Eos Energy Enterprises Inc.
02/26/2026 | Press release | Distributed by Public on 02/26/2026 05:39
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our Consolidated Financial Statements and related notes thereto included elsewhere in this Annual Report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management's expectations. Factors that could cause such differences are discussed in "Forward-Looking Statements" and "Risk Factors."
Overview
The Company offers an innovative Znyth™ technology battery energy storage system ("BESS") designed to provide the operating flexibility to manage increased grid complexity and price volatility resulting from an overall increase in renewable energy generation and a congested grid coming from an increase in electricity demand growth. The Company's BESS is a validated chemistry with accessible non-precious earth components in a durable design that is intended to deliver results in even the most extreme temperatures and conditions. The system is designed to be safe, flexible, scalable, sustainable and manufactured in the United States, using raw materials primarily sourced in the United States. We believe the Company's Z3 battery module is the core of its innovative systems. The Z3 battery module is the only US designed and manufactured battery module that today provide utilities, independent power producers, renewables developers and C&I customers with an alternative to lithium-ion and lead-acid monopolar batteries for critical 3- to 12-hour discharge duration applications. We believe the Z3 battery will transform how utility, industrial and commercial customers store power.
In addition to its BESS, the Company currently offers: (a) a BMS which provides a remote asset monitoring capability and service to track the performance and health of the Company's BESS and to proactively identify future system performance issues through predictive analytics; (b) project management services to ensure the process of implementing the Company's BESS are coordinated in conjunction with the customer's overall project plans; (c) commissioning services that ensure the customer's installation of the BESS meets the performance expected by the customer; and (d) long-term maintenance plans to maintain optimal operating performance of the Company's systems.
The Company's growth strategy contemplates increasing sales of battery energy storage systems and related software and services through a direct sales team and sales channel partners. The Company's current and target customers include utilities, project developers, independent power producers and commercial and industrial companies.
Business Trends
As an SEC-registered and Nasdaq-listed company, we are required to implement procedures and processes to address public company regulatory requirements and customary practices and have, and will continue to, hire additional personnel in this context. We have incurred additional annual expenses as a public company for, among other things, directors' and officers' liability insurance, director fees, internal and external accounting, legal, administrative resources, including increased personnel costs and audit and other professional service fees.
During 2025, the effects of the Federal Reserve's current year interest rate reductions have allowed for continued growth for the Company. These interest rate reductions have allowed the Company to reduce the cost of capital. These interest rate reductions have eased many investor concerns and worked to stabilize the cost of labor, purchasing supplies and raw materials for the Company.
DOE Loan Facility
On November 26, 2024, the Company entered into the DOE Loan Facility. The DOE Loan Facility is a key step in advancing the Company's Project American Made Zinc Energy ("AMAZE") and is expected to fund the expansion of Eos' manufacturing capacity to 8 GWh by 2027 to meet the growing demand for longer duration battery energy storage systems. The DOE Loan Facility provides for a principal amount of up to $277.5 million of borrowings and capitalized interest amount of up to $26.0 million.
The DOE Loan Facility provides for a multi draw term loan facility under a series of at least two and, if the Company elects, up to four tranches of the loan (each, a "Tranche"), subject to the achievement of certain funding conditions, with each Tranche corresponding to the production, maintenance and development and operation of a given production line to be funded using the proceeds of such Tranche and the principal amount of each Tranche consisting of a maximum principal amount designated for such Tranche in the DOE Loan Facility. Each Tranche provides the Company funding for 80% of the Eligible Project Costs (as defined in the DOE Loan Facility) associated with the corresponding production line, with the Company responsible for funding the remaining 20% of the Eligible Project Costs.
As of December 31, 2025, the Company has received funding under the DOE Loan Facility for an aggregate amount of $90.9 million utilizing the full commitment available for Tranche 1. The initial draw of $68.3 million was made at an interest rate of 4.791% for eligible project costs incurred through December 6, 2024. The second draw of $22.7 million was made at an interest rate of 4.286%, for eligible costs incurred through June 4, 2025. These costs represent Tranche 1 that provided $90.9 million for eligible costs in connection with the design, construction, installation, startup and shakedown of a battery automation line and related tools.
Inflation Reduction Act of 2022 ("IRA")
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 into law. The IRA has significant economic incentives for both energy storage customers and manufacturers for projects placed in service after December 31, 2022. One of the most important features of the IRA is that it offers a 10-year term tax credit, whereas historically similar industrial credits have been shorter in duration. Customers placing new energy storage facilities in service, which include our Gen 2.3 and Z3 BESS, could qualify for an investment tax credit ("ITC"). The IRA also offers an extra ten percent credit if the project is in an "energy community" and another ten percent credit if the project satisfies domestic content requirements. The ten percent bonus for domestic content could represent a strategic advantage for the Company resulting from the Company's near-sourcing and Made in America strategy, and we believe that projects utilizing Eos batteries qualify for the bonus.
