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

The following risk factors apply to our business and operations. These risk factors are not exhaustive, and investors are encouraged to perform their own investigation with respect to our business, financial condition and prospects. We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business. The following discussion should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Producing long-duration iron flow batteries that meet the requirements for wide adoption by commercial and utility-scale energy storage applications is a difficult undertaking. We are still in the early stage of commercialization and have faced and may yet face significant challenges in completing the development of our various energy storage products and in producing our energy storage products in commercial volumes. Some of the challenges that could prevent the successful scaling of our iron flow battery products include difficulties with (i) increasing manufacturing capacity to produce the volume of cells needed for our energy storage products, (ii) installing and optimizing higher volume manufacturing equipment, (iii) packaging our batteries to ensure adequate cycle life,cycle-life, (iv) cost reduction, (v) qualifying new vendors and subcomponents, (vi) expanding supply chain capacity, (vii) the completion of rigorous and challenging battery safety testing required by our customers or partners, including but not limited to, performance, life and abuse testing and (viii) the development of the final manufacturing processes and specifications.

As of December 31, 2024,2025, we had limited deployment of our energy storage products and there may be significant yield, cost, performance and manufacturing process challenges to be solved as we ramp up commercial production and use. Our core technology components in the Energy Warehouse, the Energy Center, and the Energy Base products are also still under development for integration into third-party systems. We have encountered and are likely to further encounter engineering challenges as we seek to increase the capacity, duration, efficiency and reliability of our batteries. If we are not able to overcome these barriers in developing and producing our iron flow batteries, our business could fail. If the performance characteristics or other specifications of the batteries fall short of our targets, our sales, product pricing and margins would likely be adversely affected.

As of December 31, 2024,2025, we had limited Energy Warehouse products fully deployed and only initial deliveries and deployment of our Energy Center products.products fully deployed. Production and productized versions of our Energy Base product and core component technology isare still under development. We have experienced various quality and performance issues with units that have been installed and although we have worked to repair or replace any known issues, our inability to address these or potential new issues effectively may have cost and warranty implications and may affect the acceptance of our products in the market. In addition, although we believe our iron flow battery technology is field tested and ready for sale, there are no assurances that our proprietary technologies, such as our Proton Pump, will operate as expected and with consistency over time. We have also experienced grid compatibility and other site integration issues that are not within our control, which has required and will continue to require an adjustment of our power electronics and energy management system interface on a site-by-site basis. Certain operational characteristics have never been witnessed in the field and as we deploy more of our products, we may discover further aspects of our technology that require improvement. Any of these issues could delay existing contracts and new sales, result in order cancellations, result in significant warranty obligations, and negatively impact the market’s acceptance of our technology. If we experience significant delays, order cancellations or warranty claims, or if we fail to develop and install our energy storage products in accordance with contract specifications, then our operating results and financial condition could be adversely affected. In addition, there is no assurance that if we alter or change our energy storage products in the future, that the demand for these new products will develop, which could adversely affect our business and revenues. If our energy storage products are not deemed desirable and suitable for purchase and we are unable to establish a customer base, we may not be able to generate significant revenues or attain profitability.

We depend on third-party suppliers for the development and supply of key raw materials and components for our energy storage products, including power module components (e.g., bipolar plates, frames, end plates and separators), shipping containers, chemicalschemicals, and electronic components. We will need to maintain and significantly grow our access to key raw materials and control our related costs. We use various raw materials and components to construct our energy storage products, including polypropylene, iron and potassium chloride, that are critical to our manufacturing process. We also rely on third-party suppliers for injectedinjection molded parts and power electronics which undergo a qualification process that can take months.

The cost of components for our iron flow batteries, whether manufactured by our suppliers or by us, depends in part upon the prices and availability of raw materials. In recent periods, we have seen an increase in costs for a wide range of materials and components and such increases may continue, particularly if we again experience high rates of inflation. Additionally, supply chain disruptions and access to materials have impacted and continue to impact our vendors and suppliers’ ability to deliver materials and components to us in a timely manner. We have experienced significant disruptions to key supply chains, shipping times, shipping availability, manufacturing times, and increases in associated costs, both with respect to the sourcing of supplies and the delivery of our products. We have experienced and may continue to experience supply chain issues, delays to deliveries, and vendor quality issues, as well as increases in our supply costs of many of our key components, including polypropylene, resin, power electronics, and circuit board components and shipping containers.components. Such issues have also affected the ramping up of our automated production line. If we experience similar issues in the future, including any delays of deliveries of additional manufacturing automation equipment that we require, they may further delay our ability to produce and deliver our products and to recognize additional revenue, particularly for our larger scale Energy Center productsrevenue (see also “Part II—I. Item 7.2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of Results of Operations—Revenue”).

We expect prices for materials to fluctuate over time. Available supply for materials may also be unstable, depending on market conditions and global demand for these materials, including as a result of increased global production of batteries and energy storage products. For example, our Proton Pump is manufactured with certain raw materials, which not only include precious and non-precious metals but also carbon, graphite and thermoplastics, the prices of which have historically fluctuated on a cyclical basis and depend on a variety of factors over which we have no control. We have also experienced increased prices and/or inconsistent quality and supply of other electrical components and power module components including frames, end plates and separators. Any reduced availability of these materials may impact our ability to manufacture our products and any further increases in their prices may reduce our profitability if we cannot recoup the increased costs through increased prices for our products. In addition, we utilize shipping containers to house our iron flow batteries within our Energy Warehouse and Energy Center products. Shipping delays caused by various economic, weather and COVID-19 pandemic effects created a shortage in shipping containers and other supply chain delays in the past and may again in the future. We have limited visibility into these supply chain disruptions and increased shipping container costs. Given that our product currently relies on the availability of shipping containers, such shortages may reduce our profitability if we are not able to pass the increased costs to our customers. Moreover, any such attempts to increase product prices may be difficult to achieve and even if achieved, may harm our brand, prospects and operating results.

In addition, the conflictstariffs put in Ukraineplace by the United States, Russia-Ukraine conflict, geopolitical tensions involving China, the conflict between the U.S., Israel and Iran, tensions in the Middle EastEast, and U.S. interventions in Venezuela have led to disruption, instability and volatility in the global markets and certain industries and may also lead to further disruptions, particularly if the conflicts were to escalate further,disruptions that could negatively impact our operations and our supply chain. The U.S. government and other governments have imposed severe sanctions and export controls against Russia and Russian interests and continue to impose additional sanctions and controls. TheWhile impactthe ofCompany has not experienced any significant impacts from these measures, as well as potential responsesdisruptions to themdate, byfuture Russia,impacts is currentlyare unknown and they could adversely affect our business, supply chain, partners or customers.

We depend on third-party vendors for the shipping of our energy storage products. We have in the past faced and may yet again face disruptions in the logistics sectorsector, making it more challenging to find trucks to ship our products. The shipping of our products to customers internationally in a timely, cost-effective, and secure manner that does not damage our products has proved and may again prove to be challenging. The failure to deliver our products in a timely fashion or within budget may also harm our brand, prospects and operating results. In addition, if our batteries are damaged during shipment, we may be required to repair or replace such units.

We continually evaluate and qualify new suppliers. However, there are a limited number of suppliers for some of the key components of our products and we have, to date, fully qualified only a very limited number of such suppliers. Therefore, we have limited flexibility in changing suppliers. In addition, we have had issues with inconsistent quality and supply of certain key power module components. We do not know whether we will be able to maintain long-term supply relationships with our critical suppliers, or, if required, secure new long-term supply relationships on terms that will allow us to achieve our objectives. A supplier’s failure to develop and supply components in a timely manner, to supply components that meet our quality, quantity, cost requirements or our technical specifications, to support our warranty claims, or our inability to obtain alternative sources of these components on a timely basis or on terms acceptable to us, could each harm our ability to manufacture and commercialize our energy storage products. Low volume requirements from third-party suppliers in the near term could strain vendor relationships or result in less favorable pricing and thus increased launch costs. In addition, to the extent the processes that our suppliers use to manufacture components are proprietary, we may be unable to obtain comparable components from alternative suppliers, all of which could harm our business, financial condition and results of operations.

In order to achieve our business plan and reach profitability, we must continue to increase the number of units sold and reduce the manufacturing and development costs for our productsproducts. as at current volumes,Currently, production costs for our units significantly exceed their selling price. Additionally, certain of our existing customer contracts were entered into based on projections regarding cost reductions that assume continued advances in our manufacturing and services processes that we may be unable to realize. The cost of components and raw materials, for example, has been increasing and could continue to increase in the future, offsetting any successes in reducing our manufacturing costs. Any such increases could slow our growth and cause our financial results and operational metrics to suffer. In addition, we may face increases in our other expenses including increases in wages or other labor costs as well as installation, marketing, sales or related costs. In order to expand into new markets (especially markets in which the price of electricity from the grid is lower), we will need to continue to reduce our costs. Increases in any of these costs or our failure to achieve projected cost reductions could adversely affect our results of operations and financial condition and harm our business and prospects. If we are unable to reduce our cost structure in the future, we may not be able to achieve profitability, which could have a material adverse effect on our business and our prospects.

Our ability to successfully implement our overall business strategy relies on our ability to reduce development and manufacturing costs in the future and thereby lower our selling price. Our cost reduction strategy is based on the assumption that increases in production will result in economies of scale. In addition, our cost reduction strategy relies on advancements in our manufacturing process, global competitive sourcing, engineering design, reducing the cost of capital and technology improvements (including stack life and projected power output). Its successful implementation also depends on a number of factors, some of which are beyond our control, including the impact of inflationinflation, tariffs and the timely delivery of key supplies at reasonable prices. For example, our current supply imbalance may result in additional costs that exceed our current expectations. There is no assurance that our cost reduction strategy will be successful and failure to achieve our cost reduction targets could have a material adverse effect on our business, financial condition and results of operations.

We rely heavily on complex machinery for our operations and manufacturing and we are pioneering the use of this equipment has not yet been used before for the large-scale manufacturing of iron flow battery products. The work required to integrate this equipment into the production of our iron flow battery product is time intensive and requires us to work closely with the equipment provider to ensure that it works properly for our unique iron flow battery technology. This integration work will involve a significant degree of uncertainty and risk and may result in a delay in the scaling up of production or result in additional cost to our iron flow batteries.

Our manufacturing facility utilizes large-scale machinery, particularly for the automated production line. Such machinery is likely to suffer unexpected malfunctions from time to time and will require repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of our production equipment may significantly affect the intended operational efficiency or yield. Some examples would be inadequate bonding of the battery cells resulting in overboard or internal leakage, damage to the separator, or cracked bipolar or monopolar plates. In addition, because this equipment has neverlimited beenhistory used to buildbuilding iron flow battery products, the operational performance and costs associated with this equipment can be difficult to predict and may be influenced by factors outside of our control, such as, but not limited to, failures by suppliers to deliver necessary components of our energy storage products in a timely manner and at prices and volumes acceptable to us, environmental hazards and remediation, difficulty or delays in obtaining governmental permits, damages or defects in systems, industrial accidents, fires, seismic activity and other natural disasters.

•We may be unable to obtain financing needed to build out our current and future manufacturing facilities.

Our energy storage products require periodic maintenance or refurbishment, such as the cleaning or replacement of air filters or other components, inspection and re-torquing of electrical or mechanical fasteners, and the replenishment of hydrogen. Maintenance items are intended to be scheduled on a periodic basis but may vary depending on system operations. We currently rely on our customers that do not have service agreements with us or that perform maintenance that is not covered by such agreements to follow our product operations and maintenance manuals. We have had, and in the future may continue to have, incidents of failure to maintain or perform required maintenance correctly that damage or adversely affect the performance of our energy storage products and/or result in the leakage of electrolyte. In addition, we have had, and in the future may continue to have, components such as our electrolyte rebalancing cell that have a shorter service life than anticipated and require replacement in lieu of maintenance. Furthermore, there is risk of harm to persons or property if individuals performing maintenance do not follow applicable maintenance or safety protocols. Any such incident or harm would likely lead to adverse publicity and potentially a safety recall, decisions or mandates to temporarily halt production or implement an extended suspension of field operations, and expenses related to carrying out site remediation, revising our training programs and updating our maintenance manual, and could also adversely affect our reputation, customer’s willingness to place future orders, our operating results and prospects, business, financial condition and results of operations. We have had, and in the future may continue to have, incidents of failure to maintain or perform required maintenance correctly that damage or adversely affect the performance of our energy storage products and/or result in the leakage of electrolyte. For example, the performance of maintenance procedures out of sequence by Company personnel in the past led to an over-pressurization event at a customer site and a sudden release of the cap to the electrolyte storage tank. The tank was not otherwise damaged and no injuries occurred, but the incident resulted in a significant spill event that we promptly reported and has since been closed with the county of jurisdiction. We conducted a full investigation and have implemented remediation steps but there is risk of damage to product or property or personal injury if such steps are not followed in the future.

