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What changed in Energy Vault Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Energy Vault Holdings, Inc.'s 2023 and 2024 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 2024 report.

+473 added−441 removedSource: 10-K (2025-04-01) vs 10-K (2024-03-13)

Top changes in Energy Vault Holdings, Inc.'s 2024 10-K

473 paragraphs added · 441 removed · 278 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur software solutions include: ◦ Vault-OS Energy Management System (“EMS”) : Our EMS manages one or more of our diverse energy storage mediums and the underlying generation assets to optimize the delivery of power to our customers for their varied and multiple use cases.
Biggest changeOur software solutions include: ◦ Vault-OS Energy Management System (“EMS”) : Our EMS manages one or more of our diverse energy storage mediums and the underlying generation assets to optimize the delivery of power to our customers for their varied and multiple use cases. ◦ Vault-Bidder: Vault-Bidder utilizes machine learning algorithms to match node-specific data with real-time weather and asset performance information to generate tailored load, generation, dispatch, and price forecasting across all assets. ◦ Vault-Manager: Vault-Manager incorporates a forward-looking design to safeguard asset management and to help blend developing technologies seamlessly into existing solutions. 6 Table of Contents Industry Overview The utility-scale energy storage industry is increasing at a rapid pace, driven by increased demand for electricity, global transitions toward renewable energy, and increased focus on grid resilience.
To date, we have completed lifecycle assessments on our G-Vault and B-Vault based on ISO 14040 standards, and we plan to conduct life cycle assessments on other energy storage system technologies as they are developed. Partnerships: The Company believes that strong partnerships are a key to our success.
To date, we have completed lifecycle assessments on G-Vault and B-Vault solutions based on ISO 14040 standards, and we plan to conduct life cycle assessments on other energy storage system technologies as they are developed. Partnerships The Company believes that strong partnerships are a key to our success.
Intellectual Property We rely on a combination of patent, trademark, copyright, unfair competition, and trade secret laws, as well as confidentiality procedures and contractual restrictions with our employees, contractors and third parties, to establish, maintain, and protect our proprietary rights.
Intellectual Property (“IP”) We rely on a combination of patent, trademark, copyright, unfair competition, and trade secret laws, as well as confidentiality procedures and contractual restrictions with our employees, contractors and third parties, to establish, maintain, and protect our proprietary rights.
Each of our installations or customer installations must be designed, constructed, and operated in compliance with applicable federal, state and local regulations, codes, standards, guidelines, policies, and laws.
Each of our owned installations or our customer installations must be designed, constructed, and operated in compliance with applicable federal, state and local regulations, codes, standards, guidelines, policies, and laws.
We demonstrate our commitment to resource preservation and environmental impacts by investing significant resources into the research and development of low carbon, innovative materials and construction practices.
We demonstrate our commitment to resource preservation and environmental impacts by investing resources into the research and development of low carbon, innovative materials and construction practices.
We also engage in a range of other traditional marketing activities such as tradeshows and events, internal / partner sources, and various digital marketing activities such as website, search engine optimization, social media integration, online events, and forums. • Sales Model : Our sales model focuses on winning large and sophisticated energy storage projects where the customers and their use cases demand, and benefit from, the agility of our solutions and organization to provide 8 Table of Contents them with the best-fit for their project requirements today and well into the future.
We also engage in a range of other traditional marketing activities such as tradeshows and events, internal / partner sources, and various digital marketing activities such as website, search engine optimization, social media integration, online events, and forums. • Sales Model : Our sales model focuses on winning large and sophisticated energy storage projects where the customers and their use cases demand, and benefit from, the agility of our solutions and organization to provide them with the best-fit for their project requirements today and well into the future.
We continue to complete the Corporate Sustainability Assessment with S&P Global and we will work closely with our vendors and partners to evaluate and assess components and materials for a chain of custody that identifies responsible and ethical sourcing, environmental product declarations, and end-of-life solutions.
We continue to complete the Corporate 12 Table of Contents Sustainability Assessment with S&P Global and we will work closely with our vendors and partners to evaluate and assess components and materials for a chain of custody that identifies responsible and ethical sourcing, environmental product declarations, and end-of-life solutions.
The information posted on our website is not incorporated by reference into this Annual Report or any of our other securities filings unless specifically incorporated herein by reference. 12 Table of Contents
The information posted on our website is not incorporated by reference into this Annual Report or any of our other securities filings unless specifically incorporated herein by reference. 13 Table of Contents
We have performed several material science projects to reduce the carbon content of materials, introduce the use of waste materials in our mobile masses for G-Vault, help understand end-of-life management for our energy storage solutions, and help contribute to a circular economy.
We have performed several material science projects to reduce the carbon content of materials, introduce the use of waste materials in our mobile masses for gravity energy storage, help understand end-of-life management for our energy storage solutions, and help contribute to a circular economy.
We primarily rely on copyright, trade secret laws, confidentiality procedures and contractual restrictions to protect our software. We also pursue the registration of our domain names and trademarks and service marks in the United States and 9 Table of Contents internationally.
We primarily rely on copyright, trade secret laws, confidentiality procedures and contractual restrictions to protect our software. We also pursue the registration of our domain names and trademarks and service marks in the United States and internationally.
Our energy storage solutions are designed to accommodate a wide variety of renewable power sources and to achieve an attractive levelized cost of energy relative to fossil fuels. Collectively, these abilities greatly broaden the use cases and time duration scenarios that can be addressed by certain sources of renewable power.
Our energy storage solutions are designed to accommodate a wide variety of power sources and to achieve an attractive levelized cost of energy relative to fossil fuels. Collectively, these abilities greatly broaden the use cases and time duration scenarios that can be addressed by certain sources of renewable power and provide backup capacity for fossil fuels.
Manufacturing and Customer Support Our manufacturing, assembly, and construction model is designed to support rapid growth, local jobs, and global execution. 7 Table of Contents The components of our B-Vault and H-Vault solutions are primarily off-the-shelf in nature and can be procured from multiple sources worldwide.
Manufacturing and Customer Support Our manufacturing, assembly, and construction model is designed to support rapid growth, local jobs, and global execution. The components of our B-Vault, B-Nest, and H-Vault solutions are primarily off-the-shelf in nature and can be procured from multiple sources worldwide.
As the world transitions to an economy powered by increasingly intermittent renewable energy such as solar and wind, the ability to provide clean and affordable electricity to a growing global population will depend heavily on the ability to store and distribute energy at appropriate times.
As the global demand for electricity increases and the world transitions to an economy powered by increasingly intermittent renewable energy such as solar and wind, the ability to provide clean, reliable, and affordable electricity to a growing global population will depend heavily on the ability to store and distribute energy at appropriate times.
The Sustainability Team works with the Company’s business units to implement an “environment first” approach to key operational processes, including reporting and disclosure 10 Table of Contents frameworks, environmental policy compliance, professional education, and other key support processes for innovation and responsible development.
The Sustainability Team works with the Company’s business units to implement an “environment first” approach to key operational processes, including reporting and disclosure frameworks, environmental policy compliance, professional education, and other key support processes for innovation and responsible development.
To install and operate energy storage systems on its platform, we, our customers or our partners, as applicable, are required to obtain applicable permits and approvals from local authorities having jurisdiction to install energy storage systems and to interconnect the systems with the local electrical utility.
To install and operate 10 Table of Contents energy storage systems on its platform, we, our customers or our partners, as applicable, are required to obtain applicable permits and approvals from local authorities having jurisdiction to install energy storage systems and to interconnect the systems with the local electrical utility.
Our solutions include: • B-Vault: Our electrochemical battery energy storage solutions that meet short-duration energy storage needs, typically, in the range of one to four hours. Our B-Vault solutions are designed to utilize purpose-built battery and inverter systems with an innovative architecture that lowers costs, improves performance, and promotes project safety.
Our solutions include: • B-Vault: Our electrochemical battery energy storage solution (“BESS”) that meets short-duration energy storage needs, typically, in the range of one to four hours. Our B-Vault solution is designed to utilize purpose-built battery and inverter systems with an innovative architecture that lowers costs, improves performance, and promotes project safety.
In our pursuit of transparency, we look to engage in regular communication with our employees through various channels, including emails and all-hands meetings, to promote clear and open dialogue between the executive leadership team and the entire organization. As of December 31, 2023, we employed 179 full-time employees and 4 part-time employees, distributed across 7 different countries.
In our pursuit of transparency, we look to engage in regular communication with our employees through various channels, including emails and all-hands meetings, to promote clear and open dialogue between the executive leadership team and the entire organization. Employees As of December 31, 2024, we employed 158 full-time employees and five part-time employees, distributed across six different countries.
In the United States, governments continuously modify these statutes and regulations. Governments, often acting through state utility or public service commissions, change and adopt different rates for commercial customers on a regular basis. These changes could affect our ability to deliver cost savings to our current and future customers for the purchase of electricity.
Governments, often acting through state utility or public service commissions, change and adopt different rates for commercial customers on a regular basis. These changes could affect our ability to deliver cost savings to our current and future customers for the purchase of electricity.
Our range of energy storage solutions assures our customers have what they need today, as well as what they will need in the future, thereby protecting their investments in our products within this high-growth market and its rapidly evolving use cases and requirements.
Our range of energy storage solutions provides alternatives to our customers to have what they need today, as well as what they will need in the future, thereby protecting their investments in our products within this high-growth market and its 7 Table of Contents rapidly evolving use cases and requirements.
There are government regulations pertaining to the disposal of hazardous materials. We and our suppliers, as applicable, are required to comply with these regulations to sell our systems into the market.
There are government regulations pertaining to the disposal of hazardous materials. We and our suppliers, as applicable, are required to comply with these regulations to operate our systems or to sell our systems into the market. U.S. Energy Storage Regulation and Legislation The U.S.
We expect that this will broaden the use cases and time duration scenarios that can be addressed by certain sources of renewable power, and thereby drive a faster transition to more widespread utilization of renewable power.
We expect that this will broaden the use cases and time duration scenarios that can be addressed by certain sources of renewable power, and thereby drive a faster transition to more widespread utilization of renewable power, as well as provide reliable additional power during peak demand periods or generation outages.
As of December 31, 2023, we had 12 issued patents and 19 patent applications pending in the U.S. Outside the U.S., we have seven issued patents and 118 patent applications pending in other countries throughout the world. Our issued patents are expected to start expiring in 2039.
As of December 31, 2024, we had 25 issued patents and 25 patent applications pending in the U.S. Outside the U.S., we have 21 issued patents and 171 patent applications pending in other countries throughout the world. We have nine Patent Cooperation Treaty (“PCT”) patent applications pending. Our issued patents are expected to start expiring in 2039.
Purpose: The Company aims to embed sustainable business management strategies across departments within the organization and to infuse our ESG philosophy throughout our business operations, product development, and accountability reporting.
The three key pillars of the Company’s sustainability strategy are (i) Purpose, (ii) Products, and (iii) Partnerships. Purpose The Company aims to embed sustainable business management strategies across departments within the organization and to infuse our ESG philosophy throughout our business operations, product development, and accountability reporting.
We anticipate that our market will be characterized by high growth and rapidly evolving use cases and requirements. We believe that the majority of our competitors are primarily focused on the development and marketing of vertically siloed solutions based on a singular energy storage technology.
We believe that the majority of our competitors are primarily focused on the development and marketing of vertically siloed solutions based on a singular energy storage technology.
Given this sales model, we focus on high growth geographical regions. While we have global coverage, our primary geographical focus is North America, Australia, Europe, and Southeast Asia. We have established offices and presence in all of these regions.
Given this sales model, we focus on high growth geographical regions. While we have global coverage, our primary geographical focus for our B-Vault business is North America and Australia, with less emphasis today on Europe and Southeast Asia.
Because of the unique advantages of our solutions-based approach that offer maximum optionality through its agnostic nature and agile architecture, we believe there is significant demand for our systems to help address the accelerating growth and needs of the global energy storage market.
Because of the unique advantages of our solutions-based approach that offer maximum optionality through its agnostic nature and agile architecture, we believe there is significant demand for our systems to help address the accelerating growth and needs of the global energy storage market. 9 Table of Contents Competition We expect competition in energy storage technology to intensify due to a regulatory push for lower-carbon energy sources such as wind and solar, continuing globalization, and consolidation in the energy industry.
Once energy is stored in our solutions, it can be discharged to the grid in a controlled and reliable manner at any time, regardless of the then current ability of the renewable sources to generate power.
Sale of Energy Storage Products Our diversified portfolio of storage solutions are designed to enhance grid stability and improve overall efficiency of the grid. Once energy is stored in our solutions, it can be discharged to the grid in a controlled and reliable manner at any time, regardless of the then current ability of the generation assets to provide power.
In the United States, none of our employees are represented by a labor union. In Switzerland, one of our employees is subject to a collective bargaining agreement. We have not encountered any employment-related work stoppages, and we believe we maintain strong relations with our employees.
None of our employees are represented by a labor union or collective bargaining agreement. We have not encountered any employment-related work stoppages, and we believe we maintain strong relations with our employees. Culture and Engagement Energy Vault continued providing a comprehensive series of workshops in 2024, known as the Energy Vault Way Culture Series.
For example, green hydrogen is produced via electrolysis and powered by renewable energy, which does not directly emit carbon emissions when used to store energy for long periods of time.
For example, hydrogen is produced via electrolysis and powered by renewable energy, which does not directly emit carbon emissions when used to store energy for long periods of time. • Software Solutions: Our proprietary software solutions offer technology-agnostic management systems designed to maximize the economic and environmental value of energy generation and storage assets.
The growth of the energy storage market that we address is primarily driven by the decreasing cost of energy storage technologies and renewable power generation sources, government mandates, financial incentives to reduce GHG emissions, and increasing geopolitical pressures driving energy independence goals.
The growth of the energy storage market that we address is primarily driven by the decreasing cost of energy storage technologies, government mandates, financial incentives to reduce GHG emissions, and efforts to enhance grid stability and efficiency. These dynamics are driving demand for increased energy storage capacity and duration.
There are also increasing government regulations regarding companies’ supply chains, including certain import or other restrictions on the use of various suppliers or materials/products from certain regions.
This includes the IRA that was passed in the United States for manufacturing and project incentives, and the potential reactionary legislation to follow in response elsewhere in the world. There are also increasing government regulations regarding companies’ supply chains, including certain import or other restrictions on the use of various suppliers or materials/products from certain regions.
Our current business model options include: • Building, operating, and transferring energy storage projects to potential customers, • Building, operating, and holding energy storage systems as equity (co-) sponsor that may provide recurring revenue in the future, • Recurring software revenue through licensing software for asset management and use case applications, • Recurring service revenue through long term service agreements, and • Intellectual property licenses and royalties associated with our energy storage technologies that may provide recurring revenues in the future.