Production Tax Credits under Internal Revenue Code 45X ("PTC") can be claimed on battery components manufactured in the U.S. and sold to U.S. or foreign customers. These tax credits available to manufacturers include a credit for ten percent of the cost incurred to make electrode active materials in addition to credits of $35 per kWh of capacity of battery cells and $10 per kWh of capacity of battery modules. These credits are cumulative, meaning that companies will be able to claim each of the available tax credits based on the battery components produced and sold through 2029, after which the PTC will begin to gradually phase down through 2032. In April 2024, the IRS issued final regulations related to applicable tax credit transferability and direct pay provisions of the Inflation Reduction Act.
Company Highlights
•In January 2025, the Company successfully achieved all operational milestones that guaranteed the final $40.5 million under the fully funded $210.5 million Delayed Draw Term Loan ("DDTL") to further solidify its position as a leader in American energy storage systems. Successfully meeting these performance milestones will enable the Company to fuel its ongoing operations, U.S. production expansion, and the creation of an American energy storage powerhouse, without the need to raise additional capital via debt or additional equity offerings.
•With the DDTL fully funded, combined with DOE Loan Facility's first disbursement in December 2024, Eos has a strong foundation and sufficient capital to continue implementing Project AMAZE. The Company is executing its strategy to scale production into strong customer demand for long duration energy storage. Cash from customer projects now play an important role in funding working capital and our American-made system can play a critical role in America achieving energy independence. The $210.5 million DDTL is now fully funded, driven by the Company consistently achieving key operational milestones related to the Company's state-of-the-art manufacturing line, raw materials cost-out, Z3 technology performance improvement and orders backlog cash conversion. The Company surpassed its January raw materials cost-out target by 6% while delivering manufacturing cycle times below 10 seconds to further demonstrate continued operational efficiency and progress.
•In March 2025, the Company announced an $8 million standalone BESS order for the Naval Base of San Diego. Fully funded by a grant from the California Energy Commission ("CEC"), this order highlights Eos' critical role in supporting U.S. national security infrastructure with American-made energy storage.
•In March 2025, the Company announced Nathan Kroeker's transition from Chief Financial Officer role to become Eos' Chief Commercial Officer. Mr. Kroeker's background as Chief Financial Officer gives him a unique advantage in understanding both the financial and commercial landscapes of the industry, allowing him to create customer-centric solutions that are not only impactful, but also financially sustainable.
•In March 2025, the Company announced that Joseph Nigro, former CFO of Exelon Corporation (NADSDAQ: EXC) and CEO of Constellation Energy (then operating division of Exelon), joined the Company's Board of Directors.
•In April 2025, the Company announced it has signed a memorandum of understanding with Frontier Power Ltd. ("Frontier"), a UK-based energy developer, for a 5 GWh energy storage framework agreement. The agreement marks Eos' entrance into a new international market and supports Frontier's plans to submit multiple bids utilizing Eos' Znyth™ battery technology in the first application window of Ofgem's new long-duration energy storage (LDES) cap and floor scheme.
•In May 2025, the Company announced it has secured an order with Faraday Microgrids to deploy a 3 MW / 15 MWh Eos Z3 system for a commercial microgrid application on tribal land in California.
•In May 2025, the Company announced an offering of 18,750,000 shares of common stock with an option, exercisable within 30 days after May 29, 2025, to purchase up to an additional 2,812,500 shares of the Company's common stock at a price to the public of $4.00 per share, made pursuant to the Securities Act of 1933. The Underwriters exercised this option to purchase additional shares in full. The issuance and sale of 21,562,500 shares of the Company's common stock was completed in June 2025, raising net proceeds of $81.1 million, after deducting underwriting discounts and commissions.
•In June 2025, the Company issued an offering of $225.0 million aggregate principal amount of May 2025 Convertible Notes in a private offering. The Company granted initial purchasers an option to purchase, for settlement within a period of thirteen days from the date the May 2025 Convertible Notes were first issued, up to an additional $25.0 million principal amounts which were exercised in full.
•In July 2025, the Company received its second loan advance from the DOE Loan Programs Office in the amount of $22.7 million under the DOE Loan Facility. The Company has fully drawn the maximum allowable amount under the first tranche of $90.9 million in connection with the completion of its first state-of-the-art manufacturing line.
•In August 2025, the Company appointed industry veteran John Mahaz as Chief Operating Officer to lead the Company's operations, supply chain and manufacturing strategy as the Company enters a critical phase of commercial scale-up.
•In September 2025, the Company announced the launch of its new proprietary battery management system, software, controls and analytics platform, DawnOS, designed to revolutionize the way energy storage systems are managed, optimized and integrated into the grid. Fully designed, engineered and developed in the United States, DawnOS represents a new standard in American-made battery energy storage software - with technical excellence and national security designed into the platform.