In addition, expectations for future performance also reflect assumptions that are subject to change and do not reflect revised prospects for our business, changes in general business or economic conditions or any other transaction or event that has occurred or that may occur and that was not previously anticipated. Our revenue and operating results have fluctuated in the past and are likely to fluctuate in the future. For example, our revenue declined from $6.3 million for the year ended December 31, 2024 to $1.6 million for the year ended December 31, 2025. These fluctuations may occur on a quarterly and annual basis due to a number of factors, many of which are beyond our control. In addition, long-term expectations by their nature become less predictive with each successive year. There can be no assurance that our future financial condition or results of operations will be consistent with our expectations or with the expectations of investors or securities research analysts, which may cause the market price of our common stock to decline. If actual results differ materially from our expectations, we may be required to make adjustments in our business operations that may have a material adverse effect on our financial condition and results of operations.

We have had net losses on a U.S. GAAP basis in each fiscal year since our inception. For the years ended December 31, 20242025 and 2023,December 31, 2024, we had $86.2$63.4 million and $77.6$86.2 million in net losses, respectively, and as of December 31, 20242025, we had $782.4$845.8 million in accumulated deficit. In order 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, reduce our manufacturing and warranty costs, competitively price and grow demand for our products, and seize new market opportunities by leveraging our proprietary technology and our manufacturing processes for novel solutions and new products. Failure to do one or more of these things could prevent us from achieving sustained, long-term profitability.

We expect, based on our sales pipeline, to grow revenues.revenues over time. However, our revenue may not grow as expected for a number of reasons, many of which are outside of our control, including a decline in global demand for iron flow battery storage products, increased competition, or our failureinability to accelerate our pipeline development and fulfill orders to continue to capitalize on growth opportunities. If we are not able to generate and grow revenue and raise the capital necessary to support our operations, we may be unable to continue as a going concern.

We will require substantial additional funds to continue our operations. Our cash and cash equivalents and short-term investments were $31.6$22.0 million at December 31, 2024.2025. Given our plannedrecurring expenditureshistory of losses and an insufficient amount of cash available to fund our ongoing operations for the next year, we have concluded, and our independent registered public accounting firm has agreed with our conclusionconcluded that there is a substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months beyond the filing of this Annual Report on Form 10-K. As a result, the report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2024 includes an explanatory paragraph regarding the existence of substantial doubt about our ability to continue as a going concern. Any such inability to continue as a going concern may result in our stockholders losing their entire investment. There is no guarantee that we will become profitable or secure additional financing on acceptable terms. Further, the inclusion of disclosures expressing substantial doubt about our ability to continue as a going concern could materially adversely affect our stock price and our ability to raise new capital or enter into partnerships or other agreements.

We have prepared our consolidated financial statements on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our audited consolidated financial statements included in this Annual Report on Form 10-K do not include any adjustments to reflect the possible inability to continue as a going concern within at least 12 months after the issuance of such financial statements.

In addition, some of the Energy Warehouse unitssystems we have shipped to date have not met the specifications set forth in the relevant purchase contracts for such units,contracts, resulting in additional installation time and costs in order to receive customer acceptance of such units. If we are unable to meet contractual performance specifications of our units, customers may bring claims against us or choose to cancel or postpone orders, which would adversely affect our business, financial condition and results of operations.

As is typical in a rapidly evolving industry, demand and market acceptance for recently introduced products and services are subject to a high level of uncertainty and risk. ItMany of our early customers purchased our products on a pilot basis and it is difficult to predict with certainty the size of the energy storage market and its growth rate. The development of a market for our products may be affected by many factors that are out of our control, including:

The energy storage markets continue to evolve and are highly competitive. Many of our current and potential competitors are large entities at a more advanced stage in development and commercialization than we are and, in some cases, have substantially greater financial, marketing, personnel and other resources, to increase their market share. Our key competitors include different energy storage technologies such as lithium-ion batteries, lithium metal batteries, lithium iron phosphate batteries, sodium-ion batteries, vanadium or zinc bromine batteries, sodium sulfur batteries, compressed air, hydrogen, fuel cell and pumped-storage hydropower. Key competitors in the traditional lithium-ion space include Contemporary Amperex Technology Co. Limited, LG Chem, Ltd., Samsung Electronics Co., Ltd., Sungrow Power Supply Co., Ltd., and Tesla, Inc. Key competitors in the non-lithium-ion space include EnerVenue, Inc., Invinity Energy Systems, CellCube, CMBlu Energy AG, Energy Dome, Energy Vault, Enerox GmbH, Eos Energy Enterprises, Inc., Form Energy, Highview Power PTY Ltd., Hydrostor, Lockheed Martin (GridStar Flow), and Malta Inc. If our competitors continue to penetrate the energy storage market, our prospects for gaining market share will be diminished.

We expect a significant portion of the business that we will seek in the foreseeable future will be awarded through competitive bidding against other energy storage technologies and other forms of power generation. The competitive bidding process involves substantial costs and a number of risks, including the significant cost and managerial time to prepare bids and proposals for contracts that may not be awarded to us, the length of time required to conclude the process, even if successful,successful and our failure to accurately estimate the resources and costs that will be required to fulfill any contract we win. In addition, following a contract award, we may encounter significant expense, delay or contract modifications or award revocation as a result of our competitors protesting or challenging contracts awarded to us in competitive bidding. Our failure to compete effectively in this procurement environment could adversely affect our revenue and/or profitability.

We intend to continue to expand our business significantly within existing and new markets. This growth has placed, and any future growth may place, a significant strain on management, operational, and financial infrastructure. In particular, we will be required to expand, train, and manage ourany growingnew employee baseemployees and scale and otherwise improve our information technology (“IT”) infrastructure in tandem with thatany headcount growth. Management will also be required to maintain and expand our relationships with customers, suppliers, and other third parties and attract new customers and suppliers, as well as manage multiple geographic locations.

Additionally, our ability to attract qualified personnel, including senior management and key technical personnel, is critical to the execution of our growth strategy. Competition in the labor market, including for qualified senior management personnel and highly skilled individuals with technical expertise, is intense. We face and are likely to continue to face challenges identifying, hiring, and retaining qualified personnel in all areas of our business, and we can provide no assurance that we will find suitable successors as transitions occur. In addition, integrating new employees into our team, and key personnel in particular, could prove disruptive to our operations, require substantial resources and management attention, and ultimately prove unsuccessful. Our failure to attract and retain qualified personnel in all areas of our business, including 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 and results of operations. The failure to ensure a smooth transition to a permanent Chief Executive Officer when identified could also have a material adverse effect on our business, financial condition and results of operations.

We currently are and in the foreseeable future will continue to be significantly dependent on revenue generated from our Energy Center and newly launched Energy Base productsproduct and the servicing thereof while our core component technology productization and future product offerings are under development. Given that our business currently depends on a limited number of products,products to the extent our products are not well-received by the market, our sales volume, business, financial condition and results of operations would be materially and adversely affected.

We have entered into contracts and other agreements to sell our products in a number of different geographic markets, including the United States, Europe (European Union (“EU”) and non-EU), Africa, and Australia. We have in the past, and may in the future, evaluate opportunities to expand into new geographic markets and introduce new product offerings and services that are a natural extension of our existing business. For example, we are launching our Energy Base product and are actively bidding on projects for daily cycling applications in the 12 to 24 hour long duration storage market to serve emerging AI/data center driven load needs and to firm baseload renewable production; however, there is no assurance that we will be able to secure any contracts for, or derive any revenue from, the installation of energy storage systems for applications in the 12 to 24 hour long duration storage market. We also may from time to time engage in acquisitions of businesses or product lines with the potential to strengthen our market position, enable us to enter attractive markets, expand our technological capabilities, or provide synergy opportunities.

As a public company, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), which requires management to certify financial and other information in our quarterly and annual reports and to provide an annual management report on the effectiveness of controls over financial reporting (see “Part II—Item 9A. Controls and Procedures”). When evaluating our internal control over financial reporting, we have previously, and may in the future identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline for compliance with the requirements of Section 404. If we are unable to identify and remediate material weaknesses, which may be more challenging as the recent furlough included employees from our accounting department, it could result in material misstatements to our annual or interim financial statements that might not be prevented or detected on a timely basis or result in delayed filings of required periodic reports. If we are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or investigations by the NYSE, the SEC, or other regulatory authorities, which could require additional financial and management resources.

We have in the past identified and remediated material weaknesses in our internal control over financial reporting. Although we review and evaluate our internal control systems on a regular basis, we cannot provide any assurances that the measures that we have taken will be sufficient to prevent future material weaknesses and control deficiencies from occurring. We also cannot assure you that we have identified all of our existing material weaknesses. If further remediation measures are required, they may be time consuming, costly, and might place significant demands on our financial and operational resources.

Furthermore, defective components may give rise to warranty, indemnity, or environmental or product liability claims against us that exceed any revenue or profit we receive from the affected products. Our product generally comes with an initial one-year manufacturing warranty. We also offer customers an extended performance warranty at an additional cost to the customer. For extended warranties, this may require system augmentation or replacements, which couldmay need to be provided at no additional charge beyond the price of the extended warranty paid by such customer.

Our business is dependent on the security and efficacy of our networks and computer and data management systems. For example, our Energyproducts Warehousedeployed andin Energythe Center productsfield are connected to and controlled and monitored by our centralized remote monitoring service, and we rely on our internal computer networks for many of the systems we use to operate our business generally. FromWe timehave toexperienced time, weand may in the future face attempts by others to gain unauthorized access through the internet or otherwise or to introduce malicious software to our IT systems. We or our products may be a target of computer hackers, organizations or malicious attackers who attempt to:

FromWe timehave toencountered time,and wein the future may again encounter attempts at gaining unauthorized access to our networknetwork. and weWe routinely run security checks. While we seekchecks to detect and investigate unauthorized attempts and attacks against our network and products of which we become aware, 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. In addition to intentional security breaches, the integrity and confidentiality of company and customer data and our intellectual property may be compromised as a result of human error, including errors, omissions, or misconduct by employees or contractors, product defects, or technological failures. Different geographic markets may have different regulations regarding data protection, raising potential compliance risks. We utilize third-party contractors to perform certain functions for us, and they face security risks similar to us. Further, retaliatory acts by Russia in response to Western sanctions could include cyber attacks that could disrupt the economy more generally or that could also impact our operations directly or indirectly.

The availability and effectiveness of our energy storage products and our ability to conduct our business and operations, depend on the continued operation of IT and communications systems, some of which we have yet to develop or otherwise obtain the ability to use. Systems used in our business, as well as systems used by third parties on which we rely, will be vulnerable to damage or interruption caused by power outages, climate change and natural disasters, interruptions or vulnerabilities related to the integration of artificial intelligence, and other factors beyond our control or which we do not presently anticipate, including technical defects or errors. Such systems could also be subject to break-ins, sabotage and intentional acts of vandalism, as well as disruptions and security incidents as a result of non-technical issues, including intentional or inadvertent acts or omissions by employees, service providers, or others. We have experienced and in the future expect to face significant challenges with respect to information security and maintaining the security and integrity of our systems and other systems used in our business, as well as with respect to the data stored on or processed by these systems. We also anticipate storing and otherwise processing confidential business information of ourselves and third parties, as well as personal information and other data. Advances in technology, an increased level of sophistication and expertise of hackers, and new discoveries in the field of cryptography can result in a compromise or breach of the systems used in our business or of security measures used in our business to protect confidential information, personal information, and other sensitive data, such as data that is subject to export control regulations and controlled unclassified information that is subject to other federal regulations. We may be a target for attacks by state-sponsored actors and others designed to disrupt our operations or to attempt to gain access to our systems or to data that is processed or maintained in our business.

We use outsourced service providers to help provide certain services. For example, we utilize email and collaboration tools,tools and other third-party services and service providers that store or otherwise process information, including personal information and confidential business information, on our behalf. Any such outsourced service providers face similar security and system disruption risks as us. We are at risk for interruptions, outages and breaches of our and our outsourced vendors’ and service providers’ operational systems and security systems, our products’ and services’ integrated software and technology, and customer data that we or our third-party service providers process. These may be caused by, among other causes, physical theft, viruses or other malicious code, denial or degradation of service attacks, ransomware, social engineering schemes, and insider theft or misuse. While we take steps to review security protections of services provided to us, there can be no guarantee that a failure or breach of such systems will not occur or be perceived to occur. 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, and other harm to our business and results of operations. Further, some of the systems used in our business will not be fully redundant, and our disaster recovery planning cannot account for all eventualities. Any securitySecurity breaches or incidents or other damage to or disruptions to any data centers or other systems used in our business have in the past resulted in interruptions and could in the future result in lengthy interruptions in our service and may adversely affect our business, prospects, financial condition and operating results.