Business Model As a result of our flexibility to own assets or deliver energy storage products to third parties, our current business model options include: • Selling energy storage products to third-parties, including constructing and delivering fully operational energy storage systems under an EPC model and delivering energy storage equipment under an EEQ model; • Building, operating, and holding energy storage systems as equity (co-) sponsor that may provide recurring revenue in the future; • Taking a minority stake in an energy storage project where we provide EPC, EEQ, or long-term services, allowing us to participate in the project’s long-term economics while strengthening alignment with strategic customers; • Recurring software revenue through licensing software for asset management and use case applications; • Recurring service revenue through long term service agreements, and; • Intellectual property licenses and royalties associated with our energy storage technologies that may provide recurring revenues in the future.
Under the EPC model, we generally rely on third-party EPC firms to construct our storage systems, under our supervision with dedicated teams tasked with project management. Under the EEQ model, we are responsible for the delivery and installation of the equipment we provide, as well as resolving issues within our scope of supply.
Third-Party Project Delivery We primarily rely on two models for third-party project delivery, which are (i) engineering, procurement, and construction (“EPC”) delivery and (ii) engineered equipment (“EEQ”) delivery. Under the EPC model, we generally rely on third-party EPC firms to construct our storage systems, under our supervision with dedicated teams tasked with project management.
As part of our overall strategy to protect our intellectual property, we may take legal actions to prevent third parties from infringing or misappropriating our intellectual property or from otherwise gaining access to our technology.
As part of our overall strategy to protect our IP, we may take legal actions to prevent third parties from infringing or misappropriating our IP or from otherwise gaining access to our technology. Government Regulation and Compliance Federal, state, and local government statutes and regulations concerning electricity heavily influence the market for our product and services.
By December 31, 2023, we achieved an 81.3% activation rate on this platform, further reflecting our commitment to a workplace that honors and celebrates every employee's contribution. 11 Table of Contents Corporate Information We file or furnish periodic reports and amendments thereto, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, proxy statements, and other information with the Securities and Exchange Commission (“SEC”).
Corporate Information We file or furnish periodic reports and amendments thereto, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, proxy statements, and other information with the Securities and Exchange Commission (“SEC”).
We believe electrochemical battery energy storage (inclusive of lithium-ion, flow, metal air, and other battery chemistry technologies) is currently the most widely accepted and fastest growing technology for short-duration energy storage applications. During 2023, we completed construction on two B-Vault systems and as of December 31, 2023, one B-Vault system was under construction.
We believe electrochemical battery energy storage (inclusive of lithium-ion, flow, metal air, and other battery chemistry technologies) is currently the most widely accepted and fastest growing technology for short-duration energy storage applications. • B-Nest : Our proprietary multi-story structure designed to house batteries for onsite energy storage serving space-constrained project sites.
Environmental, Social, and Governance Energy Vault is committed to sustainability as reflected in our core mission, our focus on sustainable business management practices, and our dedication to sustainable production design and supply chain management. Our focus in 2023 was on designing more sustainable products and taking steps to implement a cohesive sustainability strategy across business lines and geographies.
Environmental, Social, and Governance Energy Vault is committed to sustainability as reflected in our core mission, our focus on sustainable business management practices, and our dedication to sustainable production design and supply chain management. Our sustainability directive is to enable a renewable world through the implementation of sustainable business practices that will ultimately yield a positive impact on the environment.
As part of our commitment to diversity and inclusion, Energy Vault launched a comprehensive series of workshops in 2023, known as the Energy Vault Way. These workshops focus on effectively communicating Energy Vault’s purpose, vision, mission, and values statements, with a specific emphasis on nurturing a culture of recognition and continuous feedback.
These workshops focused on effectively communicating Energy Vault’s purpose, vision, mission, and values, with a specific emphasis on nurturing a culture of recognition and continuous feedback. To enhance these initiatives, we also introduced the Culture Corner in 2024. providing employees with additional resources to support the topics covered in the Energy Vault Culture workshops.
Strategy, Strengths, and Differentiation We leverage our sustainable and differentiated technologies to provide our customers with economical solutions to meet their short, long, and extended-duration renewable energy storage needs. Our energy storage solutions are designed to accommodate a wide variety of renewable power sources and to achieve an attractive levelized cost of energy relative to fossil fuels.
Strategy, Strengths, and Differentiation We leverage our sustainable and differentiated technologies to provide economical solutions to meet short, long, and extended-duration energy storage needs through ownership of assets or through sales of our energy storage products.
Supply Chain We proactively maximize our beneficial involvement in key aspects of the global, domestic, regional, and local supply chains that support our solutions. Through our extensive supply chain procurement process, we aim to deliver our customers a thoroughly vetted and secure source of integrated components for their energy storage needs.
Through our extensive supply chain procurement process, we aim to deliver our customers a thoroughly vetted and secure source of integrated components for their energy storage needs. Given our technology-agnostic approach, we can procure equipment from a variety of top-tier global suppliers without reliance on a single-source company or geography.
Given our technology-agnostic approach, we can procure equipment from a variety of top-tier global suppliers without reliance on a single-source company or geography. The market our suppliers serve is highly impacted by government legislation. As such, we continue to proactively monitor planned and/or enacted legislation in the countries and regions that we serve.
The market our suppliers serve is highly impacted by government legislation. As such, we continue to proactively monitor planned and/or enacted legislation in the countries and regions that we serve. When new legislation is enacted, we seek to find ways to utilize the legislation to reduce our cost to obtain energy storage components.
Our Company’s comprehensive offerings include proprietary gravity, battery, and green hydrogen energy storage solutions, supported by our technology-agnostic energy management software solutions. We incorporate a customer-centric, solutions-based approach toward helping utilities, independent power producers, and large industrial energy users reduce their energy costs while maintaining power reliability.
We believe that our experience in the build-and-transfer business, combined with our proprietary energy storage technologies and geographical footprint, uniquely positions us to build and operate storage projects with superior efficiency and reliability. We incorporate a customer-centric, solutions-based approach toward helping utilities, independent power producers (“IPP”), and large industrial energy users reduce their energy costs while maintaining power reliability.
For more information, see our risk factor titled “The failure or inability of our suppliers to deliver necessary components or raw materials for construction of our energy storage systems and their failure or inability to deliver them in a timely manner could cause installation delays, cancellations, penalty payments, and damage to our reputation.” Marketing and Sales We believe that our marketing strategy positions us as a leadership brand and a respected and sought-after long-term strategic partner that will contribute to our customers’ growth and profitability.
For more information about our potential risks relating to our supply chain and exposure to international pressures, see Part I, Item 1A. “Risk Factors.” Marketing and Sales We believe that our marketing strategy positions us as a leadership brand and a respected and sought-after long-term strategic partner that will contribute to our customers’ growth and profitability.
All three of these systems were sold to customers. • G-Vault : Our proprietary gravity energy storage solutions that meet long-duration energy storage needs, typically, in the range of four to twelve hours. G-Vault solutions leverage the core, proven energy storage technology of pumped hydroelectric storage, while not being constrained by the same geological factors of pumped hydroelectricity.
G-Vault solutions leverage the core, proven energy storage technology of pumped hydroelectric storage, while not being constrained by the same geological factors of pumped hydroelectricity. Today, the Company offers a suite of gravity energy storage solutions utilizing multiple approaches, including moveable masses or modular pumped hydro.
Government Regulation and Compliance Although we are not regulated as a utility, federal, state, and local government statutes and regulations concerning electricity heavily influence the market for our product and services. These statutes and regulations often relate to electricity pricing, net metering, incentives, taxation, competition with utilities and the interconnection of customer-owned electricity generation.
These statutes and regulations directly affect our owned asset business and indirectly affect our third-party sales business. These statutes and regulations often relate to electricity pricing, net metering, incentives, taxation, competition with utilities and the interconnection of customer-owned electricity generation. In the United States, governments continuously modify these statutes and regulations.
We are striving to create a world powered by renewable resources so that everyone will have access to clean, sustainable, and affordable energy. The core of our existence lies in a sense of urgency to meet today’s energy demands, while enabling prosperity for future generations.
We are striving to create a world powered by renewable resources so that everyone will have access to clean, reliable, sustainable, and affordable energy. Build, Own, and Operate Projects We expect that our first two owned projects will begin generating revenue in 2025. Our Calistoga Resiliency Center is the world’s first utility-scale hybrid hydrogen fuel cell and lithium-ion battery microgrid.
Construction at project sites typically involves establishing regional and country level infrastructure to support local deployments through an EPC contracting model. We provide maintenance, customer support, and repair services for the entire storage system throughout the system’s operating life, including performance of regular preventative maintenance and software upgrades when appropriate..
Most of the electrical system components are off-the-shelf in nature and can be procured from multiple sources worldwide. In an EPC arrangement, construction at project sites typically involves establishing regional and country level infrastructure to support local deployments through a contracting model. We provide our customers with limited assurance warranties to ensure our products are free of defects.
Furthermore, we and our customers are expected to receive economic benefits from the IRA when we begin incorporating batteries manufactured in the U.S. into its B-Vault solutions. The physical structure of our EVx G-Vault solution is based on our novel designs with many of the components manufactured by suppliers uniquely for us.
The physical structure of our gravity energy storage solutions is based on our novel designs with many of the components manufactured by suppliers uniquely for us. Some of these components are made at the supplier’s factories, while some are made closer to, or at, the project site itself.
Mission Our mission is to provide energy storage solutions to accelerate the global transition to renewable energy. About Us Energy Vault develops and deploys utility-scale energy storage solutions designed to aid in the global transition to a clean energy future.
Mission Our mission is to provide energy storage solutions to accelerate the global transition to renewable energy. About Us Energy Vault provides a diverse technology portfolio of turnkey energy storage platforms, including proprietary gravity, battery, and green hydrogen energy storage hardware technologies, supported by our technology-agnostic energy management system software and integration platform.
For these reasons, we believe we are well positioned to compete successfully in the evolving market for energy storage solutions. Project Delivery We primarily rely on two models for project delivery, which are (i) engineering, procurement, and construction (“EPC”) delivery and (ii) engineered equipment (“EEQ”) delivery.
For these reasons, we believe we are well positioned to compete successfully in the evolving market for energy storage solutions. Own and Operate Asset Site Selection and Investment Criteria We have developed well-defined investment criteria to quickly and efficiently deploy capital into attractive projects on a discretionary basis.
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We are driven by our respect and commitment to the environment, society, and the economy, and are committed to continuously develop new energy storage solutions that will be powered by renewable resources.
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In 2024, we began a multi-year transition from providing this technology portfolio solely to third parties through a build-and-transfer model or licensing model, to also taking an ownership interest in energy storage assets in select attractive markets.
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Our Products and Services Our solutions are designed to address the intermittency issues inherent in the predominant sources of renewable energy production by storing energy produced when renewable energy production is active.
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We designed the Calistoga Resiliency Center in cooperation with the City of Calistoga and Pacific Gas & Electric (“PG&E”) to provide zero-emission reliable power during public safety power shutoff (“PSPS”) events caused by elevated wildfire risks. In the past, PG&E provided power to Calistoga during PSPS events through diesel generators that produced significant air emissions and noise pollution.
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Our EVx gravity energy storage system incorporates a simplified building design that is modular 5 Table of Contents and flexible, which utilizes a patented mechanical process of lifting and lowering composite blocks to store and dispatch electrical energy to support grid reliability and enable renewable energy integration.
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The Calistoga Resiliency Center will provide 8.5MW of power at peak capacity with a 48-hour duration with the only byproduct being clean water. This unique hybrid model enables quick black-start capabilities and can be re-fueled while operational for longer duration service.
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An EVx lifts composite blocks to an elevated position to store kinetic energy, and when energy is needed, the motors in the EVx act as generators and the system discharges electricity generated from the kinetic energy of the controlled gravitational lowering of the composite blocks.
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Initially, revenue will be generated through a contract with PG&E to provide backup power to Calistoga for PSPS events or when requested. After the facility comes online, we intend to sell power into the CAISO energy and ancillary services market as an IPP for additional revenue.
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Our EVx solution combines advanced materials science and proprietary machine-vision software to autonomously coordinate the charge, storage, and discharge of electricity in grid-scale applications.
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We are currently negotiating agreements and seeking regulatory approvals to provide these merchant power services. In 2025, we also expect to begin commercial operations on our Cross Trails Battery Energy Storage System (“Cross Tails”) in Scurry County, Texas. We began construction on Cross Trails in 2024 and also signed a 10-year offtake agreement with Gridmatic, a leading AI-enabled power marketer.
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As of December 31, 2023, one G-Vault demonstration system was under construction in Snyder, Texas, which will be owned and operated by the Company as a customer demonstration unit. • H-Vault: Our hybrid energy storage solutions (“HESS”), including systems that integrate green hydrogen, are designed to meet customer specific energy storage needs.
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The Cross Trails project will service the ERCOT region Day Ahead market with improved grid resiliency. When completed, Cross Trails is designed to provide 57MW of power with a 2-hour battery capacity for peak demand periods in ERCOT. Cross Trails utilizes our proprietary B-Vault PLTF-2 batteries and our Vault-OS software package.
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As of December 31, 2023, one H-Vault system was under construction, which will be owned and operated by Energy Vault, while providing dispatchable power to a customer under a 10.5 year tolling arrangement. • Software Solutions: Our proprietary software solutions offer technology-agnostic management systems designed to maximize the economic and environmental value of energy generation and storage assets.
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We believe that Cross Trails will maintain full operational capability at low operational costs while requiring low maintenance capital expenditures over its useful life. 5 Table of Contents We are actively discussing projects with public sector and private developers in many markets to expand our owned project portfolio, including those in the U.S., Australia, and Italy.
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Two customers are currently utilizing the Company’s EMS in their B-Vault systems. ◦ Vault-Bidder: Vault-Bidder utilizes machine learning algorithms to match node-specific data with real-time weather and asset performance information to generate tailored load, generation, dispatch, and price forecasting across all assets.
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Our B-Vault solution is a suite of fully integrated battery energy storage equipment designed for reliability, flexibility, and availability.
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No customers are currently utilizing the Vault-Bidder platform. ◦ Vault-Manager: Vault-Manager incorporates a forward-looking design to safeguard asset management and to help blend developing technologies seamlessly into existing solutions. No customers are currently using the Vault-Bidder platform. The Company generates revenue from the sale and licensing of our energy storage solutions.
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Our B-Nest solution is capable of storing up to 1.6 GWh of energy per acre, which represents an 8X increase in installed site energy density over a traditional ground-mounted battery energy storage system (“BESS”).
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To date, the Company has primarily generated revenue from the sale of our battery energy storage systems (“BESSs) and from licensing our EVx technology.
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As of December 31, 2024, the Company is in active discussions with a number of potential customers, along with fire departments and other permitting bodies about our B-Nest solutions to ensure market acceptance. • G-Vault : Our proprietary gravity energy storage solutions (“GESS”) are designed to meet long-duration energy storage needs, typically, in the range of four to twelve hours.