•In October 2025, the Company announced a supply agreement for as much as 750 MWh with MN8 Energy, one of the largest independent renewable companies in the United States, to deploy Eos next-generation Z3 energy storage systems supporting a portfolio of projects that include providing clean, dispatchable power for large load applications.
•In October 2025, the Company and Talen Energy Corporation announced a strategic collaboration to develop energy storage capacity across Pennsylvania to help meet the state's growing demand and support AI infrastructure.
•In October 2025, the Company and Frontier Power Ltd. announced a strategic 228 megawatt-hour (MWh) order to deploy Eos Z3 energy storage systems across Frontier's expanding portfolio of storage and grid-reliability projects.
•During 2025, holders of the Company's public warrants exercised approximately 7.0 million warrants, resulting in proceeds of approximately $80.2 million to the Company.
•In November 2025, the Company announced the closing of its offering of November 2025 Convertible Notes, including the full exercise of the initial purchasers' option to purchase additional notes, for aggregate net proceeds of approximately $580.5 million. Following the exercise of the option, $600 million aggregate principal amount of November 2025 Convertible Notes were issued and outstanding. Concurrently, Eos announced the closing of its registered direct offering of 35,855,647 shares of common stock at a price of $12.78 per share to a limited number of purchasers, for aggregate proceeds of approximately $458.2 million.
Results of Operations
Revenue
| For the Years Ended December 31, | 2025 vs. 2024 | ||||||||||||||||||||||
| ($ in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| Revenue | $ | 114,203 | $ | 15,606 | $ | 98,597 | 632 | % | |||||||||||||||
The Company generates revenues from the delivery of its BESS and service-related solutions. The Company expects revenues to increase as it continues to scale production to meet customer demand.
Revenue increased $98.6 million, a 632% change for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase is due to increased production and deliveries as well as improved pricing.
Cost of goods sold
| For the Years Ended December 31, |
2025 vs. 2024
|
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| ($ in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
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Cost of goods sold
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$ | 258,040 | $ | 98,867 | $ | 159,173 | 161 | % | |||||||||||||||
Cost of goods sold primarily consists of direct costs relating to labor, material and overhead directly tied to product assembly, procurement and construction ("EPC"), project delivery, commissioning and start-up test procedures. Indirect costs included in cost of goods sold are manufacturing overhead such as equipment maintenance, environmental health and safety, quality and production control procurement, transportation, logistics, depreciation and facility-related costs. As a nascent technology with a new manufacturing process that is early in its product lifecycle, the Company still faces significant costs associated with production start-up, commissioning of various components, modules and subsystems and other related costs. For the year ended December 31, 2025 and 2024 the Company recognized $21.3 million and $3.8 million, respectively, reduction of cost of goods sold related to the IRA PTC. The Company expects its cost of goods sold to exceed revenues in the near term as it continues to scale production and prepares battery energy storage systems delivered to customers to go-live.
Cost of goods sold increased $159.2 million, or 161% for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase in Cost of goods sold was was driven by higher manufacturing volumes, project execution costs due to third-party materials and services required to commission customer deliveries, higher warranty accruals aligned with the increase in volumes and higher non-cash depreciation. These increases were partially offset by lower inventory related adjustments and higher PTCs.
Research and development expenses
| For the Years Ended December 31, |
2025 vs. 2024
|
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| ($ in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| R&D expenses | $ | 28,542 | $ | 22,758 | $ | 5,784 | 25 | % | |||||||||||||||
Research and development expenses consist primarily of salaries and other personnel-related costs, materials, third-party services, depreciation and amortization of intangible assets.
Research and development costs increased $5.8 million or 25% for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase was primarily driven by higher spending on outside services and payroll, partially offset by a decrease in materials and supplies.
Selling, general and administrative expenses
| For the Years Ended December 31, |
2025 vs. 2024
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| ($ in thousands) | 2025 | 2024 | $ Change | % Change | |||||||||||||||||||
| SG&A expenses | $ | 85,110 | $ | 60,047 | $ | 25,063 | 42 | % | |||||||||||||||
Selling, general and administrative expenses primarily consist of payroll and personnel-related, outside professional services, facilities, depreciation, travel, marketing and public company costs.
Selling, general and administrative expenses increased by $25.1 million, or 42%, for the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase was primarily driven by higher consulting and legal fees, payroll and personnel costs. Of the total increase approximately $7.1 million were non-cash expenses related to bad debt and stock compensation.
