choose to adjust our pricing strategy in certain markets or reduce our margin expectations, which could further affect our financial performance.

Additionally, our ability to attract qualified personnel, including senior management and key technical personnel, is critical to the execution of our growth strategy. Competition for qualified senior management personnel and highly skilled individuals with technical expertise is extremely intense. We face and are likely to continue to face challenges identifying, hiring, and retaining qualified personnel in all areas of our business. In addition, integrating new employees into our team could prove disruptive to our operations, require substantial resources and management attention, and ultimately prove unsuccessful. Our failure to attract and retain qualified senior management and other key technical personnel could limit or delay our strategic efforts, which could have a material adverse effect on our business, financial condition, results of operations,operations and prospects.

The failure or breach of our network or Information Technology ("IT") systems, including as a result of a cybersecurity breach, could affect our sales and operations.

•steal proprietary information related to our business, products, employees,employees and customers; or

To date, no attempts to gain unauthorized access to our network or IT systems have resulted in any material adverse impact to our business or operations; however, there can be no guarantee that such intrusions will not be material in the future. While we seek to detect and investigate all unauthorized attempts and attacks against our IT systems, network and products, and to prevent their recurrence where practicable through changes to our internal processes and tools and/or changes to our products, we remain potentially vulnerable to additional known or unknown threats, such as, among other things, malware and computer virus attacks, ransomware attacks, social engineering attacks (including phishing attacks), credential stuffing, terrorist attacks, civil unrest, military conflict, supply chain attacks, or denial-of-service attacks. In addition to intentional third-party cybersecurity breaches, the integrity and confidentiality of Company and customer data may be compromised as a result of human error, fraud or malice on the part of our employees or third parties, product defects, software bugs, programming errors, design flaws, server malfunctions, software or hardware failure or other technological failures.failures, or bad weather or natural disasters. Such threats are evolving, may be difficult for long periods of time, and may see their frequency increased and effectiveness enhanced by the use of artificialAI. intelligence.Any integration of AI in our or any third-party providers’ operations, products or services is expected to pose new or unknown cybersecurity risks and challenges. Further, thesecybersecurity risks may be heightened in connection with ongoing global conflicts such as the military conflict between Russia and Ukraine and the military conflict between Israel and Hamas. Cybersecurity breaches, whether successful or unsuccessful, and other IT system or network interruptions, including those resulting from human error and technological failures, could result in us incurring significant costs related to, for example, rebuilding internal systems, reduced inventory value, providing modifications to our products and services, defending against litigation, responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect to third parties.

We operate a few IT systems throughout our business that could fail for a variety of reasons, including the threats of unauthorized intrusions and attackers.attackers and any other known or unknown threats described above. If such failures were to occur, we may not be able to sufficiently recover to avoid the loss of data or any adverse impact on our operations that are dependent on such IT systems. This could result in lost sales as we may not be able to meet the demands for our product.

Furthermore, because our IT systems are essential for the exchange of information both internally and in communicating with third parties, including our suppliers and manufacturers, cybersecurity breaches and other failures or interruptions to our systems, products or networks could potentially lead to the unauthorized access to or release of sensitive, confidentialconfidential, proprietary or personal data or information,information or intellectual property, improper use of our systems, or, unauthorized access, use, disclosure, modification or destruction of information or defective products. If these cybersecurity breaches continue, our operations and ability to communicate both internally and with third parties may be negatively impacted. Additionally, if we try to remediate our cybersecurity problems, we could face significant unplanned costs or capital investments and any damage or interruption could have a material adverse effect on our reputation, business, financial condition, and results of operations. Additionally, we cannot be certain that our insurance coverage will be adequate for data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that our insurer will not deny coverage as to any future claim.

Any system or service disruptions, including to our IT systems managed by a MSP, if not anticipated and appropriately mitigated, could materially and adversely affect our business. We, and the service providers on which we rely, are also subject to systems failures, including network, software or hardware failures, whether caused by us, third-party service providers, cybersecurity threats, malicious insiders, malware and computer virus attacks, ransomware attacks, social engineering attacks, supply chain attacks, human error, software bugs, programming errors, design flaws, other software or hardware failures, bad weather, natural disasters, power shortages, terrorist attacks, pandemics or other events, which could cause loss of data and interruptions or delays in our business, cause us to incur remediation costs, subject us to claims and damage our reputation. In addition, the failure or disruption of our communications, or those of our service providers, could cause us to interrupt or suspend our operations or otherwise adversely affect our business. Our property and business interruption insurance may be inadequate to compensate us for all losses resulting from any system or operational failure or disruption. As a result, we could suffer material financial and reputational losses in the future from any internal system or service failures, or failures in the systems or services of third parties on which we rely, or the perception thereof, whether or not this perception is correct.

