[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section outlines the nature of forward-looking statements and associated risks and uncertainties - This section contains forward-looking statements regarding future results, financial condition, business strategy, and management objectives, which involve known and unknown risks, uncertainties, and other important factors beyond the company's control[10](index=10&type=chunk) - Key areas of forward-looking statements include changes in strategy, expansion plans, customer opportunities, market acceptance of business model, brand development, industry developments, impact of health epidemics (e.g., COVID-19), intellectual property protection, capital requirements, and funding ability[13](index=13&type=chunk) - Investors should not rely on forward-looking statements as predictions of future events, as actual results, events, or circumstances could differ materially due to risks and uncertainties described in the 'Risk Factors' section[11](index=11&type=chunk) [Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20Financial%20Information) This part contains the company's unaudited financial statements and management's analysis [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements and accompanying notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show a significant increase in assets and a shift to positive stockholders' equity | Item | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cash and cash equivalents | $ 249,649 | $ 105,125 | | Restricted cash | $ 25,086 | $ — | | Accounts receivable | $ 22,824 | $ — | | Contract assets | $ 24,714 | $ — | | Total current assets | $ 331,694 | $ 110,663 | | Total Assets | $ 338,549 | $ 125,294 | | Total current liabilities | $ 34,700 | $ 7,343 | | Total liabilities | $ 38,239 | $ 11,251 | | Convertible preferred stock | $ — | $ 182,709 | | Total stockholders' equity (deficit) | $ 300,310 | $ (68,666) | | Total Liabilities, Convertible Preferred Stock, and Stockholders' Equity (Deficit) | $ 338,549 | $ 125,294 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The statements detail revenue generation in 2022 alongside increased operating expenses and net loss | Item | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Revenue | $ 1,694 | $ — | $ 45,555 | $ — | | Cost of revenue | $ 1,623 | $ — | $ 2,194 | $ — | | Sales and marketing | $ 3,758 | $ 169 | $ 8,287 | $ 443 | | Research and development | $ 16,731 | $ 1,697 | $ 36,155 | $ 4,920 | | General and administrative | $ 12,960 | $ 3,759 | $ 33,434 | $ 8,620 | | Asset impairment | $ 2,828 | $ (11) | $ 2,828 | $ 2,733 | | Loss from operations | $ (36,206) | $ (5,614) | $ (37,343) | $ (16,716) | | Change in fair value of warrant liability | $ 6,706 | $ — | $ 2,061 | $ — | | Transaction costs | $ — | $ — | $ (20,586) | $ — | | Net loss | $ (28,765) | $ (6,163) | $ (55,022) | $ (18,589) | | Net loss per share — basic and diluted | $ (0.21) | $ (0.45) | $ (0.46) | $ (1.54) | | Weighted average shares outstanding — basic and diluted | 140,302 | 13,598 | 118,560 | 12,094 | [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) These statements track changes in equity, highlighting the conversion of preferred stock post-merger | Item | Balance at June 30, 2022 (in thousands) | Balance at September 30, 2022 (in thousands) | | :--------------------------------------- | :-------------------------------------- | :--------------------------------------- | | Common Stock (Shares) | 134,441 | 137,839 | | Common Stock (Amount) | $ 13 | $ 14 | | Additional Paid-In Capital | $ 402,004 | $ 424,499 | | Accumulated Deficit | $ (95,223) | $ (123,988) | | Accumulated Other Comprehensive Income (Loss) | $ (208) | $ (215) | | Total Stockholders' Equity | $ 306,586 | $ 300,310 | | Item | Balance at December 31, 2021 (in thousands) | Balance at September 30, 2022 (in thousands) | | :--------------------------------------- | :-------------------------------------- | :--------------------------------------- | | Convertible Preferred Stock (Shares) | 85,741 | — | | Convertible Preferred Stock (Amount) | $ 182,709 | $ — | | Common Stock (Shares) | 20,432 | 137,839 | | Common Stock (Amount) | $ — | $ 14 | | Additional Paid-In Capital | $ 713 | $ 424,499 | | Accumulated Deficit | $ (68,966) | $ (123,988) | | Accumulated Other Comprehensive Income (Loss) | $ (413) | $ (215) | | Total Stockholders' Equity (Deficit) | $ (68,666) | $ 300,310 | - The conversion of convertible preferred stock into common stock in connection with the reverse recapitalization resulted in a reclassification of **$182.7 million** from convertible preferred stock to common stock and additional paid-in