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In addition to these sources of revenue, in the future we expect to generate revenue from the sale of our gravity energy storage systems (“GESSs”), the sale or licensing of the Company’s software solutions, the sale of long-term service agreements to maintain customer owned energy storage systems, and through tolling arrangements in connection with energy storage systems that we intend to own and operate.
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Heretofore, the Company has largely commercialized this technology and associated material science through the use of licenses, but the Company is also exploring the use of partnership models for co-development and technology deployment. • H-Vault: Our hydrogen or hybrid energy storage solutions (“HESS”), including systems that integrate hydrogen, are designed to meet customer specific energy storage needs.
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Industry Overview We believe climate change poses a monumental risk to humanity and decreasing human generated GHG emissions is currently among the world’s most pressing challenges. Carbon dioxide is the primary GHG emitted through human activities and, according to the International Energy Agency, the energy sector is estimated to account for more than 75% of global human generated GHG emissions.
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According to a report from the U.S. Department of Energy in December 2024, electricity demand is forecasted to grow substantially in the United States over the next few decades. Electricity demand is expected to be driven primarily by new data centers, artificial intelligence, new manufacturing facilities, electric vehicles, and sector-wide electrification.
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Burning fossil fuels contributes to climate change by releasing carbon dioxide and nitrous oxide into the atmosphere. Renewable energy sources present environmental advantages over fossil fuels in terms of finite natural resource usage and GHG emission profile.
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Electricity demand for data centers alone is expected to grow at a 13% to 27% compound annual growth rate through 2028. Over the past decade, deployment of renewable energy resources has accelerated and there has been an industry-wide push for decarbonization, which is increasing the demand for grid-scale energy storage.
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These dynamics are driving demand for additional renewable power generation and increased capacity and storage duration in energy storage solutions.
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Both government mandates and companies focused on reducing energy use, cost, and emissions are expected to propel the shift to renewable sources of power. Additionally, software solutions play a vital role in assisting energy storage owners in managing the growing complexities of renewable energy and energy storage markets.
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According to the 2H 2023 Energy Storage Market Outlook published by BloombergNEF in October 2023, the energy storage market is expected to grow at a “27% compound annual growth rate through 2030, with annual additions reaching 6 Table of Contents 110 GW/372 GWh, or 2.6 times expected 2023 gigawatt installations.” Both government mandates and companies focused on reducing energy use, cost, and emissions are expected to propel the shift to renewable sources of power.
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As renewable and energy storage asset portfolios expand globally, these stakeholders will need software solutions that enhance asset performance and boost revenue while reducing total ownership costs. Our expansion of revenue depends on the ongoing adoption of energy storage solutions by our customers and our ability to source, execute, and operate energy storage projects with attractive economics.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result, our operating results and cash flows may be materially lower than our expected results of operations. • The failure or inability of our suppliers to deliver necessary components or raw materials for construction of our energy storage systems and their failure or inability to deliver them in a timely manner or to the quality standards required, could cause installation delays, cancellations, penalty payments and damage to our reputation. • Our business is subject to risks associated with construction, cost overruns and delays, including those related to obtaining government permits and approvals, electrical interconnection, and other contingencies that may arise in the course of completing installations. • Material weaknesses in our internal control over financial reporting could have a significant adverse effect on our business and the price of our common stock. • We are an early-stage company with a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future, and we may not be able to achieve profitability in the future. • Our total backlog and bookings may not be indicative of our future revenue, which could have a material adverse impact on our business, financial condition, and results of operations. • Our energy storage systems involve a lengthy sales and installation cycle, and if we fail to close sales on a regular and timely basis it could harm our business.
Biggest changeAs a result, our operating results and cash flows may be materially lower than our expected results of operations. • The failure or inability of our suppliers to deliver necessary components or raw materials for construction of our energy storage systems and their failure or inability to deliver them in a timely manner or to the quality standards required, could cause installation delays, cancellations, penalty payments and damage to our reputation. • Our business is subject to risks associated with construction, cost overruns and delays, including those related to obtaining government permits and approvals, electrical interconnection, and other contingencies that may arise in the course of completing installations. • Our B-Vault, B-Nest, G-Vault and H-Vault products are based on established principles that are deployed in a novel way to create new technologies to store energy and potential customers may be hesitant to make a significant investment in our technology or abandon the technology they are currently using. • Material weaknesses in our internal control over financial reporting could have a significant adverse effect on our business and the price of our common stock. • We are an early-stage company with a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future, and we may not be able to achieve profitability in the future. • Our total backlog, bookings, and developed pipeline may not be indicative of our future revenue, which could have a material adverse impact on our business, financial condition, and results of operations. • Our developed pipeline of awarded or shortlisted third-party EPC, EEQ, and long-term service opportunities, and the long-term economics associated with potential projects identified for our own and operate portfolio, may be subject to change and be impacted by anticipated equipment and commodity costs, tariffs, as well as changes in foreign currency exchange rates in markets in which we source materials or conduct business. • As we conduct business in a host of geographies and may engage in activity with those operating sensitive energy infrastructure, including markets subject to capital controls, our ability to collect payments or conduct business may be impacted or change without advance notice. • Our energy storage products involve a lengthy sales and installation cycle, and if we fail to close sales on a regular and timely basis it could harm our business.
Any extended interruption or failure of our customer’s projects, including systems we operate under long term service agreements, for any reason to generate the expected amount of output could adversely affect our business, financial condition and results of operations.
Any extended interruption or failure of our projects or our customer’s projects, including systems we operate under long term service agreements, for any reason to generate the expected amount of output could adversely affect our business, financial condition and results of operations.
The productivity of our or our customers’ facilities, the operation of our supply chain, the demand, performance and availability of our products, our services, our systems and our business in general may be affected by factors outside of our control, which could result in harm to our business and financial results.
The productivity of our facilities or our customers’ facilities, the operation of our supply chain, the demand, performance and availability of our products, our services, our systems and our business in general may be affected by factors outside of our control, which could result in harm to our business and financial results.
The productivity of our or our customers’ facilities, the operation of our supply chain, the demand, performance and availability of our products, our services, our systems and our business in general could be adversely affected by events outside of our control, such as natural catastrophic events, geographical instability, wars, and other calamities .
The productivity of our facilities or our customers’ facilities, the operation of our supply chain, the demand, performance and availability of our products, our services, our systems and our business in general could be adversely affected by events outside of our control, such as natural catastrophic events, geographical instability, wars, and other calamities .
If any of the analysts who may cover the Company adversely change their recommendation regarding our securities, or provide more favorable relative recommendations about our competitors, the price of the our publicly traded securities would likely decline.
If any of the analysts who may cover the Company adversely change their recommendation regarding our securities, or provide more favorable relative recommendations about our competitors, the price of our publicly traded securities would likely decline.
Any defects or errors in product or services offerings, or the perception of such defects or errors, or other performance problems could result in any of the following, each of which could adversely affect our business, financial condition, and results of operations: • expenditure of significant financial and product development resources, including recalls, in efforts to analyze, correct, eliminate, or work around errors or defects; • significant re-engineering work; • loss of existing or potential customers or partners; • interruptions or delays in sales; • delayed or lost revenue; • delay or failure to attain market acceptance; • delay in the development or release of new functionality or improvements; • negative publicity and reputational harm; • sales credits or refunds; • security vulnerabilities, data breaches, and exposure of confidential or proprietary information; • diversion of development and customer service resources; • breach of warranty claims; 35 Table of Contents • legal claims and regulatory actions under applicable laws, rules, and regulations; and • the expense and risk of litigation.
Any defects or errors in product or services offerings, or the perception of such defects or errors, or other performance problems could result in any of the following, each of which could adversely affect our business, financial condition, and results of operations: • expenditure of significant financial and product development resources, including recalls, in efforts to analyze, correct, eliminate, or work around errors or defects; • significant re-engineering work; • loss of existing or potential customers or partners; • interruptions or delays in sales; • delayed or lost revenue; 36 Table of Contents • delay or failure to attain market acceptance; • delay in the development or release of new functionality or improvements; • negative publicity and reputational harm; • sales credits or refunds; • security vulnerabilities, data breaches, and exposure of confidential or proprietary information; • diversion of development and customer service resources; • breach of warranty claims; • legal claims and regulatory actions under applicable laws, rules, and regulations; and • the expense and risk of litigation.
The process of identifying and consummating acquisitions and the subsequent integration of new assets and businesses into our own business would require attention from management and could result in a diversion of resources from its existing business, which in turn could have an adverse effect on its operations. Acquired assets or businesses may not generate the expected financial results.
The process of identifying and consummating acquisitions and the subsequent integration of new assets and businesses into our own business would require attention from management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our operations. Acquired assets or businesses may not generate the expected financial results.
You may not be able to resell your shares at an attractive price due to a number of factors such as the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our services; • future announcements concerning our business, our customers’ businesses, or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the JOBS Act or relying on “smaller reporting company” exemptions; • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect the energy storage industry generally or Energy Vault specifically; • changes in accounting standards, policies, guidance, interpretations, or principles; • impacts from bank failures, reducing the financing options for the Company and its customers and suppliers; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges, or sales of our capital stock; • changes in our dividend policy; • sales of shares of our common stock by significant shareholders; • adverse resolution of new or pending litigation against us; and 41 Table of Contents • changes in general market, economic, and political conditions in the United States and global economies or financial markets, including those resulting from inflation including the effects of upward changes to the interest rate curves, natural disasters, terrorist attacks, acts of war, and responses to such events.
You may not be able to resell your shares at an attractive price due to a number of factors such as the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our services; • future announcements concerning our business, our customers’ businesses, or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the JOBS Act or relying on “smaller reporting company” exemptions; • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect the energy storage industry generally or Energy Vault specifically; • changes in accounting standards, policies, guidance, interpretations, or principles; • impacts from bank failures, reducing the financing options for the Company and its customers and suppliers; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges, or sales of our capital stock; • changes in our dividend policy; • sales of shares of our common stock by significant stockholders; • adverse resolution of new or pending litigation against us; and 42 Table of Contents • changes in general market, economic, and political conditions in the United States and global economies or financial markets, including those resulting from inflation including the effects of upward changes to the interest rate curves, natural disasters, terrorist attacks, acts of war, and responses to such events.
Our future growth depends upon our ability to maintain relationships with third parties, and the terms and enforceability of many of these relationships are not certain. We expect to rely on engineering, procurement, construction, or EPC, firms as third-party general contractors to install energy storage systems at our customers’ sites.
Our future growth depends upon our ability to maintain relationships with third parties, and the terms and enforceability of many of these relationships are not certain. We expect to rely on engineering, procurement, and construction, or EPC, firms as third-party general contractors to install energy storage systems at our own and our customers’ sites.
Generally, a customer can cancel an order prior to installation, and, notwithstanding the fact that a customer’s termination for convenience will obligate the customer to pay us certain fees, we may be unable to recover some of our costs in connection with design, permitting, installation, and site preparations incurred prior to cancellation.
Generally, a customer can cancel an order prior to installation, and, notwithstanding the fact that a customer’s termination for convenience may obligate the customer to pay us certain fees, we may be unable to recover some of our costs in connection with design, permitting, installation, and site preparations incurred prior to cancellation.
Potential and contracted customers may abandon their indications of interest, or fail to honor contractual obligations and non-binding letters of interest may be cancelled or delayed by a customer for any reason or its terms may be amended in an manner adverse to us in connection with negotiating a definitive sales agreement.
Potential and contracted customers may abandon their indications of interest, or fail to honor contractual obligations and non-binding letters of interest may be cancelled or delayed by a customer for any reason or its terms may be amended in a manner adverse to us in connection with negotiating a definitive sales agreement.
Any expansion internationally could subject our business to risks associated with international operations, including: • conformity with applicable business customs, including translation into foreign languages and associated expenses; • lack of availability of government incentives and subsidies; • challenges in arranging, and availability of, financing for our customers; 21 Table of Contents • potential changes to our established business model; • cost of alternative power sources, which could be meaningfully lower outside the United States; • availability and cost of raw materials, labor, equipment for manufacturing or assembling our energy storage systems; • difficulties in staffing and managing foreign operations in an environment of diverse culture, laws, and customers, and the increased travel, infrastructure, finance, and legal and compliance costs associated with international operations; • installation challenges which we have not encountered before which may require the development of a unique model for each country; • compliance with multiple, potentially conflicting and changing governmental laws, regulations, and permitting processes including construction, environmental, banking, employment, tax, safety, security, grid minimum performances, and data privacy and protection laws and regulations; • compliance with U.S. and foreign anti-bribery laws including the Foreign Corrupt Practices Act and the U.K.
Any expansion internationally could subject our business to risks associated with international operations, including: • conformity with applicable business customs, including translation into foreign languages and associated expenses; • lack of availability of government incentives and subsidies; • challenges in arranging, and availability of, financing for our customers; • potential changes to our established business model; • cost of alternative power sources, which could be meaningfully lower outside the United States; • availability and cost of raw materials, labor, equipment for manufacturing or assembling our energy storage systems; • difficulties in staffing and managing foreign operations in an environment of diverse culture, laws, and customers, and the increased travel, infrastructure, finance, and legal and compliance costs associated with international operations; • installation challenges which we have not encountered before which may require the development of a unique model for each country; • compliance with multiple, potentially conflicting and changing governmental laws, regulations, and permitting processes including construction, environmental, banking, employment, tax, safety, security, grid minimum performances, and data privacy and protection laws and regulations; • compliance with U.S. and foreign anti-bribery laws including the Foreign Corrupt Practices Act and the U.K.
Additionally, the electricity stored and released by our systems may not currently be cost-competitive in some geographic markets, and we may be unable to reduce our costs to a level at which our energy storage systems would be competitive in such markets.
The electricity stored and released by our systems may not currently be cost-competitive in some geographic markets, and we may be unable to reduce our costs to a level at which our energy storage systems would be competitive in such markets.
Anti-Bribery Act; • greater difficulties in securing or enforcing our intellectual property rights in certain jurisdictions, or greater chance potential infringement of third-party intellectual property rights in new jurisdictions; • difficulties in funding our international operations; • difficulties in collecting payments in foreign currencies and associated foreign currency exposure; • restrictions on repatriation of earnings; • compliance with potentially conflicting and changing laws of taxing jurisdictions where we conduct business and compliance with applicable U.S. tax laws as they relate to international operations, the complexity and adverse consequences of such tax laws, and potentially adverse tax consequences due to changes in such tax laws; • increases or decreases in our expenses caused by fluctuation in foreign currency exchange rates; • changes in import tariffs imposed by local governments; • changes in regulations regarding the use of waste materials in our products; • changes in regulations that would prevent us from doing business in specified countries; • failure of the supply chain in local countries to provide us with materials of a sufficient quality and quantity delivered on timelines we expect; • the impacts of government spending on infrastructure projects and more broadly, including any impacts of government debt defaults or budget crises (including in the United States); • the outbreak of war or other hostilities; and • regional economic and political conditions.