Loss from write-down on property, plant and equipment
| For the Years Ended December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
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Loss from write-down on property, plant and equipment
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$ | 1,781 | $ | 9,133 | |||||||
The Company incurred losses of $1.8 million and $9.1 million from write-downs of property, plant and equipment for the years ended December 31, 2025 and 2024, respectively. The 2025 and 2024 write-downs were due to design changes from the Z3-Phase 1 to Z3-Phase 2 production in which the Phase 1 production assets could not be utilized or repurposed for Phase 2 production. Additionally, the 2024, amount contains costs for disposal of equipment and tooling that was used for manufacturing of the Gen 2.3 battery, but cannot be repurposed for the Eos Z3 battery production. Additionally, the loss from write-down of property, plant and equipment contains costs for disposal of miscellaneous equipment and tooling that cannot be repurposed for more automated processes.
Interest expense, net
| For the Years Ended December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
| Interest expense, net | $ | (13,329) | $ | (8,718) | |||||||
Interest expense, net includes expenses for accrued interest, amortization of debt issuance costs and debt discounts, partially offset by capitalized interest costs on CIP assets and interest income.
Interest expense, net increased by $4.6 million for the year ended December 31, 2025, compared to the year ended December 31, 2024 due to a full year of interest expense recognized on the DOE Loan Facility and partial year of interest expense for the May 2025 Convertible Notes and November 2025 Convertible Notes. This increase was partially offset due to lower interest expense recognized from the Senior Secured Term Loan due to the payoff of the Atlas Credit Facility in 2024 and additional interest income due to increased cash balances.
Interest expense - related parties
| For the Years Ended December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
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2021 Convertible Note Payable interest and amortization
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$ | (6,613) | $ | (14,299) | |||||||
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AFG Convertible Note interest and amortization
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(3,313) | (6,114) | |||||||||
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Capitalized interest from construction in progress assets
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- | 914 | |||||||||
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Interest expense, related parties
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$ | (9,926) | $ | (19,499) | |||||||
See Note 13, Borrowingsfor further discussion.
Change in fair value of debt - related party
| For the Years Ended December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
| Change in fair value of debt - related party | $ | 18,053 | $ | 33,823 | |||||||
The Change in the fair value of debt - related party related to the Delayed Draw Term Loan. The Change in the fair value of debt - related party of $18.1 million for the year ended December 31, 2025, primarily related to a decrease in the loan principal balance partially offset by the reduction in the contractual interest rate from 15% to 7% per annum of the Delayed Draw Term Loan.
The Change in fair value of debt - related party of $33.8 million for the year ended December 31, 2024, primarily related to the extension of the maturity date and timing of future cash flows of the DDTL.
Change in fair value of warrants
For the years ended December 31, 2025 and 2024, the change in fair value of warrants was composed of the items below:
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For the Year Ended December 31,
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| ($ in thousands) | 2025 | 2024 | |||||||||
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IPO warrants
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$ | (922) | $ | (214) | |||||||
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April 2023 Transaction
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(97,041) | (50,124) | |||||||||
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May 2023 Transaction
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(22,137) | (11,582) | |||||||||
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December 2023 Public Offering
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(159,761) | (109,306) | |||||||||
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Change in fair value of warrants
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$ | (279,861) | $ | (171,226) | |||||||
The change is largely driven by the Company's common stock price increase year over year.
Change in fair value of derivatives
| For the Years Ended December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
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Change in fair value of derivatives
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$ | 76,467 | $ | - | |||||||
For the year ended December 31, 2025 the Change in fair value of derivatives of $76.5 million primarily reflected (i) the non-option embedded derivative recognized in connection with the induced conversion of the May 2025 Convertible Notes and (ii) the mark-to-market adjustment of the embedded derivative associated with the November 2025 Convertible Notes. On November 19, 2025, the Company agreed to settle $200.0 million aggregate principal amount of the May 2025 Convertible Notes, which settled on November 24, 2025, and was accounted for as an induced conversion under ASC 470-20. In connection with the induced conversion, the Company recognized a non-option embedded derivative, resulting in a $23.1 million gain recorded in Change in fair value of derivatives. On November 24, 2025, the Company also issued $600.0 million principal amount of November 2025 Convertible Notes. The conversion feature associated with these notes does not meet the criteria for equity classification and does not qualify for the scope exception under ASC 815-40. The conversion feature was recorded as an embedded derivative, resulting in a fair value gain of approximately $53.4 million from inception through December 31, 2025.
Change in fair value of derivatives - related parties
| For the Years Ended December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
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Change in fair value of embedded derivatives - related parties
|
$ | (77,004) | $ | (39,932) | |||||||
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Change in fair value of warrants - related parties
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(306,271) | (365,456) | |||||||||
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Change in fair value of derivatives - related parties
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$ | (383,275) | $ | (405,388) | |||||||
The Change in the fair value of derivatives - related parties, was due to the 2021 Convertible Note Payable and AFG Convertible Notes (See Note 13, Borrowings) and the Change in fair value of warrants - related parties was due to changes in fair value of our SPA Warrant and Contingent warrants (See Note 14, Warrants Liability). The change is largely driven by the Company's common stock price increase year over year.