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, security breaches or other cybersecurity incidents could lead to unauthorized acquisition or unauthorized release of sensitive, confidential or personal data or information, improper use of our systems, or unauthorized access, use, disclosure, modification or destruction of information or defective products. Our IT systems also help us produce financial information. We have not, toas date,of beenthe materiallydate impactedof bythis report, experienced a cybersecurity incident or cybersecurity risk.risk that we have determined has had a material adverse effect on our business. However, any disruption, security breach, or other incident could impact our ability to produce timely and accurate financial information needed for compliance, audit, and reporting purposes. If any such security breaches or incidents were to continue, our operations and ability to communicate both internally and with third parties and other aspects of our operations may be negatively impacted. For example, on November 1, 2025, we became aware of a cybersecurity incident involving unauthorized access which resulted in the non-availability of certain systems and a limited volume of data. We promptly activated our cybersecurity incident response protocols, initiated an investigation, and retained external cybersecurity experts to assist in our response. As of the date of this report, we have completed the investigation and remediation and identified no material impacts on the operations or results of the Company.

Our facilities or operations could be adversely affected by events outside of our control, such as natural disasters, wars, health epidemics and other calamities. We cannot assure you that any backup systems will be adequate to protect our facilities or operations from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events. Any health epidemics, outbreaks of contagious diseases and other adverse public health developments in countries where we and our suppliers operate could have a material adverse effect on our business, financial condition and results of operations. Any of the foregoing events may give rise to interruptions, breakdowns, system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide services.

A sustained or repeated interruption in the manufacturing of our products due to labor shortage, fire, flood, war, pandemic, natural disasters, regulatory requirements, and similar unforeseen events beyond our control may interfere with our ability to manufacture our products and fulfilfulfill customers’ demands in a timely manner, and make it difficult, or in certain cases, impossible for us to continue our business for a substantial period of time. Failure to manufacture our products and meet customer demands would impair our ability to generate revenues which would adversely affect our financial results. We currently do not have a formal disaster recovery or business continuity plan in place and any disaster recovery and business continuity plans that we may put in place may prove inadequate in the event of a serious disaster or similar event. As part of our risk management, we maintain insurance coverage for our business. However, we cannot assure you that the amount of insurance will be sufficient to satisfy any damages or losses we may incur. If our insurance coverage is not sufficient, we may incur substantial expenses, whichwhich, could have a material adverse effect on our business.

While our current supply chain is largely domestic, it includes Chinese sources for various parts. Escalating trade tensions, particularly between the United States and China have led to increased tariffs and trade restrictions, including current and recent tariffs applicable to certain electronic materials and components of our products. ThisThese includestariffs theinclude 7.5%Section - 100%301 tariffs that the U.S. Trade Representative has imposed on certain imports from China since 2018 as well as2018, the additional 10%fentanyl-related tariff on most Chinese-origin goods as implemented by the U.S. government inbetween February 2025.2025 and February 2026, and the reciprocal tariffs implemented by the U.S. government between April 2025 and February 2026. Further, the TrumpUnited administrationStates has stronglyimplemented voicedadditional anglobal intentionsector-specific Section 232 tariffs on various items, including certain steel and aluminum products, automobiles and automotive components, and copper products. The U.S. government has announced intentions to place additional future tariffs on Chinavarious pharmaceutical, semiconductor, and otherconsumer countries.electronic products. In particular,addition, significant newfentanyl-related tariffs ofon 25% onvarious imports from Canada and Mexico announcedwere implemented with respect to non-USMCA-qualifying goods between March 2025 and February 2026. After the Supreme Court held that the fentanyl-related and reciprocal tariffs implemented under the International Emergency Economic Powers Act were ultra vires, the United States ceased collection of these tariffs and implemented a global, 10 percent tariff on many of the same items under authorities provided in FebruarySection 2025,122 whichof havethe beenTrade temporarilyAct suspendedof for1974. 30It daysis pendingunclear furtherwhether negotiationsor betweenhow the U.S. government will issue refunds for previous payments made in connection with the fentanyl-related and thesereciprocal countries,tariffs and whether or how U.S. tariff policy might change in the future or how other countries may alsoretaliate or respond to changing U.S. tariff policies. For example, additional tariffs may be implemented;forthcoming anunder escalationSection in232, tariffsSection to301, 25%Section on122, aluminumSection 338, and/or steelother importslegal into the U.S. is set to take effect in March 2025; and additional tariff actions are expected.authorities.

TariffsCurrent and recent tariffs and the possibility of additional tariffs in the future have created uncertainty, particularly if we are not able to second source parts from alternative vendors. There can be no guarantyguarantee that these developments will not negatively impact the price of the positive electrode used in our products. Additionally, existing, future, or potential tariffs may negatively affect key customers and suppliers, and other supply chain partners. Such outcomes could adversely affect the amount or timing of our revenues, results of operations or cash flows, and cause sales volatility, price fluctuations or supply shortages or cause our customers to advance or delay their purchase of our products.

We are in the process of qualifying alternative sources but anticipate it will take time before alternate sources are qualified for every component. Depending on the outcome of the tariffs that the Trump administration has implementedimplemented, previously implemented, and may eventually implement on additional products and/or countries, our ability to secure alternative sources of components may be further limited in the future. In addition, such sources may charge a higher cost than our current suppliers, which would negatively impact our results of operations. There is no guarantyguarantee that we will be able to identify alternate suppliers that meet our quality, volume and price requirements. Failure to meet these requirements could result in supply disruptions and increased costs. 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 react to such actions quicklyquickly, andcheaply or effectively, which could result in supply shortages and increased costs.

We have entered into transactions, and may in the future enter into further transactions with related parties. Related-party transactions create the possibility of conflicts of interest with regard to management, including that:

SBE, Honeywell, and any other business partners in the future, may have economic, business or legal interests or goals that are inconsistent with our interests or goals. Any disagreements with our current or other future business partners may impede our ability to maximize the benefits of these partnerships and slow the commercialization of our iron-flowiron flow batteries. Future commercial or strategic counterparties may require us, among other things, to pay certain costs or to make certain capital investments or to seek their consent to take certain actions. In addition, if our business partners are unable or unwilling to meet sourcing, development, or other obligations under our partnership arrangements, we may be required to fulfill those obligations alone. These factors could result in a material adverse effect on our business and financial results.

We may enter into strategic partnerships, joint ventures and licensing arrangements to expand our business and enter into new markets. However, there is no assurance that we will be able to consummate any such arrangements as contemplated to commercialize our energy storage products. There is also no assurance that we will be able to realize the benefits of any such arrangements even if we do enter into such strategic partnerships, joint ventures and licensing arrangements and there is always a risk that either party may be unable to comply with its delivery, payment, or other obligations under any such arrangement. The occurrence of any such risks may result in diminished potential value of these types of relationships to us. For example, in 2022 we entered into a strategic partnership with Energy Storage Industries Asia Pacific (“ESI”) and a framework agreement with Sacramento Municipal Utility District (“SMUD”). UnderWe the terms of our agreement with ESI, we commenced delivery ofdelivered Energy Warehouse systems to ESI infrom 2022, continuing2022 through 2023 and 2024, and expect to continue deliveries inearly 2025 to fulfill their orders. We agreed to move forward separately from our 2022 agreement in late 2025 and recognize the opportunity to work together again in the future, although ESI is expectedunder tono construct a manufacturing facility in Queensland, Australia, equipped to conduct final assembly of our systems from 2025 onward; however, ESI may be delayed or unable to complete construction of the manufacturing facility or may cancel or declineobligation to place futureadditional orders ofwith our product, whether due to funding constraints or other reasons, which may require ESS to find alternative arrangements to addressing the market, such as supplying products directly or identifying alternative in-country facilities.us. We made the first delivery of our systems to SMUD during the second quarter of 2023, but the task authorization supporting the Energy Warehouse pilot and the next phase order of our Energy Center expired on December 31, 2024, and while we are in discussions for future task authorizations, SMUD is under no obligation to continue the task authorization or place additional orders with us.

OnWe February 13, 2025, we publicly announced that our board of directors has engaged financial advisorscontinue to investigate and pursue commercial or financial transactions, which could include, among other things, divestitures, a merger or sale, joint ventures, partnerships and financings. Exploring commercial and financial transactions may create a significant distraction for our management team and board of directors and require us to expend significant time and resources and incur expenses for advisors. Moreover, the review and consideration of such commercial and financial transactions may disrupt our business by causing uncertainty among current and potential employees, suppliers, customers and investors. The selection and execution of a commercial or financial transaction may lead to similar disruptions, and parties advocating for alternatives not selected may solicit support for such other alternatives, causing further disruption.

ESS is a long-duration energy storage company specializing in iron flow battery technology. We design and produce long-duration batteries predominantly using earth-abundant materials that we believe can be cycled over 20,000 times without capacity fade.fade based on lab-scale results. Because our batteries are designed to operate using an electrolyte of primarily salt, iron and water, they are environmentally sustainable and substantially recyclable or reusable.

Our long-duration iron flow batteries are the product of nearly 50 years of scientific advancement. Our founders, Craig Evans and Dr. Julia Song,founders began advancing this technology in 2011 and formed Legacy ESS. Our team has significantly enhanced the technology, improved the round-trip efficiency and developed an innovative and patented solution to the hydroxide build-up problem that plagued previous researchers developing iron flow batteries. Our proprietary solution to eliminate the hydroxide formation is known as the Proton Pump, which works by utilizing hydrogen generated by side reactions on the negative electrode. The Proton Pump converts the hydrogen back into protons in the positive electrolyte. This process eliminates the hydroxide and stabilizes the electrolytes’ pH levels.

Our batteries provide flexibilitymore clean energy every day to gridutilities, operatorsindependent power producers, and commercial industrial customers, offering a path to carbon free energy assurancesupply. forESS commercialbatteries offer flexible, frequent cycling capabilities which can offer higher value clean energy when it is needed, and industrialsupport customers.a variety of grid conditions. Our technology addresses energy delivery, duration and cycle-life in a single battery platform that compares favorably to lithium-ion batteries, the most widely deployed alternative technology. Using our iron flow battery technology, we arehave developingdeveloped severala products, eachvariety of which is designedproducts to provide reliable, safe, long-duration energy storage.storage solutions. Our first energy storage product, the Energy Warehouse, iswas our ‘behind-the-meter’ solution (referring to solutions that are located on the customer’s premises, behind the service demarcation with the utility) that iswas used for initial testing and technology validation. Our product offering evolved to a larger scale energy storage products,product with the Energy Center and Energy Base, areCenter, designed for either ‘behind-the meter’behind-the-meter’ or ‘front-of-the-meter’ (referring to solutions that are located outside the customer’s premises, typically operated by the utility or by third-party providers who sell energy into the grid, often known as independent power producers) deployments specifically for utility and large commercial and industrial consumers.consumers, before the launch of our 10+ hour Energy Base product earlier this year. We arealso developing additional products at larger scale, in addition tooffer productized versions of our core technology components,components for integration into third-party systems.

We believe we have the opportunity to establish attractive margin unit economics if we are able to continue to reduce production costs and scale our operations. Our future financial performance will depend on our ability to deliver on these economies of scale with lower product costs. We believe our business model is positioned for scalability due to the ability to leverage the same core technology in the Energy Base’s modularized form for different project size and componentsduration needs across our products and customer base. We anticipate significant reduction in our cost of goods through our cost reduction initiatives, including design optimization from value engineering, strategic supply chain projects, and further automation of our manufacturing processes. Additionally, significant improvements in manufacturing scale are expected to decrease the cost of materials and direct labor. Compared to 2024, weWe expect our indirect cost of revenue and operating expenses to increase aswhen we ramp up our manufacturing and sales activities. We further expect an increase in expenses related to the implementation of cost reduction projects and initiatives in our supply chain, manufacturing engineering and research and development functions. Achievement of margin targets and cash flow generation is dependent on the execution of these cost out initiatives.

Our near-term and medium-term revenue is expected to be generated primarily from our Energy Centers, second-generation Energy Warehouses, Energy Base,Base and core technology component productization.sales. We believe our unique technology provides a compelling value proposition and an opportunity for favorable margins and unit economics in the energy storage industry in the future.

We are closely monitoring macroeconomic developments, including global supply chain challenges, foreign currency fluctuations, fluctuations in inflation and interest rates and monetary policy changes, as well as global events, such as the Russia-Ukraine conflict, the conflict between the U.S., Israel and Iran, geopolitical tensions involving China, tensions in the Middle East, U.S. interventions in Venezuela, and other areas of geopolitical tension around the world, and how they may adversely impact our and our customers’, contractors’, suppliers’ and partners’ respective businesses. In particular, weak economic conditions or significant uncertainty regarding the stability of financial markets related to stock market volatility, inflation, recession orrecession, governmental fiscal, monetary and tax policies, or tariffs and trade restrictions, among others, could adversely impact our and our customers’ business, financial condition and operating results. InWhile addition,the generalCompany has not experienced any significant impacts from these disruptions to date, future impacts are unknown and ongoing tightening in the credit market, lower levels of liquidity, increases in rates of default and bankruptcy, and significant volatility in equity and fixed-income marketsthey could alladversely negatively impactaffect our customers, contractors, suppliers and partners. As a result of these macroeconomic forces, during 2023 and 2024 we experiencedbusiness, supply constraints,chain, increased shipping delays for certain customer contracts, and delays in timing of payments from some of our customers. We believe somepartners or all of these negative trends may continue in 2025.customers.

