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

We incurred net losses of $100.2$73.0 million and $53.4$100.2 million for the years ended December 31, 20242025 and 2023,2024, respectively, and had an accumulated deficit of $298.9$371.9 million and $198.7$298.9 million from our inception through December 31, 20242025 and 2023,2024, respectively. As discussed in “Business - Our Technology,” to date, we have only validated the capabilities of our Li-Metal battery cell technology and have not produced Li-Metal batteries for sale. As a result, sinceSince inception, we have not achieved profitable operations or positive cash flows from our operations.

We believe that we will continue to incur operating and net losses as we continue to incur significant expenses in connection with our research and development efforts. As discussed in other risk factors in this section, factors that could impact the timing and levels of our profitability include, but are not limited to: our ability to solve the scientific engineering and mechanical challenges to commercialize our products; the level of demand for our products; the performance of our products; the projected supply materials for our products; the cost of our investment in artificial intelligence and machine learning infrastructure; a reduction in the cost of Li-ion; average selling prices of EVs and our products; the safety of UAM use; projected production capacities of our facilities; our collaboration with OEMs; the projected gross margin achievable upon sale of our products; and the extent to which growth of EVEV, UAM, ESS drones, robotics and UAMMolecular Universe markets and continued shift in consumer preference will conform with projections.

The development, design, manufacture and sale of batteries is a capital-intensive business. We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for a number of years. To date, we have funded our operations through a combination of proceeds from the Business Combination and subsequent equity private placement in 2022 and funding received through the sales of our redeemable convertible preferred stock. These funds are expected to finance our principal sources of liquidity and ongoing costs, such as research and development relating to our Li-ion and Li-Metal batteries and the constructioncontinued development of additionalMolecular manufacturing facilities.Universe. In the future, if we are not able to fund our operations from cash flows generated from anticipated product sales, we expect that we will need to raise additional funds through a variety of possible methods, including, but not limited to, entry into joint ventures or other strategic arrangements, issuance of equity (including through at-the-market sales), equity-related or debt securities or through obtaining credit from financial institutions, as well as anticipated future revenue from product sales.

We believe that our cash on hand and marketable securities will be sufficient to meet our working capital and capital expenditure requirements for a period of at least 12 months from the date of this Annual Report on Form 10-K, and also sufficient to fund us to commercialization.10-K. However, additional funding may be required for a variety of reasons, including opportunities to build an integrated supply chain in the United Statesmerger and delaysacquisition in expectedopportunities, development ofcosts for our Li-Metalbatteries batteryand cells.development costs for Molecular Universe. Our ability to successfully develop our products, commence commercial operationsproducts and expand our business will depend on many factors, including our working capital needs, the availability of equity and/or debt financing and, over time, our ability to generate positive cash flows from operations.

The market for UAM, and for use of Li-Metalour battery technology in UAM and other applications, is still emerging, and may not achieve the growth potential we expect.

The UAM market is still emerging, and it is uncertain to what extent market acceptance of UAM will grow, if at all. The market is new and rapidly evolving, characterized by rapidly changing technologies and evolving government regulation and industry standards. To our knowledge, there is no market standard battery technology for use in UAM applications. There can be no assurance that, even if the UAM market grows significantly, Li-Metalour technology will emerge as a preferred battery technology for use in UAM applications. The success of our ability to sell Li-Metalour batteries for use in UAM applications will depend on the growth and acceptance of UAM generally and the results of testing and certifications for use of our batteries in UAM applications. If the UAM market does not develop as we expect, or if our Li-Metal batteries do not perform as expected during testing for use in UAM applications, it could materially adversely affect our business, operating results, financial condition and prospects.

If and/or when commercial production of our Li-Metal battery technology commences, ourOur batteries may contain defects in design and manufacture that may cause them to not perform as expected or that may require repairs, recalls, and design changes. Our battery cells are inherently complex and incorporate technology and components that have not been used for other applications and that may contain defects and errors, particularly when first introduced. For more information, see “Part I, Item 1. Business—Our Technology.” Due to our limited operating history, we have a restricted frame of reference from which to evaluate the long-term performance of our Li-Metal batteries. There can be no assurance that we will be able to detect and fix any defects in our batteries prior to the sale to potential consumers. If our batteries fail to perform as expected, customers may delay deliveries, terminate further orders or initiate product recalls, each of which could adversely affect our sales and brand and could adversely affect our business, financial condition, operating results and prospects.

Our research and development efforts strive to create products that are on the cutting edge of technology and are meeting the evolving requirements of our customers, but competition in our industry is high. To secure acceptance of our products, we must also constantly develop and introduce cost-effective, increasingly more scalable Li-Metal batteries with enhanced functionality and performance to meet evolving industry standards. If we are unable to retain target customers, or convert early trial deployments into meaningful orders, our business, financial condition, operating results and prospects could be materially adversely affected. In addition, we may not receive adequate assistance from OEMs to commercialize our products successfully, which could impair our results of operations.

