10q10k10q10k.net

What changed in ESS Tech, Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of ESS Tech, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+419 added−387 removedSource: 10-K (2026-03-05) vs 10-K (2025-03-31)

Top changes in ESS Tech, Inc.'s 2025 10-K

419 paragraphs added · 387 removed · 311 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

43 edited+10 added−15 removed34 unchanged
Biggest changeBuilding upon this promising concept, our team has significantly enhanced the technology, improved round-trip efficiency and developed an innovative and patented solution to the hydroxide build-up problem. Our proprietary solution to eliminate the hydroxide formation is known as the Proton Pump, and it works by utilizing hydrogen generated by side reactions on the negative electrode.
Biggest changeOur proprietary solution to eliminate the - 4 - Table of Contents 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 level.
Without taking into account any possible patent term adjustments or extensions, the earliest our current, issued patents will begin to expire is 2028. We continually review our efforts to assess the existence and patentability of new proprietary technology. We intend to leverage our iron flow expertise to drive innovation and are pursuing additional technological advancements.
Without taking into account any possible patent term adjustments or extensions, the earliest our current, issued patents will begin to expire in 2028. We continually review our efforts to assess the existence and patentability of new proprietary technology. We intend to leverage our iron flow expertise to drive innovation and are pursuing additional technological advancements.
We believe that we have enforceable intellectual property protection over all critical design elements as well as the key enabling technologies for iron flow batteries. We have developed a significant patent portfolio. We have over 333 patents that are granted, applied for or in the pipeline for application, and an undisclosed number of trade secrets.
We believe that we have enforceable intellectual property protection over all critical design elements as well as the key enabling technologies for iron flow batteries. We have developed a significant patent portfolio. We have over 315 patents that are granted, applied for or in the pipeline for application, and an undisclosed number of trade secrets.
We believe there is significant government support available for energy storage technologies, and a variety of newer and emerging companies have announced plans to develop energy storage products using a variety of technologies, including compressed air, thermal energy, and solid-state batteries among others.
We believe there remains significant government support available for energy storage technologies, and a variety of newer and emerging companies have announced plans to develop energy storage products using a variety of technologies, including compressed air, thermal energy, and solid-state batteries among others.
Although we may be small compared to some of our competitors, we believe we are well-positioned to compete with them in the market supported by our innovative iron flow battery technology, strategic partnerships and premier leadership team with a proven track record of success. - 7 - Table of Contents New technologies may enter the market that may have additional or superior advantages to our offerings.
Although we may be small compared to some of our competitors, we believe we are well-positioned to compete with them in the market supported by our innovative iron flow battery technology, strategic partnerships and premier leadership team with a proven track record of success. New technologies may enter the market that may have additional or superior advantages to our offerings.
All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in - 8 - Table of Contents which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law.
Key competitors in the non-lithium-ion space include 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), Malta Inc., and VoltStorage GmbH. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do.
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.. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do.
These customers use our energy storage products to store energy on a utility scale that they can then utilize or sell to their customers when needed and ensure overall grid reliability at a time of increasing demand for energy and grid reliability.
These customers use our energy storage products to store energy on a utility scale that they can then utilize or sell to their customers when needed and ensure overall grid reliability at a time of increasing demand for - 5 - Table of Contents energy and grid reliability.
Our third, gigawatt-scale storage product, the Energy Base, is designed with a fully configurable layout that integrates with any site location and that allows the power (the rate of electricity flow) to be decoupled from the capacity (the total amount of energy held).
Our third and current offering, the gigawatt-hour Energy Base storage product, is designed with a fully configurable layout that integrates with any site location and that allows the power (the rate of electricity flow) to be decoupled from the capacity (the total amount of energy held).
This, combined with an expectation of unlimited cycling and rapid response time, means that the performance of each Energy Base can be tailored to meet individual customer needs. As a result, users have the flexibility to use the battery for various use cases simultaneously on a project.
This, combined with an expectation of 20,000 cycles and rapid response time, means that the performance of each Energy Base can be tailored to meet individual customer needs. As a result, users have the flexibility to use the battery for various use cases simultaneously on a project.
Research & Development Since January 1, 2019, we have invested approximately $176.4 million in improving our technology and bringing our energy storage products to market. Our research and development efforts are conducted in Oregon and supported by our approximately 41 research and development employees.
Research & Development Since January 1, 2019, we have invested approximately $184.7 million in improving our technology and bringing our energy storage products to market. Our research and development efforts are conducted in Oregon and supported by our approximately 21 research and development employees.
Examples of use cases range from localized - 4 - Table of Contents energy storage at commercial and industrial sites to grid-scale use cases, such as peaker plant replacement and grid stabilization. Our Technology and Products Our long-duration iron flow batteries are the product of nearly 50 years of scientific advancement.
Examples of use cases range from localized energy storage at commercial and industrial sites to grid-scale use cases, such as peaker plant replacement and grid stabilization. Our Technology and Products Our long-duration iron flow batteries are the product of nearly 50 years of scientific advancement. In the 1970s, researchers first developed the concept of iron flow batteries.
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.
Our batteries provide flexibility to grid operators and energy assurance for commercial and industrial customers. 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.
Front-of-the-meter customers, in contrast, are primarily utilities experiencing high rates of renewable energy penetration and requiring energy storage to help balance the grid, and IPPs who can leverage energy storage to improve the economics of renewable energy projects.
Behind-the-meter customers may include data centers, microgrids, critical infrastructure assets and commercial and industrial customers. Front-of-the-meter customers, in contrast, are primarily utilities experiencing high rates of renewable energy penetration and requiring energy storage to help balance the grid, and IPPs who can leverage energy storage to improve the economics of renewable energy projects.
The balance of system components required to build complete solutions are intentionally designed to be easily produced using broadly available pumps, tanks and other equipment and easily fabricated enclosures, allowing energy storage products to be assembled and deployed almost anywhere at an efficient cost. ESS’ Critical Technology Customers Our current and potential customers include utilities, IPPs and C&I end users.
The balance of system components required to build complete solutions are intentionally designed to be easily produced using broadly available pumps, tanks and other equipment and easily fabricated enclosures, allowing energy storage products to be assembled and deployed almost anywhere at an efficient cost.
Battery storage projects storing energy from renewable energy sources are eligible for investment tax credits that allow project developers to monetize and sell the tax credits they receive from the creation of their projects. Additionally, battery storage is eligible for accelerated depreciation via the federal government’s Modified Accelerated Cost Recovery System.
These credits are available for standalone storage systems regardless of whether they are charged by renewable energy sources, allowing project developers to monetize and sell the tax credits they receive from the creation of their projects. Additionally, battery storage projects are eligible for accelerated depreciation via the federal government’s Modified Accelerated Cost Recovery System.
We are also subject to the requirements of the Occupational Safety and Health Act, local wage regulations and rigorous health and safety regulations in the State of Oregon.
Our Oregon manufacturing facility is subject to the requirements of the Occupational Safety and Health Act, local wage regulations and rigorous health and safety regulations in the State of Oregon.
In the 1970s, researchers first developed the concept of iron flow batteries. Despite realizing the batteries’ promising ability to store energy, these researchers found that the reaction between the positive and negative sides created hydroxide formations that clogged the electrodes and reduced the activity of the electrolytes.
Despite realizing the batteries’ promising ability to store energy, these researchers found that the reaction between the positive and negative sides created hydroxide formations that clogged the electrodes and reduced the activity of the electrolytes. Hydroxide formation caused rapid degradation in early iron flow batteries after only a few cycles.
In order to retain top talent, we have designed our compensation program to provide employees with competitive compensation and benefits consistent with positions, skill levels, experience, knowledge, and geographic location.
In order to retain top talent, we have designed our compensation program to provide employees with competitive compensation and benefits consistent with positions, skill levels, experience, knowledge, and geographic location. We are also continuously working to improve our recruiting, retention and development processes as our operations grow.
The Proton Pump converts the hydrogen back into protons in the positive electrolyte. This process eliminates the hydroxide and stabilizes the pH level of the system. The Proton Pump allows the electrolyte to be used for the 20,000 cycle-design without capacity fade. Our iron flow batteries store energy by converting electrical energy into chemical energy.
The Proton Pump allows the electrolyte to be used for the 20,000 cycle-design without capacity fade. Our iron flow batteries store energy by converting electrical energy into chemical energy.
As of December 31, 2024, we employed 240 full-time employees, based primarily at our headquarters in Wilsonville, Oregon. In order to achieve our mission to create a reliable, resilient, and safe renewable energy future, we are committed to investing in our employees and building a respectful and diverse work environment.
In order to achieve our mission to create a reliable, resilient, and safe renewable energy future, we are committed to investing in our employees and building a respectful and diverse work environment.
With the rising demand for clean electric power solutions with lower greenhouse gas emissions, there has been a transition to renewable energy sources and increasing penetration of distributed energy infrastructure. The proliferation of intermittent generating resources has created new challenges to electric grid stability, and thus an opportunity for an increased role for long-duration energy storage solutions.
With the rising demand for clean electric power solutions with lower greenhouse gas emissions, there has been a transition to renewable energy sources and increasing penetration of distributed energy infrastructure.
The success of our business is connected to the well-being of our team members. Accordingly, we are committed to the health, safety and wellness of our team members worldwide. To date, we have not experienced any work stoppages and we consider our relationship with our employees to be good.
Accordingly, we are committed to the health, safety and wellness of our team members worldwide. To date, we have not experienced any work stoppages and we consider our relationship with our employees to be good. None of our employees are represented by a labor union or subject to a collective bargaining agreement.
We intend to serve customers in both ‘behind-the-meter’ and ‘front-of-the-meter’ markets. In behind-the-meter applications, customers will use our energy storage products to reduce energy costs, integrate with renewable energy solutions to achieve corporate sustainability goals, and to enhance their energy resiliency. Behind-the-meter customers may include data centers, microgrids, critical infrastructure assets and small-scale C&I customers.
Customers Our current and potential customers include utilities, Independent Power Providers (“IPPs”) and Commercial and Industrial (“C&I”) end users. We intend to serve customers in both ‘behind-the-meter’ and ‘front-of-the-meter’ markets. In behind-the-meter applications, customers will use our energy storage products to reduce energy costs, integrate with renewable energy solutions to achieve corporate sustainability goals, and to enhance their energy resiliency.
This allows for low marginal costs of energy, making our technology attractive for long-duration energy storage. Using our iron flow battery technology, we developed a variety of products to provide reliable, safe, long-duration energy storage solutions. Our first energy storage product, the Energy Warehouse, is designed as a ‘behind-the-meter’ solution and is often used for initial testing and technology verification.
This allows for low marginal costs of energy, making our technology attractive for long-duration energy storage. Using our iron flow battery technology, we have developed products to provide reliable, safe, long-duration energy storage solutions.