The CBA also allows for substantial operational flexibility with broad management rights, subcontracting rights, flexible shift and overtime scheduling,scheduling and work rules to preserve reliability and performance of the production facilities. Finally, the CBA contains other common agreement provisions, including non-discrimination, no-strike/no-lockout, union security, safety, discipline,discipline and grievance and arbitration procedures.

TheFurther Companychanges sourcesin approximately 15% of parts, products or materials from Canada and Mexico. As long as suchU.S. tariffs are inlikely, effect,though wethere expectis thatsignificant uncertainty as to the costsnature and scope of such parts,changes. productsShould tariffs increase and materialsbe wouldsustained increase.for an extended period of time, our inventory acquisition and carrying costs may be increased, which costs may be passed on to us and consumers through higher prices for our products. These increased prices may adversely impact our new product sales and demand for such products, potentially impacting our ability to sell them profitably. It is difficult to predict what further trade-related actions governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions, which could result in supply shortages and increased costs.

Our existing generation of battery systems has received Underwriters Laboratories ("UL") 1973 certificationand 9540 certifications and has been tested for UL 9540A. Based on these North American certifications, we also intend to expand our current generation of battery systems product certification to other national standards such as European Conformity (“CE”) marking in the European Union and the international certification of the International Electrotechnical Commission (“IEC”). We also intend to obtain the UL certification and all applicable safety standards for our future products. Failure to obtain UL, IEC or CE certification would have a significant impact on our revenues, as such certifications are required by most of our customers. As Battery Storage is a relatively new market segment, additional rules will be introduced and regulation changes will occur. We must continue to adapt and ensure conformity to new standards and regulations introduced in the market.

Compared to traditional Li-ion energy storage technologies, our cells and modules have less power density and round trip efficiency and may be considered inferior to competitors’ products.

While the energy density of the Eos Z3™ battery enclosure product is significantly improved compared to the Eos Gen 2.3 enclosure product, and we believe that for certain installation sites the Eos Z3 systems may now equal Li-ion energy density per acre of land, traditional Li-ion cells and modules continue to offer higher power density and a lower self-discharge rate than Eos cells and modules. The differences in power density and energy efficiency become lower when comparing full size Li-ion systems to Eos Z3 systems due to the differences in auxiliary loads required by Li-ion systems and safety spacing between enclosures required by Li-ion, however, if customers were to place greater value on power density and efficient power delivery on a cell and module basis, then we could have difficulty positioning our batteries as a viable or compelling alternative to traditional Li-ion batteries and our business would suffer.

We have limited experience in commercial manufacturing of the battery storage system. On August 21, 2019, we entered into a joint venture agreement with Holtec and formed Hi-Power, which was owned 51% by Holtec and 49% by us. We acquired the 51% equity interest owned by Holtec in April 2021. Because we have limited prior commercial manufacturing experience, we may incur manufacturing inefficiencies, delays or interruptions. Our current manufacturing and testing processes do not require significant technological or production process expertise. However, any change in our processes could cause one or more production errors, requiring a temporary suspension or delay in our production line until the errors can be researched, identified, and properly addressed and rectified. This may occur particularly as we introduce new products, modify our engineering and production techniques, and/or expand our capacity. In addition, our failure to maintain appropriate quality assurance processes could result in increased product failures, loss of customers, increased warranty reserve, decreased production,production and logistical costs and delays. Any of these developments could have a material adverse effect on our business, financial condition,condition and results of operations.

To date, we have only manufactured batteries in limited quantities for a limited number of commercial customers. The output achieved to date is a fraction of what the Company expects will be necessary for full commercialization and to meet the demand we see in the market for our product. The manufacturing process for commercial scale is being refined and improved. There are risks associated with scaling up manufacturing to commercial volumes including, among others, technical or other problems with process scale-up, process reproducibility, stability issues, quality consistency, timely availability of raw materials and cost overruns. There is no assurance that we will be successful in establishing a larger-scale commercial manufacturing process that achieves our objectives for manufacturing capacity and cost per battery, in a timely manner or at all. If we are unable to produce sufficient quantities of product for commercialization on a timely basis and in a cost-effective manner, the Company's commercialization efforts would be impaired which could materially affect our business, financial condition, results of operations and growth prospects.