We may not be able to establish new, or maintain sufficient existing, supply relationships for necessary raw materials, newly discovered materials, components or equipmentequipment, or we may be required to pay costs for raw materials, newly discovered materials, components or equipment that are more expensive than anticipated, which could delay the introduction of our product and negatively impact our business.

Currently, we are in product development and our product design has yet to be finalized, so our volume demand is limited, and we do not have long-term supply arrangements. As volume demand grows, we expect to negotiate long-term supply contracts. For our current product development needs, we source from third-party suppliers for raw materials, components and equipment necessary to develop and manufacture our Li-Metal battery cells. For more information, see “Part I, Item 1. Business—Our Suppliers.”

To the extent that, when our volume demand so requires, if we are unable to enter into long-term agreements with our current or future suppliers on beneficial terms, or such suppliers experienceare difficulties ramping up their supplyunable to meet our long-term requirements at reasonable cost, we may need to seek alternative sources for necessary raw materials, components or equipment necessary to develop and manufacture our Li-Metal battery cells, produce the raw materials or additional components in-house, produce newly discovered materials at commercial scale for customers, or redesign our proposed products to accommodate available substitutes. To the extent that our suppliers experience any delays or inability in providing or developing their products, we could also experience delays or inability in delivering on our timelines.products.

Moreover, the price of raw materials, components and equipment could fluctuate significantly due to circumstances beyond our control. Substantial increases in prices would increase our operating costs and negatively impact our prospects. Any disruption in supply could also temporarily disrupt future research and development activities or production of our batteries and newly discovered materials until an alternative supplier is able to meet our requirements.

Changes in business conditions, unforeseen circumstances and governmental changes, as well as other factors beyond our control or which we do not presently anticipate, could affect our suppliers’ ability to deliver raw materials, components or equipment to us on a timely basis. For instance, we may be impacted by currency fluctuations, trade barriers, tariffs or shortages and other general economic or political conditions (such as the ongoing military conflict between Russia and Ukraine, throughout the Middle East, and wider regional conflict), which may limit our ability to obtain key raw materials or components for our Li-Metal batteries or significantly increase freight charges and other costs and expenses associated with our business. For more information, including the impact of current tariffs on us, see “—Risks Relating to our International Operations—The international nature of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States.” Any of the foregoing could materially and adversely affect our business, financial condition, operating results and prospects.

Our ability to manufacture our Li-Metal batteries at scale depends on our ability to build, operate and staff our facilities successfully, as well as to obtain sufficient contract manufacturing capacity.

Our manufacturing facilities consist of large-scale machinery combining many components. Such machinery will require us to make intensive capital expenditures prior to our ability to earn any product revenue. The manufacturing facility machinery may suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. Additionally, unexpected malfunctions of the manufacturing facility machinery may significantly affect the intended operational efficiency, thus materially and adversely affecting our business, financial condition and operating results.

The production of our facilities also requires us to hire and train highly skilled personnel to operate such facilities, including engineers, workers, and indirect laborers. Recruiting and training such skilled staff takes significant cost and time, and an inability to do so timely or at all inhibits the successful operation of these facilities, thus negatively affecting our business. In addition, the manufacturing of our Li-Metal batteries at facilities requires us to obtain various production licenses and permits, receive the necessary internal approvals from our customers regarding specifications and enter into agreements for the supply of raw materials, components and manufacturing tools and supplies. If we do not complete such steps in a timely manner, our manufacturing timeline or output could be significantly delayed or inhibited.

We also plan to rely in the future on contract manufacturers to complete production of certain of our productsproducts, including newly discovered materials, in a timely manner that meets our quality, quantity and cost requirements. Contract manufacturers may encounter problems during manufacturing for a variety of reasons, any of which could delay or impede their ability to meet demand for our products.

Finally, the production of our Li-Metal batteries at scale and competitive cost, compared to conventional Li-ion cells, will require us to achieve rates of throughput, use of electricity and consumables, yield, and rate of automation demonstrated for mature batteries and battery material. As we have not produced Li-Metal batteries at scale, our ability to achieve such rates is untested and subject to significant constraints and uncertainties. Operational performance and costs can be difficult to predict and are often influenced by factors outside of our control, such as, but not limited to, environmental hazards and remediation, costs associated with commissioning of machines, damages or defects in electronic systems, industrial accidents, fire and seismic activity and natural disasters, and problems with equipment vendors. Should operational risks materialize, they may result in lower yield, which would negatively affect our revenue growth and profitability as projected. Additionally, they could cause personal injury to or death of workers, the loss of manufacturing equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all of which could have a material adverse effect on our business, financial condition, operating results and prospects.

We have pursued and may continue to pursue JDAs, service contractscontracts, joint ventures and other strategic alliances, which could have an adverse impact on our business if they are unsuccessful or if we are unable to enter into new strategic alliances.