capital[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The statements summarize cash movements from operating, investing, and financing activities | Cash Flow Activity | Nine Months Ended September 30, 2022 (in thousands) | Nine Months Ended September 30, 2021 (in thousands) | | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net cash used in operating activities | $ (47,795) | $ (14,075) | | Net cash used in investing activities | $ (2,679) | $ (76) | | Net cash provided by financing activities | $ 220,207 | $ 119,668 | | Effect of exchange rate changes on cash, cash equivalents, and restricted cash | $ (123) | $ 723 | | Net increase in cash, cash equivalents, and restricted cash | $ 169,610 | $ 106,240 | | Cash, cash equivalents, and restricted cash – end of the period | $ 274,735 | $ 116,291 | | Cash and cash equivalents - end of period | $ 249,649 | $ 116,291 | | Supplemental Disclosures of Cash Flow Information | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | | :------------------------------------------------ | :----------------------------------- | :----------------------------------- | | Income taxes paid | 3 | 1 | | Cash paid for interest | 1 | 50 | | Reclassification of inventory costs | — | 10,812 | | Supplemental Disclosures of Non-Cash Investing and Financing Information | Nine Months Ended September 30, 2022 | Nine Months Ended September 30, 2021 | | :----------------------------------------------------------------------- | :----------------------------------- | :----------------------------------- | | Conversion of redeemable preferred stock into common stock | 182,709 | — | | Warrants assumed as part of reverse recapitalization | 19,838 | — | | Actuarial gain on pension | 561 | 295 | | Assets acquired on finance lease | 35 | 43 | | Purchases of intangible assets recorded in accrued liabilities | — | 119 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of the accounting policies and figures in the financial statements [NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS](index=13&type=section&id=NOTE%201.%20ORGANIZATION%20AND%20DESCRIPTION%20OF%20BUSINESS) This note describes the company's business, its reverse recapitalization, and inherent operational risks - Energy Vault develops sustainable, grid-scale energy storage solutions to advance the transition to a carbon-free, resilient power grid[30](index=30&type=chunk) - The company's business model includes building/transferring energy storage projects, operating systems as equity sponsor, selling energy management software, and entering into intellectual property license and royalty agreements[35](index=35&type=chunk) - The Merger with Novus Capital Corporation II on February 11, 2022, was accounted for as a **reverse recapitalization**, with Novus treated as the acquired company[32](index=32&type=chunk) - As an early-stage clean energy company, Energy Vault is subject to risks such as dependence on key individuals, the need for commercially viable products, competition, protection of proprietary technology, and the need for adequate additional financing[34](index=34&type=chunk) [NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=14&type=section&id=NOTE%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details the key accounting principles and policies applied in the financial statements - The company reports its operating results and financial information in **one operating and reportable segment**[46](index=46&type=chunk) - As an emerging growth company, Energy Vault has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[41](index=41&type=chunk) - Transaction costs related to the Merger totaled **$44.8 million**, with $24.2 million recorded as a reduction of proceeds in additional paid-in-capital and $20.6 million expensed immediately upon closing[47](index=47&type=chunk) - Warrants for common stock not indexed to the company's own stock are accounted for as **liabilities at fair value** and are subject to remeasurement at each balance sheet date, with changes recognized in the consolidated statements of operations[48](index=48&type=chunk) - Earn-Out Shares (9.0 million) are contingently issuable to Legacy Energy Vault stockholders based on specific stock price thresholds and were recognized at fair value in shareholders' equity upon the Merger closing[49](index=49&type=chunk) - Revenue from contracts with customers is recognized in accordance with ASC 606, with build-and-transfer energy storage projects recognized over time using the **percentage of completion method**, and intellectual property licensing recognized at a point in time[51](index=51&type=chunk)[58](index=58&type=chunk)[66](index=66&type=chunk) - A refundable contribution of **$22.5 million** to Atlas Renewable LLC is included in contract assets, to be refunded upon Atlas's first gravity energy storage system (GESS) reaching substantial completion and meeting performance metrics[70](index=70&type=chunk) [NOTE 3. REVERSE RECAPITALIZATION](index=19&type=section&id=NOTE%203.