Our operations require significant amounts of certain components and raw materials. We deploy a continuous, company wide process to source the components and raw materials from a few suppliers. If we are unable to source these components or raw materials, our operations may be disrupted, or we could experience a delay or halt in certain of our manufacturing operations. We believe that our supply management and production practices are based on an appropriate balancing of the foreseeable risks and the costs of alternative practices. Nonetheless, reduced availability or interruption in supplies, whether resulting from more stringent regulatory requirements, supplier financial condition, increases in duties and tariff costs, disruptions in transportation, an outbreak of a severe public health pandemic, severe weather, the occurrence or threat of wars,wars and other geopolitical conflict could have an adverse effect on our financial condition, results of operations and cash flows.

We currently rely on a single manufacturing site in Turtle Creek, Pennsylvania to manufacture theour productsproducts, and we expect our facility in Warrendale, Pennsylvania to ourbecome customers.operational in 2026. As a result, a sustained or repeated interruption in the manufacturing of our products due to labor shortage, fire, flood, war, pandemic,pandemic or natural disasters of the current or future facilities may interfere with our ability to manufacture our products and fulfill customers’ demands in a timely manner. Failure to manufacture our products and meet customer demands would impair our ability to generate revenues which would adversely affect our financial results.

Defects or performance problems in our products could result in loss of customers, reputational damage, and decreased revenue, facing warranty, indemnity,indemnity and product liability claims that may arise from defective products.

Although our products meet our stringent quality requirements, theywe have experienced quality issues in the field and our products may contain undetected errors or defects, especially when first introduced or when new generations of products are released. Errors, defects, or poor performance can arise due to design flaws, defects in raw materials ormaterials, components or manufacturing difficulties,difficulties or products used outside of recommended parameters or maintenance programs which can affect the quality of our products. In addition, our BMS software may contain errors, bugs, vulnerabilities (including to cyber attacks), design defects or technical limitations. Some errors, bugs or vulnerabilities inherently may be difficult to detect. Any actual or perceived errors, bugs, vulnerabilities, defects, or poor performance in our products could result in the replacement or recall of our products, shipment delays, rejection of our products, damage to our reputation, legal claims, lost revenue, diversion of our engineering personnel from our product development efforts, and increases in customer service and support costs, all of which could have a material adverse effect on our business, financial condition,condition and results of operations.

Furthermore, defective components may give rise to warranty, indemnity, or product liability claims against us that exceed any revenue or profit we receive from the affected products. Generally, our product comes with an initial two (2) year manufacturing warranty. We also offer customers an extended performance warranty of up to twentytwenty-five (2025) years at an additional cost to the customer. The price charged for any such extended warranty is based on the use case of the customer and the additional performance that such customer desires. For extended warranties, this may require system augmentation or battery replacements, which would be provided at no additional charge beyond the price of the extended warranty paid by such customer.

We are heavily dependent on third-party suppliers and contractors and their ability to deliver sufficient quantities of key components, products and services at reasonable prices and in time for us to meet schedules for the delivery of our products and services. In addition, our operations depend on our ability to anticipate and our suppliers’ ability to fulfill, our needs for sufficient quantities of key components and products. Given the diverse distribution of our suppliers and contract manufacturers, and the long lead times required to manufacture, assemble and deliver our products, problems could arise in production, planning and inventory management,management and regulatory compliance that could seriously harm our business. Suppliers may face global supply chain challenges, such as transportation delays or reduced access to raw materials, and our business could be negatively impacted if suppliers are forced to reduce their normal operations.

The Company offers an innovative Znyth™ technology battery energy storage system ("BESS") designed to provide the operating flexibility to manage increased grid complexity and price volatility resulting from an overall increase in renewable energy generation and a congested grid coming from an increase in electricity demand growth. The Company’s BESS is a validated chemistry with accessible non-precious earth components in a durable design that is intended to deliver results in even the most extreme temperatures and conditions. The system is designed to be safe, flexible, scalable, sustainable and manufactured in the United States, using raw materials primarily sourced in the United States. We believe the Company’s Z3™ battery module is the core of its innovative systems. The Z3 battery module is the only US designed and manufactured battery module that today provide utilities, independent power producers, renewables developers,developers and C&I customers with an alternative to lithium-ion and lead-acid monopolar batteries for critical 3- to 12-hour discharge duration applications. We believe the Z3 battery will transform how utility, industrial,industrial and commercial customers store power.