This project coverage provides warranty continuity insurance in the event of our insolvency, providing long-term assurance of project performance to our customers and their investors and lenders. • OneBeacon Insurance : Through OneBeacon, we offer project surety capacity and corporate bonding options to our customers. • Export-Import Bank of the United States : The Export-Import Bank of the United States (“EXIM”) is the official export credit agency of the United States.
Partnerships We have various partnerships, including: • OneBeacon Insurance : Through OneBeacon, we offer project surety capacity and corporate bonding options to our customers. • Export-Import Bank of the United States : The Export-Import Bank of the United States (“EXIM”) is the official export credit agency of the United States.
We are also continuously working to improve our recruiting, retention and development processes as our operations grow. - 8 - Table of Contents Executive management assists our board of directors in its oversight of human capital management including with respect to corporate culture, diversity and inclusion, recruiting, retention, attrition, talent management, career development and progression, succession and employee relations.
Executive management assists our board of directors (the “Board”) in its oversight of human capital management including with respect to corporate culture, diversity and inclusion, recruiting, retention, attrition, talent management, career development and progression, succession and employee relations. The success of our business is connected to the well-being of our team members.
Our key competitors include different energy storage technologies such as lithium-ion batteries, lithium metal 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.
Our technology can operate efficiently and effectively in these extreme weather conditions. Our key competitors include different energy storage technologies such as lithium-ion batteries, lithium metal batteries, lithium iron phosphate batteries, sodium-ion batteries including those developed by Contemporary Amperex Technology Co., Limited, vanadium or zinc bromine batteries, sodium sulfur batteries, compressed air, hydrogen, fuel cell and pumped-storage hydropower.
Human Capital Management We pride ourselves on our clean, innovative technology and our employees are dedicated to our strategic mission to deliver reliable, resilient and safe renewable energy storage solutions to communities worldwide. Approximately a third of our employees are involved in product manufacturing in order to refine and grow our operations.
Human Capital Management We pride ourselves on our clean, innovative technology and our employees are dedicated to our strategic mission to deliver reliable, resilient and safe renewable energy storage solutions to communities worldwide. As of December 31, 2025, we employed 62 full-time employees, based primarily at our headquarters in Wilsonville, Oregon.
As a result of the Business Combination, Legacy ESS survived and became a wholly owned subsidiary of ESS Tech, Inc. On March 31, 2024, Legacy ESS merged with ESS Tech, Inc. leaving ESS Tech, Inc. as the sole remaining legal entity. As of April 1, 2024, the Company does not have any subsidiaries.
As a result of the Business Combination, Legacy ESS survived and became a wholly owned subsidiary of ESS Tech, Inc. On March 31, 2024, Legacy ESS merged with ESS Tech, Inc. leaving ESS Tech, Inc. as the successor legal entity. Business Overview ESS is a long-duration energy storage company specializing in iron flow battery technology.
Government Regulations and Compliance We operate in the heavily regulated energy sector. As such, there are a variety of federal, state and local regulations and agencies that impact our operations. As a participant in the renewable energy sector specifically, there are additional regulations, tax incentives and support mechanisms in place to promote growth.
Government Regulations and Compliance We operate in the heavily regulated energy sector. Our operations are subject to a variety of federal, state and local regulations governing manufacturing, project development, transportation, environmental, grid interconnection, and market participation matters. As such, there are a variety of federal, state and local regulations and agencies that impact our operations.
In addition to benefiting from governmental laws and regulations supporting energy storage, we are subject to federal, state and local requirements related to the environment, health, safety and employment. Our manufacturing process is subject to environmental regulations, and our products are subject to regulations addressing safety and reliability.
Additionally, new or modified regulations could impose compliance costs or affect our operations, which could materially harm our business. In addition to benefiting from governmental laws and regulations supporting energy storage, we are subject to federal, state and local requirements related to the environment, transportation, health, safety and employment.
States with high Renewable Portfolio Standards (“RPS”), for example, have seen greater deployment of renewables than states with similar renewable resources that lack such requirements. In many states, including Texas, Oklahoma and California, the RPS-driven deployment of intermittent renewables is straining the electric grid and thus driving demand for energy storage.
State incentives have also driven growth in the deployment of renewable energy and energy storage. States with high Renewable Portfolio Standards (“RPS”), such as California, have seen greater deployment of renewables than states with similar renewable resources that lack such requirements. Other states, such as Texas, have seen significant renewable deployment driven by favorable market conditions.
ESS has developed and will continue to expand its documentation, reference design and recommendations to allow customers and partners to build and operate integrated storage solutions based on our core technology. - 5 - Table of Contents For all of our energy storage products, the intellectual property and points of differentiation are contained within the core technology components, the Proton Pump, power module, Battery Management System and electrolyte.
These balance of system components are commercially available products used across a variety of industries and applications. ESS has developed and will continue to expand its documentation, reference design and recommendations to allow customers and partners to build and operate integrated storage solutions based on our core technology.
Hydroxide formation caused rapid degradation in early iron flow batteries after only a few cycles. Unable to prevent the hydroxide from forming, these scientists were forced to abandon their work. Our founders, Craig Evans and Dr. Julia Song, began advancing this technology in 2011 and formed Legacy ESS.
Unable to prevent the hydroxide from forming, these scientists were forced to abandon their work. Our founders, Craig Evans and Dr. Julia Song, began advancing this technology in 2011 and formed Legacy ESS. Building upon this promising concept, our team has significantly enhanced the technology, improved round-trip efficiency and developed an innovative and patented solution to the hydroxide build-up problem.
Both policies provide tax and financing advantages for battery storage projects, lower the capital requirements for renewable energy projects to be developed and open a new source of funding for these projects. State incentives have also driven growth in the deployment of renewable energy and energy storage.
These policies provide tax and financing advantages for battery storage projects, lower the capital requirements for renewable energy projects to be developed and open a new source of funding for these projects, although the complexity introduced by the FEOC rules, in particular as the industry is still awaiting guidance, may counteract these benefits and limit our and our customers’ ability to take advantage of such incentives.
Renewable energy is a priority for many national, state and local governments. On the federal level, tax credits are currently in place that incentivize the deployment of renewable energy and battery storage.
As a participant in the renewable energy sector specifically, there are federal and state regulations, tax incentives and support mechanisms that impact our business. In addition, renewable energy and energy storage is a priority for many national, state and local governments.
In addition, our batteries are environmentally sustainable, predominantly utilizing readily sourced materials and recyclable or reusable components.
In addition, our batteries are environmentally sustainable, predominantly utilizing readily sourced materials and recyclable or reusable components. We believe that as we are able to increase our production, our per unit costs will decrease, allowing our battery technology to be priced more competitively.
We design and build this core technology, including battery stacks, electrolyte and electrolyte health management solutions into a core power train that is then sold in a variety of configurations to create distinct products that meet the various needs of the industry.
We design and build this core technology, including battery stacks, electrolyte and electrolyte health management solutions into a core power train that is then sold in our current product focus: the gigawatt-hour scale, fully configurable Energy Base and core power trains that can be assembled at the customer site into complete storage solutions.
These components are protected by trade secrets, patents (both granted and in process) and years of research.
For all of our energy storage products, the intellectual property and points of differentiation are contained within the core technology components, the Proton Pump, power module, Battery Management System and electrolyte. These components are protected by trade secrets, patents (both granted and in process) and years of research.
Because we designed our batteries to operate using an electrolyte of primarily salt, iron and water, our products are environmentally sustainable and substantially recyclable or reusable. Our batteries provide flexibility to grid operators and energy assurance for commercial and industrial customers.
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 based on lab-scale results. Because our batteries are designed to operate using an electrolyte of primarily salt, iron and water, our products are environmentally sustainable and substantially recyclable or reusable.
In recent years there have been, and in the future there may continue to be, more unpredictable weather events including extreme temperatures, hurricanes and wildfires. Our technology can operate efficiently and effectively in these extreme weather conditions.
The proliferation of intermittent generating resources has created new challenges to electric grid stability, and thus an opportunity for an - 6 - Table of Contents increased role for long-duration energy storage solutions. In recent years, there have been, and in the future there may continue to be, more unpredictable weather events including extreme temperatures, hurricanes and wildfires.
These include our smaller-scale Energy Warehouse, larger containerized Energy Centers, gigawatt-scale fully configurable Energy Base and core power trains that can be assembled at the customer site into complete storage solutions. With each battery deployed, we further our mission to accelerate the transition to a zero-carbon energy future with increased grid reliability.
Our original product offering included the Energy Warehouse and Energy Center, which we are not currently offering for sale. With each battery deployed, we further our mission to accelerate the transition to a zero-carbon energy future with increased grid reliability.
Removed
Business Overview 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.
Added
We continue to perform warranty and maintenance activities for our first and second product generations, the Energy Warehouse and Energy Center, that remain under contract in the field.
Removed
Our batteries and technology can be purchased with an extended ten-year warranty which is backed by investment-grade, warranty and project insurance policies from Munich Re, a leading provider of reinsurance, primary insurance and insurance-related risk solutions, which stands behind the performance of our energy storage products.
Added
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.
Removed
To our knowledge, we are the first long-duration energy storage company to receive this type of insurance, which provides a warranty backstop for our proprietary flow battery technology, supporting our performance obligations regardless of project size or location and de-risking the technology for our customers. We have also collaborated with Munich Re to develop separate project coverage for our customers.
Added
On the U.S. federal level, tax credits remain in place that incentivize both the manufacturing and deployment of renewable energy and battery storage. The Inflation Reduction Act of 2022 established advanced manufacturing production credits and investment tax credits for energy storage.
Removed
This project coverage provides warranty continuity insurance in the event of our insolvency, providing long-term assurance of project performance to our customers and their investors and lenders. Bonding and surety capital is provided through OneBeacon Insurance Group (“OneBeacon”) as well as qualification from the U.S. Export-Import Bank, which provides additional product assurance.
Added
The One Big Beautiful Bill Act (H.R. 1) (the “OBBB”), enacted in July 2025, preserved these tax credits but introduced complexity by requiring compliance with certain “foreign entity of concern” (FEOC) rules.
Removed
We believe each of these elements allows us to increase our total addressable market, as potential customers have reduced technology risk, financing risk and importing risk. We believe that as we are able to increase our production, our per unit costs will decrease, allowing our battery technology to be priced more competitively.
Added
Beginning in 2026, energy storage technology will need to comply with these rules, which generally restrict entities linked to adversarial nations, particularly China, from accessing the benefits of U.S. tax credits including by placing limitations on the eligibility of equipment procured from such entities for such credits.
Removed
Our second, larger scale energy storage product, the Energy Center, is designed to be a complete battery solution delivered in a modular, stackable form factor that can be deployed either ‘behind-the-meter’, at commercial/industrial sites or in micro-grid deployments, or ‘front-of-the-meter’ for large-scale grid applications.
Added
As a manufacturer of energy storage systems, we may be eligible for advanced manufacturing production credits to produce eligible battery components. For project deployments, battery energy storage systems are eligible for investment tax credits.