%20REVERSE%20RECAPITALIZATION) This note explains the accounting treatment and financial impact of the merger with Novus - On February 11, 2022, the company raised gross proceeds of **$235.8 million** from the Merger and PIPE financing, with net cash proceeds of **$191.0 million** after $44.8 million in transaction costs[79](index=79&type=chunk) - The Merger was accounted for as a **reverse recapitalization**, treating Novus as the acquired company, and Legacy Energy Vault's financial statements continued with the Merger being equivalent to Legacy Energy Vault issuing shares for Novus's net assets[80](index=80&type=chunk) | Item | Shares (in thousands) | | :--------------------------------------- | :-------------------- | | Legacy Energy Vault stock | 106,079 | | Novus public shares | 4,079 | | Novus sponsor shares | 3,975 | | PIPE shares | 19,500 | | **Total shares of Energy Vault common stock immediately after the Merger** | **133,633** | [NOTE 4. REVENUE RECOGNITION](index=20&type=section&id=NOTE%204.%20REVENUE%20RECOGNITION) This note breaks down revenue by category and details contract balances and performance obligations | Revenue Category | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | | :-------------------------------- | :--------------------------------------- | :--------------------------------------- | | Licensing of intellectual property | $ — | $ — | | Build and transfer energy storage products | $ 1,153 | $ — | | Other | $ 541 | $ — | | **Total revenue** | **$ 1,694** | **$ —** | | Revenue Category | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | | Licensing of intellectual property | $ 42,884 | $ — | | Build and transfer energy storage products | $ 1,153 | $ — | | Other | $ 1,518 | $ — | | **Total revenue** | **$ 45,555** | **$ —** | - For the nine months ended September 30, 2022, **one customer accounted for 97% of total revenue**, primarily from intellectual property licensing[87](index=87&type=chunk) - Remaining performance obligations totaled **$211.5 million** as of September 30, 2022, with the majority expected to be recognized as revenue within the next twelve months[88](index=88&type=chunk) | Contract Balances (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------------------- | :----------------- | :----------------- | | **Contract Assets:** | | | | Refundable contribution | $ 22,500 | $ — | | Unbilled receivables | $ 298 | $ — | | Retainage | $ 1,916 | $ — | | **Total Contract Assets** | **$ 24,714** | **$ —** | | **Contract Liabilities:** | | | | Current portion | $ 27,517 | $ — | | Long-term portion | $ 1,500 | $ 1,500 | | **Total Contract Liabilities** | **$ 29,017** | **$ 1,500** | [NOTE 5. FAIR VALUE MEASUREMENTS](index=21&type=section&id=NOTE%205.%20FAIR%20VALUE%20MEASUREMENTS) This note outlines the framework for measuring financial instruments at fair value | Financial Instruments (in thousands) | September 30, 2022 (Total) | December 31, 2021 (Total) | | :----------------------------------- | :------------------------- | :------------------------- | | Money market funds | $ 5,357 | $ 5,304 | | Derivative asset — conversion option | $ 1,025 | $ 350 | | Warrant liability | $ (271) | $ — | - The company categorizes assets and liabilities measured at fair value into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[93](index=93&type=chunk) [NOTE 6. RELATED PARTY TRANSACTIONS](index=22&type=section&id=NOTE%206.%20RELATED%20PARTY%20TRANSACTIONS) This note discloses transactions conducted with entities related to the company's officers or shareholders - Received a **$1.5 million deposit** for an EV1 tower from a customer owned by one of its primary shareholders; the order remains outstanding as of September 30, 2022[96](index=96&type=chunk) - Paid consulting fees of **$0.1 million** (three months) and **$0.3 million** (nine months) to the father of an executive officer for the periods ended September 30, 2022[97](index=97&type=chunk) - Paid EVx/EV1 prototype construction labor costs of **$0.1 million** (three months) and **$0.4 million** (nine months) to a company owned by the brother of an employee for the periods ended September 30, 2022[98](index=98&type=chunk) - Paid marketing costs of **$0.3 million** (three months) and **$0.8 million** (nine months) to a company whose director is also an Energy Vault executive officer for the periods ended September 30, 2022[99](index=99&type=chunk) [NOTE 7. CONVERTIBLE NOTE RECEIVABLE](index=22&type=section&id=NOTE%207.