(Loss) Gain on debt extinguishment
| For the Years Ended December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
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(Loss) gain on debt extinguishment
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$ | (52,652) | $ | 68,478 | |||||||
The Company recognized a loss on debt extinguishment of $52.7 million for the year ended December 31, 2025 from the payoff of the 2021 Convertible Notes, prepayment of the DDTL and modification of the Non-Affiliated AFG Convertible Notes.
The Company recognized a gain on debt extinguishment of $68.5 million for the year ended December 31, 2024 from the payoff of the Senior Secured Term Loan.
Induced conversion expense
The Company recognized an induced conversion expense of $63.5 million for the year ended December 31, 2025 related to the May 2025 Convertible Notes See Note 13, Borrowings for further discussion.
Other expense
| For the Years Ended December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
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Other expense
|
$ | (2,359) | $ | (8,120) | |||||||
Other expense of $2.4 million for the year ended December 31, 2025 primarily relates to costs associated with professional fees related to the Cerberus Amendments, extinguishment of the 2021 Convertible Notes, recognition of financing issuance costs from the Credit and Securities Purchase Transaction, professional fees associated with the amendment of the AFG Convertible Notes and repayment of the May 2025 Convertible Notes.
Other expense of $8.1 million for the year ended December 31, 2024 primarily relates to the loss from derecognition of loan commitment assets during 2024 from the Credit and Securities Purchase Transaction. See Note 3, Credit and Securities Purchase Transaction, for more information.
Income tax expense
| For the Years Ended December 31, | |||||||||||
| ($ in thousands) | 2025 | 2024 | |||||||||
| Income tax expense | $ | 24 | $ | 21 | |||||||
Income tax expense of approximately $0.02 million was recorded for the years ended December 31, 2025 and 2024. The taxes are attributable to taxable earnings from the Company's foreign operations which were insignificant for all periods presented.
Liquidity and Capital Resources
During the year ended December 31, 2025, the Company incurred a net loss of $969.6 million. Adjustments to reconcile the net loss to cash used in operations are primarily from non-cash items on the Consolidated Statements of Cash Flows. The non-cash items totaled $746.4 million. The Company incurred negative cash flows from operations of $211.2 million and had an accumulated deficit of $2,535.8 million as of December 31, 2025.
As of December 31, 2025, the Company had $568.0 million of unrestricted cash and cash equivalents available to fund the Company's operations, and working capital of $564.9 million on the Consolidated Balance Sheets. Additionally, the Company had $56.6 million of restricted cash, refer to Note 5, Cash, Cash Equivalents and Restricted Cashfor further discussion.
Through December 31, 2025, under the DOE Loan Facility, the Company drew down $90.9 million for the eligible project cost that the Company had incurred through June 4, 2025. These costs represent Tranche 1 of the DOE Loan Facility for eligible costs in connection with the design, construction, installation, startup and shakedown of a battery automation line and related tools. In the event the Company does not achieve certain funding conditions and the DOE chooses not to continue funding, the Company may need to seek alternative sources of capital, which may not be available on favorable terms or at all.
Financing Arrangements
The Company has historically relied on outside capital to fund its cost structure and expects this reliance to continue for the foreseeable future until the Company reaches profitability through its planned revenue generating activities. The Company has sufficient working capital for the next twelve months, however the Company may rely upon profitability and outside capital in the long term. During 2025, the Company closed on the following capital transactions:
In January 2025, the final $40.5 million draw under the Delayed Draw Term Loan was funded, resulting in $38.5 million of cash proceeds after discount. Additionally, as part of the strategic investment under the Credit and Guaranty Agreement, the Company may access a $105.0 million Revolving Facility at the sole discretion of the Lenders as the Delayed Draw Term Loan has been fully funded as of January 24, 2025.
In May 2025, the Company announced an offering of 18,750,000 shares of common stock with an option, exercisable within 30 days after May 29, 2025, to purchase up to an additional 2,812,500 shares of the Company's common stock at a price to the public of $4.00 per share. The Underwriters exercised this option to purchase additional shares in full. The issuance and sale of 21,562,500 shares of the Company's common stock was completed in June 2025, raising net proceeds of $81.1 million.
In June 2025, the Company issued $225.0 million of aggregate principal amount of May 2025 Convertible notes in a private offering. The Company granted initial purchasers an option to purchase, for settlement within a period of thirteen days from the date the May 2025 Convertible Notes were first issued, up to an additional $25.0 million principal amounts which were exercised in full. In June 2025, $250.0 million aggregate principal amount of the May 2025 Convertible Notes were issued, raising net proceeds of $240.0 million.