As an SEC-registered and Nasdaq-listed company, we are required to implement procedures and processes to address public company regulatory requirements and customary practices and have, and will continue to, hire additional personnel in this context. We have incurred additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, internal and external accounting, legal, administrative resources, including increased personnel costs,costs and audit and other professional service fees.

Inflation and cost factors - During 2024,2025, the effects of the Federal Reserve’s current year interest rate hikesreductions inhave 2022allowed andfor incontinued growth for the firstCompany. halfThese interest rate reductions have allowed the Company to reduce the cost of 2023capital. hadThese aninterest impactrate onreductions reducing inflation back towards normal levels. Thishave eased many investor concerns and worked to stabilize the cost of labor, purchasing supplies and raw materials for the Company.

On November 26, 2024, the Company entered into the DOE Loan Facility. The DOE Loan Facility is a key step in advancing the Company's Project American Made Zinc Energy ("AMAZE") and is expected to fund the expansion of Eos’ manufacturing capacity to 8 GWh by 2027 to meet the growing demand for longer duration battery energy storage systems. The DOE Loan Facility provides for a principal amount of up to $303.5$277.5 million inof funding,borrowings includingand capitalized interest.interest amount of up to $26.0 million.

The DOE Loan Facility provides for a multi draw term loan facility under a series of at least two and, if the Company elects, up to four tranches of the loan (each, a “Tranche”), subject to the achievement of certain funding conditions, with each Tranche corresponding to the production, maintenance and development,development and operation of a given production line to be funded using the proceeds of such Tranche and the principal amount of each Tranche consisting of a maximum principal amount designated for such Tranche in the DOE Loan Facility. Each Tranche provides the Company funding for 80% of the Eligible Project Costs (as defined in the DOE Loan Facility) associated with the corresponding production line, with the Company responsible for funding the remaining 20% of the Eligible Project Costs.

ThroughAs of December 31, 2024,2025, the Company has received funding under the DOE Loan Facility for an aggregate amount of $90.9 million utilizing the full commitment available for Tranche 1. The initial draw of $68.3 million,million was made at an interest rate of 4.791% for eligible project costs incurred through December 6, 2024. The second draw of $22.7 million was made at an interest rate of 4.286%, for eligible costs incurred through June 4, 2025. These costs are a portion ofrepresent Tranche 1 ofthat theprovided DOE Loan Facility. Tranche 1 provides up to $102.0$90.9 million for eligible costs in connection with the design, construction, installation, startup and shakedown of a battery automation line and related tools, with a projected annual production capacity of approximately 1.25 GWh ("Line 1").tools.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 into law. The IRA has significant economic incentives for both energy storage customers and manufacturers for projects placed in service after December 31, 2022. One of the most important features of the IRA is that it offers a 10-year term tax credit, whereas historically similar industrial credits have been shorter in duration. Customers placing new energy storage facilities in service, which include our Gen 2.3 and Z3™ BESS, could qualify for an investment tax credit (“ITC”). The IRA also offers an extra ten percent credit if the project is in an “energy community” and another ten percent credit if the project satisfies domestic content requirements. The ten percent bonus for domestic content could represent a strategic advantage for the Company resulting from the Company’s near-sourcing and Made in America strategy, and we believe that projects utilizing Eos batteries qualify for the bonus.

Production Tax Credits under Internal Revenue Code 45X (“PTC”) can be claimed on battery components manufactured in the U.S. and sold to U.S. or foreign customers. These tax credits available to manufacturers include a credit for ten percent of the cost incurred to make electrode active materials in addition to credits of $35 per kWh of capacity of battery cells and $10 per kWh of capacity of battery modules. These credits are cumulative, meaning that companies will be able to claim each of the available tax credits based on the battery components produced and sold through 2029, after which the PTC will begin to gradually phase down through 2032. In April 2024, the IRS issued final regulations related to applicable tax credit transferability and direct pay provisions of the Inflation Reduction Act. The Company has reviewed these regulations and believes they do not have a material impact on the financial statements.

•In January 2025, the Company successfully achieved all operational milestones that guaranteesguaranteed the final $40.5 million under the fully funded $210.5 million Delayed Draw Term Loan ("DDTL") to further solidify its position as a leader in American energy storage systems. Successfully meeting these performance milestones will enable the Company to fuel its ongoing operations, U.S. production expansion, and the creation of an American energy storage powerhouse, without the need to raise additional capital via debt or additional equity offerings.