While offering potential benefits, these current and future strategic alliances with battery manufacturers, OEMsOEMs, contract suppliers and others could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by our partners and costs of establishing and maintaining new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of our partners and, to the extent any of them suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with them. For example, if we rely on our partners’ manufacturing facilities, those operations would be outside of our control. We could experience delays if our partners do not meet agreed-upon timelines or experience capacity constraints, and in turn, we could lose customers and face reputational harm.

Further, there is risk of potential disputes with any partners with whom we collaborate, and we could be affected by adverse publicity related to our partners, whether or not such publicity is related to their collaboration with us. Our ability to build a premium brand successfully could also be adversely affected by perceptions about the quality of our partners’ products. In addition, because we rely on our partners and third parties to meet our quality standards, there can be no assurance that we will successfully maintain quality standards. Finally, we may not be successful in signingentering into new JDAs, service contracts or other strategic alliances in the future, whether with new OEM partners or with existing OEM partners with whom we want to continue our relationships. Any of the foregoing could adversely affect our business, financial condition, operating results and prospects.

The EV battery market continues to evolve and is highly competitive, and certain other battery manufacturers have significantly greater resources than we do.

The EV battery market, like the EVmarket marketfor renewable energy that it services, is fast-growing, extremely competitive and driven by the innovation of both large incumbents and emerging entrants like SES. For more information, see “Part I, Item 1. Business—Competition.” Li-ion battery technology has been widely adopted and our current competitors have, and future competitors may have, greater resources than we do and may also be able to devote greater resources to the development of their current and future technologies. These competitors also may have greater access to customers and may be able to establish cooperative or strategic relationships amongst themselves or with third parties that may further enhance their resources and competitive positioning. In addition, Li-ion battery manufacturers may continue to reduce cost and expand supply of conventional batteries and therefore reduce the prospects for our business or negatively impact our ability to sell our products at a market-competitive price and yet with sufficient margins.

A number of development-stage companies are also seeking to develop new technologies for Li-Metal batteries. Potential new entrants are seeking to develop new technologies for cathodes, anodes, electrolytes and additives. Some of these companies have established relationships with OEMs and are in varying stages of development. Additionally, many OEMs are researching and investing in conventional Li-ion batteries and/or Li-Metal battery efforts and, in some cases, in battery development and production. Furthermore, other companies are developing alternative technologies such as advanced diesel, ethanol, fuel cells or compressed natural gas, as well as potential improvements in the fuel economy of the internal combustion engine. We expect competition in battery technology and EVs to intensify due to increased demand for thesehigh vehiclesenergy anddensity a regulatory push for EVs, continuing globalization, and consolidation in the worldwide automotive industry.batteries. Developments in alternative technologies or improvements in battery technology made by competitors may materially adversely affect the sales, pricing and gross margins of our batteries. If a competing technology is developed that has superior operational or price performance, our business will be harmed. Similarly, if we fail to accurately predict and ensure that our battery technology can address customers’ changing needs or emerging technological trends, or if our customers fail to achieve the benefits expected from our Li-Metal batteries, our business will be harmed.

We may not be able to estimate accurately the future supply and demand for our batteries, or battery materials, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to predict accurately our manufacturing requirements, we could incur additional costs or experience delays.

It is difficult to predict our future revenues and 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 forecasts of our demand to our current and future suppliers prior to the scheduled delivery of products to potential customers. Currently, there is no historical basis for making judgments on the demand for our batteries or our ability to develop, manufacture, and deliver batteries, or our profitability in the future. If we overestimate our requirements, our suppliers may have excess inventory, which may increase our costs. If we underestimate our requirements, our suppliers may have inadequate inventory, which could interrupt manufacturing of our products and result in delays in shipments and product revenue or potential liability for late delivery. In addition, lead times for raw materials, components and manufacturing equipment may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each raw material, component or manufacturing equipment at a given time. Any of the foregoing could result in delays in the delivery of batteries or battery materials to our potential customers, which would harm our business, financial condition, operating results and prospects.

Our success depends on our ability to attract and retain our executive officers, key employees and other qualified personnel, and our operations may be severely disrupted if we lost their services. As we build our brand and become better known, there is increased risk that competitors or other companies will seek to hire our personnel. All of our executives and engineering staff are subject to non-competition agreements, but we may face challenges in enforcing these non-competition agreements, and such agreements may become illegal if the Federal Trade Commission’s Non-Compete Clause Rule is found enforceable following the conclusion of pending litigation.agreements. The failure to attract, integrate, train, motivate and retain these personnel could seriously harm our business and prospects.