In November 2025, the Company issued $525.0 million of aggregate principal amount of November 2025 Convertible Notes in a private offering. The Company granted initial purchasers an option to purchase, for settlement within a period of thirteen days from the date the November 2025 Convertible Notes were first issued, up to an additional $75.0 million principal amounts which were exercised in full. In November 2025, $600.0 million aggregate principal amount of the November 2025 Convertible Notes were issued, raising net proceeds of $580.5 million. Until shareholder approval is obtained to authorize additional common stock, the notes are required to be settled entirely in cash.
Additionally in November 2025, the Company entered into certain share purchase agreements, by the Company, pursuant to which the Company agreed to sell 35,855,647 shares of the Company's common stock in a registered direct offering at a price of $12.78 per share. The issuance and sale of 35,855,647 shares of the Company's common stock was completed on November 24, 2025, raising proceeds of $458.2 million.
As of December 31, 2025, the Company had drawn down $90.9 million under the DOE Loan Facility, utilizing the full commitment available for Tranche 1. The initial draw of $68.3 million was made for eligible project costs
incurred through December 6, 2024. The second draw of $22.7 million was made for eligible project costs incurred through June 4, 2025. These costs represent Tranche 1 that provided $90.9 million for eligible costs in connection with the design, construction, installation, startup and shakedown of a battery automation line and related tools. See Note 13, Borrowingsand Note 20, Shareholders' Equityfor all of the Company's outstanding debt and equity transactions.
As of the date the accompanying Consolidated Financial Statements were issued (the "issuance date"), management evaluated the significance of the following negative financial conditions in accordance with Accounting Standard Codification 205-40, Going Concern: As a growth company in the early commercialization stage of its lifecycle, Eos is subject to inherent risks and uncertainties associated with the development of an enterprise. In this regard, substantially all of the Company's efforts historically have been devoted to the development and manufacturing of battery energy storage systems and complementary products and services, recruitment of management and technical staff, deployment of capital to expand the Company's operations to meet customer demand and raising capital to fund the Company's development. As a result of these efforts, the Company has incurred significant losses and negative cash flows from operations since its inception.
During the year ended December 31, 2025, the Company achieved a series of significant operational, commercial, financial and strategic milestones that collectively strengthened its liquidity position and long-term outlook. Throughout 2025, the Company expanded its market presence through new orders while also enhancing its technology portfolio with the launch of DawnOS, a proprietary U.S.-engineered battery management and analytics platform. The Company executed several successful financing arrangements of outside capital, including proceeds from the Delayed Draw Term Loan ($38.5 million), equity offerings ($539.3 million), warrant exercises ($108.6 million), convertible note issuances (net proceeds of $240.0 million in May 2025 and $580.5 million in November 2025), and proceeds from the DOE ($22.7 million), collectively raising approximately $1.5 billion during the year. The Company repurchased $122.9 million in principal and $3.1 million of interest payable of the 2021 Convertible Notes for $126.0 million, net of repurchase premium returned to the Company, $200.0 million in principal of the May 2025 Convertible Notes for $564.6 million and made a $50.0 million partial repayment of the Delayed Draw Term Loan, resulting in net proceeds from financing transactions of $789.2 million. These achievements, combined with ongoing operational improvements such as reduced manufacturing cycle times, raw material cost reductions and consistent milestone execution, substantially enhanced liquidity and financial flexibility.
The Company considered the covenants in place as of December 31, 2025 which relate to the Credit Agreement and the DOE Loan Facility which contain certain quarterly financial covenants. These covenants include (a) Minimum Liquidity, (b) Minimum Consolidated EBITDA and (c) Minimum Consolidated Revenue (collectively, the "financial covenants"). As of the fiscal quarter ended December 31, 2025, the only financial covenant in effect was Minimum Liquidity. As of December 31, 2025, the Company was in compliance with this covenant, as well as all non-financial covenants and expects to remain in compliance with the Minimum Liquidity covenant over the next twelve months beyond the issuance date. The Minimum Consolidated EBITDA and Minimum Consolidated Revenue financial covenants are effective starting fiscal quarter ending March 31, 2027.
In light of the significant amount of capital raised in 2025 and our anticipated ability to meet the covenants associated with the debt instruments held by the Company, management has concluded that there is no longer substantial doubt about our ability to continue as a going concern within one year after the date that the Consolidated Financial Statements are issued.
Capital Expenditures
The Company expects capital expenditures and working capital requirements to increase as it seeks to execute its growth strategy, total capital expenditures for the years ended December 31, 2025 and 2024 were $54.7 million, $33.2 million, respectively. See Note 7, Property, Plant and Equipmentand Note 8, Intangible Assetsfor further discussion.
Discussion and Analysis of Cash Flows
The Company relies heavily on private placement of convertible notes, term loans, equipment financing and issuance of common stock and warrants. Our short-term working capital needs are primarily related to funding of debt interest payments, repayment of debt principal, product manufacturing, research and development and general corporate expenses. The Company's long-term working capital needs are primarily related to repayment of long-term debt obligations and capital expenses for capacity expansion and maintenance, equipment upgrades and repair of equipment.