Anti-Bribery Act; • greater difficulties in securing or enforcing our IP rights in certain jurisdictions, or greater chance of potential infringement of third-party IP rights in new jurisdictions; • difficulties in funding our international operations; • difficulties in collecting payments in foreign currencies and associated foreign currency exposure; • restrictions on repatriation of earnings; • compliance with potentially conflicting and changing laws of taxing jurisdictions where we conduct business and compliance with applicable U.S. tax laws as they relate to international operations, the complexity and adverse consequences of such tax laws, and potentially adverse tax consequences due to changes in such tax laws; • increases or decreases in our expenses caused by fluctuation in foreign currency exchange rates; • changes in tariffs and import/export regulations imposed by local governments; • changes in regulations regarding the use of waste materials in our products; • changes in regulations that would prevent us from doing business in specified countries; • failure of the supply chain in local countries to provide us with materials of a sufficient quality and quantity delivered on timelines we expect; • the impacts of government spending on infrastructure projects and more broadly, including any impacts of government debt defaults or budget crises (including in the United States); • the outbreak of war or other hostilities; and • regional economic and political conditions.
We expect to continue incurring significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations. We expect to continue incurring increased legal, accounting, administrative and other costs and expenses as a public company.
We expect to continue incurring significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations. We incur increased legal, accounting, administrative and other costs and expenses as a public company.
If the markets for renewable energy and energy storage do not develop as we expect, or if they develop more slowly than we expect, our business, prospects, financial condition and operating results could be adversely affected.
If the markets for energy storage do not develop as we expect, or if they develop more slowly than we expect, our business, prospects, financial condition and operating results could be adversely affected.
Delay in the review and permitting process for a project can impair or delay our or our customers’ abilities to develop that project or increase the cost so substantially that the project is no longer attractive to our customers.
Delay in the review and permitting process for a project can impair or delay our or our customers’ abilities to develop that project or increase the cost so substantially that the project is no longer attractive.
If our customers are unable to procure financing partners willing to finance deployments of our products or if the cost of such financing exceeds our estimates, our business would be negatively impacted.
If we or our customers are unable to procure financing partners willing to finance deployments of our products or if the cost of such financing exceeds our estimates, our business would be negatively impacted.
We are likely to work with a limited number of such EPC firms, which may impact our ability to facilitate customer installations as planned.
We are likely to work with a limited number of such EPC firms, which may impact our ability to facilitate installations as planned.
Our business may rely on these governmental rebates, tax credits, and other financial incentives to significantly lower the effective price of our energy storage systems for our customers. However, these incentives may expire on a particular date, end when the allocated funding is exhausted, or be reduced or terminated as a matter of regulatory or legislative policy.
Our business may rely on these governmental rebates, tax credits, and other financial incentives to significantly lower the effective price of our energy storage systems. However, these incentives may expire on a particular date, end when the allocated funding is exhausted, or be reduced or terminated as a matter of regulatory or legislative policy.
If we become more exposed to currency fluctuations and are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be adversely affected. Our future growth is dependent upon the pace and depth of renewable energy adoption and energy storage technologies, which are emerging industries, as well as our competition.
If we become more exposed to currency fluctuations and are not able to successfully hedge against the risks associated with currency fluctuations, our results of operations could be adversely affected. Our future growth is dependent upon the pace and depth of energy storage technologies, which are emerging industries, as well as our competition.
Additionally, financing options are also limited by the customer’s willingness to commit to making fixed payments regardless of the performance of the energy storage systems or our performance of our obligations under the customer agreement Further, our sales process for transactions that require financing require that we and our customers make certain assumptions regarding the cost of financing capital.
Additionally, financing options are also limited by the borrower’s willingness to commit to making fixed payments regardless of the performance of the energy storage systems or our performance of our obligations under the customer agreement. Further, our sales process for transactions that require financing require that we and our customers make certain assumptions regarding the cost of financing capital.
To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees, customers, and/or business partners, which may adversely impact our operations. While many stakeholders expect companies to pursue ESG initiatives, other may seek to reduce companies’ efforts on certain ESG-related matters.
To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees, customers, and/or business partners, which may adversely impact our operations. While many stakeholders expect companies to pursue ESG initiatives, others may seek to reduce companies’ efforts on certain ESG-related matters.
If our energy storage systems contain engineering or construction defects, our business and financial results could be harmed. In addition, the development and updating of these systems will require us to incur potentially significant costs and expenses. To date, we have deployed two fully operational BESSs.
If our energy storage systems contain engineering or construction defects, our business and financial results could be harmed. In addition, the development and updating of these systems will require us to incur potentially significant costs and expenses. To date, we have deployed three fully operational BESSs.
The Company may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of the Company’s common stock. As of December 31, 2023, the Company had warrants outstanding to purchase an aggregate 5,166,666 of private warrants.
The Company may issue additional shares of common stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of the Company’s common stock. As of December 31, 2024, the Company had warrants outstanding to purchase an aggregate 5,166,666 of private warrants.
In addition, if individuals are elected to our Board with a specific agenda or without relevant experience or expertise, it may adversely affect the ability of the Board to function effectively, as well as our ability to effectively and timely implement our strategic plans, which are focused on building shareholder value.
In addition, if individuals are elected to our Board with a specific agenda or without relevant experience or expertise, it may adversely affect the ability of the Board to function effectively, as well as our ability to effectively and timely implement our strategic plans, which are focused on building stockholder value.
Their ability to obtain third-party financing depends on many factors that are outside of our control, including the ability of third parties to utilize tax credits and other government incentives, interest rate and/or currency exchange fluctuations, their perceived creditworthiness and the condition of credit markets generally.
The ability to obtain third-party financing depends on many factors that are outside of our control, including the ability of third parties to utilize tax credits and other government incentives, interest rate and/or currency exchange fluctuations, the borrower’s perceived creditworthiness and the condition of credit markets generally.
For example, to the extent such events become more frequent or intense, we may not be able to procure insurance to cover all potential losses on terms we deem acceptable. 25 Table of Contents We are subject to certain risks associated with the energy transition.
For example, to the extent such events become more frequent or intense, we may not be able to procure insurance to cover all potential losses on terms we deem acceptable. 26 Table of Contents We are subject to certain risks associated with the energy transition.
Our success depends on our ability to generate revenue and operate profitably, which depends in part on our ability to identify target customers and convert such contacts into meaningful orders or expand on current customer relationships. To date, we have only deployed two operational energy systems.
Our success depends on our ability to generate revenue and operate profitably, which depends in part on our ability to identify target customers and convert such contacts into meaningful orders or expand on current customer relationships. To date, we have only deployed three operational energy systems.
Any decision to declare and pay dividends will be made at the discretion of the Company’s Board and will depend on, among other things, the Company’s results of operations, financial 40 Table of Contents condition, cash requirements, contractual restrictions and other factors that the Company’s Board may deem relevant.
Any decision to declare and pay dividends will be made at the discretion of the 41 Table of Contents Company’s Board and will depend on, among other things, the Company’s results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Company’s Board may deem relevant.
Efforts to prevent cyberattackers from entering IT Systems are expensive to implement, and there can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information, and we may not be able to ensure the implementation or enforcement of the same with respect to our third-party vendors.
Efforts to prevent cyber-attackers from entering IT Systems are expensive to implement, and there can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information, and we may not be able to ensure the implementation or enforcement of the same with respect to our third-party vendors.
A failure or delay in the operation or development of these distribution or transmission facilities could result in a loss of revenues or breach of a contract because such a failure or delay could limit the amount of renewable electricity that our energy storage systems deliver or delay the completion of our customers’ construction projects.
A failure or delay in the operation or development of these distribution or transmission facilities could result in a loss of revenues or breach of a contract because such a failure or delay could limit the amount of electricity that our energy storage systems deliver or delay the completion of our construction projects.
The Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits are invested in short duration U.S. Treasury bills, money market funds holding U.S. Treasury bills, and similarly rated agency indebtedness.
The Company maintains the majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and our deposits are invested in money market funds holding U.S. Treasury bills, and similarly rated agency indebtedness.
If a catastrophic event occurs relative to these third-party manufacturers, or the political, social, or economic conditions shift 17 Table of Contents within their respective geographies or between trade partners, we could experience business interruptions, delayed delivery of products, or other adverse impacts to our ongoing business. We have also outsourced much of our transportation and logistics management.
If a catastrophic event occurs relative to these third-party manufacturers, or the political, social, or economic conditions shift within their respective geographies or between trade partners, we could experience business interruptions, delayed delivery of products, or other adverse impacts to our ongoing business. We have also outsourced much of our transportation and logistics management.
Although we try to ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed intellectual property rights, including trade secrets or other proprietary information, of any such individual’s current or former employer.
Although we try to ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed IP rights, including trade secrets or other proprietary information, of any such individual’s current or former employer.
As a result of our current or future use of open- 32 Table of Contents source software, we may face claims or litigation, be required to release our proprietary source code, pay damages for breach of contract, re-engineer our solutions, discontinue making our solutions available in the event re-engineering cannot be accomplished on a timely basis, or take other remedial action.
As a result of our current or future use of open-source software, we may face claims or litigation, be required to release our proprietary source code, pay damages for breach of contract, re-engineer our solutions, discontinue making our solutions available in the event re-engineering cannot be accomplished on a timely basis, or take other remedial action.
These laws generally prohibit us and our officers, directors, employees and business partners acting on our behalf, including 37 Table of Contents agents, from corruptly offering, promising, authorizing or providing anything of value to obtain or retain business or otherwise obtain favorable treatment and require companies to maintain accurate books and records and a system of internal controls or adequate procedures to prevent bribery.
These laws generally prohibit us and our officers, directors, employees and business partners acting on our behalf, including agents, from corruptly offering, promising, authorizing or providing anything of value to obtain or retain business or otherwise obtain favorable treatment and require companies to maintain accurate books and records and a system of internal controls or adequate procedures to prevent bribery.
Those holding intellectual property rights allegedly relating to our products or services could, in the future, make claims or bring suits alleging infringement, misappropriation, or other violations of such rights, or otherwise assert their rights by seeking royalties or injunctions, which may become more likely if we gain greater recognition in the market.
Those holding IP rights allegedly relating to our products or services could, in the future, make claims or bring suits alleging infringement, misappropriation, or other violations of such rights, or otherwise assert their rights by seeking royalties or injunctions, which may become more likely if we gain greater recognition in the market.
The economic benefit of our energy storage systems to our customers depends on the cost of electricity available from alternative sources, including local electric utility companies, which cost structure is subject to change.
The economic benefit of our energy storage systems to us and to our customers depends on the cost of electricity available from alternative sources, including local electric utility companies, which cost structure is subject to change.
In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property rights to execute agreements assigning such intellectual property rights to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property rights that we regard as our own.
In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of IP rights to execute agreements assigning such IP rights to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops IP rights that we regard as our own.
In addition, the development and updating of these systems will require us to incur potentially significant costs and expenses. • If any of our products are or are alleged to be defective in design or manufacturing or experience other failures, we may be compelled to undertake corrective actions, which could adversely affect our business, prospects, operating results, reputation and financial condition. 13 Table of Contents • If we fail to protect, defend, maintain, or enforce intellectual property rights on which our business depends, including against existing or future competitors, our growth and success may be adversely affected. • Third parties may assert that we are infringing upon their intellectual property rights, which could divert management’s attention, cause us to incur significant costs, and prevent us from selling or using the technology to which such rights relate.
In addition, the development and updating of these systems will require us to incur potentially significant costs and expenses. • If any of our products are or are alleged to be defective in design or manufacturing or experience other failures, we may be compelled to undertake corrective actions, which could adversely affect our business, prospects, operating results, reputation and financial condition. • If we fail to protect, defend, maintain, or enforce IP rights on which our business depends, including against existing or future competitors, our growth and success may be adversely affected. • Third parties may assert that we are infringing upon their IP rights, which could divert management’s attention, cause us to incur significant costs, and prevent us from selling or using the technology to which such rights relate.
As such, unless the cost of electricity in these markets rises or we are able to generate demand for our energy storage systems based on benefits other than electricity cost savings, our potential for growth may be limited. Our energy storage systems’ performance may not meet our customers’ expectations or needs.
As such, unless the cost of electricity in these markets rises or we are able to generate demand for our energy storage systems based on benefits other than electricity cost savings, our potential for growth may be limited. 17 Table of Contents Our energy storage systems’ performance may not meet our customers’ expectations or needs.
As a result of these risks, any potential future international expansion efforts that we may undertake may not be successful. In addition, nearly all of our letters of intent are denominated in U.S. dollars, and certain of our definitive agreements could be denominated in currencies other than the U.S. dollar.
As a result of these risks, any potential future international expansion efforts that we may undertake may not be successful. 23 Table of Contents In addition, nearly all of our letters of intent are denominated in U.S. dollars, and certain of our definitive agreements could be denominated in currencies other than the U.S. dollar.
Companies, organizations, or individuals, including our competitors, hold numerous patents or other intellectual property rights related to technology used in our industry, some of which may prevent, limit, or interfere with our ability to make, use, develop, or sell our products or services, which could make it more difficult for us to operate our business.
Companies, organizations, or individuals, including our competitors, hold numerous patents or other IP rights related to technology used in our industry, some of which may prevent, limit, or interfere with our ability to make, use, develop, or sell our products or services, which could make it more difficult for us to operate our business.
Any failure to maintain high-quality and highly-responsive technical support, or a market perception that we do not maintain high-quality and highly-responsive support, could adversely affect our reputation, our ability to sell our products to existing and prospective customers, and our business, financial condition and results of operations. 34 Table of Contents We intend to offer technical support services alongside our systems.
Any failure to maintain high-quality and highly-responsive technical support, or a market perception that we do not maintain high-quality and highly-responsive support, could adversely affect our reputation, our ability to sell our products to existing and prospective customers, and our business, financial condition and results of operations. We intend to offer technical support services alongside our systems.
Additionally, in many cases we contractually commit to performing all necessary installation work on a fixed-price basis, and 36 Table of Contents unanticipated costs associated with environmental remediation, worker safety, and/or EHS compliance expenses may cause the cost of performing such work to exceed our revenue.
Additionally, in many cases we contractually commit to performing all necessary installation work on a fixed-price basis, and unanticipated costs associated with environmental remediation, worker safety, and/or EHS compliance expenses may cause the cost of performing such work to exceed our revenue.