On August 16, 2022, the President Bidenof the United States signed into law the IRA, which extendsextended the availability of ITCs and PTCs and makesmade significant changes to the tax credit regime that applies to solar and energy storage products. As a result of changes made by the IRA, the ITC for solar generation projects iswas extended until at least 2033 and has been expanded to include stand-alone battery storage projects. This expansion providesprovided more certainty on the tax incentives that will be available to stand-alone battery storage projects in the future. WeSubject to recently enacted legislation discussed above, we believe the IRA will increase demand for our services due to the extensions and expansions of various tax credits that are critical for our customers’ economic returns, while also providing more certainty in and visibility into the supply chain for materials and components for energy storage systems. On July 4, 2025, the OBBB was signed into law by the President of the United States. The OBBB contains a number of changes to the IRA that significantly impact the availability of the ITCs under Sections 48(a) and 48E of the Code and Section 45X PTCs as discussed further above, but the Company’s domestic manufacturing and supply chain structure generally should benefit from the addition of FEOC limitations, subject to our review of recently issued and future FEOC guidance. We are continuing to evaluate the overall impact and applicability of the IRA and OBBB as guidance is issued,issued and further legislative changes are enacted, including the passage of comparable legislation in other jurisdictions, to our results of operations going forward.

As discussed in Note 15,17, Government Grants, to our consolidated financial statements, Section 45X of the Code, as enacted by the IRA, currently provides a PTC that can be claimed on certain battery components manufactured in the U.S. and sold to unrelated U.S. or foreign customers after 2022, through the end of 2032. The 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 for battery cells and $10 per kWh of capacity for battery modules. The 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 the end of 2032.2032, subject to additional qualification requirements in the recently enacted OBBB as discussed further above, including qualifications for integrated components sold after December 31, 2026 to the effect that any primary component integrated into a secondary component must be produced within the same manufacturing facility, at least 65 percent of the total direct material costs of the secondary component must be attributable to primary components which are domestically mined, produced or manufactured, and the secondary component must be sold to a third party. The Section 45X PTC may be refundable by the IRS or saleable to unrelated third parties. We continue to evaluate the impact of the OBBB; however, we generally expect to sell these credits to third party buyers, which will have a positive impact on our gross margins in the future. Further, on October 28, 2024, Treasury and the IRS issued final regulations providing guidance on requirements that taxpayers must satisfy to qualify for the Section 45X PTC, including the definition of a Section 45X manufacturing facility.

As discussed above, commencing with the third quarter of 2023 we reached commercial viability and transitioned out of the research and development phase and into commercial inventory accounting. Following the Transition Date, costCost of revenue is primarily driven by direct material, labor, freight and overhead expenses. Cost of revenue also includes LCNRV charges, warranty costs, losses on unfulfilled noncancellable purchase commitments, obsolescence charges, and fulfillment costs. Cost of revenue does not include inventory previously expensed during the research and development phase priorof toaccounting which we transitioned out of in the Transitionthird Date.quarter of 2023. We expect revenue and cost of revenue to increase aswhen we scale the business and deliver our energy storage products to customers.

Following the Transition Date, researchResearch and development expenses consist of materials, supplies, personnel-related expenses, consulting services and other direct expenses. Personnel-related expenses consist of salaries, bonuses, benefits and stock-based compensation. Prior to the Transition Date, research and development expenses also included direct product development material costs, including freight charges, and warranty-related costs. Our research and development costs have decreased following the transition to commercial inventory accounting in the third quarter of 2023; however, weWe continue to perform research and development activities to further expand our product roadmap.

Interest (expense) income, net

Interest (expense) income, net consists primarily of interest expense on the Promissory Note and our sale-leaseback financing obligation and earned income on our cash equivalents, restricted cash, and short-term investments. These earned income amounts will vary based on our cash, cash equivalents, restricted cash and short-term investment balances, and on market rates. Interest income is partially offset by interest expense on notes payable.

Other income (expense),expense, net

Other income (expense),expense, net consists primarily of various gains and losses associated with our short-term investments and other income and expense items.

Sales and marketing expenses increaseddecreased by $1.4$5.3 million, or 18%,58%, from $7.7 million for the year ended December 31, 2023 to $9.2 million for the year ended December 31, 2024.2024 to $3.8 million for the year ended December 31, 2025. The increasedecrease is driven by an increase inreduced personnel-related expensesexpenses, dueincluding tostock-based expandedcompensation, sales headcount and an increase indecreased outside services and externalprofessional expenses, and decreased marketing costs.and trade show expenses.

InterestGeneral income,and netadministrative expenses decreased by $1.7$5.9 million, or 32%,25%, from $5.3$23.5 million for the year ended December 31, 20232024 to $3.6$17.6 million for the year ended December 31, 2024.2025. The decrease resultedis fromdriven by decreased personnel-related expenses, including stock-based compensation expense, as a decreaseresult inof interestreduced incomeexecutive earnedcompensation, ondecreased ourIT short-termexpenses investmentand portfoliodecreased insurance fees, partially offset by aincreased decreaseprofessional inand expenseoutside resultingservices from the repayment of our notes payable during 2023.costs.

The change in fair value of common stock warrant liabilities resulted in a gain of $0.1$0.2 million and $2.3$0.1 million for the years ended December 31, 20242025 and 2023,2024, respectively. The changes in fair value of common stock warrant liabilities waswere driven by changes in the market price of our common stock over the respective period.

Other income (expense),expense, net

Since our inception, we have financed our operations primarily through the issuance and sale of equity and debt securities and loan agreements. We have incurred losses since inception and have negative cash flows from operations. We anticipate that losses will continue in the near term. During the year ended December 31, 2024,2025, we incurred net losses of $86.2$63.4 million and used $72.2$50.3 million of cash in operating activities. As of December 31, 2024,2025, we had unrestricted cash and cash equivalents of $13.3$14.5 million and short-term investments of $18.3$7.5 million, or total liquid assets of $31.6$22.0 million. We have expanded certain cost reduction and cash conservation measures, including ongoing evaluation of workforce staffing requirements,requirements and essential business functions, and the implementation of a furlough for a substantial number of our employees as of May 30, 2025 to better align organizational costs with business continuity, further reduction of material purchases by continuing to minimize spending until firm orders are received, refining our focus on R&Dresearch and development and engineering project efforts towards highest priority, greatest return projects and additional reduction in outside vendor spending, and we may implement further measures.spending.

WeManagement willhas needtaken additionala debtvariety orof equity financing in ordersteps to meetmitigate costs, reduce operating expenses and extend our near-termrunway operatingwhile cashwe flow requirements, and accordingly there is substantial doubt as to our ability to continue as a going concern for 12 months from the issuance of the financial statements included in this Annual Report on Form 10-K. Management isare evaluating various strategies to obtain additional funding, which may include additional offerings of equity, issuance of debt, or other capital sources. If such financing is not available or if the financing terms are less desirable than we expect, we may be forced to decrease our level of investment in product development or further scale back our operations, which could have an adverse impact on our business and financial prospects.

We have a standby letter of credit with Bank of America for $0.6 million as security for the performance and payment of the Company’sour obligations under a customer agreement. The letter of credit is in effect until the date on which the warranty period under the agreement expires, which is anticipated to be more than a year from the balance sheet date. As of December 31, 2024,2025, $0.6 million was pledged as collateral for the letter of credit and recorded as restricted cash, non-current. There were no draws against the letter of credit during the years ended December 31, 20242025 and 2023.2024.

We have a standby letter of credit with Bank of America for $0.2 million in support of our customs and duties due on imported materials. The letter of credit is in effect until May 19, 2025.2026. As of December 31, 2024,2025, $0.2$0.1 million was pledged as collateral for the letter of credit and recorded as restricted cash, current. There were nodraws drawsof $0.1 million against the letter of credit during the year ended December 31, 2024.2025.

On November 1, 2024, we entered into a Credit Agreement with Export-Import Bank of the United States, as lender, and related agreements related to the financing of two production lines (the “Credit Agreement”). The Credit Agreement provides for a secured loan facility in an aggregate principal amount of up to $22.7 million, of which $20.0 million is available to be borrowed for equipment financing and the balance will be used to finance an exposure fee and transaction expenses. The loan facility has a maturity date of June 30, 2031. Half of the proceeds of the loan facility may be used on a retroactive basis for the financing of the Company’sour existing automated battery assembly line and the remainder may be used for the financing or refinancing of an additional line upon the closing of an equity raise milestone. AtAs of December 31, 2024,2025 we had no outstanding borrowings under the Credit Agreement. Any obligations under the Credit Agreement are secured pursuant to a security agreement granting EXIM a first priority security interest in the financed equipment and a securities account containing collateral consisting of cash and cash equivalents in an amount equal to a substantial portion of the disbursements under the Credit Agreement, reportable as restricted cash, that decreases upon the equity raise milestone. See Note 10,11, Commitments and Contingencies, to our financial statements for the year ended December 31, 2024 included elsewhere in this Annual Report on Form 10-K for further discussion.

Cash flows used in operating activities to date have primarily consisted of inventory purchases and cost of revenue, costs related to research and development of our energy storage systems, building awareness of our products’ capabilities and other general and administrative activities.

Net cash used in operating activities was $72.2$50.3 million for the year ended December 31, 2024,2025, which is comprised of net loss of $86.2 million, adjusted for noncash interest income of $2.4$63.4 million, partially offset by depreciation expense of $5.7 million, stock-based compensation of $11.6 million, inventory write-downs and losses on noncancellable purchase commitments of $4.9$5.4 million, and depreciationnon-cash interest expense of $4.7$5.0 million. Net changes in operating assets and liabilities used $6.5$6.4 million of cashcash, driven by inventory purchases, an increasedecreases in prepaidaccounts and other current assets, and decreases inpayable, accrued and other current liabilities, deferred revenue, accrued product warranties, and operating lease liabilities,liabilities and deferred revenue,partially offset by increasesreductions in accounts payableinventory and accruedprepaid product warrantiesexpenses and cash collections on accounts receivable.

Net cash used in operating activities was $54.9$72.2 million for the year ended December 31, 2023,2024, which is comprised of net loss of $77.6$86.2 million, adjusted for noncash interest income of $3.6 million and noncash changes in the fair value of warrant liabilities of $2.3$2.4 million, partially offset by inventory write-downs and losses on noncancellable purchase commitments of $11.9 million, stock-based compensation of $10.6$11.6 million,million and depreciation expense of $6.5$4.7 million. Net changes in operating assets and liabilities used $1.6 million of cash driven by cashinventory collections on accounts receivable,purchases, an increase in prepaid expenses and other current assets, accrued product warranties and deferred revenue, partially offset by inventory purchases and decreases in accrued and other current liabilities, operating lease liabilities, and deferred revenue, offset by increases in accounts payable and operatingaccrued leaseproduct liabilities.warranties and cash collections on accounts receivable.

Net cash provided by financing activities was $25.7$43.5 million for the year ended December 31, 20232025 and consisted of $27.1 million of proceeds from the issuance of common stock and common stock warrants, net of issuance costs,costs of $37.7 million and proceeds from contributionsfinancing to our ESPParrangements of $0.5 million and stock options exercised of $0.2$27.0 million, partially offset by principal payments on notesfinancing payableobligations of $1.7 million and repurchases of shares from employees for income tax withholding purposes of $0.3$21.0 million.

Our contractual obligations and other commitments as of December 31, 20242025 consist of lease commitments and threetwo standby letters of credit and the Credit Agreement. The letters of credit serve as security for certain operating leases for office and manufacturing space, for our performance and payment obligations under a customer agreement,agreement and in support of our customs and duties due on imported materials. The letter of credit related to operating leases is fully secured by restricted certificate of deposit accounts. The letters of credit related to a customer contractmaterials and to support customs and duties due on imported materials are secured by a total of $0.8$0.7 million pledged as collateral. Our obligations under the Credit Agreement are secured pursuant to a security agreement granting EXIM a first priority security interest in the financed equipment and a securities account containing collateral consisting of cash and cash equivalents in an amount equal to a certain portion of the disbursements under the Credit Agreement that decreases upon the equity raise milestone and will be reported as restricted cash. There were draws of $0.1 million against the letter of credit supporting our customs and duties due on imported materials during the year ended December 31, 2025 and no draws against theother letters of credit or under the Credit Agreement during the years ended December 31, 20242025 andor 2023.2024. Additionally, we are committed to non-cancellable purchase commitments of $0.2$0.1 million as of December 31, 20242025 and to reimburse UOP a minimum of $8.0 million for research and development expenses incurred through December 31, 2028 under the JDA (as defined herein).

Revenue is earned from the sales of energy storage systems and related services and is derived from customer contracts. Revenue is recognized in an amount that reflects the consideration to which we expect to be entitled in exchange for transferring the promised goods and/or services to the customer, when or as our performance obligations are satisfied which includes estimates for variable consideration (e.g., liquidated damages).consideration. For sales of energy storage systems, our performance obligations are satisfied at the point in time when the customer obtains control of the system. Payment terms generally include advance payments to reserve capacity and/or material procurement or commence upon issuance of the customer’s purchase order with the remainder due upon the achievement of various milestones including shipment readiness, delivery, system start up, and/or completion of final site testing.