InWe 2019,rely in connection with our establishment of our Shanghai facility, the first two years of rentpart on thegovernmental facilityand totalingeconomic approximatelyincentives RMB7.1 million was borne by the Jiading district local government which also took on certain renovationsavailable to the facilityEV atbattery the cost of approximately RMB 4.3 million such that it is suitable for our use. In 2020, we received an incentive award of RMB10,000 under the Jiading Industrial Zone Development Potential Award from the Jiading district local government. In 2022, we also received an incentive award from certain South Korean government agencies. We intend to apply for further grants in the future in the jurisdictions in which we operate.developers. Government incentives and subsidies are granted in connection with government’s efforts to promote the development of the local economy and other policies. For instance, we have historically received rent subsidies and incentive awards from local governmental authorities for our operations in Shanghai and Seoul. We intend to apply for further grants in the future in the jurisdictions in which we operate. Some local government incentives and subsidies may be challenged by higher-level government authorities. Therefore, government incentives and subsidies may be modified, terminated or subject to clawback at the sole discretion of the relevant governmental authorities. Additionally, because laws, regulations and policies with respect to incentives and subsidies may change, we cannot be sure that government incentives and subsidies will continue to be available. In the event that we cease to receive any government incentives or subsidies, any current or future incentive or subsidy is reduced, or any of our current or future incentives or subsidies are challenged, our business, financial condition and operating results may be adversely affected. See Note 10 “Government Grant” of the Notes to the Financial Statements for discussion of our accounting for government incentives.

InFor Octoberthe years ended December 31, 2025 and 2024, we began to generate revenue from our principal business activities. We generategenerated revenue from two primary sources:

Cost of revenue includes materials, labor, depreciation and amortization expense, inventory, freight costs, warranty, and other direct costs related to manufacturing our products and service contracts. Labor consists of personnel-related expenses such as salaries, benefits, and stock-based compensation. We anticipate that cost of revenue will continue to increase as we enter into new revenue contracts.

We are an early-stage growth company conducting business activities through one operating segment. Research and development expenses consist primarily of costs incurred forinclude personnel-related expenses, includingsuch as salaries, benefits, and stock-based compensation expenses,compensation, for scientists, experienced engineers and technicians,technicians. These expenses foralso cover materials and supplies used in product research and development, process engineering efforts and testing, aspayments well as paymentsmade to consultants, and patent related legal costs,costs. Furthermore, they encompass depreciation, and allocated facilities expenses, and information technology costs.costs, including costs incurred for renting graphic processing units (“GPUs”) to train AI models.

General and administrative expenses consist primarily of costs incurred for salaries andinclude personnel-related expenses, includingsuch as salaries, benefits, and stock-based compensation expense, for our finance, legal and human resource functions,functions. These expenses foralso cover director and officer insurance, outside contractor fees, and professional serviceservices, fees,including auditaudit, and compliance expenses,compliance, legal, accountingaccounting, investor relations, and other advisory services,services. asAdditionally, wellthe asexpenses encompass allocated facilities and information technology costscosts, includingsuch as depreciation and amortization. Upon commencement of commercial operations, we also expect to incur customer and sales support and advertising costs.

General and administrative expensesexpense for the year ended December 31, 20242025 decreased $9.1$11.5 million, or 19.1%,30.0%, to $38.4$26.9 million, compared withto $47.5$38.4 million for the year ended December 31, 2023.2024. This decrease primarilywas resulteddriven fromby a $5.2$8.1 million decrease in personnel-relatedpersonnel expenses,costs includingprimarily stock-based compensation expense, that relatesattributable to lowersalaries, benefits and stock-based compensation due to forfeituresreduced from headcount reductions. In addition,headcount, a $1.7$3.1 million decrease in generalprofessional liabilityservices including marketing and public relations, a $0.6 decrease in insurance costs due to lower rates,costs, and a $3.3$0.3 million decrease in audit fees,and legal expenses and professional and consulting fees due to change in auditors and nonrecurring prior period expenses. These decreases were partlypartially offset by a $1.0$0.6 million increase in rentother operating costs including franchise tax fees and facilityregulatory costs due to expansion of facility in our headquarters office and a $0.3 million increase in expenses related to investor relations, repairs and maintenance, and information technology services.costs.

Interest income primarily consists of interest earned on our cash and cash equivalents, which are primarily invested in money market funds, and short-term investments in marketable securities, which are invested in U.S. treasury securities, and accretion income from the marketable securities.

DuringInterest income for the year ended December 31, 2024,2025 wedecreased had$5.7 interestmillion, incomeor of37.9%, $15.0to $9.3 million compared withto $16.7$15.0 million for the year ended December 31, 2023.2024. This $1.7$5.7 million decrease was primarily dueattributable to alower decreaseaverage inshort-term investment balances resultingand froma cash useddecline in operations.market interest rates during the current year.

During the year ended December 31, 2024,2025, we incurred a $1.7 million gain compared with a $5.3 million loss compared with a $6.8 million gain for the year ended December 31, 20232024 associated with the change in fair value of the Sponsor Earn-Out liabilities. This $12.1$7.0 million decreaseincrease in gain on the change in fair value of the Sponsor Earn-Out liabilities is tied to SES’s stock price, continued volatility in the stock price or changes in the expected term. See “Note 1112 – Sponsor Earn-Out Liabilities” to the consolidated financial statements for additional information.