In addition to the other risks described herein, the following factors could also cause our financial condition and results of operations to fluctuate on a quarterly basis: • fluctuations in costs associated with the first few groups of energy storage systems that we deploy; • the timing of customer installations of our energy storage systems, which may depend on many factors such as availability of inventory, product quality or performance issues, or local permitting requirements, utility requirements, environmental, health and safety requirements, weather and customer facility construction schedules, customer interconnection timing, availability and schedule of our third-party general contractors; • size of particular customer installations and number of sites involved in any particular quarter; • delays or cancellations of purchases and installations; • the timing of when control of uninstalled materials transfers to the customer; • fluctuations in our service costs; • weaker than anticipated demand for our energy storage systems due to changes in government regulation, incentives and policies; • weaker than anticipated demand for our energy storage systems due to our customers’ inability to finance their projects; • interruptions in our supply chain; • the timing and level of additional purchases by existing customers; • unanticipated expenses incurred due to changes in governmental regulations, permitting requirements by local authorities at particular sites, utility requirements and environmental, health and safety requirements; • disruptions in our sales, production, service or other business activities resulting from our inability to attract and retain qualified personnel; • shortage of raw materials from our suppliers and associated price increases due to fluctuations in commodities prices; and • availability of spare parts from our suppliers.
In addition to the other risks described herein, the following factors could also cause our financial condition and results of operations to fluctuate on a quarterly basis: • the timing of customer installations of our energy storage systems, which may depend on many factors such as availability of inventory, product quality or performance issues, or local permitting requirements, utility 29 Table of Contents requirements, environmental, health and safety requirements, weather and customer facility construction schedules, customer interconnection timing, availability and schedule of our third-party general contractors; • size of particular customer installations and number of sites involved in any particular quarter; • delays or cancellations of purchases and installations; • the timing of when control of uninstalled materials transfers to the customer; • fluctuations in our service costs; • weaker than anticipated demand for our energy storage systems due to changes in government regulation, incentives and policies; • weaker than anticipated demand for our energy storage systems due to our customers’ inability to finance their projects; • interruptions in our supply chain; • the timing and level of additional purchases by existing customers; • unanticipated expenses incurred due to changes in governmental regulations, permitting requirements by local authorities at particular sites, utility requirements and environmental, health and safety requirements; • disruptions in our sales, production, service or other business activities resulting from our inability to attract and retain qualified personnel; • shortage of raw materials from our suppliers and associated price increases due to fluctuations in commodities prices; and • availability of spare parts from our suppliers.
We depend on a limited number of customers for the majority of our revenue, and the loss of any one of these customers could substantially reduce our revenue and impact our liquidity. 14 Table of Contents The loss of any significant customers or partners or reduction in our business activities could cause our revenues to decrease significantly and increase our losses from operations.
We depend on a limited number of customers for the majority of our revenue, and the loss of any one of these customers could substantially reduce our revenue and impact our liquidity. The loss of any significant customers or partners or reduction in our business activities could cause our revenues to decrease significantly and increase our losses from operations.
We rely heavily on complex machinery for our operations and our production involves a significant degree of uncertainty and risk in terms of operational performance and costs. When fully operational, our energy storage systems will consist of large-scale machinery comprised of many components assembled on-site for our customers.
We rely heavily on complex machinery for our operations and our production involves a significant degree of uncertainty and risk in terms of operational performance and costs. When fully operational, our energy storage systems will consist of large-scale machinery comprised of many components assembled on-site for our customers or for our owned projects.
We could incur liability under EHS laws and regulations if contamination is discovered in the future at properties formerly or currently owned, leased or operated by us, or properties to which hazardous substances were sent by us, . As noted above, such liability can be strict, joint and several.
We could incur liability under EHS laws and regulations if contamination is discovered in the future at properties formerly or currently owned, leased or operated by us, or properties to which hazardous substances were sent by us. Such liability can be strict, joint and several.
Our total backlog and bookings may not be indicative of our future revenue, which could have a material adverse impact on our business, financial condition, and results of operations.
Our total backlog, bookings and developed pipeline may not be indicative of our future revenue, which could have a material adverse impact on our business, financial condition, and results of operations.
Over time, we may need to raise additional funds, including through entry into new joint venture arrangements, through the issuance of equity, equity-linked or debt securities or through obtaining credit from financial institutions to fund, together with our principal sources of liquidity, ongoing costs such as research and development relating to our products and technologies, the construction and tooling of prototypes, the implementation of our systems for our future customers, any significant unplanned or accelerated expenses, and new strategic investments.
Over time, we may need to raise additional funds, including through entry into new joint venture arrangements, through the issuance of equity, equity-linked or debt securities or through obtaining credit from financial institutions to fund, together with our principal sources of liquidity, ongoing costs such as capital expenditures on our owned projects, research and development relating to our products and technologies, the construction and tooling of prototypes, the implementation of our systems for our future customers, any significant unplanned or accelerated expenses, and new strategic investments.
Our work with contractors or their sub-contractors may have the effect of our being required to comply with additional rules (including rules unique to our customers), working conditions, site remediation and other union requirements, which can add costs and complexity to an installation project.
Our work with contractors or their sub-contractors 18 Table of Contents may have the effect of our being required to comply with additional rules (including rules unique to our customers), working conditions, site remediation and other union requirements, which can add costs and complexity to an installation project.
Any future full energy storage deployments may incur more costs than we expect.
Any future energy storage deployments may incur more costs than we expect.
The size of our GESSs may negatively impact our ability to enter into contracts with customers or obtain government permits and approvals. Our GESSs require a considerably larger space for their deployment than comparable systems based on certain technologies such as lithium-ion technology, and this can result in a significant delay in the permitting process.
The size of our G-Vault products may negatively impact our ability to enter into contracts with customers or obtain government permits and approvals. Our G-Vault products require a considerably larger space for their deployment than comparable systems based on certain technologies such as lithium-ion technology, and this can result in a significant delay in the permitting process.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.
Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable IP rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.
Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and seriously harm our reputation and our business. In addition, further development and updating of our energy storage systems will require us to incur potentially significant costs and expenses.
Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and seriously harm our reputation and our business. 35 Table of Contents In addition, further development and updating of our energy storage systems will require us to incur potentially significant costs and expenses.
While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve the ESG profile of our company or to respond to stakeholder expectations, such initiatives may be costly and may not have the desired effect.
While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve the ESG profile of our company or to respond to stakeholder expectations, such initiatives may be costly and 21 Table of Contents may not have the desired effect.
The installation and operation of our energy storage systems at a particular site is generally subject to oversight and regulation in accordance with national, state, tribal, and local laws and ordinances relating to building codes, health and safety, environmental protection, FERC and specific Independent System Operators regulation and related matters, and typically requires obtaining and keeping in good standing various local and other governmental approvals and permits, including environmental approvals and permits, that vary by jurisdiction.
The installation and operation of our energy storage systems at a particular site is generally subject to oversight and regulation in accordance with national, state, tribal, and local laws and ordinances relating to building codes, health and safety, environmental protection, Federal Energy Regulatory Commission (“FERC”) and specific Independent System Operators regulation and related matters, and typically requires obtaining and keeping in good standing various local and other governmental approvals and permits, including environmental approvals and permits, that vary by jurisdiction.
If 26 Table of Contents insurance coverage, customer indemnifications and/or other legal protections are not available or are not sufficient to cover risks or losses, it could have a material adverse effect on our financial position, results of operations and/or cash flows.
If insurance coverage, customer indemnifications and/or other legal protections are not available or are not sufficient to cover risks or losses, it could have a material adverse effect on our financial position, results of operations and/or cash flows.
If a claim is 31 Table of Contents successfully brought in the future and we or our products or services are determined to have infringed, misappropriated, or otherwise violated a third party’s intellectual property rights, we may be required to do one or more of the following: • cease selling or using our products or services that incorporate the challenged intellectual property; • pay substantial damages (including treble damages and attorneys’ fees if our infringement is determined to be willful); • obtain a license from the holder of the relevant intellectual property rights, which may not be available on reasonable terms or at all; or • redesign our products, services, or means of production, which may not be possible or cost-effective.
If a claim is successfully brought in the future and we or our products or services are determined to have infringed, misappropriated, or otherwise violated a third party’s IP rights, we may be required to do one or more of the following: • cease selling or using our products or services that incorporate the challenged IP; • pay substantial damages (including treble damages and attorneys’ fees if our infringement is determined to be willful); • obtain a license from the holder of the relevant IP rights, which may not be available on reasonable terms or at all; or • redesign our products, services, or means of production, which may not be possible or cost-effective.
These competitors may engage in more extensive research and development efforts, 23 Table of Contents undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to more effectively compete for new energy storage projects and energy management software customers. We intend to continue committing significant resources to establish a competitive position.
These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to more effectively compete for new energy storage projects and energy management software customers. We intend to continue committing significant resources to establish a competitive position.
We rely on a combination of patent, trademark, copyright, trade secret and unfair competition laws, as well as confidentiality and other contractual provisions with our customers, suppliers, employees, and others to establish, maintain, and enforce our intellectual property and proprietary rights.
We rely on a combination of patent, trademark, copyright, trade secret and unfair competition laws, as well as confidentiality and other contractual provisions with our customers, suppliers, employees, and others to establish, maintain, and enforce our IP and proprietary rights.
Additionally, we may be unable to effectively assert our intellectual property rights or our intellectual property rights may not be sufficient to provide us with a competitive advantage, any of which could have a material adverse effect on our business, financial condition or operating results.
Additionally, we may be unable to effectively assert our IP rights or our IP rights may not be sufficient to provide us with a competitive advantage, any of which could have a material adverse effect on our business, financial condition or operating results.
We rely on a limited number of third-party suppliers for some of the components and raw materials such as steel, cement, polymers and, in certain cases, coal ash waste and retired wind turbine blades, and other materials that may be of limited supply for our GESSs and batteries, inverters, enclosures, and transformers for our BESSs.
We rely on a limited number of third-party suppliers for some of the components and raw materials such as steel, cement, polymers and, in certain cases, coal ash waste and retired wind turbine blades, and other materials that may be of limited supply for our G-Vault products and batteries, inverters, enclosures, and transformers for our BESSs.
In addition, certain of our energy storage systems’ generation may be curtailed without compensation due to distribution and transmission limitations, reducing our revenues and impairing our ability to capitalize fully on a 18 Table of Contents particular customer project’s potential. Such a failure or curtailment at levels above our expectations could adversely affect our business.
In addition, certain of our energy storage systems’ generation may be curtailed without compensation due to distribution and transmission limitations, reducing our revenues and impairing our ability to capitalize fully on a particular project’s potential. Such a failure or curtailment at levels above our expectations could adversely affect our business.
For example, there have been increasing allegations of greenwashing against 20 Table of Contents companies making significant ESG claims due to a variety of perceived deficiencies in performance or methodology, including as stakeholder perceptions of sustainability continue to evolve.
For example, there have been increasing allegations of greenwashing against companies making significant ESG claims due to a variety of perceived deficiencies in performance or methodology, including as stakeholder perceptions of sustainability continue to evolve.
We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed proprietary information or know-how of their current or former employers or claims asserting ownership of what we regard as our own intellectual property rights.
We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed proprietary information or know-how of their current or former employers or claims asserting ownership of what we regard as our own IP rights.
Additionally, the assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property rights.
Additionally, the assignment of IP rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our IP rights.
The Company may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay any cash dividends for the foreseeable future.
The Company may retain future earnings, if any, for future operations and expansion and has no current plans to pay any cash dividends for the foreseeable future.
These rules and regulations require, among other things, that we have, and periodically evaluate, procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to continue to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.
These rules and regulations require, among other things, that we have, and periodically evaluate, procedures with 27 Table of Contents respect to our internal control over financial reporting. Reporting obligations as a public company are likely to continue to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.
We may be subject to third-party claims of infringement, misappropriation or other violation of intellectual property rights, or other claims challenging our agreements related to intellectual property, which may be time-consuming and costly to defend, and could result in substantial liability.
We may be subject to third-party claims of infringement, misappropriation or other violation of IP rights, or other claims challenging our agreements related to IP, which may be time-consuming and costly to defend, and could result in substantial liability.
Risks Related to Government Regulation Our future financial performance may depend on the continued availability of rebates, tax credits and other financial incentives. The reduction, modification, or elimination of government economic incentives could cause our revenue to decline and harm our financial results.
Our future financial performance may depend on the continued availability of rebates, tax credits and other financial incentives. The reduction, modification, or elimination of government economic incentives could cause our revenue to decline and harm our financial results.
Therefore, our intellectual property rights may not be as strong or as easily enforced outside of the United States and efforts to protect against the unauthorized use of our intellectual property rights, technology and other proprietary rights may be more expensive and difficult outside of the United States.
Therefore, our IP rights may not be as strong or as easily enforced outside of the United States and efforts to protect against the unauthorized use of our IP rights, technology and other proprietary rights may be more expensive and difficult outside of the United States.
However, our ability to do so may be limited until such time as we are able to generate sufficient cash flow from operations or otherwise raise sufficient capital to continue to invest in our intellectual property.
However, our ability to do so may be limited until such time as we are able to generate sufficient cash flow from operations or otherwise raise sufficient capital to continue to invest in our IP.
Moreover, smaller reporting companies may choose to present only the two most recent fiscal years of audited 39 Table of Contents financial statements in their Annual Reports on Form 10-K.
Moreover, smaller reporting companies may choose to present only the two most recent fiscal years of audited financial statements in their Annual Reports on Form 10-K.
To the extent our customers are unable to arrange future financings for any of our current or potential projects, our business would be negatively impacted. In attempting to attract new customers to support our growth, we intend to refine our customer agreements based on experience.
To the extent neither our customers or us are able to arrange future financings for any of our current or potential projects, our business would be negatively impacted. In attempting to attract new customers to support our growth, we intend to refine our customer agreements based on experience.
Companies that incorporate open-source software into their solutions have, from time to time, faced claims challenging the use of open-source software and compliance with open-source license terms.
Companies that incorporate open-source software into their solutions have, from time to time, faced claims challenging the use of open-source software 33 Table of Contents and compliance with open-source license terms.
In addition, our energy storage systems may need to be decommissioned from time to time, and the related costs could be significant given the size and complexity of our energy storage systems.
In addition, our energy storage systems may need to be decommissioned from time to time, and the related 16 Table of Contents costs could be significant given the size and complexity of our energy storage systems.
In the ordinary course of our business, we collect, store, and transmit confidential information, including intellectual property, proprietary business information, and personal information of customers, our employees, and contractors (collectively, “Confidential Information”).
In the ordinary course of our business, we collect, store, and transmit confidential information, including IP, proprietary business information, and personal information of customers, our employees, and contractors (collectively, “Confidential Information”).

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBoard members receive presentations 43 Table of Contents on cybersecurity topics from our CIO, internal security staff, or external experts as part of the Board’s continuing education on topics that impact public companies.