•We rely on complex machinery for our operations and the production of our ironsodium-ion flowBESS and batteries involveswill continue to involve a significant degree of risk and uncertainty in terms of operational performance and costs;

•Our plans are dependent on the development of market acceptance of our products and longour durationvarious energy storage technologytechnologies;

Producing sodium-ion BESS and long-duration iron flow batteries that meet the requirements for wide adoption by commercial and utility-scale energy storage applications is a difficult undertaking. We are still assessing the technology related to sodium-ion BESS, in the early stage of commercialization for long-duration iron flow batteries and have faced and may continue to face significant challenges in completing the development of our various energy storage products and in producing our energy storage products in commercial volumes. SomeIn addition, some of the challenges that could prevent the successful scaling of our iron flow battery products and sodium-ion BESS, if developed, include difficulties with (i) increasing manufacturing capacity to produce the volume of cells needed for our energy storage products, (ii) installing and optimizing higher volume manufacturing equipment, (iii) packaging our batteries to ensure adequate cycle-life, (iv) cost reduction, (v) qualifying new vendors and subcomponents, (vi) expanding supply chain capacity, (vii) the completion of rigorous and challenging battery safety testing required by our customers or partners, including but not limited to, performance, life and abuse testing and (viii) the development of our products and the final manufacturing processes and specifications.specifications related to our products.

As of MarchJune 31,30, 2026, we had limited deployment of our energylong-duration storageiron productsflow batteries and there may be significant yield, cost, performance and manufacturing process challenges to be solved as we ramp up commercial production and use. Our core technology components are also still under development for integration into third-party systems. We have encountered and are likely to further encounter engineering challenges as we seek to increase the capacity, duration, efficiency and reliability of our batteries. If we are not able to overcome these barriers in developing and producing our sodium-ion BESS or iron flow batteries, our business could fail. If the performance characteristics or other specifications of the batteries fall short of our targets, our sales, product pricing and margins would likely be adversely affected.

We are continuing to develop our products and are in the early stage of commercialization.commercialization with respect to our iron flow products. In addition, certain aspects of our technology have not been fully field tested. If we are unable to develop our business and effectively commercialize our energy storage products as anticipated, we may not be able to generate significant revenues or achieve profitability.

As of MarchJune 31,30, 2026, we had limited Energyiron Warehouse and Energy Centerflow products fully deployed. ProductionWe are assessing the technology related to sodium-ion BESS and production and productized versions of our sodium-ion BESS, and our sodium-ion and Energy Base productBESS products and core component technology are still under development. We have experienced various quality and performance issues with unitsiron flow products that have been installed and although we have worked to repair or replace any known issues, our inability to address these or potential new issues effectively may have cost and warranty implications and may affect the acceptance of our products in the market. In addition, although we believe our iron flow battery technology is field tested and ready for sale, there are no assurances that our proprietary technologies, such as our Proton Pump, will operate as expected and with consistency over time. We have also experienced grid compatibility and other site integration issues that are not within our control, which has required and will continue to require an adjustment of our power electronics and energy management system interface on a site-by-site basis. Certain operational characteristics have never been witnessed in the field and as we deploy more of our products, we may discover further aspects of our technology that require improvement. Any of these issues could delay existing contracts and new sales, result in order cancellations, result in significant warranty obligations, and negatively impact the market’s acceptance of our technology. If we experience significant delays, order cancellations or warranty claims, or if we fail to develop and install our energy storage products in accordance with contract specifications, then our operating results and financial condition could be adversely affected. In addition, there is no assurance that if we alter or change our energy storage products in the future, that the demand for these new products will develop, which could adversely affect our business and revenues. If our energy storage products are not deemed desirable and suitable for purchase and we are unable to establish a customer base, we may not be able to generate significant revenues or attain profitability.

We depend on third-party suppliers for the development and supply of key raw materials and components for our energy storage products, including power module components (e.g., bipolar plates, frames, end plates and separators), chemicals, electronic components, and electroniccell components.components for our current sodium-ion product line. We will need to maintain and significantly grow our access to key raw materials and control our related costs. We use various raw materials and components to construct our energy storage products, including polypropylene, iron and potassium chloride, that are critical to our manufacturing process. We also rely on third-party suppliers for injection molded parts and power electronics which undergo a qualification process that can take months.

The cost of components for our sodium-ion and iron flow batteries, whether manufactured by our suppliers or by us, depends in part upon the prices and availability of raw materials. In recent periods, we have seen an increase in costs for a wide range of materials and components and such increases may continue, particularly if we again experience high rates of inflation. Additionally, supply chain disruptions and access to materials have impacted and continue to impact our vendors and suppliers’ ability to deliver materials and components to us in a timely manner. We have experienced significant disruptions to key supply chains, shipping times, shipping availability, manufacturing times, and increases in associated costs, both with respect to the sourcing of supplies and the delivery of our products. We have experienced and may continue to experience supply chain issues, delays to deliveries, and vendor quality issues, as well as increases in our supply costs of many of our key components, including polypropylene, resin, power electronics, and circuit board components. Such issues have also affected the ramping up of our automated production line. If we experience similar issues in the future, including any delays of deliveries of additional manufacturing automation equipment that we require, they may further delay our ability to produce and deliver our products and to recognize additional revenue (see also “Part I. Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—ComponentsOperations-Components of Results of Operations—Revenue”).Operations-Revenue.

In addition, the tariffs put in place by the United States, Russia-Ukraine conflict, geopolitical tensions involving China, the conflict between the U.S., Israel and Iran, tensions in the Middle East, and U.S. interventions in Venezuela have led to disruption, instability and volatility in the global markets and certain industries and may also lead to further disruptions that could negatively impact our operations and our supply chain. The U.S. government and other governments have imposed severe sanctions and export controls against Russia and Russian interests and continue to impose additional sanctions and controls. While the Company has not experienced any significantsignificant, direct impacts from these disruptions to date, future impacts are unknown and they could adversely affect our business, supply chain, partners or customers.

In addition, general and ongoing tightening in the credit market, lower levels of liquidity, increases in rates of default and bankruptcy, and significant volatility in equity and fixed-income markets could all negatively impact our customers, contractors, suppliers and partners. As a result of these macroeconomic forces, during 2025 and the first quarter of 2026,2026 we experienced supply constraints, and we have experienced in the past and may experience again in the future increased shipping delays for certain customer contracts, and delays in timing of payments from some of our customers.contracts. Some or all of these negative trends may continue during the remainder of 2026.

We continually evaluate and qualify new suppliers. However, there are a limited number of suppliers for some of the key components of our products and we have, to date, fully qualified only a very limited number of such suppliers.suppliers, and a more limited number of domestic suppliers in certain cases. Therefore, we have limited flexibility in changing suppliers. In addition, we have had issues with inconsistent quality and supply of certain key power module components. We do not know whether we will be able to maintain long-term supply relationships with our critical suppliers, or, if required, secure new long-term supply relationships on terms that will allow us to achieve our objectives. A supplier’s failure to develop and supply components in a timely manner, to supply components that meet our quality, quantity, cost requirements or our technical specifications, to support our warranty claims, or our inability to obtain alternative sources of these components on a timely basis or on terms acceptable to us, could each harm our ability to manufacture and commercialize our energy storage products. Low volume requirements from third-party suppliers in the near term could strain vendor relationships or result in less favorable pricing and thus increased launch costs. In addition, to the extent the processes that our suppliers use to manufacture components are proprietary, we may be unable to obtain comparable components from alternative suppliers, all of which could harm our business, financial condition and results of operations.

Substantial increases in the prices of raw materials would increase our operating costs and could adversely affect our profitability. The price of oil likewise generally fluctuates on a cyclical basis and anyhas increasemaintained sustained increased levels in pricelight mayof the ongoing conflict in Iran, which has previously and could in the future affect the cost of manufacturing, distributing and transporting our products. If we are unable to pass any such increased costs to our customers, this could have a material adverse effect on our business, financial condition and results of operations.

In order to achieve our business plan and reach profitability, we must continue to increase the number of units sold and reduce the manufacturing and development costs for our products. Currently, production costs for our units significantly exceed their selling price. Additionally, certain of our existing customer contracts were entered into based on projections regarding cost reductions that assume continued advances in our manufacturing and services processes that we may be unable to realize. The cost of components and raw materials, for example, has been increasing and could continue to increase in the future, offsetting any successes in reducing our manufacturing costs. Any such increases could slow our growth and cause our financial results and operational metrics to suffer. In addition, we may face increases in our other expenses including increases in wages or other labor costs as well as installation, marketing, sales or related costs. In order toTo expand into new markets (especially markets in which the price of electricity from the grid is lower), we will need to continue to reduce our costs. Increases in any of these costs or our failure to achieve projected cost reductions could adversely affect our results of operations and financial condition and harm our business and prospects. If we are unable to reduce our cost structure in the future, we may not be able to achieve profitability, which could have a material adverse effect on our business and our prospects.

Our ability to successfully implement our overall business strategy relies on our ability to reduce development and manufacturing costs in the future and thereby lower our selling price. Our cost reduction strategy is based on the assumption that a diversified product mix and increases in production will result in economies of scale. In addition, our cost reduction strategy relies on advancements in our manufacturing process, global competitive sourcing, engineering design, reducing the cost of capital and technology improvements (including stack life and projected power output). Its successful implementation also depends on a number of factors, some of which are beyond our control, including the impact of inflation, tariffs, and the timely delivery of key supplies at reasonable prices. For example, our current supply imbalance may result in additional costs that exceed our current expectations. There is no assurance that our cost reduction strategy will be successful and failure to achieve our cost reduction targets could have a material adverse effect on our business, financial condition and results of operations.

We rely on complex machinery for our operations and the production of our iron flow batteries and will for our sodium-ion BESS, if developed, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.

We rely heavily on complex machinery for our operations and manufacturing and we are pioneering the use of this equipment for the large-scale manufacturing of iron flow battery products.products and will for sodium-ion BESS, if developed. The work required to integrate this equipment into the production of our iron flow battery product and sodium-ion BESS is time intensive and requires us to work closely with the equipment provider to ensure that it works properly for our unique iron flow battery technology. This integration work will involve a significant degree of uncertainty and risk and may result in a delay in the scaling up of production or result in additional cost to our iron flow batteries.batteries and sodium-ion BESS, if developed.

Our manufacturing facility utilizes large-scale machinery, particularly for the automated production line. Such machinery is likely to suffer unexpected malfunctions from time to time and will require repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of our production equipment may significantly affect the intended operational efficiency or yield. Some examples would be inadequate bonding of the battery cells resulting in overboard or internal leakage, damage to the separator, or cracked bipolar or monopolar plates. In addition, because this equipment has limited history building iron flow battery products,products and no history building sodium-ion BESS, the operational performance and costs associated with this equipment can be difficult to predict and may be influenced by factors outside of our control, such as, but not limited to, failures by suppliers to deliver necessary components of our energy storage products in a timely manner and at prices and volumes acceptable to us, environmental hazards and remediation, difficulty or delays in obtaining governmental permits, damages or defects in systems, industrial accidents, fires, seismic activity and other natural disasters.

In order to grow our business, we will need to increase our production capacity. For example, our current manufacturing capacity may not be sufficient to meet our planned production targets and we are currently seeking to expand our capacity.targets. Our ability to plan, develop and equip additional manufacturing facilities is subject to significant risks and uncertainties, including but not limited to the following:

If we are unable to expand our manufacturing facilities, we may be unable to further scale our business, which would negatively affect our results of operations and financial condition. We cannot provide any assurances that we would be able to successfully establish or operate an additional manufacturing facility in a timely or profitable manner, or at all, or within any expected budget for such a project.project, or at all. The construction of any such facility would require significant capital expenditure and result in significantly increased fixed costs. If we are unable to transition manufacturing operations to any such new facility in a cost-efficient and timely manner, then we may experience disruptions in operations, which could negatively impact our business and financial results. Further, if the demand for our products decreases or if we do not produce the expected output after any such new facility is operational, we may not be able to spread a significant amount of our fixed costs over the production volume, thereby increasing our per product fixed cost, which would have a negative impact on our business, financial condition and results of operations.

In addition, if any of our partners suffer from capacity constraints, deployment delays, work stoppages or any other reduction in output, we may be unable to meet our delivery schedule, which could result in lost revenue, damages, and deployment delays that could harm our business and customer relationships. If the demand for our iron flow batteriesproducts or our production output decreases or does not rise as expected, we may not be able to spread a significant amount of our fixed costs over the production volume, resulting in a greater than expected per unit fixed cost, which would have a negative impact on our financial condition and our results of operations.

We have in the past and may be compelled in the future to undertake product recalls. For example, in the past, we had to recall our Gen I iron flow battery modules due to vendors not properly manufacturing the parts to our specifications and we have also had to replace, and may again be required to replace, certain components of our iron flow products delivered to customers to date. Any quality issues can result in single module failures or can result in a cascade of numerous failures. Failures in the field can result in a single module replacement or may result in a total recall depending on the severity or contamination to the remainder of the system.