During the year ended December 31, 2024,2025, we had miscellaneous expense of $0.5$1.2 million, compared with miscellaneous incomeexpense of $0.4$0.5 million for the year ended December 31, 2023.2024. This $0.9$0.7 million increase in miscellaneous expense was primarily due to $0.7a $1.3 million loss on salethe disposal of assetsproperty and $0.6 million of interest expense related to our unearned government grant liability that was not incurred in prior year. These increases wereequipment, partly offset by receipts of government subsidy, and unrealized and realized foreign currency gains duerecognized toin the weakeningcurrent ofyear the Chinese renminbi and South Korean won compared with the U.S. dollar.period.

Income tax expense was $0.2 million on pre-tax loss of $74.6 million for the year ended December 31, 2025 compared with an income tax expense of $0.2 million on pre-tax loss of $100.0 million for the year ended December 31, 2024 compared with an income tax benefit of $0.9 million on pre-tax loss of $54.3 million for the year ended December 31, 2023.2024. Our effective tax rate was (0.20.3)% and 1.6%(0.2)% for the years ended December 31, 20242025 and 2023,2024, respectively. The difference between our effective tax rate and the U.S. federal statutory rate of 21% was primarily driven by deferred tax benefits and release of valuation allowances from foreign jurisdictions. See “Note 1617 – Income Taxes” to the consolidated financial statements for additional information on our income tax expense.

As of December 31, 2024,2025, we had total cash and cash equivalents of $128.8$29.5 million,million and short-term investments in marketable securities of $133.7 million, and an accumulated deficit of $298.9$170.1 million. As an early-stage growth company that has just begun the commercialization stage of development,company, the net operating losses we have incurred since inception are consistent with our strategy and budget.

We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for a numberfew ofmore years. Our ability to successfully develop our products and services, scale up our commercial operations and expand our business will depend on many factors, including our working capital needs, the availability of equity and/or debt financing and, over time, our ability to generate positive cash flows from operations. To date, we have funded our operations through a combination of proceeds from the Business Combination and subsequent equity private placement in 2022 and funding received through the sales of our redeemable convertible preferred stock. We believe that our cash on hand and marketable securities resulting from these proceeds will be sufficient to meet our principal working capital and capital expenditure requirements and ongoing costs, such as research and development relatingcosts, operational and commercial activities, including expenditures for deferred cash payments of an estimated approximately RMB 59.9 million ($8.4 million) related to the acquisition of UZ Energy as well as activities related to the recently acquired ESS business, our Li-Metalplans batteriesfor NDAA-compliant manufacturing capacity to develop drone cells and thedevelopment constructionand commercialization of additionalMolecular manufacturingUniverse facilities,material discoveries, for a period of at least 12 months from the date of this Annual Report on Form 10-K, as well as to full commercialization.Report. However, additional funding may be required during or after this period forto afinance varietycertain ofneeds reasons,beyond our principal working capital and capital expenditure requirements and ongoing costs, including additional opportunities to purchase data and equipment toequipment, develop and train our AI models, and/or develop commercial operations in the United States,States businessand combinationsabroad, acquisitions or acquisitions,other strategic transactions, and unexpected delays in expectedthe development of our Li-Metal battery cells. IfSee we“Note need3 such– additionalAcquisition” fundingof beyondour theseaccompanying existingconsolidated short-financial statements for further discussion of the estimated deferred cash payments related to medium-termthe sourcesacquisition of liquidity,UZ or if following commercialization, we are not able to fund our operations from cash flows generated from anticipated product sales, we expect that we will need to raise additional funds. This may be through a variety of possible methods, including, but not limited to, entry into joint ventures or other strategic arrangements, issuance of equity, equity-related or debt securities or through obtaining credit from financial institutions, as well as anticipated future revenue from product sales. For more information about our at-the-market equity offering program with certain investment banks, through which we may offer and sell, from time to time, shares of Class A Common Stock having an aggregate offering price of up to $150.0 million, see “Part II, Item 9.B. Other Information.”Energy.

Our cash flows used in operating activities to date have been comprisedattributable ofto payroll, revenue from customers, consumables and supplies related to research and development, expenditures and reimbursements related to our JDAs, and facilities expense and professional services for general and administrative activities. As we continue to grow as an early commercialization company,grow, we expect our cash usedoutflows infrom operating activities to increase before we start to generate any material cash inflows from our operations.