•With the Delayed Draw Term LoanDDTL fully funded, combined with DOE loanLoan facility'sFacility's first disbursement in December 2024, Eos has a strong foundation and sufficient capital to continue implementing Project AMAZE. The Company is executing its strategy to scale production into strong customer demand for long duration energy storage. Cash from customer projects now play an important role in funding working capital and our American-made system can play a critical role in America achieving energy independence. The $210.5 million Delayed Draw Term Loan ("DDTL") is now fully funded, driven by the Company consistently achieving key operational milestones related to the Company’s state-of-the-art manufacturing line, raw materials cost-out, Z3 technology performance improvement and orders backlog cash conversion. The Company surpassed its January raw materials cost-out target by 6% while delivering manufacturing cycle times below 10 seconds to further demonstrate continued operational efficiency and progress.

The Company generates revenues from the delivery of its BESS and service-related solutions. The Company expects revenues to increase as it scalescontinues to scale production to meet customer demand.

Revenue slightlyincreased decreased$98.6 million, a 632% change for the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024. The increase is due to reducedincreased production and deliveries dueas towell theas installationimproved of the Company’s new manufacturing line.pricing.

Cost of goods sold primarily consists of direct costs relating to labor, material and overhead directly tied to product assembly, procurement and construction (“EPC”), project delivery, commissioning and start-up test procedures. Indirect costs included in cost of goods sold are manufacturing overhead such as equipment maintenance, environmental health and safety, quality and production control procurement, transportation, logistics, depreciation and facility-related costs. As a nascent technology with a new manufacturing process that is early in its product lifecycle, the Company still faces significant costs associated with production start-up, commissioning of various components, modules and subsystems and other related costs. For the year ended December 31, 2024,2025 and 2024 the Company recognized $21.3 million and $3.8 millionmillion, respectively, reduction of cost of goods sold related to the IRA PTC. The Company expects its cost of goods sold to exceed revenues in the near term as it continues to scale production and prepares battery energy storage systems delivered to customers to go-live.

Research and development costs increased by $4.1$5.8 million or 22% from $18.7 million25% for the year ended December 31, 2023,2025 compared to $22.8 million for the year ended December 31, 2024. The increase inwas research and development costs wasprimarily driven by higher spending on outside services and payroll, partially offset by a decrease in materials and supplies related to the implementation of the automated line, as well as an increase in payroll and personnel costs.supplies.

Selling, general and administrative expenses primarily consist of payroll and personnel-related, outside professional services, facilities, depreciation, travel, marketing,marketing and public company costs.

Selling, general and administrative expenses increased by $6.4$25.1 millionmillion, or 12%, from $53.7 million42%, for the year ended December 31, 20232025 compared to $60.0 million for the year ended December 31, 2024. The increase was primarily driven by higher consulting feesand legal fees, payroll and payroll,personnel partiallycosts. offsetOf bythe decreasetotal inincrease legalapproximately fees.$7.1 million were non-cash expenses related to bad debt and stock compensation.

The Company incurred losses of $9.1$1.8 million and $7.2$9.1 million from write-downs of property, plant and equipment for the years ended December 31, 20242025 and 2023,2024, respectively. The 2023 write-downs were mainly due to replacement of equipment, outsourcing of certain production processes2025 and the shift in production from the Gen 2.3 battery system to the Z3™ battery system. The 2024 write-downs were primarily relateddue to design changes from the Z3™-PhaseZ3-Phase 1 to Z3™-PhaseZ3-Phase 2 production in which the Phase 1 production assets could not be utilized or repurposed for Phase 2 production. Additionally, the 20242024, amount contains costs for disposal of equipment and tooling that was used for manufacturing of the Gen 2.3 battery, but cannot be repurposed for the Eos Z3 battery production. Additionally, the loss from write-down of property, plant and equipment contains costs for disposal of miscellaneous equipment and tooling that cannot be repurposed for more automated processes.

Interest expense, net includes expenses for accrued interest, amortization of debt issuance costs and debt discounts.discounts, partially offset by capitalized interest costs on CIP assets and interest income.

Interest expense, net decreasedincreased by $10.1$4.6 million for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024 due to a full year of interest expense recognized on the DOE Loan Facility and partial year of interest expense for the May 2025 Convertible Notes and November 2025 Convertible Notes. This increase was mainlypartially offset due to lower interest expense recognized from the Senior Secured Term Loan due to the loan'spayoff extinguishmentof the Atlas Credit Facility in June2024 2024.and See Note 13, Borrowings for detail ofadditional interest expenseincome recognizeddue forto theincreased Seniorcash Secured Term Loan.balances.