Removed
The Energy Center is designed to allow customers to connect multiple units in a variety of configurations, supporting energy storage projects ranging from sub-megawatt to tens-of-megawatt scale. The Energy Center is configured with higher power and longer duration than the Energy Warehouse, and the modular design allows customers to meet the specific requirements of their application as needed.
Added
In both types of markets, the deployment of intermittent renewables is straining the electric grid and thus driving demand for energy storage. We have made sales in Australia, where government incentive programs support renewable energy and energy storage deployment.
Removed
These balance of system components are commercially available products used across a variety of industries and applications.
Added
The Australian federal government and several state governments have established renewable energy targets and energy storage procurement goals that may drive future demand for our products. All of these governmental programs supporting demand for our products depend on continued legislative support and favorable regulatory implementation.
Removed
Partnerships • Munich Re : We offer our customers the opportunity to purchase our batteries and technology with a ten-year warranty which is backed by investment-grade warranty and project insurance policies from Munich Re, a leading - 6 - Table of Contents provider of reinsurance, primary insurance and insurance-related risk solutions, which stands behind the performance of our energy storage products.
Added
Changes in policy guidance or budget priorities could reduce or eliminate these benefits, including through repeal of modification of tax credits, weakening of state renewable energy mandates, or - 7 - Table of Contents reduction in grid modernization funding. Any such changes would adversely affect demand for our products and our financial position.
Removed
To our knowledge, we are the first long-duration energy storage company to receive this type of insurance, which provides a warranty backstop for our proprietary flow battery technology, supporting our performance obligations regardless of project size or location and de-risking the technology for our customers. We have also collaborated with Munich Re to develop separate project coverage for our customers.
Added
Our manufacturing operations are subject to environmental regulations, and our products are subject to regulations addressing safety and reliability. We are also subject to state utility commission requirements, grid interconnection timelines, as well as other permitting processes for project development.
Removed
Incentives for renewable energy and grid upgrades in Australia may drive growth for battery and energy storage as well. The Australian Government’s Powering Australia plan includes an investment of AU$20 billion by 2030 for upgrades to the electricity grid to support more renewable power.
Removed
At the state level, the government of Victoria has pledged to legislate Australia’s largest renewable energy storage targets: 2.6 gigawatts of renewable energy storage capacity by 2030 and 6.3 gigawatts of storage by 2035.
Removed
New South Wales has also recognized the critical need for energy storage, calling for the procurement of 2 gigawatts of long-duration energy storage in its Electricity Infrastructure Roadmap. All of these governmental programs supporting demand for our products are complex and political in nature, and therefore are subject to repeal, amendment, and interpretation in ways less supportive of our growth.
Removed
None of our employees are represented by a labor union or subject to a collective bargaining agreement. Recent Developments On February 13, 2025, Eric Dresselhuys, Chief Executive Officer of the Company, separated from the Company and resigned as a member of our board of directors. In connection with Mr. Dresselhuys’ departure, Kelly F.
Removed
Goodman, the Company’s then Vice President of Legal and Corporate Secretary, was appointed as the interim Chief Executive Officer and principal executive officer of the Company, effective February 13, 2025. Ms. Goodman is being supported by an Office of the Interim CEO, which includes Ms. Goodman, Anthony Rabb, Chief Financial Officer, and Ben Heng, EVP of Engineering.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

185 edited+63 added−36 removed397 unchanged
Biggest changeIf we elect to expand our production capacity by constructing or leasing one or more new manufacturing facilities, we may encounter challenges relating to the construction, management and operation of such facilities; • If required maintenance is performed incorrectly or if maintenance requirements exceed our current expectations, this could adversely affect our reputation, prospects, business, financial condition and results of operations; • 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; • We have a history of losses and have to deliver significant business growth to achieve sustained, long-term profitability and long-term commercial success; • Our warranty insurance provided by Munich Re is important to many potential customers.
Biggest changeIf we elect to expand our production capacity by constructing or leasing one or more new manufacturing facilities, we may encounter challenges relating to the construction, management and operation of such facilities; • If required maintenance is performed incorrectly or if maintenance requirements exceed our current expectations, this could adversely affect our reputation, prospects, business, financial condition and results of operations; • We have a history of losses and have to deliver significant business growth to achieve sustained, long-term profitability and long-term commercial success; • Failure to deliver the benefits offered by our technology, or the emergence of improvements to competing technologies, could reduce demand for our energy storage products and harm our business; • Our plans are dependent on the development of market acceptance of our products and long duration energy storage technology; • As deployment of our energy storage products increases, we will incur corresponding warranty obligations and our warranty obligations may be significant.
SBE, Honeywell, and any other business partners in the future, may have economic, business or legal interests or goals that are inconsistent with our 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-flow batteries.
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 flow batteries.
In addition, any such expansion brings with it the risk of managing larger scale foreign operations. • We may be unable to achieve the production throughput necessary to achieve our target annualized production run rate at our current and future manufacturing facilities. • Manufacturing equipment may take longer and cost more to engineer and build than expected and may not operate as required to meet our production plans. • We may depend on third-party relationships in the development and operation of additional production capacity, which may subject us to the risk that such third parties do not fulfill their obligations to us under our arrangements with them. • We may be unable to obtain financing needed to build future manufacturing facilities. • We may be unable to attract or retain qualified personnel.
In addition, any such expansion brings with it the risk of managing larger scale foreign operations. • We may be unable to achieve the production throughput necessary to achieve our target annualized production run rate at our current and future manufacturing facilities. • Manufacturing equipment may take longer and cost more to engineer and build than expected and may not operate as required to meet our production plans. • We may depend on third-party relationships in the development and operation of additional production capacity, which may subject us to the risk that such third parties do not fulfill their obligations to us under our arrangements with them. • We may be unable to obtain financing needed to build out our current and future manufacturing facilities. • We may be unable to attract or retain qualified personnel.
For example, beginning in January 2022, the Tax Cuts and Jobs Act of 2017 eliminated the right to deduct research and development expenditures for tax purposes in the period such expenses were incurred and instead requires all U.S. and foreign research and development expenditures to be amortized over five and fifteen tax years, respectively, and as a result, we have recognized a deferred tax asset for the future tax benefit of the amortization deductions of these capitalized research and development expenditures.
For example, beginning in January 2022, the Tax Cuts and Jobs Act of 2017 (the “TCJA”) eliminated the right to deduct research and development expenditures for tax purposes in the period such expenses were incurred and instead requires all U.S. and foreign research and development expenditures to be amortized over five and fifteen tax years, respectively, and as a result, we have recognized a deferred tax asset for the future tax benefit of the amortization deductions of these capitalized research and development expenditures.
Our planned expansion into new geographic markets or new product lines or services could subject us to additional business, financial, and competitive risks. 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.
Our planned expansion into new geographic markets or new product lines or services could subject us to additional business, financial, and competitive risks. 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 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. As deployment of our energy storage products increases, we will undertake corresponding warranty obligations and our warranty obligations may be significant.
We also cannot assure you that we have identified all of our existing material weaknesses. If remediation measures are required, they may be time consuming, costly, and might place significant demands on our financial and operational resources. As deployment of our energy storage products increases, we will undertake corresponding warranty obligations and our warranty obligations may be significant.
Its successful implementation also depends on a number of factors, some of which are beyond our control, including the impact of inflation 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.
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.
In such an event, the amount of cash available for distribution to our stockholders, if any, would depend on many factors, including the costs and timing of such liquidation, the market for the Company’s assets, the Company’s cash balance, the amount of cash that would need to be reserved for commitments and contingent liabilities, and the amount and relative priority of the Company’s liabilities.
In such an event, the amount of cash available for distribution to our stockholders, if any, would depend on many factors, including the costs and timing of such liquidation, the market for our assets, our cash balance, the amount of cash that would need to be reserved for commitments and contingent liabilities, and the amount and relative priority of our liabilities.
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.
Our 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.
To the extent that any impacts from the IRA are less beneficial than anticipated or have a negative impact on us or our business or on our customers’ businesses, these changes may materially and adversely impact our business, financial condition, and results of operations.
To the extent that any impacts from the IRA or OBBB are less beneficial than anticipated or have a negative impact on us or our business or on our customers’ businesses, these changes may materially and adversely impact our business, financial condition, and results of operations.
These provisions, among other things: • establish a classified board of directors so that not all members of our board are elected at one time; • permit only the board of directors to establish the number of directors and fill vacancies on the board; • provide that directors may only be removed “for cause” and only with the approval of a majority of the voting power of the issued and outstanding capital stock of the Company entitled to vote in the election of directors; • authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a “poison pill”); • eliminate the ability of our stockholders to call special meetings of stockholders; • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • prohibit cumulative voting by stockholders at any election of directors; • authorize our board of directors to amend the bylaws; • establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; and • require a super-majority vote of stockholders to amend some of the provisions described above.
These provisions, among other things: • establish a classified board of directors so that not all members of our board are elected at one time; • permit only our board of directors to establish the number of directors and fill vacancies on the board; • provide that directors may only be removed “for cause” and only with the approval of a majority of the voting power of the issued and outstanding capital stock of the Company entitled to vote in the election of directors; • authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan (also known as a “poison pill”); • eliminate the ability of our stockholders to call special meetings of stockholders; - 43 - Table of Contents • prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; • prohibit cumulative voting by stockholders at any election of directors; • authorize our board of directors to amend the bylaws; • establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; and • require a super-majority vote of stockholders to amend some of the provisions described above.
Our future growth and success depend on our ability to sell effectively to large customers. Many of our potential customers are electric utilities and C&I businesses that tend to be large enterprises. Therefore, our future success will depend on our ability to effectively sell and deliver our products to such large customers.
Many of our potential customers are electric utilities and C&I businesses that tend to be large enterprises. Therefore, our future success will depend on our ability to effectively sell and deliver our products to such large customers.
As described in the Notice, as of March 21, 2025, our 30 trading-day average market capitalization was approximately $47.8 million and our last reported stockholders’ equity as of September 30, 2024, was approximately $49.2 million.
As described in the Notice, as of March 21, 2025, our 30 trading-day average global market capitalization was approximately $47.8 million and our last reported stockholders’ equity as of September 30, 2024, was approximately $49.2 million.
Our ability to plan, develop and equip additional manufacturing facilities is subject to significant risks and uncertainties, including but not limited to the following: • The expansion or construction of any manufacturing facilities will be subject to the risks inherent in the development and construction of new facilities, including risks of delays and cost overruns as a result of factors outside our control, which may include delays in government approvals, burdensome permitting conditions, and delays in the delivery or installation of manufacturing equipment and subsystems that we manufacture or obtain from suppliers, similar to or more severe than what we have experienced recently. - 14 - Table of Contents • In order for us to expand internationally, we anticipate entering into strategic partnerships, joint ventures and licensing agreements that allow us to add manufacturing capability outside of the United States.