CapitalThe Spendingdecrease –in Capitalcapital expenditures were $12.2 million and $15.8 million for the years ended December 31, 2024 and 2023, respectively. These expenditureswas primarily relatedattributable to reductions in purchases of manufacturing equipment, lab machinery and equipment, and leasehold improvements to manufacture battery cells due to the current year strategic shift to AI focused spending which consisted of purchases of software and computer equipment, lab tools and instruments and leaseholdAI improvementsrelated to our facilities in the United States.infrastructure. We expect capital expenditures to decreaseremain consistent in 20252026 compared with 20242025 as we continue to spend on AI related infrastructure rather than invest in manufacturing equipment.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors disclosed in “Part I, Item 1A” of our 2025 Annual Report on Form 10-K, and the other reports that we have filed with the SEC. Any of the risks discussed in such reports, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations, financial condition or prospects. During the period covered by this Quarterly Report on Form 10-Q, there have been no material changes in our risk factors as previously disclosed.disclosed, except for the following:

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The following discussion and analysis should be read in conjunction with the accompanying unaudited interim condensed consolidated financial statements as of and for the three and six months ended MarchJune 31,30, 2026 and the related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2025 and the related notes contained in the 2025 Annual Report on Form 10-K. This Quarterly Report on Form 10-Q includes forward-looking statements. These forward-looking statements within the meaning of the federal securities law are based on our current expectations and beliefs concerning future developments and their potential effects on us. These forward-looking statements are not statements of historical fact and may include statements regarding possible or assumed future results of operations. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Factors that might cause or contribute to such forward-looking statements include, but are not limited to, those set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Item 1A. Risk Factors in the 2025 Annual Report on 10-K. Unless the context otherwise requires, references in this section to “the Company,” “we,” “us” and “our” refer to the business and operations of SES Holdings Pte. Ltd. (“Old SES”) and its consolidated subsidiaries prior to the Business Combination and to SES AI Corporation and its consolidated subsidiaries following the Closing. References in this section to our future plans that indicate the timing of when we expect such plans to be completed by a certain year mean at any point during that year.

We are a leading developer and manufacturer of high-performance, AI-enhanced Lithium-Metal (“Li-Metal”) and Lithium-ion (“Li-ion”) rechargeable battery technologies for electric vehicles (“EVs”), Urban Air Mobility (“UAM”), drones, robotics, Energy Storage Systems (“ESS”) and other applications. The Company’s mission is to accelerate the world’s energy transition through AI-enhanced material discovery and battery management. SES accelerates its pace of innovation by utilizing superintelligent AI across the spectrum of our business, from research and development, materials sourcing, cell design, engineering and manufacturing, to battery health and safety monitoring.

We are an early-stage growth company. We incurred net losses of $12.1$17.9 million and $12.4$22.7 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $30.0 million and $35.1 million for the six months ended June 30, 2026 and 2025, respectively, and had an accumulated deficit of $384.0$401.9 million and $311.3$334.0 million from our inception through MarchJune 31,30, 2026 and 2025, respectively. We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for a few moreseveral years. Our historical results may not be indicative of our future results for reasons that may be difficult to anticipate and our ability to generate revenue in the future that is sufficient enough to achieve profitability will depend largely on the successful development of our products and services. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical results of operations.operations We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose significant risks and challenges, including those discussed below and in “Part I, Item 1A. Risk Factors.”

Shift to Joint Venture Manufacturing with Hisun

Our strategic shift away from in-house manufacturing of certain battery materials, and the announcement of a jointfully ventureconsolidated variable interest entity with Hisun to produce novel materials at commercial scale, is expected to reduce capital intensity and accelerate time-to-market for new products. We anticipate that this approach will allow us to scale more efficiently and address a broader customer base, which could positively impact future revenues. However, the transition introduces new uncertainties, including the risk of production delays, quality control challenges, and dependence on third-party manufacturing partners. These factors could result in variability in cost of goods sold, potential supply chain disruptions, and fluctuations in cash flows. See “Note 14 – Variable Interest Entities” of our accompanying consolidated financial statements for further discussion.

Our plan to develop NDAA-compliant manufacturing capacity for drone cells is intended to position us to capture new business from U.S. government and defense-related customers, which we believe could be a driver of future revenue growth. Achieving NDAA compliance may also enhance our competitive positioning and open additional market opportunities. However, this initiative will require substantial capital investment and ongoing compliance costs, and there is uncertainty regarding the timing and magnitude of customer demand. If we are unable to achieve commercial-scale production or if demand for NDAA-compliant drone cells does not materialize as expected, we could experience underutilization of assets and negative impacts on cash flows.

For the three and six months ended MarchJune 31,30, 2026 and 2025, we generatedgenerate revenue from two primary sources:

ServiceServices revenuesrevenue decreased $5.5$3.5 million,million orand nearly 95%, to $0.3$9.0 million for the three monthsand ended March 31, 2026 compared to $5.8 million for the threesix months ended MarchJune 31, 2025. This decrease was primarily attributable to completion of the service revenue projects with OEMs and other manufacturers in last quarter of 2025. Product revenue increased $6.4 million, or nearly 100%, for the three months ended March 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025. ThisProduct increaserevenue wasincreased primarily$5.1 attributablemillion and $11.5 million for the three and six months ended June 30, 2026 compared to ESSthe systemsthree salesand fromsix UZmonths Energy,ended whichJune was30, acquired2025. duringRefer to “Note 4 – Revenue” to the thirdcondensed quarterconsolidated offinancial 2025.statements for additional information.