The changeChange in the fair value of debt - related party of $33.8 million for the year ended December 31, 2024, primarily related to the Delayed Draw Term Loan. The primary factors contributing to the fair value change was the extension of the maturity date and timing of future cash flows of the DDTL netting with a debt yield reduction which decreased from 47.5% to 30.0% during the year ended December 31, 2024. The change in fair value applicable to the debt yield reduction is included in Change in fair value of debt - credit risk in Accumulated other comprehensive (loss) income.DDTL.

As of the date of this Quarterly Report on Form 10-Q, there have been no additional material changes to the risk factors disclosed in our annual report on Form 10-K for the fiscal year ended December 31, 2025.2025, except as discussed below. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

The following discussion should be read in conjunction with the accompanying Unaudited Condensed Consolidated Financial Statements for the threesix months ended MarchJune 31,30, 2026 and 2025 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, including the financial statements and notes thereto.

The Company continues to invest in the design, development and production of its next‑generation product, the Eos Z3 battery. The Z3 builds upon the same underlying electrochemistry the Company has utilized for nearlyover a decade. The Eos Z3 is engineered to reduce cost and weight while improving manufacturability and overall system performance. Compared to the Company’s prior Gen 2.3 product, the Z3 incorporates a more cost‑effective design, including a simplified tub structure, approximately 50% fewer cells and approximately 98% fewer welds per battery module. The Company believes the Eos Z3 will provide customers with approximately twice the energy density per square foot while maintaining the safety and reliability characteristics of the previous generation.

For the three months ended MarchJune 31,30, 2026, RevenueTotal revenue increased by $46.5$53.5 million or 445%351% from $10.5$15.2 million. For the six months ended June 30, 2026, Total revenue increased by $100.0 million or 389% from $25.7 million. The increase for the three and six months ended June 30, 2026 was primarily drivedriven by an increase in deliveries, an increase in the average selling price and higher revenue from third-party materials. These increases were partially offset by a decline in service revenue.

Cost of goods sold primarily consists of direct costs relating to labor, materialmaterials, and overhead directlyassociated tied towith product assembly,assembly procurementas andwell construction (“EPC”),as project delivery, commissioning and start-upfield testinstallation procedures.activities prior to projects becoming operational. Indirect costs included in cost of goods sold are manufacturing overhead such as equipment maintenance, environmental health and safety, quality and production control procurement, transportation, logistics, depreciation and facility-related costs. As a nascent technology with a new manufacturing process that is early in its product lifecycle, the Company still faces significant costs associated with production start-up, commissioning of various components, modules and subsystems and other related costs. For the three months ended March 31, 2026 and 2025, the Company recognized $10.3 million and $1.8 million, respectively, reduction of cost of goods sold related to the IRA PTC. The Company expects its cost of goods sold to exceed revenues in the near term as it continues to scale production and prepares battery energy storage systems delivered to customers to go-live.

For the three months ended June 30, 2026, Cost of goods sold increased by $66.4$71.4 million or 190%155% from $35.0$46.2 million.million recognized during the three months ended June 30, 2025. For the six months ended June 30, 2026, Cost of goods sold increased by $137.8 million or 170% from $81.2 million recognized during the six months ended June 30, 2025. The increase in Cost of goods sold for the three and six months ended June 30, 2026 was driven by costs associated with significantly higher cube deliveries, higher direct and indirect labor, higher field service costs associated with increased deliveries and higher volume-driven warranty accruals. These increases were partially offset by tax credit recognition.

For the three months ended June 30, 2026 Research and development expenses increased $3.9$3.3 million or 57% for the three months ended March 31, 2026,46%, compared to the three months ended MarchJune 31,30, 2025. For the six months ended June 30, 2026, Research and development expenses increased $7.2 million or 51% compared to the six months ended June 30, 2025. The increase for the three and six months ended June 30, 2026 was primarily attributable to higher facility,facility costs, materials and supplies, outside services and payroll-related costs partially offset by lower stock-based compensation costs.

For the three months ended June 30, 2026 Selling, general and administrative expenses increaseddecreased $3.1$1.0 million or 15% for the three months ended March 31, 20264% compared to the three months ended MarchJune 31,30, 2025. The increasedecrease for the three months ended June 30, 2026, was primarily attributable to highera facility,decrease marketing,in insurancebad debt expense, stock compensation and payroll-relatedoutside costs,services, partially offset by lowerincreases legalto feesfacility costs, marketing and stock-basedpayroll compensationrelated costs.items.