Our ability to plan, develop and equip additional manufacturing facilities is subject to significant risks and uncertainties, including but not limited to the following: • The expansion or construction of any manufacturing facilities will be subject to the risks inherent in the development and construction of new facilities, including risks of delays and cost overruns as a result of factors outside our control, which may include delays in government approvals, burdensome permitting conditions, and delays in the delivery or installation of manufacturing equipment and subsystems that we manufacture or obtain from suppliers, similar to or more severe than what we have experienced recently. • In order for us to expand internationally, we anticipate entering into strategic partnerships, joint ventures and licensing agreements that allow us to add manufacturing capability outside of the United States.
Maintenance of our existing and any future indebtedness could also: • cause us to dedicate a substantial portion of our cash flows from operations towards debt service obligations and principal repayments; • increase our vulnerability to adverse changes in general economic, industry, and competitive conditions; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • impair our ability to obtain future financing for working capital, capital expenditures, acquisitions, general corporate, or other purposes; and • due to limitations within the debt instruments, restrict our ability to grant liens on property, enter into certain mergers, dispose of all or substantially all of our assets, or materially change our business, subject to customary exceptions.
Maintenance of our existing and any future indebtedness could also: • cause us to dedicate a substantial portion of our cash flows from operations towards debt service obligations and principal repayments; • increase our vulnerability to adverse changes in general economic, industry, and competitive conditions; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • impair our ability to obtain future financing for working capital, capital expenditures, acquisitions, general corporate, or other purposes; and - 39 - Table of Contents • due to limitations within the debt instruments, restrict our ability to grant liens on property, enter into certain mergers, dispose of all or substantially all of our assets, or materially change our business, subject to customary exceptions.
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 fulfil 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.
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 fulfill 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.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other - 43 - Table of Contents considerations, our amended and restated bylaws further provide that, unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of the Company’s securities, including any auditor, underwriter, expert, control person, or other defendant.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated bylaws further provide that, unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of the Company’s securities, including any auditor, underwriter, expert, control person, or other defendant.
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 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.
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 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.
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 substantial portion of the disbursements under the Credit Agreement that decreases upon the equity raise milestone and will be reported as restricted cash.
(“Honeywell”), pursuant to which UOP may purchase equipment supplied by us, and we agreed to issue additional - 28 - Table of Contents 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.
(“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.
Treasury Department (“Treasury”) to implement many of the IRA’s provisions, including with respect to battery storage projects and domestic content requirements, however there continues to be uncertainty with respect to certain aspects of the IRA, which could cause our customers to delay projects pending further guidance and which could reduce demand for our technology and harm our business.
Treasury Department (“Treasury”) to implement many of the IRA’s provisions, including with respect to battery storage projects and domestic content requirements, however there continues to be uncertainty with respect to certain aspects of the IRA, which could cause our customers to delay projects pending further guidance and legislative changes and which could reduce demand for our technology and harm our business.
We have warrants outstanding that are exercisable for our common stock, which, if exercised, would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. As of December 31, 2024, we had outstanding 11,461,227 Public Warrants to purchase an aggregate of 764,081 shares of our common stock.
We have warrants outstanding that are exercisable for our common stock, which, if exercised, would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders. As of December 31, 2025, we had outstanding 11,461,227 Public Warrants to purchase an aggregate of 764,081 shares of our common stock.
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, chemicals and electronic components. We will need to maintain and significantly grow our access to key raw materials and control our related costs.
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, and electronic components. We will need to maintain and significantly grow our access to key raw materials and control our related costs.
If we do not successfully identify a viable commercial or financial transaction, or consummate such a transaction, or if we are unable to raise sufficient capital to fund our operations, our board of directors may determine that a liquidation of our assets, wind-down, or dissolution of our business is the best method to seek to maximize value.
If we do not successfully identify a viable commercial or financial transaction, or consummate such a transaction, or if we are unable to raise sufficient capital to fund our operations, our board of directors may determine that a liquidation of our assets, wind-down, dissolution, or other restructuring of our business is the best method to seek to maximize value.
If we do not successfully identify a viable commercial or financial transaction, or consummate such a transaction, or if we are unable to raise sufficient capital to fund our operations, our board of directors may determine that the liquidation of our assets, wind-down, or dissolution of our business is the best method to seek to maximize value.
If we do not successfully identify a viable commercial or financial transaction, or consummate such a transaction, or if we are unable to raise sufficient capital to fund our operations, our board of directors may determine that the liquidation of our assets, wind-down, dissolution, or other restructuring of our business is the best method to seek to maximize value.
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 injected molded parts and power electronics which undergo a qualification process that can take months.
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.
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, circuit board components and shipping containers. Such issues have also affected the ramping up of our automated production line.
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.
Any actual or perceived breach of our network or systems, or those of our vendors or service providers, could result in claims, litigation, and proceedings against us by governmental entities or others, have negative effects on our business and future prospects, including possible fines, penalties and damages, or loss of eligibility for government grants and contracts, and could result in reduced demand for our energy storage products and harm to our reputation and brand, resulting in negative impacts to our business, prospects, and financial results.
Any actual or perceived breach of our network or systems, or those of our vendors or service providers, could result in claims, litigation, and proceedings against us by governmental entities or others, have negative effects on our business and future prospects, including possible fines, penalties and damages, or loss of eligibility - 31 - Table of Contents for government grants and contracts, and could result in reduced demand for our energy storage products and harm to our reputation and brand, resulting in negative impacts to our business, prospects, and financial results.
If we or our customers are unable to obtain additional capital as required, whether due to such disruptions or otherwise, we may be required to take further measures to conserve cash, including ongoing evaluation of workforce staffing requirements, 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, until alternative credit arrangements or other funding for our business needs can be arranged, which may adversely affect our business, financial condition and results of operations.
If we or our customers are unable to obtain additional capital as required, whether due to such disruptions or otherwise, we may be required to take further measures to conserve cash, including ongoing evaluation of workforce staffing requirements, further reduction of material purchases by continuing to minimize spending until firm orders are received, refining our focus on research and development and engineering project efforts towards highest priority, greatest return projects and additional reduction in outside vendor spending, until alternative credit arrangements or other funding for our business needs can be arranged, which may adversely affect our business, financial condition and results of operations.
We have also filed registration statements with the SEC to register shares of our common stock for certain stockholders who have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.
We have also filed, or may be required to file, registration statements with the SEC to register shares of our common stock for certain stockholders who have rights, subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.
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 products and the servicing thereof while our core component technology productization and future product offerings are under development.
We currently are and in the foreseeable future will continue to be significantly dependent on revenue generated from our newly launched Energy Base product and the servicing thereof while our core component technology productization and future product offerings are under development.
Any actual or perceived errors, defects, or poor performance in our products could result in repair costs or the replacement or recall of our products, shipment delays, rejection of our products, damage to our reputation, lost revenue, - 23 - Table of Contents diversion of our personnel from our operational efforts, and increases in customer service and support costs, all of which could have a material adverse effect on our business, financial condition, and results of operations.
Any actual or perceived errors, defects, or poor performance in our products could result in repair costs or the replacement or recall of our products, shipment delays, rejection of our products, damage to our reputation, lost revenue, diversion of our personnel from our operational efforts, and increases in customer service and support costs, all of which could have a material adverse effect on our business, financial condition, and results of operations.
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.
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, - 24 - Table of Contents 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.
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, and our failure to accurately estimate the resources and costs that will be required to fulfill any contract we win.
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, - 18 - Table of Contents even if successful and our failure to accurately estimate the resources and costs that will be required to fulfill any contract we win.
These factors could result in a material adverse effect on our business and financial results. The execution of our strategy to expand into new markets through strategic partnerships, joint ventures and licensing arrangements is in a very early stage and is also subject to various risks which could adversely affect our business and future prospects.
These factors could result in a material adverse effect on our business and financial results. - 28 - Table of Contents The execution of our strategy to expand into new markets through strategic partnerships, joint ventures and licensing arrangements is in a very early stage and is also subject to various risks which could adversely affect our business and future prospects.
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 - 15 - Table of Contents hydrogen. Maintenance items are intended to be scheduled on a periodic basis but may vary depending on system operations.
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.
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. Our facilities or operations could be damaged or adversely affected as a result of natural disasters and other catastrophic events.
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. - 25 - Table of Contents Our facilities or operations could be damaged or adversely affected as a result of natural disasters and other catastrophic events.
If a court were to find these types of provisions to be inapplicable or unenforceable, and if a court were to find the exclusive forum provision in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could materially adversely affect our business.
If a court were to find these types of provisions to be inapplicable or unenforceable, and if a court were to find the exclusive forum provision in our amended and restated bylaws to be inapplicable or unenforceable - 44 - Table of Contents in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could materially adversely affect our business.
In addition, expanding into new geographic markets will increase our exposure to presently existing and new risks, such as - 22 - Table of Contents fluctuations in the value of foreign currencies and difficulties and increased expenses in complying with United States and foreign laws, regulations and trade standards, including the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”).
In addition, expanding into new geographic markets will increase our exposure to presently existing and new risks, such as fluctuations in the value of foreign currencies and difficulties and increased expenses in complying with United States and foreign laws, regulations and trade standards, including the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”).
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.
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.
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 this Annual Report on Form 10-K.
Important factors that may affect the actual results and cause our operating and financial results - 15 - Table of Contents 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 this Annual Report on Form 10-K.
We also had outstanding a warrant issued to SMUD exercisable for up to 33,333 shares of our common stock, with the vesting of the shares underlying the warrant being subject to the achievement of certain commercial milestones through December 31, 2030 pursuant to a related commercial agreement, the Investment Warrant held by Honeywell ACS Ventures LLC (“Honeywell Ventures”) exercisable for up to 708,775 shares of common stock, the IP Warrant held by Honeywell Ventures exercisable for up to 417,997 shares of common stock, and the initial Performance Warrant held by UOP exercisable for up to 51,717 shares of common stock.
We also had outstanding a warrant issued to SMUD exercisable for up to 33,333 shares of our common stock, with the vesting of the shares underlying the warrant being subject to the achievement of certain commercial milestones through December 31, 2030 pursuant to a related commercial agreement; the Investment Warrant held by Honeywell Ventures exercisable for up to 708,775 shares of common stock; the IP Warrant held by Honeywell Ventures exercisable for up to 417,997 shares of common stock; and the initial Performance Warrant held by UOP exercisable for up to 51,717 shares of common stock.
If we are unable to cost-efficiently design, manufacture, market, sell and distribute our energy storage products, our margins, profitability and prospects would be materially and adversely affected. Substantial increases in the prices of raw materials would increase our operating costs and could adversely affect our profitability.
If we are unable to cost-efficiently design, manufacture, market, sell and distribute our energy storage products, our margins, profitability and prospects would be materially and adversely affected. - 12 - Table of Contents Substantial increases in the prices of raw materials would increase our operating costs and could adversely affect our profitability.