The following table summarizes our cash flows from operating, investing and financing activities for the periods presented.
| For the Years Ended December 31, | ||||||||||||||
| ($ in thousands) | 2025 | 2024 | ||||||||||||
| Net cash used in operating activities | $ | (211,190) | $ | (153,936) | ||||||||||
| Net cash used in investing activities | $ | (54,691) | $ | (33,186) | ||||||||||
| Net cash provided by financing activities | $ | 787,088 | $ | 205,834 | ||||||||||
Cash flows from operating activities:
Cash flows used in operating activities primarily comprise of costs related to research and development, manufacturing of products, project commissioning and other general and administrative activities.
Net cash used in operating activities of $211.2 million for the year ended December 31, 2025 was primarily driven by a net loss of $969.6 million, adjusted for non-cash items of $746.4 million. Non-cash items included stock-based compensation expense, depreciation and amortization, non-cash interest expense, loss on debt extinguishment, induced conversion expense, loss from the write-down of property, plant and equipment and changes in the fair value of debt, warrants and derivatives. The net cash inflow from changes in operating assets and liabilities of $12.1 million was primarily driven by an increase in accounts payable of $62.1 million and accrued expenses of $3.3 million, partially offset by an increase in inventory of $22.4 million, grant receivable of $8.7 million, accounts receivable of $4.0 million, vendor deposits $2.9 million and a decrease in contract liabilities of $8.9 million.
Net cash used in operating activities of $153.9 million for the year ended December 31, 2024 was primarily driven by a net loss of $685.9 million, adjusted for non-cash items of $549.2 million. Non-cash items primarily related to stock compensation expense, depreciation and amortization, non-cash interest expense, gain on debt extinguishment, loss from the write-down of property, plant and equipment, and changes in fair value of debt, warrants and derivatives. The net cash outflows from changes in operating assets and liabilities of $17.2 million was primarily driven by an increase in inventory of $20.5 million, decrease in accrued expenses of $14.7 million, and increase in contract assets of $5.7 million, partially offset by an increase in contract liabilities of $19.7 million.
Cash flows from investing activities:
Cash flows from investing activities:
Net cash flows used in investing activities for the year ended December 31, 2025 were primarily composed of payments made for purchases of property, plant and equipment of $53.8 million.
Net cash flows used in investing activities for the year ended December 31, 2024 were primarily composed of payments made for purchases of property, plant and equipment of $33.2 million.
Cash flows from financing activities:
Net cash provided by financing activities was $787.1 million for the year ended December 31, 2025. This was primarily due to the proceeds received from the issuance of common stock of $539.3 million, the November 2025 Convertible Notes of $580.5 million, May 2025 Convertible Notes of $240.0 million, exercise of warrants of $108.6 million, Credit and Securities Purchase Transaction of $38.5 million and DOE Loan of $22.7 million. The proceeds were partially offset by the partial payoff of the May 2025 Convertible Notes of $558.2 million, payoff of the 2021 Convertible Notes of $130.9 million, partial payoff of the DDTL of $50.0 million, debt issuance costs related to the Credit and Securities Purchase Transaction and DOE Loan of $7.0 million and payments on the equipment financing facility of $1.6 million.
Net cash provided by financing activities was $205.8 million for the year ended December 31, 2024. This was primarily due to the proceeds received from the Credit and Securities Purchase Transaction of $160.3 million, DOE Loan of $66.6 million, and issuance of common stock of $14.1 million. The proceeds were partially offset by payoff of the Senior Secured Term Loan of $19.9 million, debt issuance costs related to the Credit and Securities Purchase Transaction and DOE Loan of $18.1 million, payments on the equipment financing facility of $3.3 million and share repurchases from employees for tax withholding of $1.2 million.
Contractual Obligations
The Company has certain obligations and commitments to make future payments under contracts. As of December 31, 2025, this is comprised of the following:
•Future lease payments, including interest, under non-cancellable operating and financing leases of $58.9 million. The leases expire at various dates prior to 2039. See Note 15, Leases to our Consolidated Financial Statements included elsewhere in this Annual Report.
•Principal and Interest payments related to the following debt obligations. See Note 13, Borrowings to our Consolidated Financial Statements included elsewhere in this Annual Report.
| Future Debt Payments | |||||
|
Delayed Draw Term Loan - due June 2034 (1)(2)
|
348,386 | ||||
|
Equipment financing facility - due April 2026
|
382 | ||||
|
DOE Loan Facility - due June 2034 (1) (2)
|
120,284 | ||||
|
May 2025 Convertible Notes - due June 2030
|
65,187 | ||||
|
November 2025 Convertible Notes - due December 2031
|
663,204 | ||||
| Total | $ | 1,197,443 | |||
(1) As of December 31, 2025, the Company is obligated to repay future contractual interest payments for these borrowings in-kind.