The Company incurred a loss of $0.1 million and $0.6$0.2 million from write-down of property, plant and equipment for the three months ended MarchJune 31,30, 2025, and a loss of $0.1 million and $0.8 million for the six months ended June 30, 2026 and 2025, respectively. TheFor the three and six months ended June 30, 2026, the write-downs were mainly related to miscellaneous equipment and tooling that could not be repurposed. In 2025, the write-downs were mainly due to design changes from the Z3-Phase 1 to Z3-Phase 2 production in which the Phase 1 production assets could not be utilized or repurposed for Phase 2 production. Additionally, the loss from write-down of property, plant and equipment contains costs for disposal of miscellaneous equipment and tooling that cannot be repurposed for more automated processes.

Interest expense includes expenses for contractual interest, amortization of debt issuance costs and debt discounts, partially offset by capitalized interest costs on CIP assets and interest income.assets.

Interest expense increased $11.3$9.0 million and $20.3 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the three and six months ended MarchJune 31,30, 2025, primarily due to an increased principal balance under the DOE Loan Facility and interest associated with the May 2025 Convertible Notes and November 2025 Convertible Notes, which were not outstanding asfor ofthe Marchentire 31,period 2025.for the three and six months ended June 30, 2026. See Note 12, Borrowings to our Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further discussion.

Interest expense - related party decreased $5.8$4.5 million and $10.3 million for the three and six months ended MarchJune 31,30, 2026, respectively, compared to the three and six months ended MarchJune 31,30, 2025, due to the fact that the 2021 Convertible Note Payable and the AFG Convertible Note were no longer outstanding during the three and six months ended MarchJune 31,30, 2026. See Note 11,12, Borrowings to our Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for further discussion.

The Change in fair value of debt - related party is related to the DDTL. The Change in fair value of debt - related party ofwas $4.2$4.5 million income and $5.9$31.6 million expense for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively, primarilyand reflects$8.8 million income and $25.7 million expense for the accretionsix ofmonths theended DDTLJune resulting30, from2026 theand passageJune of30, time.2025, respectively.

For the three and six months ended MarchJune 31,30, 2026 and 2025, the change in fair value of warrants was composed of the items below:

The change in the fair value of the warrants for the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025 is largely driven by the Company'sCompany’s common stock price decreasemovement quarterfor overthe quarter.periods presented.

For the three and six months ended MarchJune 31,30, 2026, the Change in fair value of derivatives of $165.9$70.4 million and $95.5 million, respectively, related to the change in fair value of the embedded derivative associated with the November 2025 Convertible Notes. The change is largely driven by the Company’s common stock price decreasemovement quarterfor overthe quarter.periods presented. The November 2025 Convertible Notes were not outstanding for the comparable periodperiods for the three and six months ended MarchJune 31,30, 2025.

The Change in the fair value of derivatives - related parties, was due to the 2021 Convertible Note Payable and AFG Convertible Notes (See Note 11,12, Borrowings) and the Change in fair value of warrants - related parties was due to changes in fair value of our SPA Warrant and Contingent warrants (See Note 12,13, Warrants Liability). The change is largely driven by the Company's common stock price decreasemovement quarterfor overthe quarter.periods presented. The 2021 Convertible Note Payable and AFG Convertible Notes were not outstanding for the comparable period for the three and six months ended MarchJune 31,30, 2026.

For the three and six months ended MarchJune 31,30, 2025,2026, Other income (expense) of $0.6$0.2 million, wasmillion primarily duerelates to theinsurance recognition of financing issuance costs from the Credit and Securities Purchase Transaction.claims.

The Company incurred income tax expense for the three and six months ended MarchJune 31,30, 2026 and 2025, attributable to taxable earnings from the Company’s foreign operations which were insignificant for the periods presented.

During the threesix months ended MarchJune 31,30, 2026, the Company incurred Net income of $508.9$233.2 million. Adjustments to reconcile the net income to cash used in operations are primarily from non-cash items on the Unaudited Condensed Consolidated Statements of Cash Flows. The non-cash items totaled $577.0$370.8 million. The Company incurred negative cash flows from operations of $119.7$191.8 million and had an accumulated deficit of $2,026.9$2,302.6 million as of MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, the Company had $410.7$305.5 million of unrestricted cash and cash equivalents available to fund the Company’s operations, and working capital of $464.7$356.1 million on the Unaudited Condensed Consolidated Balance Sheets. Additionally, the Company had $61.7$58.6 million of restricted cash, refer to Note 4, Cash, Cash Equivalents and Restricted Cash for further discussion.