Operational problems with our manufacturing equipment could result in the personal injury to or death of workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in production. In addition, operational problems may result in environmental damage, administrative fines, increased insurance costs and potential legal liabilities.
Operational problems with our manufacturing equipment could result in the personal injury to or death of workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in - 13 - Table of Contents production. In addition, operational problems may result in environmental damage, administrative fines, increased insurance costs and potential legal liabilities.
We maintain a shelf registration statement on Form S-3 pursuant to which we may, from time to time, sell up to an aggregate of $300 million of our common stock, preferred stock, debt securities, depositary shares, warrants, subscription rights, purchase contracts, or units.
We maintain a shelf registration statement on Form S-3 pursuant to which we may, from time to time, sell up to an aggregate of $300 million of our common stock, preferred stock, debt securities, depositary shares, warrants, subscription - 40 - Table of Contents rights, purchase contracts, or units.
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.
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 - 20 - Table of Contents compelling enhancements to our products and technologies and generate revenue, if any, from those activities.
Controls and Procedures ”). When evaluating our internal control over financial reporting, we may 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.
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.
In addition, if the license terms for the open source software that we use change, we may be forced to re-engineer our software, incur additional costs or discontinue the use of certain offerings if re-engineering could not be accomplished in a timely manner.
In addition, if the license terms for the open source software that we use change, we may be forced to re-engineer our software, incur additional costs or - 37 - Table of Contents discontinue the use of certain offerings if re-engineering could not be accomplished in a timely manner.
In addition, because this equipment has never been used to build 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.
In addition, because this equipment has limited history building 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.
Further, U.S. export control laws and trade and economic sanctions as well as similar laws and regulations in other jurisdictions prohibit the export of products and services to certain U.S. embargoed or sanctioned countries, governments, and persons, as well as for prohibited end-uses.
Further, U.S. export control laws and trade and economic sanctions as well as similar laws and regulations in other jurisdictions prohibit the export of products and services to certain U.S. - 32 - Table of Contents embargoed or sanctioned countries, governments, and persons, as well as for prohibited end-uses.
Although we - 37 - Table of Contents monitor our use of open source software to avoid subjecting our offerings to unintended conditions, there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our offerings.
Although we monitor our use of open source software to avoid subjecting our offerings to unintended conditions, there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our offerings.
We cannot guarantee that any of our pending applications will be approved or that our existing and future intellectual property rights will be maintained or sufficiently broad to protect our proprietary technology, and any failure to obtain such approvals or finding that our intellectual property rights are invalid or unenforceable could force us to, among other things, rebrand or re-design our affected products.
We cannot guarantee that any of our pending applications will be approved or that our existing and future intellectual property rights will be maintained or sufficiently broad to protect our proprietary technology, and any failure to obtain such approvals or finding that our intellectual property rights are invalid or unenforceable, or if we decline to continue certain intellectual property rights, could force us to, among other things, rebrand or re-design our affected products.
If we cannot successfully overcome those barriers, our business will be negatively impacted and could fail; - 9 - Table of Contents • We are in the early stage of commercialization. In addition, certain aspects of our technology have not been fully field tested.
If we cannot successfully overcome those barriers, our business will be negatively impacted and could fail; • We are in the early stage of commercialization. In addition, certain aspects of our technology have not been fully field tested.
However, any such lawsuits may consume management and financial - 36 - Table of Contents resources for long periods of time and may not result in outcomes that are favorable or readily enforceable, which may adversely affect our business, financial condition or results of operations.
However, any such lawsuits may consume management and financial resources for long periods of time and may not result in outcomes that are favorable or readily enforceable, which may adversely affect our business, financial condition or results of operations.
On March 24, 2025, we received a written notice from the NYSE (the “Notice”) indicating that we did not satisfy the continued listing standard set forth in Section 802.01B of the NYSE’s Listed Company Manual, as our average global - 41 - Table of Contents market capitalization over a consecutive 30 trading-day period was less than $50 million and, at the same time, our stockholders’ equity was less than $50 million.
On March 24, 2025, we received a written notice from the NYSE (the “Notice”) indicating that we did not satisfy the continued listing standard set forth in Section 802.01B of the NYSE’s Listed Company Manual, as our average global market capitalization over a consecutive 30 trading-day period was less than $50 million (the “Minimum Market Capitalization Standard”) and, at the same time, our stockholders’ equity was less than $50 million.
We utilize third-party contractors to perform certain functions for us, and they face security risks similar to us. Further, retaliatory acts by Russia - 24 - Table of Contents 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.
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.
As such, an export license may be required to export, re-export or transfer our products and services to certain countries or end-users or for certain end-uses.
As such, a license may be required to export, re-export or transfer our products and services to certain countries or end-users or for certain end-uses.
We also depend on vendors for the shipping of our energy storage products. Quality issues or delays in - 11 - Table of Contents our supply or delivery chain and shipments could harm our ability to manufacture, supply and commercialize our energy storage products.
We also depend on vendors for the shipping of our energy storage products. Quality issues or delays in our supply or delivery chain and shipments could harm our ability to manufacture, - 21 - Table of Contents supply and commercialize our energy storage products. ”).
While we have conducted tests to determine the overall life of our energy - 20 - Table of Contents storage products, we have not run certain of our energy storage products over their projected useful life or in all potential conditions prior to large scale commercialization.
While we have conducted tests to determine the overall life of our energy storage products, we have not run certain of our energy storage products over their projected useful life or in all potential conditions prior to large scale commercialization.
We 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 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.
While our engineering team has worked closely with the CSA Group, Intertek, UL and Technischer Überwachungsverein certification agencies to obtain certifications of our flow battery products under all applicable safety standards, there is no guarantee that such certifications will continue to be obtained.
While our engineering team has worked closely with the CSA Group, Intertek, UL and Technischer Überwachungsverein certification agencies to obtain certifications of our flow battery products under all applicable safety standards, there is no guarantee that such certifications will continue to be obtained or that our batteries will be certificate compliant.
The selection - 29 - Table of Contents 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.
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.
Such cash conservation activities may yield unintended consequences, such as attrition beyond any planned reduction in workforce or near-term delays in our ability to deliver products to our customers. - 38 - Table of Contents Our debt service obligations may adversely affect our financial condition and cash flows from operations.
Such cash conservation activities may yield unintended consequences, such as attrition beyond any planned reduction in workforce or near-term delays in our ability to deliver products to our customers. Our debt service obligations may adversely affect our financial condition and cash flows from operations.
In addition, contracted customers may have specific site requirements and interface technology or experience delays in preparing their site for - 19 - Table of Contents equipment installation, which has caused, and in the future may continue to cause, delays with respect to delivery and installation and potentially our ability to recognize revenue.
In addition, contracted customers may have specific site requirements and interface technology or experience delays in preparing their site for equipment installation, which has caused, and in the future may continue to cause, delays with respect to delivery and installation and potentially our ability to recognize revenue.
In addition, actual or alleged violations - 32 - Table of Contents could damage our reputation and ability to do business. Any of the foregoing could materially adversely affect our reputation, business, financial condition, prospects and results of operations.
In addition, actual or alleged violations could damage our reputation and ability to do business. Any of the foregoing could materially adversely affect our reputation, business, financial condition, prospects and results of operations.
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.
In addition, although we believe our - 10 - Table of Contents 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.
It is possible - 31 - Table of Contents that these laws, regulations, and other obligations may be inconsistent with one another or be interpreted or asserted to be inconsistent with our business or practices. We anticipate needing to dedicate substantial resources in order to comply with laws, regulations, and other obligations relating to privacy and cybersecurity.
It is possible that these laws, regulations, and other obligations may be inconsistent with one another or be interpreted or asserted to be inconsistent with our business or practices. We anticipate needing to dedicate substantial resources in order to comply with laws, regulations, and other obligations relating to privacy and cybersecurity.
For extended warranties, this may require system augmentation or replacements, which could be provided at no additional charge beyond the price of the extended warranty paid by such customer.
For extended warranties, this may require system augmentation or replacements, which may need to be provided at no additional charge beyond the price of the extended warranty paid by such customer.
The price of our common stock may fluctuate due to a variety of factors, including: • changes in the industries in which we and our customers operate; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; • additions and departures of key personnel; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; - 39 - Table of Contents • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • publication of research reports by securities analysts about us or our competitors or our industry; • sales of shares of our common stock by our existing stockholders; • short selling activities; • the volume of shares of our common stock available for public sale; and • general economic and political conditions such as recessions, interest rates, fuel prices, inflation, instability in the banking sector and financial markets, foreign currency fluctuations, changing international trade policies, social, political and economic risks, hostilities or the perception that hostilities may be imminent, terrorism, military conflict and acts of war, including an escalation of the situation in Ukraine or the Middle East and the related responses, including sanctions or other restrictive actions, by the United States and/or other countries.
The price of our common stock may fluctuate due to a variety of factors, including: • changes in the industries in which we and our customers operate; • variations in our operating performance and the performance of our competitors in general; • actual or anticipated fluctuations in our quarterly or annual operating results; • the public’s reaction to our press releases, our other public announcements and our filings with the SEC; • our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market; • additions and departures of key personnel; • changes in laws and regulations affecting our business; • commencement of, or involvement in, litigation involving us; • changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; • publication of research reports by securities analysts about us or our competitors or our industry; • sales of shares of our common stock by our existing stockholders; • short selling activities; • the trading volume of our shares and the volume of shares of our common stock available for public sale; and • general economic and political conditions such as recessions, interest rates, fuel prices, inflation, instability in the banking sector and financial markets, foreign currency fluctuations, changing international trade policies, social, political and economic risks, hostilities or the perception that hostilities may be imminent, terrorism, military conflict and acts of war, including the escalation of the 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 and the related responses, including sanctions or other restrictive actions, by the United States and/or other countries.
So far, we have been neither the subject of any lawsuits challenging the ownership or validity of our intellectual property, nor have we been required to initiate any lawsuits to protect our intellectual property.
So far, we have been neither the subject of any lawsuits challenging the ownership or validity of our intellectual property, nor have we been required to initiate any - 36 - Table of Contents lawsuits to protect our intellectual property.
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 quickly and effectively, which could result in supply shortages and increased costs. We could be subject to foreign exchange risk.
It is difficult to predict what further trade-related actions governments may - 26 - Table of Contents take, which may include additional or increased tariffs and trade restrictions, and we may be unable to react to such actions quickly, cheaply or effectively, which could result in supply shortages and increased costs. We could be subject to foreign exchange risk.
We believe the IRA will increase demand for our products and 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.
Subject to recently enacted legislation discussed below, we believe the IRA will increase demand for our products and 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.
The additional Performance Warrants will have an exercise price equal to the volume- - 40 - Table of Contents weighted average price of the Company’s common stock for the last fifteen (15) trading days of the relevant calendar year for which such additional Performance Warrant is being issued.