Gross profit margin for the three and six months ended MarchJune 31,30, 2026 and March 31, 2025 were 18.1%22.6% and 78.7%,20.0% as well as 73.7% and 76.8%, respectively. The fluctuationdecrease was primarily due to the effect of changing revenue mix between product and service offerings as explained above.offerings.

Research and development expenses for the three months ended MarchJune 31,30, 2026 decreased $9.5$7.7 million, or 46.2%,40.5%, to $11.0$11.4 million, compared with $20.5$19.1 million for the three months ended MarchJune 31,30, 2025. This decrease was primarily resulteddriven fromby a $5.4 million decrease in automotive OEM JDA related lab equipment expenses, a $3.4$4.0 million decrease in AI infrastructure costs incurred from renting Graphic Processing Unit (“GPU”) computing resources, and a $0.5$2.6 million decrease in automotive OEM JDA related lab equipment expenses, and a $1.1 million decrease in personnel costs and stock-based compensation expensemainly attributable to reducedheadcount headcountreductions resulting from the company’s strategicfocus shifton tocommercial an AI-based focus.activities.

General and administrative expenses for the three months ended MarchJune 31,30, 2026 increased $0.7$2.5 million, or 10.0%,37.7%, to $8.1$9.0 million, compared with $7.3$6.5 million for the three months ended MarchJune 31,30, 2025. This increase was primarily resulteddriven fromby an increase of $0.9 million in bad debt expense, a $0.8 million increase infor salaries,personnel costs and benefitsstock-based expensecompensation due to UZincreased acquisition and hiring of sales personnel,headcount, a $0.3$0.6 million increase in professional recruitmentservices fees,including amarketing $0.2and millionpublic increaserelations in software expenses,consulting, and a $0.2 million increase in officerent, utility, and utilitydepreciation expenses. These increases were partially offset by a $0.9 million decrease in stock-based compensation expense due to generally lower headcount.

During the three and six months ended MarchJune 31,30, 2026, we incurred a gain of less than $0.1 million and a gain of $4.2 millionmillion, respectively, associated with the change in fair value of the Sponsor Earn-Out liabilities compared with a loss of $1.4 million and a gain of $7.9$6.4 millionmillion, respectively, for the three and six months ended MarchJune 31,30, 2025. This gain onWith the change in fair value of the Sponsor Earn-Out liabilities is tied to SES’sthe Company’s stock price, continued volatility in the stock price or changes in the expected term.term could result in further gains or losses resulting from the change in fair value. Refer to “Note 9 – Sponsor Earn-Out Liabilities” to the unaudited interim condensed consolidated financial statements for additional information.

Miscellaneous Income,Income (Expense), Net

The provision for income taxes forDuring the three months ended MarchJune 31,30, 20262026, waswe $0.4had millionmiscellaneous expense of $0.1 million, compared towith nearlymiscellaneous $0.0income of $0.1 million for the three months ended MarchJune 31,30, 20252025. mainlyThis $0.2 million increase in miscellaneous expense was primarily due to pre-taxan incomeincrease in Chinathe andloss Southon Korea.foreign currency translation.

As of MarchJune 31,30, 2026, we had total cash and cash equivalents of $46.9$64.1 million and investments in marketable debt and equity securities of $130.7$98.9 million. As an early-stage growth company, the net operating losses we have incurred since inception are consistent with our strategy and budget.

We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for a few more years. Our ability to successfully develop our products and services, scale up our commercial operations and expand our business will depend on many factors, including our working capital needs, the availability of equity and/or debt financing and, over time, our ability to generate positive cash flows from operations. We believe that our cash on hand and marketable securities will be sufficient to meet our principal working capital and capital expenditure requirements and ongoing research and development costs, operational and commercial activities, including expenditures for deferred cash payments of an estimated approximately RMB 55.5 million ($8.0 million) related to the acquisition of UZ Energy as well as activities related to the recently acquired ESS business, our plans for NDAA-compliant manufacturing capacity to develop drone cells and development and commercialization of Molecular Universe material discoveries, for a period of at least 12 months from the date of this Quarterly Report. However, additional funding may be required during or after this period to finance certain needs beyond our principal working capital and capital expenditure requirements and ongoing costs, including additional opportunities to purchase data and equipment, develop and train our AI models, and/or develop commercial operations in the United States and abroad, acquisitions or other strategic transactions, and unexpected delays in the development of our battery cells. See “Note 3 – Acquisition” of our accompanying consolidated financial statements for further discussion of the estimated deferred cash payments related to the acquisition of UZ Energy.