The Company has historically relied on outside capital to fund its cost structure and expects this reliance to continue for the foreseeable future until the Company reaches profitability through its planned revenue generating activities. During the three and six months ended MarchJune 31,30, 2026, the Company did not have any significant capital transactions.

Through MarchJune 31,30, 2026, under the DOE Loan Facility, the Company drew down $90.9 million for the eligible project costs that the Company had incurred through June 4, 2025. These costs represent Tranche 1 of the DOE Loan Facility for eligible costs in connection with the design, construction, installation, startup and shakedown of a battery automation line and related tools. The Company has approximately $186.6 million of availability under the DOE Loan Facility. In the event the Company does not achieve certain funding conditions and the DOE chooses not to continue funding, the Company may need to seek alternative sources of capital, which may not be available on favorable terms or at all.

The Company expects capital expenditures and working capital requirements to increase as it seeks to execute its growth strategy. Total capital expenditures for the threesix months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025 were $35.1$70.6 million and $4.9$12.0 million, respectively. See Note 6, Property, Plant and Equipment and Note 7, Intangible Assets for further discussion.

The Company relies heavily on private placement of convertible notes, term loans, equipment financingloans and issuance of common stock and warrants. Our short-term working capital needs are primarily related to funding of debt interest payments, product manufacturing, research and development and general corporate expenses. The Company’s long-term working capital needs are primarily related to repayment of long-term debt obligations and capital expenses for capacity expansion and maintenance, equipment upgrades and repair of equipment.

Net cash used in operating activities was $119.7$191.8 million for the threesix months ended MarchJune 31,30, 2026, adjusted for non-cash items of $577.0$370.8 million, primarily related to changes in fair value of warrants and derivatives, with offsets of stock compensation expense, depreciation and amortization, non-cash interest expense, and change in fair value of debt - related party. The net cash outflows from changes in operating assets and liabilities was $51.6$54.1 million, primarily driven by an increase in grant receivable of $10.3$22.8 million due to increased volumes of production, an increase in contract assetsinventory of $25.5$16.6 million to support anticipated customer demand and future shipments, decrease in contract liabilities of $8.5$7.6 million and increase in contract assets of $7.4 million driven by revenue recognition and production, decreasean increase in vendor deposits of $5.9 million to supports anticipated customer demand, an increase in accounts payablereceivable related party and accounts receivable of $14.8$5.5 million fromand $1.4 million, respectively, due to the increase in total sales and timing of customer payments madeand duringan theincrease period,in other of $7.0 million mainly related to IEEPA tariffs. This was partially offset by an increase of accounts payable of $12.5 million relating to increased production and timing of vendor payments and an increase in accrued expenses of $7.2$7.5 million which wasis attributable to timing of payroll and various accruals atfor periodlegal end.and professional fees and volume related warranty accruals.

Net cash used in operating activities of $28.9$95.0 million for the threesix months ended MarchJune 31,30, 2025, adjusted for non-cash items of $60.9$106.9 million, primarily related to stock compensation expense, loss on debt extinguishment and changes in fair value of debt, warrants and derivatives and partially offset by stock compensation expense relating to expanded headcount in engineering, sales, manufacturing engineering and R&D. Additionally, offsets included depreciation and amortization, non-cash interest expense and the change in fair value of debt.derivatives. The net cash inflows from changes in operating assets and liabilities was $16.8$5.8 million,million primarily driven by an increase in contract liabilities of $17.1$13.2 million due to customer cash receipts and increase in accounts payable of $8.1$10.2 million, partially offset by an increase in inventoryvendor deposits of $6.1$5.1 million for future production and increased 2025 volumes, increase in accounts receivable of $4.1 million due to customer invoicing and increase in grant receivable of $1.8$4.3 million.

Net cash flows used in investing activities for the threesix months ended MarchJune 31,30, 2026 were primarily composed of payments made for purchases of property, plant and equipment of $35.1$70.5 million and minor investments in internally developed software. The increase in cash flows used in investing activities are primarily to support the growth of manufacturing facilities at our Warrendale location.

Net cash flows used in investing activities for the threesix months ended MarchJune 31,30, 2025 were primarily composed of payments made for purchases of property, plant and equipment of $4.9$12.0 million.

Net cash provided by financing activities was $2.7$1.8 million for the threesix months ended MarchJune 31,30, 2026, primarily due to the proceeds received from the exercise of warrants during the period of $3.3 million. The proceeds were partially offset by debt issuance costs of $0.5$0.6 million and paymentsshare onrepurchases thefrom equipmentemployees financingfor facilitytax withholding of $0.1$0.8 million.