Biggest changeThe Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives briefings from the CIO on our cyber risk management program. Board members receive presentations on cybersecurity topics from our CIO, internal security staff, or external experts as part of the Board’s continuing education on topics that impact public companies.
Energy Vault’s CIO has more than 25 years of cybersecurity and risk management experience across multiple market verticals, including extensive experience overseeing critical and complex cybersecurity teams spanning multiple federal agencies and private industry. Further, the Audit Committee has a combined nine years of experience in organizational cybersecurity and risk management.
Energy Vault’s CIO has more than 25 years of cybersecurity and risk management experience across multiple market verticals, including extensive experience overseeing critical and complex cybersecurity teams spanning multiple federal agencies and private industry. Further, the Audit Committee has a combined twelve years of experience in organizational cybersecurity and risk management.
The Audit Committee oversees management’s implementation of our cybersecurity risk management program. The Audit Committee receives quarterly reports from the Chief Information Officer (“CIO”) on our cybersecurity risks. In addition, the CIO updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.
The Audit Committee oversees management’s implementation of our cybersecurity risk management program. The Audit Committee receives regular reports from the Chief Information Officer (“CIO”) on our cybersecurity risks. In addition, the CIO updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public, or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information environment.
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other 44 Table of Contents information obtained from governmental, public, or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information environment.
Removed
The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives briefings from the CIO on our cyber risk management program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal offices are located in Westlake Village, California, Vienna, Virginia, and Lugano, Switzerland. The Westlake Village office serves as our U.S. headquarters and the Lugano office serves as our international headquarters. The Westlake Village facility consists of approximately 15,767 square feet and is under a lease that expires in November 2028.
Biggest changeITEM 2. PROPERTIES Our principal offices are located in Westlake Village, California, Vienna, Virginia, and Lugano, Switzerland. The Westlake Village office serves as our U.S. headquarters and the Lugano office serves as our international headquarters. The Westlake Village facility consists of 10,042 square feet and is under a lease that expires in December 2029.
The Lugano facility is under a lease that expires in July 2027. The Vienna facility is under a lease that expires in January 2025.
The Lugano facility is under a lease that expires in July 2027. The Vienna facility is under a lease that expires in January 2026.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFrom time to time, Energy Vault may become involved in additional legal proceedings arising in the ordinary course of its business. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 44 Table of Contents PART II
Biggest changeFrom time to time, Energy Vault may become involved in additional legal proceedings arising in the ordinary course of its business. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 45 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is listed on the New York Stock Exchange under the ticker symbol “NRGV.” Prior to February 14, 2022 and before the completion of the Merger, Novus’ Class A common stock traded on the New York Stock Exchange under the ticker symbol “NXU.” Holders of Record At March 7, 2024, there were 123 holders of record of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is listed on the New York Stock Exchange under the ticker symbol “NRGV.” Holders of Record At March 28, 2025, there were 119 holders of record of our common stock.
In addition, the Board is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of the Company’s equity securities during 2023. Repurchase of Equity Securities There were no repurchases of the Company’s equity securities during 2023. ITEM 6. [RESERVED]
In addition, the Board is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of the Company’s equity securities during 2024. Repurchase of Equity Securities There were no repurchases of the Company’s equity securities during 2024. ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

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

58 edited+109 added−89 removed22 unchanged
Biggest changeThe following table provides a reconciliation from GAAP S&M expenses to non-GAAP adjusted S&M expenses (amounts in thousands): Year Ended December 31, 2023 2022 S&M expenses (GAAP) $ 18,210 $ 12,582 Non-GAAP adjustments: Stock-based compensation expense 7,143 5,111 Reorganization expenses 84 — Adjusted S&M expenses (non-GAAP) $ 10,983 $ 7,471 55 Table of Contents The following table provides a reconciliation from GAAP R&D expenses to non-GAAP adjusted R&D expenses (amounts in thousands): Year Ended December 31, 2023 2022 R&D expenses (GAAP) $ 37,104 $ 42,605 Non-GAAP adjustments: Stock-based compensation expense 10,057 14,775 Reorganization expenses 182 — Adjusted R&D expenses (non-GAAP) $ 26,865 $ 27,830 The following table provides a reconciliation from GAAP G&A expenses to non-GAAP adjusted G&A expenses (amounts in thousands): Year Ended December 31, 2023 2022 G&A expenses (GAAP) $ 68,060 $ 56,622 Non-GAAP adjustments: Stock-based compensation expense 25,897 21,172 Reorganization expenses 318 — Adjusted G&A expenses (non-GAAP) $ 41,845 $ 35,450 The following table provides a reconciliation from GAAP net loss to non-GAAP adjusted EBITDA, with net loss being the most directly comparable GAAP measure (amounts in thousands): Year Ended December 31, 2023 2022 Net loss (GAAP) $ (98,443) $ (78,299) Non-GAAP adjustments: Interest income, net (8,117) (3,693) Income tax expense (349) 427 Depreciation and amortization 893 7,743 Stock-based compensation expense 43,097 41,058 Reorganization expenses 584 — Change in fair value of warrant liability — (2,330) Transaction costs — 20,586 Asset impairment — 2,828 Foreign exchange losses 222 316 Adjusted EBITDA (non-GAAP) $ (62,113) $ (11,364) We present adjusted EBITDA, which is net loss excluding adjustments that are outlined in the quantitative reconciliation provided above, as a supplemental measure of our performance and because we believe this measure is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry.
Biggest change(GAAP) $ (135,750) $ (98,443) Non-GAAP adjustments: Interest income, net (5,413) (8,117) Provision for income taxes 67 (349) Depreciation and amortization 1,058 893 Stock-based compensation expense 38,709 43,097 Impairment of equity securities 11,730 — Provision for credit losses 29,980 150 Reorganization expenses 1,559 584 Gain on derecognition of contract liability (1,500) — Loss on impairment and sale of long-lived assets 336 — Change in fair value of derivative asset — conversion option 1,025 — Foreign exchange losses 300 222 Adjusted EBITDA (non-GAAP) $ (57,899) $ (61,963) We present adjusted EBITDA, which is net loss excluding adjustments that are outlined in the quantitative reconciliation provided above, as a supplemental measure of our performance and because we believe this measure is frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry.
Some of these limitations are: • it does not reflect our cash expenditures, future requirements for capital expenditures, or contractual commitments; • it does not reflect changes in, or cash requirements for, our working capital needs; • it does not reflect stock-based compensation, which is an ongoing expense; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and our adjusted EBITDA measure does not reflect any cash requirements for such replacements; • it is not adjusted for all non-cash income or expense items that are reflected in our consolidated statements of cash flows; • it does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; • it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and • other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
Some of these limitations are: • it does not reflect our cash expenditures, future requirements for capital expenditures, or contractual commitments; • it does not reflect changes in, or cash requirements for, our working capital needs; • it does not reflect stock-based compensation, which is an ongoing expense; 59 Table of Contents • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and our adjusted EBITDA measure does not reflect any cash requirements for such replacements; • it is not adjusted for all non-cash income or expense items that are reflected in our consolidated statements of cash flows; • it does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; • it does not reflect limitations on or costs related to transferring earnings from our subsidiaries to us; and • other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
Emerging Growth Company Accounting Election We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and have irrevocably elected to take advantage of the benefits of this extended transition period for new or revised standard.
Emerging Growth Company Accounting Election We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and have irrevocably elected to take advantage of the benefits of this extended transition period for new or revised standards.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provide information which Energy Vault’s management believes is relevant to an assessment and understanding of Energy Vault’s consolidated results of operations and financial condition as of December 31, 2023 and for the fiscal year ended December 31, 2023.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis provide information which Energy Vault’s management believes is relevant to an assessment and understanding of Energy Vault’s consolidated results of operations and financial condition as of December 31, 2024 and for the fiscal year ended December 31, 2024.
Research and Development (“R&D”) Expenses R&D expenses consist primarily of internal and external expenses incurred in connection with our research activities and development programs that include materials costs directly related to product development, testing and evaluation costs, 49 Table of Contents construction costs including labor and transportation of material, overhead related costs and other direct expenses consisting of personnel-related expenses and consulting expenses relating to study of product safety, reliability and development.
Research and Development (“R&D”) Expenses R&D expenses consist primarily of internal and external expenses incurred in connection with our research activities and development programs that include materials costs directly related to product development, testing and evaluation costs, construction costs including labor and transportation of material, overhead related costs and other direct expenses consisting of personnel-related expenses and consulting expenses relating to study of product safety, reliability and development.
As the world transitions to an economy powered by increasingly intermittent renewable energy such as solar and wind, the ability to provide clean and affordable electricity to a growing global population will depend heavily on the ability to store and distribute energy at appropriate times.
As the global demand for electricity increases and the world transitions to an economy powered by increasingly intermittent renewable energy such as solar and wind, the ability to provide clean, reliable, and affordable electricity to a growing global population will depend heavily on the ability to store and distribute energy at appropriate times.
Recently Adopted and Issued Accounting Pronouncements Recently issued and adopted/unadopted accounting pronouncements are described in Note 2 of the consolidated financial statements included elsewhere in this Annual Report. 58 Table of Contents
Recently Adopted and Issued Accounting Pronouncements Recently issued and adopted/unadopted accounting pronouncements are described in Note 2 of the consolidated financial statements included elsewhere in this Annual Report.
Since the revenue recognition of these contracts depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profits are subject to revisions as the contract progresses to completion.
Since revenue recognition for these performance obligations depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profits are subject to revisions as the performance obligations progresses to completion.
When control of significant uninstalled materials is transferred to customers, the Company recognizes revenue in an amount equal to the cost of those materials. The profit margin inherent in these materials is deferred until the Company fulfills its obligation to install the materials during construction of the energy storage systems.
When control of significant uninstalled equipment is transferred to customers in a EPC project, the Company recognizes revenue in an amount equal to the cost of that equipment. The profit margin inherent in these materials is deferred until the Company fulfills its obligation to install the materials during construction of the energy storage systems.
Our cost of revenue is affected by underlying costs of materials such as batteries, inverters, enclosures, transformers, and cables, as well as the cost of subcontractors to provide construction services. We do not currently hedge against changes in the price of raw materials as we do not purchase raw materials. We purchase energy storage system components from our suppliers.
Our cost of revenue is affected by underlying costs of equipment and materials such as batteries, inverters, enclosures, transformers, and cables, as well as the cost of subcontractors to provide construction services. We do not currently hedge against changes in the price of raw materials as we do not purchase raw materials.
Our revenue growth is dependent on continued growth in the amount of energy storage systems constructed each year and our ability to increase our share of demand in the geographic regions where we currently compete and plan to compete in the future.
Our revenue growth is dependent on continued growth in the number of energy storage systems constructed each year and our ability to increase our share of demand in the geographic regions where we currently compete and plan to compete in the future. Additionally, our revenue growth is dependent on our ability to find attractive projects to build, own, and operate.
Gross Profit and Gross Profit Margin Gross profit and gross profit margin may vary from period to period due to the timing of transferring control of significant uninstalled materials to customers under contracts to sell energy storage systems.
We purchase energy storage system components from our suppliers. Gross Profit and Gross Profit Margin Gross profit and gross profit margin may vary from period to period due to the timing of transferring control of significant uninstalled equipment to customers under contracts to sell energy storage systems.
Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net loss, operating loss, or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity. 56 Table of Contents Our adjusted EBITDA measure has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP.
Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net loss, operating loss, or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of our liquidity.
Any equity securities issued may also provide for rights, preferences or privileges senior to those of holders of our common stock. If we raise funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of common stock. The terms of debt securities or borrowings could impose significant restrictions on our operations.
If the Company raises funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of common stock. The terms of debt securities or borrowings could impose significant restrictions on our operations.
Stock-based compensation for RSUs that vest based solely on a service condition is measured based on the closing fair market value of the Company’s common stock on the date of the grant. Stock-based compensation for RSUs that vest based on market conditions is estimated on the date of the grant using a Monte Carlo simulation model.
Stock-Based Compensation Stock-based compensation for RSUs that vest based on market conditions is estimated on the date of the grant using a Monte Carlo simulation model.
To the extent that the price of our common stock exceeds $11.50 per share, it is more likely that our private warrant holders will exercise their warrants. To the extent that the price of our common stock declines, including a decline below $11.50 per share, it is less likely that our private warrant holders will exercise their warrants.
The exercise price for our private warrants is $11.50 per warrant, subject to certain specified adjustments. To the extent that the price of our common stock exceeds $11.50 per share, it is more likely that our private warrant holders will exercise their warrants.
The transaction costs in 2022 related to the consummation of the Merger. Liquidity and Capital Resources Sources of Liquidity Since inception , we have financed our net cash used in operating and investing activities primarily through the issuance and sale of equity, and with the proceeds from the Merger and the PIPE.
Liquidity and Capital Resources Sources of Liquidity Since inception , we have financed our net cash used in operating and investing activities primarily through the issuance and sale of equity, and with the proceeds from the reverse recapitalization and private investment in public equity that occurred in 2022.
The decrease was primarily attributable to a $2.7 million decrease in engineering and development costs, a $2.0 million decrease in personnel-related expenses, and a $0.8 million decrease in consulting costs. These cost decreases were primarily attributable to a focus on cost controls and a reduction in personnel.
The decrease was primarily attributable to a $5.0 million decrease in personnel-related expenses, a $3.9 million decrease in engineering and development costs, and a $2.5 million decrease in software expenses. These decreases in costs were primarily attributable to a decrease in headcount and a focus on cost control measures.
We may continue to incur operating losses in the future due to our on-going research and development activities. We may seek additional capital through equity and/or debt financings depending on market conditions. If we are required to raise additional funds by issuing equity securities, dilution to stockholders would result.
Energy Vault has incurred negative operating cash flows and operating losses in the past and we may incur operating losses in the future. Energy Vault may seek additional capital through combinations of equity and/or debt financings depending on market conditions. If we are required to raise additional funds by issuing equity securities, dilution to stockholders would result.
Cash Flows The following table summarizes cash flows from operating, investing, and financing activities for the periods indicated (amounts in thousands): Year Ended December 31, 2023 2022 Net cash used in operating activities $ (92,655) $ (23,346) Net cash used in investing activities (42,542) (13,319) Net cash (used in) provided by financing activities (5,482) 217,771 Effects of exchange rate changes on cash 52 (49) Net (decrease) increase in cash, cash equivalents, and restricted cash $ (140,627) $ 181,057 Operating Activities During the years ended December 31, 2023 and 2022, cash used in operating activities totaled $92.7 million and $23.3 million, respectively.