Our energy storage products require periodic maintenance or refurbishment, such as the cleaning or replacement of air filters or other components, inspection and re-torquing of electrical or mechanical fasteners, and the replenishment of hydrogen. Maintenance items are intended to be scheduled on a periodic basis but may vary depending on system operations. We currently rely on our customers that do not have service agreements with us or that perform maintenance that is not covered by such agreements to follow our product operations and maintenance manuals. In addition, we have had, and in the future may continue to have, components such as our electrolyte rebalancing cell that have a shorter service life than anticipated and require replacement in lieu of maintenance. Furthermore, there is risk of harm to persons or property if individuals performing maintenance do not follow applicable maintenance or safety protocols. Any such incident or harm would likely lead to adverse publicity and potentially a safety recall, decisions or mandates to temporarily halt production or implement an extended suspension of field operations, and expenses related to carrying out site remediation, revising our training programs and updating our maintenance manual, and could also adversely affect our reputation, customer’s willingness to place future orders, our operating results and prospects, business, financial condition and results of operations. We have had, and in the future may continue to have, incidents of failure to maintain or perform required maintenance correctly that damage or adversely affect the performance of our energy storage products and/or result in the leakage of electrolyte. For example, the performance of maintenance procedures out of sequence by Company personnel in the past for the iron flow product led to an over-pressurization event at a customer site and a sudden release of the cap to the electrolyte storage tank. The tank was not otherwise damaged and no injuries occurred, but the incident resulted in a significant spill event that we promptly reported and has since been closed with the county of jurisdiction. We conducted a full investigation and have implemented remediation steps but there is risk of damage to product or property or personal injury if such steps are not followed in the future.

In addition, for customers that have purchased maintenance services from us, unforeseen issues may arise that may require maintenance beyond what we currently expect.expect or we may be unable to deliver the maintenance services. We have no experience providing maintenance on a large scale or over an extended period and since our existing and potential customers are geographically dispersed, if any recurring or significant one-off maintenance is required, this could increase our costs.costs or ability to service.

We operate in rapidly changing and competitive markets and our expectations for future performance are subject to the risks and assumptions made by management with respect to our industry. Operating results are difficult to predict because they generally depend on our assessment of the timing of adoption of our technology and energy storage products, which is uncertain. Expectations for future performance are also subject to significant economic, competitive, industry and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond our control, and subsequent developments may affect such expectations. As discussed elsewhere in thisour Quarterly Report on Form 10-Q,10-Q for the quarter ended on March 31, 2026 (the “Q1 Form 10-Q”), any future sales and related future cash flows may not be realized in full or at all. Furthermore, our planned expansion into new revenue streams such as producing sodium-ion BESS or franchising opportunities for our energy storage products may never be realized or achieve commercial success, whether because of lack of market adoption of our energy storage products, competition or otherwise. Important factors that may affect the actual results and cause our operating and financial results and market growth expectations to not be achieved include risks and uncertainties relating to our business, industry performance, the regulatory environment, general business and economic conditions and other factors described under the section entitled “Cautionary Note Regarding Forward-Looking Statements” in thisthe Quarterly Report onQ1 Form 10-Q.

We have had net losses on a U.S. GAAP basis in each fiscal year since our inception. For the threesix months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, we had $15.9$31.5 million and $18.0$29.1 million in net losses, respectively, and as of MarchJune 31,30, 2026 we had $861.7$877.3 million in accumulated deficit. In order 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, reduce our manufacturing and warranty costs, competitively price and grow demand for our products, and seize new market opportunities by leveraging our proprietary technology and our manufacturing processes for novel solutions and new products. Failure to do one or more of these things could prevent us from achieving sustained, long-term profitability.

We expect, based on our sales pipeline, to grow revenues over time. However, our revenue may not grow as expected for a number of reasons, many of which are outside of our control, including the early stage nature of our pipeline opportunities, a decline in global demand for sodium-ion BESS and iron flow battery storage products, increased competition, or our inability to accelerate our pipeline development and fulfill orders to capitalize on growth opportunities. If we are not able to continue to generate and grow revenue and raise the capital necessary to support our operations, we may be unable to continue as a going concern.

In addition, some of the iron flow systems we have shipped to date have not met the specifications set forth in the relevant purchase contracts, resulting in additional installation time and costs in order to receive customer acceptance of such units. If we are unable to meet contractual performance specifications of our units, customers may bring claims against us or choose to cancel or postpone orders, which would adversely affect our business, financial condition and results of operations.

We believe that, compared to lithium-ioncompeting batteries,battery technology, our energy storage solutions offer significant benefits, including using widely available, low-cost materials with no rare mineral components, being substantially recyclable or reusable at end-of-life, having a 25-year iron flow product design life, and having a wide thermal operating range that reduces the need for fire suppression and heating (except where otherwise required by applicable law), ventilation and air conditioning equipment, which would otherwise be required for use with lithium-ion batteries. While we believe that total cost of ownership pricing is thea key consideration, lithium-ion battery pack selling costs have decreased significantly over time and may decrease further in the future. While we have also decreased our selling costs, if we are unable to further decrease our costs or if our manufacturing costs increase, if our or our customers’ expectations regarding the operation, performance, maintenance and disposal of our energy storage products are not realized, or if local regulations require alterations to our equipment, then we could have difficulty marketing our energy storage products as a superior alternative to already-established technologies. This would also impact the market reputation and adoptability of our energy storage products.

We also currently market our iron flow energy storage products as having superior design cyclability to other energy storage solutions on the market. However, in general, flow batteries have suffered challenges running multiple cycles over their lifetime without experiencing degradation in storage capacity and, in particular, earlier iterations of our iron flow batteries, specifically our first-generation units, failed at cycling reliably. All of our first-generation units (except for one) have been returned to us and the continuing risk of product failure on our first-generation units is limited. However, there is no assurance that our later-generation units will not fail or have issues cycling in the future if our technology does not operate as expected. If our technology is inadequate or our energy storage solutions fail to operate as expected or designed, our warranty costs may be significant and current and potential customers may choose to cancel or postpone orders or seek alternative solutions for their energy storage needs, which would adversely affect our business, financial condition and results of operations.

Our plans are dependent on the development of market acceptance of our productsproducts, sodium-ion BESS and long durationlong-duration energy storage technology.

Our plans are dependent upon market acceptance of our products and our ability to effectively educate potential customers on the benefits of our technology. IronBoth sodium-ion BESS and iron flow batteries represent an emerging market, and we cannot be sure that potential customers will accept ironthese flow batteriestechnologies as a replacementreplacements for traditional power sources. In particular, traditional lithium-ion batteries, which are already produced on a large global scale and have widespread market acceptance, offer higher power density and round-trip efficiency than our iron flow batteries.batteries and more than our sodium-ion BESS are expected to. If customers were to place greater value on power density and round-trip efficiency over what we believe to be the numerous other advantages of our technology, then we could have difficulty positioning our sodium-ion BESS and iron flow batteries as a viable alternative to traditional lithium-ion batteries and our business would suffer.

The energy storage markets continue to evolve and are highly competitive. Many of our current and potential competitors are large entities at a more advanced stage in development and commercialization than we are and, in some cases, have substantially greater financial, marketing, personnel and other resources, to increase their market share. OurAs keywe competitorsexpand includeour differentenergy storage portfolio into a wider range of duration applications, we compete across the full duration curve against a wide range of energy storage technologies suchand asproviders. Competing technologies include lithium-ion batteries,batteries lithium metal batteries,(including lithium iron phosphate batteries,and lithium metal batteries), sodium-ion batteries, vanadium or zinc bromine batteries, sodium sulfur batteries, vanadium and zinc bromine flow batteries, other flow and metal-based chemistries, nickel-hydrogen batteries, compressed air, liquid air, gravity-based and thermal storage, hydrogen, fuel cellcells and pumped-storage hydropower. Lithium-ion technology, and in particular lithium iron phosphate, remains the dominant incumbent across most storage durations, and continued declines in lithium-ion pricing, together with its established manufacturing scale, could make it more difficult for our non-lithium solutions to compete on cost. Key competitors inoffering thelithium-ion-based traditional lithium-ion spacesystems include Contemporary Amperex Technology Co. Limited, LG Chem,Energy Solution, Ltd., Samsung ElectronicsSDI Co., Ltd., Sungrow Power Supply Co., Ltd., and Tesla, Inc. Key competitors inoffering thenon-lithium non-lithium-ion spacetechnologies include EnerVenue, Inc., Invinity Energy Systems, CellCube, CMBlu Energy AG, EnerVenue, Inc., Energy Dome, Energy Vault, Enerox GmbH,GmbH (CellCube), Eos Energy Enterprises, Inc., Form Energy, Highview Power PTY Ltd.,Power, Hydrostor, LockheedInvinity MartinEnergy (GridStarSystems, Flow),Malta Inc., and MaltaPeak Energy. As we develop digital and software-enabled offerings to optimize the dispatch, performance and economics of our systems, we also increasingly compete with providers of energy management, dispatch and optimization software, including Fluence Energy, Inc., Stem, Inc., Tesla, Inc. and Wärtsilä Corporation. If our competitors continue to penetrate the energy storage market, our prospects for gaining market share will be diminished.

We also bear the risk of non-payment or late payments by our customers. In the near term, we will depend on a relatively small number of customers for a significant portion of our revenue. If these customers fail to pay us or pay us late, cash flow from operations areis impacted and our operating results and financial condition could be harmed. If a contract is cancelled due to the customer’s inability to pay, the redeployment of our product(s) could be expensive, and it may take time to find a replacement customer to whom our product(s) could be redeployed in a cost-effective manner.

We are a company with a limited operating history. Having only recently transitioned from research and development activities to commencing commercial production and sales, it is difficult to predict our future revenues and budget appropriately budget for our expenses, and we may have limited insight into trends that may emerge and affect our business. We anticipate being required to provide expectations of our demand to our current and future suppliers prior to the scheduled delivery of products to potential customers. Currently, there is limited historical basis for making judgments on the demand for our products and services or our ability to develop, manufacture, and deliver sodium-ion BESS and iron flow batteries, or our profitability in the future. If we overestimate our manufacturing requirements, our suppliers may have excess inventory, which indirectly would increase our costs. If we underestimate our manufacturing requirements, our suppliers may have inadequate inventory or capacity, which could interrupt manufacturing of our products and result in delays in shipments and revenues. In addition, lead times for materials and components that our suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If we fail to order sufficient quantities of product components in a timely manner, the delivery of batteries to our potential customers could be delayed, which would harm our business, financial condition and results of operations.

We invest significantly in research and development, and toTo the extent our research and development investments are not sized appropriately, directed efficiently or do not result in material enhancements to our products and technologies, our business and results of operations would be harmed.

A key element of our strategy is toachieving investthe significantlyappropriate level of investment in our research and development efforts to enhance the features, functionality, performance and ease of use of our products and technologies to address additional applications that will broaden the appeal of our products and technologies and facilitate their broad use. Research and development projects can be technically challenging and expensive. As a result of the nature of research and development cycles, there will be delays between the time we incur expenses associated with research and development activities and the time we are able to offer compelling enhancements to our products and technologies and generate revenue, if any, from those activities. If we do not expend athe significantappropriate amount of resources on research and development efforts thatto do not lead toachieve the successful introduction of new products, functionality or improvements that are competitive in our current or future markets, our business and results of operations will suffer.

Further, we have in the past and may again in the future need to furlough or reduce in force a substantial number of our employees, which may yield unintended consequences, such as delays or a reduction inreducing our ability to achieve our business objectives, delaying the development and commercialization of our products, including our iron flow battery program, impairing our ability to respond to technological or market developments, making future retention and recruiting of qualified personnel more difficult, unexpected attrition, decline in employee productivity, negative impacts on internal controls over financial reporting, and reduced employee morale, which may cause our employees to seek alternative employment.

We currently are and in the foreseeable future will continue to be significantly dependent on revenue generated from our Energy Basenew product offerings and the servicing thereof while our core component technology productization and future product offerings are under development.thereof. Given that our business currently depends on a limited number of products to the extent our products are not well-received by the market, our sales volume, business, financial condition and results of operations would be materially and adversely affected.

We have entered into contracts and other agreements to sell our products in a number of different geographic markets, including the United States, Europe (European Union (“EU”) and non-EU), and Australia. We have in the past, and may in the future, evaluate opportunities to expand into new geographic markets and introduce new product offerings and services that are a natural extension of our existing business. For example, we are launching our Energy Base product and are actively bidding our sodium-ion BESS and iron flow products on projects for daily cycling applications in the 12 to 24 hour long duration storage market to serve emerging AI/data center driven load needs and to firm baseload renewable production; however, there is no assurance that we will be able to secure any contracts for, or derive any revenue from, the installation of energy storage systems forthese applications in the 12 to 24 hour long duration storage market.markets. We also may from time to time engage in acquisitions of businesses or product lines with the potential to strengthen our market position, enable us to enter attractive markets, expand our technological capabilities, or provide synergy opportunities.