(2)The DDTL and DOE Loan Facility contain springing maturity dates that could make the debt payments March 14, 2030 ("Springing Maturity").
Critical Accounting Estimates
Our Consolidated Financial Statements are prepared in conformity with U.S. generally accepted accounting principles. In preparing our Consolidated Financial Statements, we make assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We regularly reevaluate our assumptions, judgments and estimates.
Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and could have a material impact on our financial condition or results of operations.
Warranty Liability
The Company generally provides a standard warranty. We also provide extended warranties and performance guarantees, which are identified as separate performance obligations in the Company's contracts with customers. We accrue warranty reserves at the time of recording the sale. Warranty reserves include management's best estimate of the projected costs to repair or to replace any items under warranty, which is based on various factors including actual claim data to date, results of lab testing, factory quality data and field monitoring. Due to limited claim experience since commercialization of our product, and the potential for variability in these underlying factors, the difference between our estimated costs and our actual costs could be material to our Consolidated Financial Statements. If actual product failure rates or the frequency or severity of reported claims differ from our estimates, we may be required to revise our estimated warranty liability. We will also update actual warranty experience to determine warranty reserves as such experience becomes available. We review our reserves at least quarterly, seeking to ensure that our accruals are adequate in meeting expected future warranty obligations, and we will adjust our estimates as needed. Initial warranty data can be limited at the early stage in the commercialization of our products and, the adjustments that we record may be material. Thus, it is likely that as we sell additional BESS, we will acquire additional information on the projected costs to repair or replace items under warranty and may need to make additional adjustments (See Note 10, Accrued Expenses to our Consolidated Financial Statements included elsewhere in this Annual Report).
Warrants Liability
The Company estimated the fair value of the April 2023 warrants, the May 2023 warrants and the December 2023 warrants using the Black-Scholes model at inception and on subsequent valuation dates. This model incorporates inputs such as the stock price of the Company, exercise price, risk-free interest rate, expected volatility and time to expiration. The expected volatility involves unobservable inputs classified as Level 3 of the fair value hierarchy. The sensitivity of the fair value calculation to this assumption could create materially different results under different conditions or using different assumptions. See Note 16, Fair Value Measurement to our Consolidated Financial Statements included elsewhere in this Annual Report.
Convertible Notes and Embedded Derivatives
The Company estimated the fair value of the embedded conversion features in the May 2025 Convertible Notes, November 2025 Convertible Notes, 2021 Convertible Notes and the AFG Convertible Notes using a binomial lattice model at inception and on subsequent valuation dates. This model incorporates inputs such as the stock price of the Company, dividend yield, risk-free interest rate, the effective debt yield and expected volatility. The effective debt yield and volatility involve unobservable inputs classified as Level 3 of the fair value hierarchy. The sensitivity of the fair value calculation to these methods, assumptions and estimates included could create materially different results under different conditions or using different assumptions. See Note 16, Fair Value Measurements to our Consolidated Financial Statements included elsewhere in this Annual Report.
Instruments issued under the Credit and Securities Purchase Transaction (see Note 16, Fair Value Measurement)
The fair value of the Delayed Draw Term Loan was estimated using a discounted cash flow ("DCF") method, based on the contractual cash flows discounted at an effective debt yield. The fair value of the loan commitment asset was estimated using the discounted cash flow model, based on the contractual cash flows discounted at the effective debt yield and considering the probability of achieving certain milestones. The fair value for the SPA Warrant is estimated based on its intrinsic value, using the Eos common stock closing price adjusted by a discount for lack of marketability ("DLOM"), less the exercise price of $0.01 for the SPA Warrant. A DLOM was applied considering the SPA Warrants are unregistered. The fair value of the Contingent Warrants is estimated based on the underlying Eos common stock closing price adjusted by a DLOM using a Black-Scholes model, considering the probability of achieving certain milestones. A DLOM was applied considering the Contingent Warrants are unregistered. The fair values for all these instruments are designated as level 3 measurements as they rely on significant unobservable inputs. The significant unobservable inputs for each of these instruments are detailed in Note 16, Fair Value Measurement), which include debt yield, DLOM and milestones achievement expectations. The sensitivity of the fair value calculation to debt yield, DLOM and milestones achievement expectations could create materially
different results under different conditions or using different assumptions.
DOE Warrants
The fair value for the DOE Warrants is estimated based on their intrinsic value, using the Eos common stock closing price adjusted by a DLOM less the exercise price of $0.01. A DLOM was applied considering the DOE Warrants are unregistered. The fair values for these instruments are designated as level 3 measurements as they rely on significant unobservable inputs. The sensitivity of the fair value calculation to these methods, assumptions and estimates could create materially different results under different conditions or using different assumptions.
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