The additional Performance Warrants will have an exercise price equal to the volume-weighted average price of our common stock for the last fifteen (15) trading days of the relevant calendar year for which such additional Performance Warrant is being issued.
Accordingly, holders of our shares and warrants could lose all or a significant portion of their investment in the event of a liquidation of the Company’s assets, wind-down, or dissolution of its business. Risks Related to Regulatory, Environmental and Legal Issues We may face regulatory challenges to or limitations on our ability to sell our products directly in certain markets.
Accordingly, holders of our shares and warrants could lose all or a significant portion of their investment in the event of a liquidation of our assets, wind-down, dissolution, or other restructuring of our business. - 29 - Table of Contents Risks Related to Regulatory, Environmental and Legal Issues We may face regulatory challenges to or limitations on our ability to sell our products directly in certain markets.
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 as at current volumes, production costs for our units significantly exceed their selling price.
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.
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 our growing employee base and scale and otherwise improve our information technology (“IT”) infrastructure in tandem with that headcount growth.
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 any new employees and scale and otherwise improve our information technology (“IT”) infrastructure in tandem with any headcount growth.
Our inability to predict the extent of customer adoption of our proprietary technologies in the already-established traditional energy storage market makes it difficult to evaluate our future prospects. As of December 31, 2024, we had limited Energy Warehouse products fully deployed and only initial deliveries and deployment of our Energy Center products.
Our inability to predict the extent of customer adoption of our proprietary technologies in the already-established traditional energy storage market makes it difficult to evaluate our future prospects. As of December 31, 2025, we had limited Energy Warehouse and Energy Center products fully deployed.
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, product defects, or technological failures. Different geographic markets may have different regulations regarding data protection, raising potential compliance risks.
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.
Our business is dependent on the security and efficacy of our networks and computer and data management systems. For example, our Energy Warehouse and Energy Center products 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.
Our business is dependent on the security and efficacy of our networks and computer and data management systems. For example, our products deployed in the field 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.
In addition, some of the Energy Warehouse units we have shipped to date have not met the specifications set forth in the purchase contracts for such units, resulting in additional installation time and costs in order to receive customer acceptance of such units.
In addition, some of the 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.

… 204 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

7 edited+0 added−0 removed9 unchanged
Biggest changeWe devote significant resources and designate high-level personnel, including our Chief Information Officer who reports to our Chief Financial Officer, to manage the risk assessment and mitigation process. As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with human resources, IT, and management.
Biggest changeWe devote significant resources and designate high-level personnel, including our interim Chief Operating Officer, whose oversight includes information technology and cybersecurity and who reports to our Chief Executive Officer, to manage the risk assessment and mitigation process. - 45 - Table of Contents As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with human resources, IT, and management.
ITEM 1C. CYBERSECURITY Risk Management and Strategy We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes.
ITEM 1C. CYBERSECURITY Risk Management and Strategy We have established policies and processes for assessing, identifying, and managing risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes.
Our Chief Information Officer has an advanced degree in management information systems and has managed the Company’s IT processes and policies inclusive of cybersecurity matters throughout his tenure at the Company, in addition to many years of prior experience in various technology roles at a large U.S. public company.
Our interim Chief Operating Officer has an advanced degree in management information systems and has managed the Company’s IT processes and policies inclusive of cybersecurity matters throughout his tenure at the Company, in addition to many years of prior experience in various technology roles at a large U.S. public company.
We measure our - 44 - Table of Contents cybersecurity infrastructure against the NIST 800-171 framework and routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.
We measure our cybersecurity infrastructure against the NIST 800-171 framework and routinely assess risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.
In accordance with our cybersecurity incident response plan (“IRP), our Chief Information Officer, members of our management team, including personnel representative of the following functions – legal, IT, finance, audit, operations, engineering, human resources, communications, and additional executives as applicable under the plan – and external cybersecurity support providers (collectively, “IRP stakeholders”), are primarily responsible to assess and manage our material risks from cybersecurity threats.
In accordance with our cybersecurity incident response plan (“IRP”), our interim Chief Operating Officer, members of our management team, including personnel representative of the following functions – legal, IT, finance, audit, operations, engineering, human resources, communications, and additional executives as applicable under the plan – and external cybersecurity support providers (collectively, “IRP stakeholders”), are primarily responsible to assess and manage risks from cybersecurity threats.
Our Chief Information Officer provides quarterly briefings to the audit committee and board of directors regarding our Company’s cybersecurity program, including risks and activities, reports of recent cybersecurity incidents and related responses (if any, and if not previously reported to the Board pursuant to the incident response plan), cybersecurity systems testing, the status of third party assessments, general updates in the cybersecurity space, relevant disclosures related to SEC reporting, and the like. - 45 - Table of Contents
Our interim Chief Operating Officer provides quarterly briefings to the audit committee and board of directors regarding our Company’s cybersecurity program, including risks and activities, reports of recent cybersecurity incidents and related responses (if any, and if not previously reported to the Board pursuant to the incident response plan), cybersecurity systems testing, the status of third party assessments, general updates in the cybersecurity space, relevant disclosures related to SEC reporting, and the like.
Our Chief Information Officer and our IRP stakeholders oversee our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.
Our interim Chief Operating Officer and our IRP stakeholders oversee our cybersecurity policies and processes, including those described in “Risk Management and Strategy” above.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed1 unchanged
Biggest changeThe facility was also retooled to produce ESS’s new Energy Centers. We currently are in the process of commissioning a second automated battery manufacturing line and repurposing our original semi-automated line for research and development activities. This will result in a total battery manufacturing capacity of 1.05 GWh annually.
Biggest changeWe currently are in the process of commissioning a second automated battery manufacturing line and repurposing our original semi-automated line for research and development activities. This will result in a total battery manufacturing capacity of 1.05 GWh annually.
ITEM 2. PROPERTIES Our corporate headquarters is located in Wilsonville, Oregon. The approximately 200,000 square foot facility contains both our corporate, engineering, and administrative functions as well as our automated and semi-automated battery manufacturing lines. During 2024, the facility had the capacity to manufacture approximately 560 MWh of batteries annually.
ITEM 2. PROPERTIES Our corporate headquarters is located in Wilsonville, Oregon. The approximately 200,000 square foot facility contains both our corporate, engineering, and administrative functions as well as our automated and semi-automated battery manufacturing lines. During 2025, the facility had the capacity to manufacture approximately 560 MWh of batteries annually.
This global expansion plan may include the following levers that are currently under consideration: • Strategic investments in the supply chain to grow capacity; • Production expansion to Europe and/or Australia; and • Vertical integration of power module comportments.
This global expansion plan may include the following levers that are currently under consideration: • Strategic investments in the supply chain to grow capacity; • Production expansion to Europe and/or Australia; and • Vertical integration of power module compartments. - 46 - Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+2 added−1 removed5 unchanged
Biggest changeAny decision to declare and pay dividends in the future will be made at the discretion of the board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that the board of directors may deem relevant.
Biggest changeWe have no current plans to pay cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of the Board and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Board may deem relevant.
Issuer Purchases of Equity Securities During the year ended December 31, 2024, we did not purchase any of our equity securities that are registered under Section 12(b) of the Exchange Act (other than shares that were repurchased pursuant to net settlement to satisfy tax withholding obligations of plan participants upon the vesting of restricted stock unit awards).
Issuer Purchases of Equity Securities During the year ended December 31, 2025, we did not purchase any of our equity securities that are registered under Section 12(b) of the Exchange Act (other than shares that were repurchased pursuant to net settlement to satisfy tax withholding obligations of plan participants upon the vesting of restricted stock unit awards).
As of March 25, 2025, there were 45 holders of record of our common stock and one holder of record of our Public Warrants.
As of February 27, 2026, there were 16 holders of record of our common stock and 1 holder of record of our Public Warrants.
Removed
We have no current plans to pay cash dividends for the foreseeable future.
Added
Investor Relations Agreement On December 29, 2025, we entered into an agreement with MZHCI, LLC to provide investor relations consulting services for an initial term of one year. We agreed to, among other things, issue MZHCI $199,999.92 worth of our restricted common stock, vesting in equal monthly increments over 12 months.
Added
The Company issued 9,009 shares to MZHCI on December 29, 2025 and such securities were exempt from registration under Section 4(a)(2) of the Securities Act. The Company also agreed to provide performance bonuses if certain criteria are met, in the form of cash or restricted common stock (at the discretion of the Company).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

69 edited+33 added−24 removed19 unchanged
Biggest changeComparison of Year Ended December 31, 2024 to Year Ended December 31, 2023 The following table sets forth ESS’ operating results for the periods indicated: Year Ended December 31, ($ in thousands) 2024 2023 $ Change % Change Revenue $ 6,295 $ 7,540 $ (1,245) (17)% Cost of revenue 51,653 20,495 31,158 152 Gross profit (loss) (45,358) (12,955) (32,403) 250 Operating expenses Research and development 11,772 42,632 (30,860) (72) Sales and marketing 9,161 7,744 1,417 18 General and administrative 23,507 22,574 933 4 Total operating expenses 44,440 72,950 (28,510) (39) Loss from operations (89,798) (85,905) (3,893) 5 Other income, net Interest income, net 3,574 5,262 (1,688) (32) Gain on revaluation of common stock warrant liabilities 115 2,292 (2,177) (95) Other income (expense), net (113) 773 (886) (115) Total other income, net 3,576 8,327 (4,751) (57) Net loss and comprehensive loss to common stockholders $ (86,222) $ (77,578) $ (8,644) 11% Revenue Revenue for the year ended December 31, 2024 was $6.3 million compared to $7.5 million for the year ended December 31, 2023 as we recognized revenue for the sale of Energy Centers, Energy Warehouses, other related equipment, engineering services related to a product site deployment, and extended warranty services.
Biggest changeResults of Operations In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. - 51 - Table of Contents Comparison of Year Ended December 31, 2025 to Year Ended December 31, 2024 The following table sets forth ESS’ operating results for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 $ Change % Change Revenue $ 1,583 $ 6,295 $ (4,712) (75)% Cost of revenue 29,255 51,653 (22,398) (43) Gross loss (27,672) (45,358) 17,686 (39) Operating expenses Research and development 8,297 11,772 (3,475) (30) Sales and marketing 3,834 9,161 (5,327) (58) General and administrative 17,604 23,507 (5,903) (25) Total operating expenses 29,735 44,440 (14,705) (33) Loss from operations (57,407) (89,798) 32,391 (36) Other (expense) income, net Interest (expense) income, net (5,455) 3,574 (9,029) (253) Gain on revaluation of common stock warrant liabilities 229 115 114 99 Other expense, net (807) (113) (694) 614 Total other (expense) income, net (6,033) 3,576 (9,609) (269) Net loss and comprehensive loss to common stockholders $ (63,440) $ (86,222) $ 22,782 (26)% Revenue Revenue for the year ended December 31, 2025 was $1.6 million compared to $6.3 million for the year ended December 31, 2024.