If we need additional funding beyond these existing short- to medium-term sources of liquidity, or if we are not able to fund our operations from cash flows generated from anticipated product sales and service offerings, we expect that we will need to raise additional funds. This may be through a variety of possible methods, including, but not limited to, entry into joint ventures or other strategic arrangements, issuance of equity, equity-related or debt securities, and obtaining credit from financial institutions. We currently maintain an at-the-market equity offering program with certain investment banks (the “Agents”), pursuant to which we may offer and sell into the open market from time to time, at our option, shares of our Class A common stock with an aggregate offering price of up to $150.0 million. Subject to the terms and conditions of our agreement with them, the Agents will use their commercially reasonable efforts to sell shares of our Class A common stock from time to time, based on instructions from us (including any price, time or size limits or other parameters or conditions we may impose), in exchange for a commission of up to 3.0% of the aggregate gross sale proceeds. We have also provided the banks with customary indemnification and contribution rights. We are not obligated to sell any Class A common stock and may at any time suspend solicitation and offers thereunder. We sold no shares under the at-the-market equity offering program during the three months ended MarchJune 31,30, 2026, and to date have sold no shares under the program.

Our cash flows used in operating activities to date have primarily comprised research and development and general and administrative activities as discussed above. As we continue to hire research and development personnel to accelerate our Molecular Universe AI-enhanced materials discovery and battery management, we expect our cash used in operating activities to increase before we start to generate any material cash inflows from our operations.

Net cash used in operating activities of $19.8$33.6 million for the threesix months ended MarchJune 31,30, 2026 was primarily attributable to net loss of $12.1$30.0 million, as adjusted for stock-based compensation expense of $4.1 million, a gain on change in fair value of Sponsor Earn-Out liabilities of $4.2 million, gaindepreciation and amortization of $5.4 million, a loss on change in fair value of deferredcontingent consideration of $0.8$1.0 million, accretion income from marketable securities of $0.5 million, stock-based compensation expense of $2.1 million, depreciation and amortization of $2.7$0.8 million, and $0.4$0.7 million of other items. These non-cash operating items were combined with a $7.4$7.7 million working capital outflow. The working capital outflow was primarily driven primarily by a $3.4 million increase in trade accounts receivables, a $1.7$3.1 million increase in inventories, a $1.3$2.9 million increase in receivables from customers, and a $1.7 million decrease in accrued expenses and other liabilities,current a $0.9 million increase in prepaid and other assets, and a $0.4 million decrease in net lease activity. These working capital outflows were partially offset by a working capital inflow of a $0.4 million increase in accounts payable.liabilities. The increase in inventories was primarily due to purchases for ESS commercial operations as a result of the acquisition of UZ Energy in the third quarter of 2025.operations. The decrease in accrued expenses and other liabilities was primarily due to decreases in accruals for purchases of equipment for a JDA, accrued income taxes payable,compensation and payrollcontract related accruals. The increase in prepaids and other assets was primarily due to payments for licenses or hosting software data. The changes to operating lease liabilities and right of use assets was primarily driven by lease modifications.liabilities. The changes in trade account receivables and accounts payables were driven by timing of receipts.

Net cash used in operating activities of $22.8$33.7 million for the threesix months ended MarchJune 31,30, 2025 was primarily attributable to net loss of $12.4$35.1 million, as adjusted for stock-based compensation expense of $6.7 million, a gain on change in fair value of Sponsor Earn-Out liabilities of $7.9$6.4 million, depreciation and amortization of $5.0 million, accretion income from marketable securities of $0.8 million, stock-based compensation expense of $4.0 million, depreciation and amortization of $2.5$1.7 million, and a $8.0$2.2 million working capital outflow. The working capital outflow was primarily driven primarily by a $5.3$2.5 million decrease in accrued expenses and other liabilities, a $1.7 million increase in prepaid and other assets, a $1.0 million decrease in operating lease liabilities, a $0.5 million increase in trade accounts receivables, and a $0.1 million decrease in accounts payable. These working capital outflows were partially offset by working capital inflows of a $0.7 million increase in right of use assets. The decrease in accrued expenses and othercurrent liabilities was primarily due to accruals for purchases of equipment for a JDA, changes in deferred revenue balances, accrued income taxes payable, and payroll related accruals.accruals and a $2.1 million increase in receivables from customers. The working capital outflow was partially offset by a $2.3 million increase in prepaids and other assets was primarily due to accruedadvance receivablespayments made for servicessoftware renderedrelated service costs due to customers.AI Theinfrastructure changes to operating lease liabilities and right of use assets were primarily driven by lease modifications. The changes in receivables and payables were driven by timing of receipts.spend.

Net cash provided by investing activities was $39.1$70.6 million for the threesix months ended MarchJune 31,30, 20262026, compared to net cash used in investing activities of $49.8$83.2 million for the threesix months ended MarchJune 31,30, 2025. This increase in cash provided was primarily attributable to ana $88.4$153.8 million increase in cash provided by the maturities of short-term investments, net of purchases in the current year period compared to the prior year period and $0.6$0.7 million of lower capital expendituresexpenditures.

See “Note 2 – Basis of Presentation” of our accompanying unaudited interim condensed consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 included in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and their potential impact on our financial condition, results of operations and cash flows.

Our financial statements have been prepared in accordance with U.S. GAAP. In the preparation of these unaudited interim condensed consolidated financial statements, we are required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the unauditedcondensed interim condensedconsolidated financial statements, as well as the reported expenses incurred during the reporting periods.