We may from time to time selectively pursue onor anbe opportunisticapproached basisrelated to acquisitions of additional businesses that complement our existing business and footprint. The success of any such growth strategy would depend, in part, on selecting strategic acquisition candidates at attractive prices and effectively integrating their businesses into our own, including with respect to financial reporting and regulatory matters. There can be no assurance that we will be able to identify attractive acquisition candidates or complete the acquisition of any identified candidates at favorable prices and upon advantageous terms and conditions, including financing alternatives. In addition, general economic conditions or unfavorable capital and credit markets could affect the timing and extent to which we can successfully acquire new businesses, which could limit our revenues and profitability.

While our current supply chain is largely domestic, it includes Chinese sources for various parts. Escalating trade tensions, particularly between the United States and China have led to increased tariffs and trade restrictions, including current and recent tariffs applicable to certain electronic materials and components of our products. These tariffs include Section 301 tariffs that the U.S. Trade Representative has imposed on certain imports from China since 2018,2018 under authorities provided in Section 301 of the Trade Act of 1974, the additional fentanyl-related tariff on most Chinese-origin goods and some Canadian- and Mexican-origin goods as implemented by the U.S. government between February 2025 and February 2026,2026 under the International Emergency Economic Powers Act (IEEPA), and the reciprocal tariffs implemented by the U.S. government on imports from most U.S. trading partners between April 2025 and February 2026.2026 under IEEPA. Further, the United States has implemented or scheduled additional global sector-specific Section 232 tariffs on various items, including certain steel and aluminum products, automobiles and automotive components, and copper products. After the Supreme Court held that the fentanyl-related and reciprocal tariffs implemented under the International Emergency Economic Powers ActIEEPA were ultra vires, the United States ceased collection of these tariffs and implemented a global, 10 percent tariff on many of the same items under authorities provided in Section 122 of the Trade Act of 1974.1974 between February 2026 and July 2026. Upon expiration of the Section 122 temporary import surcharge on July 24, 2026, the U.S. government implemented tariffs of up to 10% or 12.5% on imported commodities from 60 U.S. trading partners, with certain items excepted, under authorities provided under Section 301, following a determination by the U.S. Trade Representative that these trading partners have insufficiently enforced or implemented forced labor laws. These newest Section 301 tariffs apply in addition to preexisting tariffs, including the earlier Section 301 tariffs on certain imports from China.

The U.S. government ishas in the process of establishing a system to automate thebegun processing of refunds for previous payments made in connection with the tariffs imposed under the International Emergency Economic Powers Act, but the timing, availability, and amount of such refunds we may be able to seek is uncertain, as is whether or how U.S. tariff policy might change in the future or how other countries may retaliate or respond to changing U.S. tariff policies. For example, additional tariffs may be forthcoming under Section 232, Section 301, Section 122, Section 338, and/or other legal authorities, and the U.S. government has already initiated investigations in furtherance of such potential additional tariffs.

Current and recent tariffs and the possibility of additional tariffs in the future have created uncertainty, particularly if we are not able to second source parts from alternative vendors.vendors or if supply is unavailable from our domestic suppliers. There can be no guarantee that these developments will not negatively impact the price of the positive electrode used in our products. Additionally, existing, future, or potential tariffs may negatively affect key customers and suppliers, and other supply chain partners. Such outcomes could adversely affect the amount or timing of our revenues, results of operations or cash flows, and cause sales volatility, price fluctuations or supply shortages or cause our customers to advance or delay their purchase of our products.

Our relationships with related parties, SBE, an affiliate of SoftBank Group Corp., and Honeywell, are subject to various risks which could adversely affect our business and future prospects. There are no assurances that we will be able to commercialize ironour flow batteriesproducts from our joint development relationship with such parties. In addition, neither SBE nor Honeywell has any obligation to order any energy storage products from us under the agreements with such business partners, including at any price point.

On September 21, 2023, we signed a Supply Agreement with UOP LLC (“UOP”), an affiliate of Honeywell International Inc. (“Honeywell”), pursuant to which UOP may purchase equipment supplied by us, and we agreed to issue additional warrants to purchase common stock to UOP, consisting of (i) an initial Performance Warrant to issue up to 51,717 shares of common stock, issued on September 21, 2023 in exchange for a prepayment of equipment by UOP in the amount of $15 million, and (ii) additional Performance Warrants (not to exceed an aggregate value of $15 million based on target purchase amounts of up to $300 million by 2030) to be issued on an annual basis for the five-year period beginning in 2026, based on UOP’s purchase of additional equipment after execution of the Supply Agreement. On September 21, 2023, we and UOP also entered into a Joint Development Agreement,Agreement or have adequate resources available, pursuant to which we and UOP have agreed to work together to collaborate and engage in certain research and development activities generally related to flow battery technology, and a Patent License Agreement, pursuant to which UOP will license certain patent rights to us. However, Honeywell is under no obligation to place any additional firm orders with us at any price point, and any future orders may be subject to future pricing or other commercial or technical negotiations, which we may not be able to satisfy, resulting in a diminished potential value of this relationship to us. In addition, while activities under the Joint Development Agreement have commenced, we and Honeywell may not be able to agree on future activities and endeavors to pursue under the Joint Development Agreement, activities under the Joint Development Agreement may not be successful, or the Patent License Agreement may have limited value to us.

We believe we have the opportunity to establish attractive margin unit economics if we are able to continue to reduce production costs and scale our operations. Our future financial performance will depend on our ability to deliver on these economies of scale with lower product costs. We believe our business model is positioned for scalability due to the ability to leverage the same core technology in the Energy Base’s modularized form for different project size and duration needs across our customer base. We anticipate significant reductionimprovements in our cost of goodsmargins through our cost reduction initiatives, including design optimization from value engineering, strategic supply chain projects,initiatives and furtherthrough automationproduct diversification with the addition of oursodium-ion manufacturingtechnology-based processes. Additionally, significant improvements in manufacturing scale are expected to decrease the cost of materials and direct labor. We expect our indirect cost of revenue and operating expenses to increase when we ramp up our manufacturing and sales activities. We further expect an increase in expenses related to the implementation of cost reduction projects and initiatives in our supply chain, manufacturing engineering and research and development functions.products. Achievement of margin targets and cash flow generation is dependent on the executioncontinuation of theseour cost outcontrolling initiatives.initiatives and on the realization of improved margins on our new products.

Our near-term and medium-term revenue is expected to be generated primarily from Bridge™ sodium-ion and Energy Base and core technology componentBESS sales. We believe our unique technology provides a compelling value proposition and an opportunity for favorable margins and unit economics in the energy storage industry in the future.

We are closely monitoring macroeconomic developments, including global supply chain challenges, foreign currency fluctuations, fluctuations in inflation and interest rates and monetary policy changes, as well as global events, such as the Russia-Ukraine conflict, geopolitical tensions involving China, the conflict between the U.S.,United States, Israel and Iran, tensions in the Middle East, tensions in the Middle East, U.S. interventions in Venezuela, and other areas of geopolitical tension around the world, and how they have and may continue to adversely impact our and our customers’, contractors’, suppliers’ and partners’ respective businesses. In particular, weak economic conditions or significant uncertainty regarding the stability of financial markets related to stock market volatility, inflation, recession, governmental fiscal, monetary and tax policies, or tariffs and trade restrictions, among others, could adversely impact our and our customers’ business, financial condition and operating results. In addition, general and ongoing tightening in the credit market, lower levels of liquidity, increases in rates of default and bankruptcy, and significant volatility in equity and fixed-income markets could all negatively impact our customers, contractors, suppliers and partners. As a result of these macroeconomic forces, during 2025 and the first quarterhalf of 2026 we experienced supply constraints, and we have experienced in the past and may experience again in the future increased shipping delays for certain customer contracts, and delays in timing of payments from some of our customers.contracts. Some or all of these negative trends may continue during the remainder of 2026. While the Company has not experienced any significant impacts from these disruptions to date, future impacts are unknown and they could adversely affect our business, supply chain, partners or customers.

On August 16, 2022, the PresidentInflation ofReduction Act (the United“IRA”) Stateswas signedenacted, into law the IRA, which extendedextending the availability of investment tax credits (“ITCs”) and production tax credits (“PTCs”) and made significant changes to the tax credit regime that appliesapplicable to solar and energy storage products. As a result of changes made by the IRA, theThe ITC for solar generation projects was extended at that time until at least 2033 and expanded to include stand-alone battery storage projects. This expansion provided more certainty on the tax incentives available to stand-alone battery storage projects in the future. Subject to recently enacted legislation discussed below, we believe the IRA will increase demand for our services due to the extensions and expansions of various tax credits that are critical for our customers’ economic returns, while also providing more certainty in and visibility into the supply chain for materials and components for energy storage systems. On July 4, 2025, the One Big Beautiful Bill Act (H.R. 1) (the “OBBB”) was signedenacted into law by the President of the United States. The OBBB containswith a number of changes to the IRA that significantly impact the availability of the ITCs under Sections 48(a) and 48E of the Code and Section 45X PTCsPTCs, asincluding discussed further below, but the Company’s domestic manufacturing and supply chain structure generally should benefit from the addition ofnew foreign entity of concern limitations.limitations, as discussed further below. We believe the IRA will nevertheless increase demand for our services by improving our customers’ economic returns, while also providing more visibility into the supply chain for materials and components for energy storage systems. We are continuing to evaluate the overall impact and applicability of the IRA and OBBB to our results of operations as guidance is issued and further legislative changes are enacted, including the passage of comparable legislation in other jurisdictions, to our results of operations going forward.jurisdictions.

Section 45X of the Code, as enacted by the IRA, currently provides a PTC that can be claimed on certain battery components manufactured in the U.S. and sold to unrelated U.S. or foreign customers after 2022, through the end of 2032. The 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 for battery cells and $10 per kWh of capacity for battery modules. The 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 the end of 2032, subject to additional qualification requirements in the recently enacted OBBB as discussed further below, including qualifications for integrated components sold after December 31, 2026 to the effect that any primary component integrated into a secondary component must be produced within the same manufacturing facility, at least 65 percent of the total direct material costs of the secondary component must be attributable to primary components which are domestically mined, produced or manufactured, and the secondary component must be sold to a third party.2026. The Section 45X PTC may be refundable by the Internal Revenue Service (the “IRS”) or saleable to unrelated third parties. We continue to evaluate the impact of the OBBB; however, we expect these credits will have a positive impact on our gross margins in the future. Further, on October 28, 2024, Treasury and the IRS issued final regulations providing guidance on requirements that taxpayers must satisfy to qualify for the Section 45X PTC, including the definition of a Section 45X manufacturing facility. We continue to evaluate the impact of the OBBB on our gross margins, including whether these credits will ultimately have a net positive effect.

Sales and marketing expenses consist primarily of salaries, bonuses, benefits and stock-based compensation for marketing and sales personnel and related support teams. To a lesser extent, sales and marketing expenses also include professional services costs, travel costs, and trade show sponsorships. We expect that our sales and marketing expenses will increaseremain overat timesimilar levels despite cost reduction and cash conservation measures as we continue to hire additional personnel to scalemarket our business.expanding product roadmap.

General and administrative expenses consist of personnel-related expenses for our corporate, executive, finance, legal, and other administrative functions, as well as expenses for outside professional services and insurance costs. Personnel-related expenses consist of salaries, bonuses, benefits and stock-based compensation. To a lesser extent, general and administrative expenses include depreciation and other allocated costs, and supplies. We expect some of our general and administrative expenses to increase or remain at similar levels despite cost reduction and cash conservation measures as we expand our operations and manufacturing capacity to support the growth of our business, and as a result of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Gain (loss) on revaluation of common stock warrant liabilities

Gain (loss) on revaluation of common stock warrant liabilities consists of periodic fair value adjustments related to our common stock warrants.

Comparison of Three and Six Months Ended MarchJune 31,30, 2026 to Three and Six Months Ended MarchJune 31,30, 2025

Revenue decreased by $0.5$2.3 million or 79%million, from $0.6$2.4 million for the three months ended MarchJune 31,30, 2025 to $0.1 million for the three months ended MarchJune 31,30, 20262026, as a result of decreased sales volume as we continue to wind down existing contracts while developing the next product offeringofferings in the sodium-ion Bridge™ BESS and iron flow Energy Base. For the three months ended MarchJune 31,30, 2026, we recognized revenue for site preparation work and extended warranty services.services and customer reimbursements for freight, travel, and other out-of-pocket expenses. For the three months ended MarchJune 31,30, 2025, we delivered and recognized revenue for Energy Warehouses, Energy Centers, and other related equipment, primarily to related parties. The sales to related parties included both completed and extendedin-process warrantyenergy services.storage systems and core technology components.