Gain on revaluation of common stock warrant liabilities Gain on revaluation of common stock warrant liabilities consists of periodic fair value adjustments related to our common stock warrants. Other income (expense), net Other income (expense), net consists primarily of various gains and losses associated with our short-term investments and other income and expense items.
Gain on revaluation of common stock warrant liabilities Gain on revaluation of common stock warrant liabilities consists of periodic fair value adjustments related to our common stock warrants. Other expense, net Other expense, net consists primarily of various gains and losses associated with our short-term investments and other income and expense items.
Our team has significantly enhanced the technology, improved the round-trip efficiency and developed an innovative 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.
Our team has significantly enhanced the technology, improved 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.
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 scale back our operations, which could have an adverse impact on our business and financial prospects.
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.
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, $0.6 million was pledged as collateral for the letter of credit and recorded as restricted cash, non-current.
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, 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, 2024 and 2023. 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.
There were no draws against the letter of credit during the years ended December 31, 2025 and 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, 2026.
Off-Balance Sheet Arrangements We are not a party to any off-balance sheet arrangements, including guarantee contracts, retained or contingent interests, or unconsolidated variable interest entities that either have, or are reasonably likely to have, a current or future material effect on our financial statements. - 53 - Table of Contents Critical Accounting Policies and Estimates The preparation of financial statements in conformity with U.S.
Off-Balance Sheet Arrangements We are not a party to any off-balance sheet arrangements, including guarantee contracts, retained or contingent interests, or unconsolidated variable interest entities that either have, or are reasonably likely to have, a current or future material effect on our financial statements. Critical Accounting Policies and Estimates The preparation of financial statements in conformity with U.S.
Half of the proceeds of the loan facility may be used on a retroactive basis for the financing of the Company’s 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.
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.
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.
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 - 55 - Table of Contents 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.
Recently Issued Accounting Standards See Note 2, Significant Accounting Policies to our financial statements for the year ended December 31, 2024 included elsewhere in this Annual Report on Form 10-K.
Recently Issued Accounting Standards See Note 2, Significant Accounting Policies to our financial statements for the year ended December 31, 2025 included elsewhere in this Annual Report on Form 10-K.
Net cash provided by financing activities was $0.2 million for the year ended December 31, 2024 and consisted of proceeds from contributions to our ESPP of $0.4 million and stock options exercised of $86 thousand, partially offset by repurchases of shares from employees for income tax withholding purposes of $0.3 million.
Net cash provided by financing activities was $0.2 million for the year ended December 31, 2024 and consisted of proceeds from contributions to our ESPP of $0.4 million and stock options exercised of $0.1 million, partially offset by repurchases of shares from employees for income tax withholding purposes of $0.3 million.
In particular, weak economic conditions or significant uncertainty regarding the stability of financial markets related to stock market volatility, inflation, recession or governmental fiscal, monetary and tax policies, among others, could adversely impact our and our customers’ business, financial condition and operating results.
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.
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.
We have a standby letter of credit with Bank of America for $0.6 million as security for the performance and payment of our obligations under a customer agreement.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Overview 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.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Overview 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 based on lab-scale results.
Net changes in operating assets and liabilities used $1.6 million of cash driven by cash collections on accounts receivable, 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, accounts payable and operating lease liabilities.
Net changes in operating assets and liabilities used $1.6 million of cash driven by inventory purchases, an increase in prepaid and other current assets, and decreases in accrued and other current liabilities, operating lease liabilities, and deferred revenue, offset by increases in accounts payable and accrued product warranties and cash collections on accounts receivable.
As discussed in Note 15, Government Grants, to our financial statements, Section 45X of the Code, as enacted by the IRA, 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.
As discussed in Note 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.
Gain on revaluation of common stock warrant liabilities The change in fair value of common stock warrant liabilities resulted in a gain of $0.1 million and $2.3 million for the years ended December 31, 2024 and 2023, respectively.
Gain on revaluation of common stock warrant liabilities The change in fair value of common stock warrant liabilities resulted in a gain of $0.2 million and $0.1 million for the years ended December 31, 2025 and 2024, respectively.
As a result of these macroeconomic forces, during 2023 and 2024 we experienced supply constraints, increased shipping delays for certain customer contracts, and delays in timing of payments from some of our customers. We believe some or all of these negative trends may continue in 2025.
As a result of these macroeconomic forces, during 2024 and 2025 we experienced supply constraints, increased shipping delays for certain customer contracts, and delays in timing of payments from some of our customers. Some or all of these negative trends may continue into 2026.
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).
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.
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, began advancing this technology in 2011 and formed Legacy ESS.
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 began advancing this technology in 2011 and formed Legacy ESS.
Additionally, we are committed to non-cancellable purchase commitments of $0.2 million as of December 31, 2024 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).
Additionally, we are committed to non-cancellable purchase commitments of $0.1 million as of December 31, 2025 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).
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.
Subject 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.
Cash flows from investing activities: Our cash flows from investing activities 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 $64.8 million for the year ended December 31, 2024, which related to maturities of short-term investments partially offset by purchases of property and equipment.
Cash flows from investing activities: Our cash flows from investing activities 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 $7.5 million for the year ended December 31, 2025, which related to maturities of short-term investments partially offset by purchases of property and equipment.
Impact of Macroeconomic Developments 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, tensions in the Middle East, 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.
Impact of Macroeconomic Developments 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.
Net cash provided by investing activities was $15.1 million for the year ended December 31, 2023, which related to maturities of short-term investments partially offset by purchases of property and equipment.
Net cash provided by investing activities was $64.8 million for the year ended December 31, 2024, which related to maturities of short-term investments partially offset by purchases of property and equipment.
We are continuing to evaluate the overall impact and applicability of the IRA as guidance is issued, and the passage of comparable legislation in other jurisdictions, to our results of operations going forward.
We are continuing to evaluate the overall impact and applicability of the IRA and OBBB 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.
Net cash used in operating activities was $72.2 million for the year ended December 31, 2024, which is comprised of net loss of $86.2 million, adjusted for noncash interest income of $2.4 million, partially offset by stock-based compensation of $11.6 million, inventory write-downs and losses on noncancellable purchase commitments of $4.9 million, and depreciation expense of $4.7 million.
Net cash used in operating activities was $72.2 million for the year ended December 31, 2024, which is comprised of net loss of $86.2 million, adjusted for noncash interest income of $2.4 million, partially offset by stock-based compensation of $11.6 million and depreciation expense of $4.7 million.
Contractual Obligations and Commitments Our contractual obligations and other commitments as of December 31, 2024 consist of lease commitments and three standby letters of credit and the Credit Agreement.
Contractual Obligations and Commitments Our contractual obligations and other commitments as of December 31, 2025 consist of lease commitments and two standby letters of credit and the Credit Agreement.
As a result of changes made by the IRA, the ITC for solar generation projects is extended until at least 2033 and has been expanded to include stand-alone battery storage projects. This expansion provides more certainty on the tax incentives that will be available to stand-alone battery storage projects in the future.
As a result of changes made by the IRA, the ITC for solar generation projects was extended 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.
Our larger scale energy storage products, the Energy Center and Energy Base, are designed for either ‘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) - 47 - Table of Contents deployments specifically for utility and large commercial and industrial consumers.
Our product offering evolved to a larger scale energy storage product with the Energy Center, designed for either ‘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, before the launch of our 10+ hour Energy Base product earlier this year.
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.
Risk Factors ” included elsewhere in this Annual Report on Form 10-K. 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.
The changes in fair value of common stock warrant liabilities was driven by changes in the market price of our common stock over the respective period. Other income (expense), net Other income (expense), net resulted in $0.8 million of income for the year ended December 31, 2023 and $0.1 million of expense for the year ended December 31, 2024.
The changes in fair value of common stock warrant liabilities were driven by changes in the market price of our common stock over the respective period. Other expense, net Other expense, net increased by $0.7 million, from $0.1 million for the year ended December 31, 2024 to $0.8 million for the year ended December 31, 2025.
Net changes in operating assets and liabilities used $6.5 million of cash driven by inventory purchases, an increase in prepaid and other current assets, and decreases in accrued and other current liabilities, - 52 - Table of Contents operating lease liabilities, and deferred revenue, offset by increases in accounts payable and accrued product warranties and cash collections on accounts receivable.
Net changes in operating assets and liabilities used $6.4 million of cash, driven by decreases in accounts payable, accrued and other current liabilities, deferred revenue, accrued product warranties, and operating lease liabilities and partially offset by reductions in inventory and prepaid expenses and cash collections on accounts receivable.
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.
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.
Risk Factors ” of this Annual Report on Form 10-K. - 48 - Table of Contents Inflation Reduction Act of 2022 On August 16, 2022, President Biden signed into law the IRA, which extends the availability of ITCs and PTCs and makes significant changes to the tax credit regime that applies to solar and energy storage products.
Risk Factors ” of this Annual Report on Form 10-K. Impact of Legislative Developments On August 16, 2022, the President of the United States signed into law the IRA, which extended the availability of ITCs and PTCs and made significant changes to the tax credit regime that applies to solar and energy storage products.
Other income, net Interest income, net Interest income, net consists primarily of earned income on our cash equivalents, restricted cash, and short-term investments. These 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 (expense) income, net 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.
These effects could include, among others, slower purchasing decisions by existing and potential new customers, additional delays in timing of payments under our existing customer contracts, further reduction or delays in purchasing decisions by our customers, potential losses of customers as a result of economic distress or bankruptcy, and increased costs for raw materials and freight resulting from inflationary cost pressures.
These effects could include, among others, slower purchasing decisions by existing and potential new customers, additional delays in timing of payments under our existing customer contracts, further reduction or delays in purchasing decisions by our customers, potential losses of customers as a result of economic distress or bankruptcy, and increased costs for raw materials and freight resulting from inflationary cost pressures. - 49 - Table of Contents For further discussion of the challenges and risks we confront related to macroeconomic conditions and geopolitical tension around the world, please refer to “ Part I—Item 1A.
The following table summarizes cash flows from operating, investing and financing activities for the periods presented (in thousands): Years Ended December 31, 2024 2023 Net cash used in operating activities $ (72,219) $ (54,896) Net cash provided by investing activities 64,757 15,071 Net cash provided by financing activities 174 25,653 Cash flows from operating activities: Cash flows used in operating activities to date have primarily consisted 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.
The net proceeds of the RDO were approximately $14 million, after deducting placement agent fees and expenses and other estimated offering expenses payable by the Company. - 54 - Table of Contents The following table summarizes cash flows from operating, investing and financing activities for the periods presented (in thousands): Years Ended December 31, 2025 2024 Net cash used in operating activities $ (50,284) $ (72,219) Net cash provided by investing activities 7,528 64,757 Net cash provided by financing activities 43,462 174 Cash flows from operating activities: 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.