Cash Flows The following table summarizes cash flows from operating, investing, and financing activities for the periods indicated (amounts in thousands): Year Ended December 31, 2024 2023 Net cash used in operating activities $ (55,860) $ (92,655) Net cash used in investing activities (58,736) (42,542) Net cash used in financing activities (252) (5,482) Effects of exchange rate changes on cash (634) 52 Net decrease in cash, cash equivalents, and restricted cash $ (115,482) $ (140,627) Operating Activities For the years ended December 31, 2024 and 2023, cash used in operating activities totaled $55.9 million and $92.7 million, respectively.
Variable consideration is included in the transaction price only to the extent that it is improbable that a significant reversal in the amount of cumulative revenue recognized will occur when the uncertainty is resolved.
LDs are accounted for as variable consideration, and the contract price is reduced by the expected penalty or LD amount when recognizing revenue. Variable consideration is included in the transaction price only to the extent that it is improbable that a significant reversal in the amount of cumulative revenue recognized will occur when the uncertainty is resolved.
If inflation continues to increase in our markets, it may increase our expenses that we may not be able to pass through to customers. It may also increase the costs of our products that could negatively impact their competitiveness.
If inflation continues to increase in our markets, it may increase our expenses that we may not be able to pass through to customers.
For the year ended December 31, 2023, cash used in financing activities was primarily attributable to $6.0 million in tax payments related to the net settlement of equity awards, and $0.9 million in repayments for insurance premium financings. These cash outflows were partially offset by $1.3 million in proceeds from insurance premium financings.
Financing Activities During the years ended December 31, 2024 and 2023, cash used in financing activities totaled $0.3 million and $5.5 million, respectively. 57 Table of Contents For the year ended December 31, 2024, cash used in financing activities was primarily attributable to $2.4 million in repayments on insurance premium financings, $0.4 million in tax payments related to the net settlement of equity awards, and $0.2 million in finance lease payments, partially offset by $2.7 million in proceeds from insurance premium financings.
Our cost projections are heavily dependent upon raw materials (such as steel), equipment (such as motors, batteries, inverters, and power electronic devices) and technical and construction service providers (such as engineering, procurement, construction firms).
Under the EEQ model, we are responsible for the delivery of the equipment we provide, as well as resolving issues within our scope of supply. Our cost projections are heavily dependent upon raw materials (such as steel), equipment (such as motors, batteries, inverters, and power electronic devices), and technical and construction service providers (such as engineering, procurement, construction firms).
The following tables summarizes our cash, cash equivalents, and restricted cash balances as of December 31, 2023 and 2022 (amounts in thousands): December 31, 2023 2022 Cash and cash equivalents $ 109,923 $ 203,037 Restricted cash 35,632 83,145 Total cash, cash equivalents, and restricted cash $ 145,555 $ 286,182 Short-Term Liquidity M anagement believes that its cash and cash equivalents on hand as of the filing date of this Annual Report will be sufficient to fund our operating activities for at least the next twelve months without regard to any cash proceeds we may receive in the future upon the exercise of our private warrants.
Management believes that its cash, cash equivalents, and restricted cash on hand as of the filing date of this Annual Report will be sufficient to fund our operating activities for at least the next twelve months without regard to any cash proceeds we may receive in the future upon the exercise of our private warrants.
Our non-cancellable purchase obligations as of December 31, 2023 totaled approximately $4.7 million.
Our non-cancellable purchase obligations as of December 31, 2024 totaled $1.9 million.
Energy storage solutions are needed to balance the production intermittency of variable renewable energy to support a clean-energy future and a balanced electrical grid infrastructure.
Energy storage solutions are needed to balance the production intermittency of variable renewable energy to support a clean-energy future and a balanced electrical grid infrastructure. Both government mandates and companies focused on reducing energy use, cost, and emissions are expected to propel the shift to renewable sources of power.
Key Factors and Trends Affecting our Business We believe that our performance and future success depend upon several factors that present significant opportunities for us, but also pose risks and challenges including those discussed below and in Part I, Item 1A.
We are striving to create a world powered by renewable resources so that everyone will have access to clean, reliable, sustainable, and affordable energy. 46 Table of Contents Key Factors and Trends Affecting our Business We believe that our performance and future success depend upon several factors that present significant opportunities for us, but also pose risks and challenges including those discussed below and in Part I, Item 1A.
In the United States, governments continuously modify these statutes and regulations. Governments, often acting through state utility or public service commissions, change and adopt different rates for commercial customers on a regular basis. These changes could affect our ability to deliver cost savings to our current and future customers for the purchase of electricity.
These statutes and regulations often relate to electricity pricing, net metering, incentives, taxation, competition with utilities and the interconnection of customer-owned electricity generation. In the United States, governments continuously modify these statutes and regulations. Governments, often acting through state utility or public service commissions, change and adopt different rates for commercial customers on a regular basis.
You should compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only supplementally. Critical Accounting Policies and Use of Estimates Our consolidated financial statements are prepared in conformity with GAAP.
You should compensate for these limitations by relying primarily on our GAAP results and using adjusted EBITDA only supplementally. Critical Accounting Estimates Our consolidated financial statements are prepared in conformity with GAAP. In preparing our financial statements, we make assumptions, judgments, and estimates based on historical experience and various other factors that we believe to be reasonable under the circumstances.
In addition to these sources of revenue, in the future we expect to generate revenue from the sale of our GESSs, the sale or licensing of the Company’s software solutions, the sale of long-term service agreements to maintain customer owned energy storage systems, and through tolling arrangements in connection with energy storage systems that we intend to own and operate.
To date, the Company has primarily generated revenue from the sale of our BESSs and from licensing our EVx technology. In addition to these sources of revenue, in the future we expect to generate revenue from tolling arrangements in connection with energy storage systems that we intend to own and operate.
The credit market and financial services industry have in the past, and may in the future, experience periods of uncertainty that could impact the availability and cost of equity and debt financing. 53 Table of Contents Licensing Agreements with Extended Payment Terms The Company has licensed its gravity storage technology and certain of these agreements contain extended payment terms.
The credit market and financial services industry have in the past, and may in the future, experience periods of uncertainty that could impact the availability and cost of equity and debt financing.
The Company utilizes the percentage of completion method based on costs incurred as a percentage of total estimated contract costs to determine the amount of revenue to recognize. Contract costs include all direct materials and labor costs related to contract performance.
The Company utilizes the percentage of completion method when recognizing revenue over time and percentage of completion is based on costs incurred as a percentage of total estimated contract costs.
Additionally, gross profit and gross profit margin may vary from period to period due to our sales volume, product prices, product costs, product mix, geographical mix, along with the timing of when we perform installation and construction services.
Additionally, gross profit and gross profit margin may vary from period to period due to our sales volume, product prices, product costs, product mix, geographical mix, and change in estimates for warranty liabilities.
Under the EPC model, we generally rely on third-party EPC firms to construct our storage systems, under our supervision with dedicated teams tasked with project management. Under the EEQ model, we are responsible for the delivery and installation of the equipment we provide, as well as resolving issues within our scope of supply.
“Risk Factors.” Development and Deployment Plan for Third-Party Sales of Energy Storage Products We primarily rely on two models for project delivery, which are (i) EPC delivery and (ii) EEQ delivery. Under the EPC model, we generally rely on third-party EPC firms to construct our storage systems, under our supervision with dedicated teams tasked with project management.
Additionally, our revenue growth is dependent on our ability to continue to develop and commercialize new and innovative products to meet our customer’s energy storage needs. Cost of Revenue Cost of revenue primarily consists of product costs, including purchased materials and supplies, as well as costs related to subcontractors, direct labor, and product warranties.
Cost of Revenue Cost of revenue primarily consists of product costs, including purchased equipment, materials and supplies, as well as costs related to subcontractors, direct labor, and product warranties.
The growth of the energy storage market that we address is primarily driven by the decreasing cost of energy storage technologies and renewable power generation sources, government mandates, financial incentives to reduce GHG 46 Table of Contents emissions, and increasing geopolitical pressures driving energy independence goals.
The growth of the energy storage market that we address is primarily driven by the decreasing cost of energy storage technologies, government mandates, financial incentives to reduce GHG emissions, and efforts to enhance grid stability and efficiency. These dynamics are driving demand for increased energy storage capacity and duration.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. For more information on our significant accounting policies, refer to Note 2 - Summary of Significant Accounting Policies of our audited consolidated financial statements included in this Annual Report on Form 10-K.
Actual results could differ materially from these estimates under different assumptions and conditions. For a summary of significant accounting policies, refer to Note 2 - Summary of Significant Accounting Policies of our audited consolidated financial statements included in this Annual Report on Form 10-K.
We incorporate a customer-centric, solutions-based approach toward helping utilities, independent power producers, and large industrial energy users reduce their energy costs while maintaining power reliability.
We believe that our experience in the build-and-transfer business, combined with our proprietary energy storage technologies and geographical footprint, uniquely positions us to build and operate storage projects with superior efficiency and reliability. We incorporate a customer-centric, solutions-based approach toward helping utilities, independent power producers (“IPP”), and large industrial energy users reduce their energy costs while maintaining power reliability.
When the Company sells a BESS, the Company recognizes revenue over time as we transfer control of our product to the customer. When the Company licenses its intellectual property, revenue is recognized at the point in time at which the customer obtains control of the licensed technology.
Under an EEQ model, the Company recognizes revenue related to equipment sales upon delivery to the customer and service revenue over time as we provide specialized technical services to the customer. When the Company licenses its IP, revenue is recognized at the point in time at which the customer obtains control of the licensed technology.
Gross Profit and Gross Profit Margin Gross profit was $17.5 million and gross profit margin was 5.1% for the year ended December 31, 2023. Gross profit for 2023 was primarily attributable to the sale and transfer of the Company’s BESS projects. Gross profit was $59.3 million and gross profit margin was 40.6% for the year ended December 31, 2022.
Cost of revenue decreased due to the reduction in active BESS projects. Gross Profit and Gross Profit Margin Gross profit was $6.2 million and gross profit margin was 13.4% for the year ended December 31, 2024, compared to gross profit of $17.5 million and gross profit margin of 5.1% for the year ended December 31, 2023.
We expect to invest in additional property, equipment, and other assets as we construct and own energy storage systems, which will result in additional depreciation expense in the future. Asset Impairment Energy Vault began building a prototype of the EV1 in March 2020, resulting in the EV1 CDU, which was connected to the Swiss national grid in July 2020.
We expect to invest in additional property, equipment, and other assets as we construct and own energy storage systems, which will result in additional depreciation expense in the future. Loss on Impairment and Sale of Long-Lived Assets Asset impairment and loss on sale of assets consists of losses associated with the write-down or sale of property and equipment.
Cash used in investing activities for the year ended December 31, 2023 consisted of $30.4 million for the purchase of property and equipment, primarily related to the energy storage systems being constructed in Snyder, Texas and Calistoga, California, $6.1 million for the purchase of property and equipment that the Company expects to resell, and $6.0 million for the purchase of equity securities in KORE.
Cash used in investing activities for the year ended December 31, 2024 primarily consisted of $58.9 million for the purchase of property and equipment, primarily related to the construction of a hybrid energy storage system in Calistoga, California, Cross Trails BESS, and the Snyder CDU.
Investing Activities During the years ended December 31, 2023 and 2022, cash used in investing activities totaled $42.5 million and $13.3 million, respectively.
Net cash used in operating activities declined during 2024 compared to 2023 primarily due to the timing of customer collections and vendor payments. Investing Activities For the years ended December 31, 2024 and 2023, cash used in investing activities totaled $58.7 million and $42.5 million, respectively.
Partially offsetting these cash inflows was $20.7 million transaction cost payments related to the reverse recapitalization and $5.5 million in tax payments related to the net settlement of equity awards. Non-GAAP Financial Measures To complement our consolidated statements of operations, we use non-GAAP financial measures of adjusted S&M expenses, adjusted R&D expenses, adjusted G&A expenses, and adjusted EBITDA.
Non-GAAP Financial Measures To complement our consolidated statements of operations and comprehensive loss, we use non-GAAP financial measures of adjusted S&M expenses, adjusted R&D expenses, adjusted G&A expenses, adjusted operating expenses, and adjusted EBITDA.
Stock-based compensation expense was $7.1 million for the year ended December 31, 2023, compared to $5.1 million for the year ended December 31, 2022. R&D Expenses R&D expenses decreased by $5.5 million to $37.1 million for the year ended December 31, 2023, compared to $42.6 million for the year ended December 31, 2022.
The decrease in personnel-related expenses was primarily due to a reduction in headcount. Research and Development Expenses R&D expenses decreased by $11.1 million to $26.0 million for the year ended December 31, 2024, compared to $37.1 million for the year ended December 31, 2023.
Depreciation and Amortization Expense Depreciation and amortization expense decreased by $6.9 million to $0.9 million for the year ended December 31, 2023, compared to $7.7 million for the year ended December 31, 2022. The decrease was primarily due to the EV1 CDU being decommissioned in 2022, resulting in the asset being fully depreciated during 2022.
Depreciation and Amortization Expense Depreciation and amortization expense increased by $0.2 million to $1.1 million for the year ended December 31, 2024, compared to $0.9 million for the year ended December 31, 2023. The increase is primarily attributable to capitalized software that was placed into service during 2024.
The presentation of these non-GAAP measures is not meant to be considered in isolation or as an alternative to net loss as an indicator of our performance.
The presentation of these non-GAAP measures is not meant to be considered in isolation or as an alternative to other measures of financial performance calculated in accordance with GAAP. These non-GAAP measures and their reconciliation to GAAP financial measures are shown below. Beginning September 30, 2024, provision for credit losses has been treated as a non-GAAP adjustment.
The increase was primarily attributable to a $9.8 million increase in personnel-related expenses, a $1.4 million increase in software and IT costs, a $1.1 million increase in insurance costs, and a $0.6 million increase in consulting costs. The increase in personnel costs was due to expanded headcount and an increase in stock-based compensation expense.
General and Administrative Expenses G&A expenses decreased by $4.9 million to $63.0 million for the year ended December 31, 2024, compared to $67.9 million for the year ended December 31, 2023. The decrease was primarily attributable to a $4.6 million decrease in personnel-related expenses, a $1.2 million decrease in software expenses, and a $0.7 million decrease in consulting costs.
The non-cash charges primarily consisted of $41.1 million in stock-based compensation expense, $7.7 million in depreciation and amortization expense, and $2.8 million in asset impairment charges, partially offset by a $2.3 million gain from a change in the fair value of the Company’s warrant liability.
Significant non-cash items include $38.7 million in stock-based compensation expense, $11.7 million in impairment of equity securities, $30.0 million in bad debt expense, $1.4 million in non-cash interest income, $1.1 million in depreciation and amortization expense, and a $1.0 million loss due to the change in fair value of a derivative asset.
In these situations, the contract prices are aggregated and then allocated to each energy storage project based upon their relative stand-alone selling price. The Company recognizes revenue over time on these projects as a result of the continuous transfer of control of its products to the customer.