Cost of revenue decreasedincreased by $1.6an millionimmaterial or 18% from $8.7 millionamount for the three months ended MarchJune 31, 2025 to $7.2 million for the three months ended March 31,30, 2026 asand aJune result30, of2025, fewerholding deliveriesat of$7.5 equipmentmillion, towith customers.decreases Thein volume driven decreasescosts wereand partiallyin LCNRV losses offset by an increase in depreciation expense of $0.8$3.6 million related to abandonment of certain fixed assets as discussed within Note 4, Property and Equipment, Net, as well as ana increasedecrease in expensebenefits relatedfrom toPTCs inventorywhich reservesoffset cost of $1.0 millionrevenue in the three months ended MarchJune 31,30, 20262025 comparedby to$638 thousand and did not reoccur in the three months ended MarchJune 31,30, 2025.2026.

Research and development expenses increased by $0.1$0.8 million or 6%55% from $2.5$1.4 million for the three months ended MarchJune 31,30, 2025 to $2.6$2.2 million for the three months ended MarchJune 31,30, 2026. The increase was driven by purchases of intellectual property of $0.9 million, partially offset by reductions in personnel-related expenses, including stock-based compensation.

Sales and marketing expenses decreased by $1.7$2.4 million or 87%75% from $2.0$3.3 million for the threesix months ended MarchJune 31,30, 2025 to $0.3$0.8 million for the threesix months ended MarchJune 31,30, 2026. The decrease in both periods is driven by reduced personnel-related expenses, including stock-based compensation, decreased outside services and professional expenses, and marketing and trade show expenses.

General and administrative expenses decreasedincreased by $1.7$1.2 million or 31%33% from $5.6$3.7 million for the three months ended MarchJune 31,30, 2025 to $3.9$5.0 million for the three months ended MarchJune 31,30, 2026. The decreaseincrease is duedriven toby decreasedlegal outsideexpense servicesassociated with contingent liability accruals as presented within Note 6, Accrued and professionalOther expenses.Current Liabilities and further discussed in Note 9, Commitments and Contingencies, partially offset by decreases in personnel-related expenses, including stock-based compensation.

Interest (expense) income, net was $2.5$0.6 million of interest expense for the three months ended MarchJune 31,30, 2026, compared to $30 thousand of interest income for the three months ended June 30, 2025. Interest (expense) income, net was $3.1 million of interest expense for the six months ended June 30, 2026, compared to $0.2 million of interest income for the threesix months ended MarchJune 31,30, 2025. The interest income was earned on our short-term investment portfolio. In the three and six months ended MarchJune 31,30, 2026, interest income was offset by interest incurred on the Yorkville Promissory Note and sale-leaseback financing obligation.

Gain (loss) on revaluation of common stock warrant liabilities

The change in fair value of common stock warrant liabilities resulted in gains of $344$166 thousand and losses of $115$459 thousand for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively. The change in fair value of common stock warrant liabilities resulted in gains of $510 thousand and of $344 thousand for the six months ended June 30, 2026 and June 30, 2025, respectively. The changes in fair value of warrant liabilities were driven by changes in the market price of our common stock over the respective periods.

Other income, net wasremained $10materially consistent for the three and six months ended June 30, 2026, at $11 thousand for the three months ended MarchJune 31,30, 2026 compared to $19$12 thousand for the three months ended MarchJune 31,30, 2025.2025, Theand decreaseat of$21 47%thousand duringfor the threesix months ended MarchJune 31,30, 2026 was duecompared to a$31 lackthousand of recurrence of immaterial miscellaneous income fromfor the disposalsix ofmonths excessended materialsJune in30, 2025.

Since our inception, we have financed our operations primarily through the issuance and sale of equity and debt securities and loan agreements. We have incurred losses since inception and have negative cash flows from operations. We anticipate that losses will continue in the near term. During the threesix months ended MarchJune 31,30, 2026, we incurred net losses of $15.9$31.5 million and used $13.5$22.4 million of cash in operating activities. As of MarchJune 31,30, 2026, we had total unrestricted cash and cash equivalents of $15.5 million and short-term investments of $6.0 million, or total liquid assets of $21.5$10.8 million.

We have expanded certain cost reduction and cash conservation measures, including ongoing evaluation of workforce staffing requirements and essential business functions, and the implementation of a furlough for a substantial number of our employees as of May 30, 2025functions to better align organizational costs with business continuity, further reduction of material purchases by continuing to minimize spending until firm orders are received, refining our focus on R&D and engineering project efforts towards highest priority, greatest return projects and additional reduction in outside vendor spending.

Despite the cost reductions and cash conservation measures, we will need additional debt or equity financing in the near term in order to meet our near-term operating cash flow requirements, and accordingly substantial doubt exists as to our ability to continue as a going concern for 12 months from the issuance of the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. We have based our near-term operating cash flow requirements on certain assumptions, including that cash usage in the latter half of 2025 and first half of 2026 is predictive of needs in 2026,the 12 months following the date of this report, and no other significant unanticipated contingencies will arise. These assumptions may be inaccurate, and we may use our available capital resources sooner than we currently expect. In addition, we may not be successful in raising additional funds.funds on acceptable terms and conditions, or at all.

We have a standby letter of credit with Bank of America for $0.6 million as security for the performance and payment of the Company’s obligations under a customer agreement. The letter of credit is automatically extended in successive six-month periods on May 19 and November 19 of each calendar year, unless the beneficiary cancels it or Bank of America elects to not extend it. Based on the terms of the customer agreement, we expect the letter of credit to remain in effect until the date on which the warranty period under the agreement expires, which is anticipated to be more than a year from the balance sheet date. As of MarchJune 31,30, 2026, $0.6 million was pledged as collateral for the letter of credit and recorded as restricted cash, non-current. There were no draws against the letter of credit during the three and six months ended MarchJune 31,30, 2026 and 2025.

We have a standby letter of credit with Bank of America for $0.2 million in support of our customs and duties due on imported materials. The letter of credit is automatically extended in successive one-year periods on May 19 of each calendar year, unless the beneficiary cancels it or Bank of America elects to not extend it. We expect the letter of credit to remain in effect untilfor Maya 19,period 2026.more than a year from the balance sheet date. As of MarchJune 31,30, 2026, $0.1 million was pledged as collateral for the letter of credit and recorded as restricted cash, current. There were no draws against the letter of credit during the three and six months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

We have a standby letter of credit with Bank of America for $0.3 million as security for our subsidiary’s performance under a 2025 customer agreement. The letter of credit is automatically extended in successive one-year periods on December 31 of each calendar year until 2037, unless the beneficiary cancels it or Bank of America elects to not extend it. We expect the letter of credit to remain in effect throughfor thea expiration of the customer agreement, which is anticipated to beperiod more than a year from the balance sheet date. As of MarchJune 31,30, 2026, $0.3 million was pledged as collateral for the letter of credit and recorded as restricted cash, non-current. There were no draws against the letter of credit during the three and six months ended MarchJune 31,30, 2026 or since its inception.

On November 1, 2024, we entered into a Credit Agreement with Export-Import Bank of the United States, as lender, and related agreements related to the financing of two production lines (the “Credit Agreement”). The Credit Agreement provides for a secured loan facility in an aggregate principal amount of up to $22.7 million, of which $20.0 million is available to be borrowed for equipment financing and the balance will be used to finance an exposure fee and transaction expenses. The loan facility has a maturity date of June 30, 2031. Half of the proceeds of the loan facility may be used on a retroactive basis for the financing of our existing automated battery assembly line and the remainder may be used for the financing or refinancing of an additional line upon the closing of an equity raise milestone. As of MarchJune 31,30, 2026, we had no outstanding borrowings under the Credit Agreement. Any obligations under the Credit Agreement are secured pursuant to a security agreement granting EXIM a first priority security interest in the financed equipment and a securities account containing collateral consisting of cash and cash equivalents in an amount equal to a substantial portion of the disbursements under the Credit Agreement, reportable as restricted cash, that decreases upon the equity raise milestone. See Note 9, Commitments and Contingencies, to our financial statements included elsewhere in this Quarterly Report on Form 10-Q for further discussion.

On November 13, 2025, in connection with an “at the market offering” program, we entered into a Salessales Agreementagreement (the “Original Sales Agreement”) with Yorkville Securities, LLC (“now known as Yorkville Securities”Ives & Co., LLC), BMO Capital Markets Corp., Canaccord Genuity LLC, Needham & Company, LLC and Stifel, Nicolaus & Company, Incorporated (the “Agents”) pursuant to which we may sell, from time to time, shares of our common stock during the term of the Original Sales Agreement, through the Agents acting either as agent or principal. WeOn July 16, 2026, the Company entered into an amendment to the Original Sales Agreement (as amended, the “Sales Agreement”) which (i) terminated the original sales agreement with respect to BMO Capital Markets Corp., Canaccord Genuity LLC, Needham & Company, LLC and Stifel, Nicolaus & Company, Incorporated; (ii) added Roth Capital Partners, LLC as an additional sales agent, and (iii) granted Roth Capital Partners, LLC the responsibilities of acting as a “qualified independent underwriter” within the meaning of Rule 5121 of the Financial Industry Regulatory Authority in connection with this offering, replacing Canaccord as “qualified independent underwriter.” In connection with such amendment, we filed aan amendment to the prospectus supplement with the SEC relating to the offer and sale of our common stock having an aggregate gross sales price of up to $75 million pursuant to the Sales Agreement. We intend to use the net proceeds from the offering, if any, in compliance with the terms of the Promissory Note, which generally requires that proceeds first be used to satisfy any installment payments under the Promissory Note due within thirty days. After any such payments, 80% of the remaining proceeds from this offering will be used to satisfy installment payments under the Promissory Note in direct order of maturity until the Promissory Note is repaid in full. In respect of the remaining 20% of proceeds that we may receive while the Promissory Note is outstanding, and all net proceeds we may receive following the repayment of the Promissory Note, we intend to use such net proceeds for working capital and general corporate purposes.

Net cash used in operating activities was $13.5$22.4 million for the threesix months ended MarchJune 31,30, 2026, which is comprised of net loss of $15.9$31.5 million partially offset by depreciation and amortization expense, including asset abandonment charges, of $7.4 million and non-cash interest expense of $2.5 million, depreciation and amortization expense of $2.4 million, stock-based compensation of $1.1 million, and non-cash lease expense of $0.4$2.8 million. Net changes in operating assets and liabilities used $3.5$3.3 million of cash driven by decreases in accounts payable, accrued and other current liabilities, and operating lease liabilities, partially offset by a decrease in prepaid expenses and other assets.

Net cash used in operating activities was $18.2$30.6 million for the threesix months ended MarchJune 31,30, 2025, which is comprised of net loss of $18.0$29.1 million, and non-cash interest income of $0.1$0.2 million, partially offset by stock-based compensation of $1.2 million and depreciation and amortization expense of $1.5$3.1 million and stock-based compensation of $2.7 million. Net changes in operating assets and liabilities used $3.4$7.7 million of cash driven by an increasedecreases in deferred revenue, accrued and other current liabilities, a decrease in inventory, increases inand accrued product warranties, operating lease liabilities and deferred revenue, and an increase in accounts receivable, partially offset by an increase in accounts payable and a decrease in prepaid and other current assets.payable.

Cash flows from investing activities to date have been comprised primarily of purchases and sales of short-term investments and purchases of property and equipment.

Net cash provided by investing activities was $0.7$6.2 million for the threesix months ended MarchJune 31,30, 2026, and $13.3$16.9 million for the threesix months ended MarchJune 31,30, 2025, and in both periods related to maturities of short-term investments partially offset by purchases of property and equipment.

Cash flows from financing activities toin datethe current and prior year have consisted of the Business Combination and the issuance of debt and equity securities and loan agreements.

Net cash provided by financing activities was $14.0$12.9 million for the threesix months ended MarchJune 31,30, 2026, which consisted primarily of proceeds from the issuancesissuance of common stock under the Yorkville ATM program and issuances of common stock and pre-funded warrants under the RDO, partially offset by net repayments on financing obligations.

Net cash provided by financing activities was $13$803 thousand for the threesix months ended MarchJune 31,30, 2025, which consisted of proceeds from the issuances of common stock optionsunder exercisedthe Baird ATM program and proceeds from our ESPP, offset by repurchases forof shares from employees for income tax withholding purposes.

Our contractual obligations and other commitments as of MarchJune 31,30, 2026 consist of lease commitments and three standby letters of credit and the Credit Agreement. The letters of credit serve as security for our performance and payment obligations under a customer agreement, in support of our customs and duties due on imported materials, and as security for our subsidiary’s performance under a 2025 customer agreement. They are secured by a total of $1.0 million pledged as collateral. Our obligations under the Credit Agreement are secured pursuant to a security agreement granting EXIM a first priority security interest in the financed equipment and a securities account containing collateral consisting of cash and cash equivalents in an amount equal to a certain portion of the disbursements under the Credit Agreement that decreases upon the equity raise milestone and will be reported as restricted cash. There were no draws against the letters of credit during the three and six months ended MarchJune 31,30, 2026 and 2025. Additionally, we are committed to noncancellable purchase commitments of $0.1 million as of MarchJune 31,30, 2026 and to reimburse UOP a minimum of $7.9 million for research and development expenses incurred through December 31, 2028 under the JDA (as defined herein).