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”).
There were draws of $0.1 million against the letter of credit during the year ended December 31, 2025. - 53 - Table of Contents 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”).
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.
General and administrative 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.
Key Factors and Trends Affecting Our Business We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section “ Part I—Item 1A. Risk Factors ” included elsewhere in this Annual Report on Form 10-K.
We also offer productized versions of our core technology components for integration into third-party systems. Key Factors and Trends Affecting Our Business We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section “ Part I—Item 1A.
Our first energy storage product, the Energy Warehouse, is our ‘behind-the-meter’ solution (referring to solutions that are located on the customer’s premises, behind the service demarcation with the utility) that is used for initial testing and technology validation.
Using our iron flow battery technology, we have developed a variety of products to provide reliable, safe, long-duration energy storage solutions. Our first energy storage product, the Energy Warehouse, was our ‘behind-the-meter’ solution (referring to solutions that are located on the customer’s premises, behind the service demarcation with the utility) that was used for initial testing and technology validation.
The letters of credit related to a customer contract and to support customs and duties due on imported materials are secured by a total of $0.8 million pledged as collateral.
The letters of credit serve as security for our performance and payment obligations under a customer agreement and in support of our customs and duties due on imported materials and are secured by a total of $0.7 million pledged as collateral.
As of December 31, 2024, $0.2 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 year ended December 31, 2024.
As of December 31, 2025, $0.1 million was pledged as collateral for the letter of credit and recorded as restricted cash, current.
At December 31, 2024, we had no outstanding borrowings under the Credit Agreement. See Note 10, 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.
See Note 11, Commitments and Contingencies , to our financial statements included elsewhere in this Annual Report on Form 10-K for further discussion.
Our near-term and medium-term revenue is expected to be generated from our Energy Centers, second-generation Energy Warehouses, Energy Base, and core technology component productization. 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 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 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.
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.
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 flexibility to grid operators and energy assurance for commercial and industrial customers.
The Proton Pump converts the hydrogen back into protons in the positive electrolyte. This process eliminates the hydroxide and stabilizes the electrolytes’ pH levels. - 48 - Table of Contents Our batteries provide more clean energy every day to utilities, independent power producers, and commercial industrial customers, offering a path to carbon free energy supply.
There were no draws against the letters of credit or under the Credit Agreement during the years ended December 31, 2024 and 2023.
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 other letters of credit or under the Credit Agreement during the years ended December 31, 2025 or 2024.
Net cash provided by financing activities was $25.7 million for the year ended December 31, 2023 and consisted of $27.1 million of proceeds from the issuance of common stock and common stock warrants, net of issuance costs, proceeds from contributions to our ESPP of $0.5 million and stock options exercised of $0.2 million, partially offset by principal payments on notes payable of $1.7 million and repurchases of shares from employees for income tax withholding purposes of $0.3 million.
Net cash provided by financing activities was $43.5 million for the year ended December 31, 2025 and consisted of proceeds from the issuance of common stock and common stock warrants, net of issuance costs of $37.7 million and proceeds from financing arrangements of $27.0 million, partially offset by payments on financing obligations of $21.0 million.
Other income, net Interest income, net Interest income, net decreased by $1.7 million, or 32%, from $5.3 million for the year ended December 31, 2023 to $3.6 million for the year ended December 31, 2024.
Other (expense) income, net Interest (expense) income, net Interest (expense) income, net increased by 253% to a net expense position of $5.5 million for the year ended December 31, 2025 compared to $3.6 million of interest income for the year ended December 31, 2024.
Management is evaluating various strategies to obtain additional funding, which may include additional offerings of equity, issuance of debt, or other capital sources.
Management has taken a variety of steps to mitigate costs, reduce operating expenses and extend our runway while we are evaluating various strategies to obtain additional funding, which may include additional offerings of equity, issuance of debt, or other capital sources.
We expect revenue and cost of revenue to increase as we scale the business and deliver our energy storage products to customers. Operating expenses Research and development Following the Transition Date, research 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.
Operating expenses Research and development Research 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.
We have expanded certain cost reduction and cash conservation measures, including ongoing evaluation of workforce staffing requirements, 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, and we may implement further measures. - 51 - Table of Contents We will need additional debt or equity financing in order to meet our near-term operating cash 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.
Despite the cost reductions and cash conservation measures, we will need additional debt or equity financing 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 consolidated financial statements included in this Annual Report on Form 10-K.
We believe our business model is positioned for scalability due to the ability to leverage the same core technology and components 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.
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.
Net cash used in operating activities was $54.9 million for the year ended December 31, 2023, which is comprised of net loss of $77.6 million, adjusted for noncash interest income of $3.6 million and noncash changes in the fair value of warrant liabilities of $2.3 million, partially offset by inventory write-downs and losses on noncancellable purchase commitments of $11.9 million, stock-based compensation of $10.6 million, and depreciation expense of $6.5 million.
Net cash used in operating activities was $50.3 million for the year ended December 31, 2025, which is comprised of net loss of $63.4 million, partially offset by depreciation expense of $5.7 million, stock-based compensation of $5.4 million, and non-cash interest expense of $5.0 million.
Operating expenses Research and development expenses Research and development expenses decreased by $30.9 million, or 72%, from $42.6 million for the year ended December 31, 2023 to $11.8 million for the year ended December 31, 2024. $30.4 million of the $30.9 million decrease resulted from the transition out of research and development accounting in the third quarter of 2023 into commercial inventory accounting as of the Transition Date.
Operating expenses Research and development expenses Research and development expenses decreased by $3.5 million, or 30%, from $11.8 million for the year ended December 31, 2024 to $8.3 million for the year ended December 31, 2025.
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 are developing several products, each of which is designed to provide reliable, safe, long-duration energy storage.
ESS batteries offer flexible, frequent cycling capabilities which can offer higher value clean energy when it is needed, and support 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.
Liquidity and Capital Resources 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.
The increase was due to discount expenses incurred in the year ended December 31, 2025 related to sales made under the SEPA. Liquidity and Capital Resources Since our inception, we have financed our operations primarily through the issuance and sale of equity and debt securities and loan agreements.
We expect that our sales and marketing expenses will increase over time as we continue to hire additional personnel to scale our business. - 49 - Table of Contents General and administrative 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.
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 increase over time as we continue to hire additional personnel to scale our business.
The remaining decrease is driven by a decrease in personnel-related expenses and hardware and IT costs. Sales and marketing expenses Sales and marketing expenses increased by $1.4 million, or 18%, from $7.7 million for the year ended December 31, 2023 to $9.2 million for the year ended December 31, 2024.
Sales and marketing expenses Sales and marketing expenses decreased by $5.3 million, or 58%, from $9.2 million for the year ended December 31, 2024 to $3.8 million for the year ended December 31, 2025. The decrease is driven by reduced personnel-related expenses, including stock-based compensation, decreased outside services and professional expenses, and decreased marketing and trade show expenses.
The increase is driven by an increase in personnel-related expenses due to expanded sales headcount and an increase in outside services and external marketing costs. General and administrative expenses General and administrative expenses increased by $0.9 million, or 4%, from $22.6 million for the year ended December 31, 2023 to $23.5 million for the year ended December 31, 2024.
General and administrative expenses General and administrative expenses decreased by $5.9 million, or 25%, from $23.5 million for the year ended December 31, 2024 to $17.6 million for the year ended December 31, 2025.
Sales and marketing 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 continue to perform research and development activities to further expand our product roadmap. - 50 - Table of Contents Sales and marketing Sales and marketing expenses consist primarily of salaries, bonuses, benefits and stock-based compensation for marketing and sales personnel and related support teams.
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 prior to the Transition Date.
Cost 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.
During the year ended December 31, 2024, we incurred net losses of $86.2 million and used $72.2 million of cash in operating activities. As of December 31, 2024, we had unrestricted cash and cash equivalents of $13.3 million and short-term investments of $18.3 million, or total liquid assets of $31.6 million.
As of December 31, 2025, we had unrestricted cash and cash equivalents of $14.5 million and short-term investments of $7.5 million, or total liquid assets of $22.0 million.
The increase is due to increased professional and outside services costs, and increased personnel-related expenses, partially offset by decreased insurance and reduced facilities costs allocated to general and administrative expenses.
The decrease is driven by decreased personnel- - 52 - Table of Contents related expenses, including stock-based compensation expense, as a result of reduced executive compensation, decreased IT expenses and decreased insurance fees, partially offset by increased professional and outside services costs.
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. The Section 45X PTC may be refundable by the IRS or saleable to unrelated third parties.
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 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 decrease resulted from a decrease in interest income earned on our short-term investment portfolio partially offset by a decrease in expense resulting from the repayment of our notes payable during 2023.
The change resulted from interest incurred on the Promissory Note and the sale-leaseback financing obligation compounded by a decrease in interest income earned on our short-term investment portfolio due to lower investment balances.
During the third quarter of 2023 we reached commercial viability and transitioned out of the research and development phase and into commercial inventory accounting. As such, we began recording cost of revenue as of the Transition Date.
Cost of revenue does not include inventory previously expensed during the research and development phase of accounting which we transitioned out of in the third quarter of 2023. We expect revenue and cost of revenue to increase when we scale the business and deliver our energy storage products to customers.
Removed
We are developing additional products at larger scale, in addition to productized versions of our core technology components, for integration into third-party systems. Transition to Commercial Inventory Accounting We historically had been in the research and development phase for accounting purposes.
Added
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.
Removed
On a quarterly basis we had evaluated a combination of evidence including production quality metrics, field functionality to date, revenue trends, and existing contracts with customers. Based on the evaluation performed during the third quarter of 2023, we transitioned out of the research and development phase and into commercial inventory accounting as of July 1, 2023 (the “Transition Date”).
Added
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 Energy Base and core technology component sales.
Removed
As a result of the transition, all inventoriable costs incurred are capitalized, net of any lower of cost or net realizable value (“LCNRV”) charges, which are recognized as cost of revenue.
Added
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.
Removed
Further, unfulfilled noncancellable purchase commitments are recognized as expense for estimated losses in cost of revenue and warranty and fulfillment costs are recorded as a component of cost of revenue rather than research and development expense as of the Transition Date.
Added
On July 4, 2025, the OBBB was signed into law by the President of the United States.
Removed
Additionally, significant improvements in manufacturing scale are expected to decrease the cost of materials and direct labor. Compared to 2024, we expect our indirect cost of revenue and operating expenses to increase as we ramp up our manufacturing and sales activities.
Added
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.
Removed
For further discussion of the challenges and risks we confront related to macroeconomic conditions and geopolitical tension around the world, please refer to “ Part I—Item 1A.

… 46 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise reported under this Item. - 55 - Table of Contents
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise reported under this Item. - 56 - Table of Contents

Other GWH 10-K year-over-year comparisons