Revenue The Company recognizes revenue over time for EPC contracts and technical services in EEQ contracts as a result of the continuous transfer of control of the products and services to the customer.
Renewable energy sources present environmental advantages over fossil fuels in terms of finite natural resource usage and GHG emission profile. A major obstacle to transitioning to renewable sources of energy such as wind and solar is the intermittent availability of these types of energy sources.
Over the past decade, deployment of renewable energy resources has accelerated and there has been an industry-wide push for decarbonization, which is increasing the demand for grid-scale energy storage. A major obstacle to transitioning to renewable sources of energy such as wind and solar is the intermittent availability of these types of energy sources.
Our Business Energy Vault develops and deploys utility-scale energy storage solutions designed to aid in the global transition to a clean energy future. Our Company’s comprehensive offerings include proprietary gravity, battery, and green hydrogen energy storage solutions, supported by our technology-agnostic energy management software solutions.
Our Business Energy Vault provides a diverse technology portfolio of turnkey energy storage platforms, including proprietary gravity, battery, and green hydrogen energy storage hardware technologies, supported by our technology-agnostic energy management system software and integration platform.
G&A Expenses G&A expenses increased by $11.4 million to $68.1 million for the year ended December 31, 2023, compared to $56.6 million for the year ended December 31, 2022.
Other Income (Expense), Net Other income (expense), net improved by $0.7 million to other income, net of $0.6 million for the year ended December 31, 2024 compared to other expense, net of $0.2 million for the year ended December 31, 2023.
Revenue The Company generates revenue from the sale and licensing of our energy storage solutions. To date, the Company has primarily generated revenue from the sale of our BESSs and from licensing our EVx technology.
Key Components of Results of Operations Revenue The Company generates revenue from the sale of our energy storage products, the licensing of the Company’s software solutions and IP, and from long-term service agreements to operate and maintain customer owned energy systems.
Transaction Costs Transaction costs consist of legal, accounting, banking fees, and other costs directly related to the consummation of the Merger and the PIPE. 50 Table of Contents Results of Operations Consolidated Comparison of Year Ended December 31, 2023 to Year Ended December 31, 2022 The following table sets forth our results of operations for the periods indicated (amounts in thousands): Year Ended December 31, 2023 2022 $ Change Revenue $ 341,543 $ 145,877 $ 195,666 Cost of revenue 324,012 86,580 237,432 Gross profit 17,531 59,297 (41,766) Operating expenses: Sales and marketing 18,210 12,582 5,628 Research and development 37,104 42,605 (5,501) General and administrative 68,060 56,622 11,438 Depreciation and amortization 893 7,743 (6,850) Asset impairment — 2,828 (2,828) Loss from operations (106,736) (63,083) (43,653) Other income (expense): Interest expense (35) (2) (33) Interest income 8,152 3,695 4,457 Change in fair value of warrant liability — 2,330 (2,330) Transaction costs — (20,586) 20,586 Other expense, net (173) (226) 53 Loss before income taxes $ (98,792) $ (77,872) $ (20,920) Revenue The Company recognized revenue for the product and service categories as follows for the years ended December 31, 2023 and 2022 (amounts in thousands): Year Ended December 31, 2023 2022 Build and transfer energy storage products $ 339,891 $ 85,636 Licensing of intellectual property 735 58,483 Other 917 1,758 Total revenue $ 341,543 $ 145,877 Revenue for the year ended December 31, 2023 increased by $195.7 million to $341.5 million comp ared to $145.9 million for the year ended December 31, 2022.
(“KORE”). 52 Table of Contents Results of Operations Consolidated Comparison of Year Ended December 31, 2024 to Year Ended December 31, 2023 The following table sets forth our results of operations for the periods indicated (amounts in thousands): Year Ended December 31, 2024 2023 $ Change Revenue $ 46,199 $ 341,543 $ (295,344) Cost of revenue 40,012 324,012 (284,000) Gross profit 6,187 17,531 (11,344) Operating expenses: Sales and marketing 15,839 18,210 (2,371) Research and development 25,999 37,104 (11,105) General and administrative 62,971 67,910 (4,939) Provision for credit losses 29,980 150 29,830 Depreciation and amortization 1,058 893 165 Loss on impairment and sale of long-lived assets 336 — 336 Total operating expenses 136,183 124,267 11,916 Loss from operations (129,996) (106,736) (23,260) Other income (expense): Interest expense (123) (35) (88) Interest income 5,537 8,152 (2,615) Impairment of equity securities (11,730) — (11,730) Other income (expense), net 566 (173) 739 Loss before income taxes $ (135,746) $ (98,792) $ (36,954) Revenue The Company recognized revenue for the product and service categories as follows for the years ended December 31, 2024 and 2023 (amounts in thousands): Year Ended December 31, 2024 2023 Sale of energy storage products (1) $ 44,592 $ 340,292 Operation and maintenance services 1,090 — Software licensing 402 — IP licensing 115 735 Other — 516 Total revenue $ 46,199 $ 341,543 __________________ (1) For the year ended December 31, 2023, $0.4 million in revenue from the sale of spare energy system parts has been reclassified from “other” to “sale of energy storage products.” Revenue for the year ended December 31, 2024 decreased by $295.3 million to $46.2 million compared to $341.5 million for the year ended December 31, 2023.
Anticipated cash inflows from licensing agreements with extended payment terms as of December 31, 2023 were as follows (amounts in thousands): Year ended December 31, Amount 2024 $ 6,600 2025 9,250 2026 6,750 2027 7,250 2028 7,250 Thereafter 60,000 Total $ 97,100 Contractual Obligations Our principal commitments as of December 31, 2023 consisted primarily of obligations under operating leases, finance leases, warranty obligations, deferred pensions, a nd issued purchase orders.
Cash, Cash Equivalents, and Restricted Cash The following tables summarizes our cash, cash equivalents, and restricted cash balances as of December 31, 2024 and 2023 (amounts in thousands): December 31, 2024 2023 Cash and cash equivalents $ 27,091 $ 109,923 Restricted cash 2,982 35,632 Total cash, cash equivalents, and restricted cash $ 30,073 $ 145,555 Contractual Obligations Our principal commitments as of December 31, 2024 consisted primarily of obligations under operating leases, finance leases, warranty liabilities, a deferred pension, a nd issued purchase orders.
The increase in cost of revenue for the year ended December 31, 2023 compared to the 51 Table of Contents year ended December 31, 2022 was primarily due to the increase in revenue from the sale and transfer of energy storage products.
Revenue from two customers accounted for 75% and 19%, respectively, of the Company’s total revenue for the year ended December 31, 2024. 53 Table of Contents Cost of Revenue Cost of revenue for the year ended December 31, 2024 decreased by $284.0 million to $40.0 million compared to $324.0 million for the year ended December 31, 2023.
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We are striving to create a world powered by renewable resources so that everyone will have access to clean, sustainable, and affordable energy. 45 Table of Contents Our solutions are designed to address the intermittency issues inherent in the predominant sources of renewable energy production by storing energy produced when renewable energy production is active.
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In 2024, we began a multi-year transition from providing this technology portfolio solely to third parties through a build-and-transfer model or licensing model, to also taking an ownership interest in energy storage assets in select attractive markets.
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Once energy is stored in our solutions, it can be discharged to the grid in a controlled and reliable manner at any time, regardless of the then current ability of the renewable sources to generate power.
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Energy Storage Industry The utility-scale energy storage industry is increasing at a rapid pace, driven by increased demand for electricity, global transitions toward renewable energy, and increased focus on grid resilience. According to a report from the U.S. Department of Energy in December 2024, electricity demand is forecasted to grow substantially in the United States over the next few decades.
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Our energy storage solutions are designed to accommodate a wide variety of renewable power sources and to achieve an attractive levelized cost of energy relative to fossil fuels. Collectively, these abilities greatly broaden the use cases and time duration scenarios that can be addressed by certain sources of renewable power.
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Electricity demand is expected to be driven primarily by new data centers, artificial intelligence, new manufacturing facilities, electric vehicles, and sector-wide electrification. Electricity demand for data centers alone is expected to grow at a 13% to 27% compound annual growth rate through 2028.
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“Risk Factors.” Product Development and Deployment Plan We leverage our sustainable and differentiated technologies to provide our customers with economical solutions to meet their short, long, and extended-duration renewable energy storage needs. Our energy storage solutions are designed to accommodate a wide variety of renewable power sources and to achieve an attractive levelized cost of energy relative to fossil fuels.
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Additionally, software solutions play a vital role in assisting energy storage owners in managing the growing complexities of renewable energy and energy storage markets. As renewable and energy storage asset portfolios expand globally, these stakeholders will need software solutions that enhance asset performance and boost revenue while reducing total ownership costs.
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We anticipate that our market will be characterized by high growth and rapidly evolving use cases and requirements. We believe that the majority of our competitors are primarily focused on the development and marketing of vertically siloed solutions based on a singular energy storage technology.
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Our expansion of revenue depends on the ongoing adoption of energy storage solutions by our customers and our ability to source, execute, and operate energy storage projects with attractive economics.
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Alternatively, we have strategically chosen to design an agile and agnostic software platform that can orchestrate the management of not just one energy storage technology, but rather one or more of our diverse storage mediums and the underlying power generation assets to harmonize asset operation and drive competitive operational performance.
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It may also increase the costs of our products that could negatively impact their competitiveness. 47 Table of Contents Government Regulation and Compliance Federal, state, and local government statutes and regulations concerning electricity heavily influence the market for our product and services. These statutes and regulations directly affect our owned asset business and indirectly affect our third-party sales business.
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We expect that this will broaden the use cases and time duration scenarios that can be addressed by certain sources of renewable power, and thereby drive a faster transition to more widespread utilization of renewable power.
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These changes could affect our ability to deliver cost savings to our current and future customers for the purchase of electricity. Each of our owned installations or our customer installations must be designed, constructed, and operated in compliance with applicable federal, state and local regulations, codes, standards, guidelines, policies, and laws.
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Our range of energy storage solutions assures our customers have what they need today, as well as what they will need in the future, thereby protecting their investments in our products within this high-growth market and its rapidly evolving use cases and requirements.
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To install and operate energy storage systems on its platform, we, our customers or our partners, as applicable, are required to obtain applicable permits and approvals from local authorities having jurisdiction to install energy storage systems and to interconnect the systems with the local electrical utility. U.S. Energy Storage Regulation and Legislation The U.S.
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For these reasons, we believe we are well positioned to compete successfully in the evolving market for energy storage solutions. We primarily rely on two models for project delivery, which are (i) EPC delivery and (ii) EEQ delivery.
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Congress is continuously reviewing and passing various climate change proposals, incentives, regulations, and legislation that may support the energy storage industry, including in the form of tax credits and incentives. The implementation of these laws can vary greatly across administrations and take long periods of time before the full extent of regulations are adopted.
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The global supply chain, on which Energy Vault relies, has been significantly impacted by (i) the COVID-19 pandemic, (ii) economic uncertainties, including the war in Ukraine and the conflict in the Middle East, and (iii) high inflation pressure on project budgeting resulting in potential significant delays and cost fluctuations, particularly with respect to microchips and many other raw materials that are within the motor and power electronic supply chains.
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We cannot guarantee we will realize any or all of the anticipated benefits or incentives under any such enacted regulations or legislation, including the IRA. IRS private letter ruling 201809003 clarified that energy storage is eligible for federal tax credits if charged primarily by qualifying renewable resources.
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These future timing and financial developments may impact Energy Vault’s performance from both a deployment and cost perspective. Energy Storage Industry We believe climate change poses a monumental risk to humanity and decreasing human generated GHG emissions is currently among the world’s most pressing challenges.
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The IRA adopted in August 2022 contains a number of tax incentive provisions that directly support the adoption of energy storage solutions and services. Before the enactment of the IRA, the Section 48 ITC did not apply to standalone energy storage projects.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Currency Risk The majority of our contracts with customers are denominated in U.S. dollars, and certain of our definitive agreements could be denominated in currencies other than the U.S. dollar, including the Euro, the Swiss franc, the Australian dollar, the South African rand, the Brazilian real, and the Saudi riyal.
Biggest changeForeign Currency Risk The majority of our contracts with customers are denominated in U.S. dollars or the Australian dollar, and certain of our definitive agreements could be denominated in other currencies, including the Euro, the Swiss franc, the South African rand, the Brazilian real, and the Saudi riyal.
Significant price changes for these raw materials could reduce our operating margins if suppliers increase component prices and we are unable to recover such increases from our customers and could harm our business, financial condition, and results of operations. 59 Table of Contents
Significant price changes for these raw materials could reduce our operating margins if suppliers increase component prices and we are unable to recover such increases from our customers and could harm our business, financial condition, and results of operations. 62 Table of Contents
In addition, a portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, such as the euro and the Swiss franc, and are subject to fluctuations due to changes in foreign currency exchange rates.
In addition, a portion of our operating expenses are incurred outside the United States and are denominated in foreign currencies, such as the euro, the Swiss franc, and the Australian dollar, and are subject to fluctuations due to changes in foreign currency exchange rates.
These policies establish guidelines, controls, and credit limits to manage credit risk within approved tolerances by mandating an appropriate evaluation of the financial condition of existing and potential customers, monitoring agency credit ratings, and by implementing credit practices that limit exposure according to the risk profiles of the counterparties.
These policies establish guidelines, controls, and credit limits to manage credit risk within approved tolerances by mandating an appropriate evaluation of the financial condition of existing and potential customers, monitoring agency 61 Table of Contents credit ratings, and by implementing credit practices that limit exposure according to the risk profiles of the counterparties.
Credit Risk Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a loss to us. Our customers include the counterparties for the sale of our energy storage products and solutions and the licensees of our intellectual property.
Credit Risk Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in a loss to us. Our customers include the counterparties for the sale of our energy storage products and solutions and the licensees of our IP.
In addition, customers are required to make milestone payments based on their project’s progress. We may also, at times, require letters of credit, parent guarantees, or cash collateral when deemed necessary. Our overall exposure may be affected positively or negatively by macroeconomic or regulatory changes that may impact our counterparties.
In addition, customers are required to make milestone payments based on their project’s progress. We may also, at times, require letters of credit, parent guarantees, or cash collateral when deemed necessary. Our overall exposure may be affected positively or negatively by macroeconomic or regulatory changes that may impact our counterparties. We continuously monitor the creditworthiness of all our customers.
Prices of these raw materials may be affected by supply restrictions or other logistic costs market factors from time to time. As we are not the direct buyer of these raw materials, we do not enter into hedging arrangements to mitigate commodity risk.
Prices of these raw materials may be affected by supply restrictions or other logistic costs market factors from time to time. We do not enter into hedging arrangements to mitigate commodity risk.
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Currently, management does not anticipate a material adverse effect in our financial position or results of operations from non-performance of a customer. We continuously monitor the creditworthiness of all our customers.

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