%20CONVERTIBLE%20NOTE%20RECEIVABLE) This note details the terms and accounting for a convertible note investment in DG Fuels, LLC - The company purchased a **$3.0 million convertible promissory note** from DG Fuels, LLC, with an annual interest rate of 10.0%[100](index=100&type=chunk)[104](index=104&type=chunk) - The note includes a discounted conversion rate (20% discount to issuance price) into DG Fuels' equity securities, which is considered an embedded derivative and recognized as an asset at fair value (**$1.025 million** as of September 30, 2022)[105](index=105&type=chunk)[106](index=106&type=chunk)[108](index=108&type=chunk) - The company's maximum exposure to loss related to DG Fuels, a variable interest entity, is limited to its **$3.0 million investment**[108](index=108&type=chunk) [NOTE 8. PROPERTY AND EQUIPMENT, NET](index=23&type=section&id=NOTE%208.%20PROPERTY%20AND%20EQUIPMENT,%20NET) This note provides a breakdown of property and equipment, including depreciation and impairment charges | Item | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Brick machines | $ 1,108 | $ 2,515 | | Demonstration & test equipment | $ 8,881 | $ 11,218 | | Total property and equipment | $ 11,091 | $ 14,263 | | Less: accumulated depreciation | $ (9,514) | $ (2,395) | | **Property and equipment, net** | **$ 1,577** | **$ 11,868** | - Depreciation and amortization related to property and equipment increased to **$7.6 million** for the nine months ended September 30, 2022, from $1.0 million in the prior year period[111](index=111&type=chunk) - The company recognized impairment charges of **$2.8 million** for both the three and nine months ended September 30, 2022, related to demonstration and test equipment and brick machines, due to the dismantling of the Commercial Demonstration Unit (CDU)[112](index=112&type=chunk) [NOTE 9. STOCKHOLDERS' EQUITY](index=24&type=section&id=NOTE%209.%20STOCKHOLDERS'%20EQUITY) This note describes the changes in stockholders' equity, including the conversion of preferred stock - Upon the closing of the Merger on February 11, 2022, **85.6 million shares** of redeemable convertible preferred stock were converted into 85.6 million shares of Energy Vault common stock, reclassifying **$182.0 million** from preferred stock to common stock and additional paid-in-capital[113](index=113&type=chunk) - Prior to the Merger, preferred stock holders were entitled to non-cumulative dividends at **8% per annum** (if declared), had conversion options to common stock, and specific liquidation preferences[115](index=115&type=chunk)[116](index=116&type=chunk)[120](index=120&type=chunk) - In connection with the reverse recapitalization, the company effectively issued **27.6 million new shares** of common stock and converted Legacy Energy Vault's common and preferred stock into **106.1 million new common shares**[123](index=123&type=chunk) [NOTE 10. WARRANTS](index=25&type=section&id=NOTE%2010.%20WARRANTS) This note details the status of public and private warrants, including redemption and fair value changes - Upon the Merger closing, the company assumed **9.6 million Public Warrants** and **5.2 million Private Warrants**, each exercisable for one common stock share at $11.50[124](index=124&type=chunk) - All outstanding Public Warrants were redeemed on August 1, 2022, for $0.10 per warrant or through cashless exercise, resulting in **no Public Warrants outstanding** as of September 30, 2022[128](index=128&type=chunk)[129](index=129&type=chunk) - Private Warrants (**5.167 million outstanding**) are exercisable on a cash or cashless basis and are not redeemable by the company if held by Novus or permitted transferees[130](index=130&type=chunk)[131](index=131&type=chunk) - The fair value measurement of Private Warrants transferred from Level 2 to **Level 3** after Public Warrant trading ceased, valued at **$0.05 per warrant** as of September 30, 2022, using a Black Scholes model[131](index=131&type=chunk) | Item | Nine Months Ended September 30, 2022 (in thousands) | | :--------------------------------------- | :-------------------------------------- | | Warrant liability assumed upon the Closing of the Merger | $ 19,838 | | Warrants exercised | $ (17,483) | | Warrants redeemed | $ (23) | | Change in fair value | $ (2,061) | | **End of period** | **$ 271** | [NOTE 11. STOCK-BASED COMPENSATION](index=27&type=section&id=NOTE%2011.%20STOCK-BASED%20COMPENSATION) This note outlines the company's equity incentive plans and associated compensation expenses - The company adopted the 2022 Equity Incentive Plan, reserving approximately **15.5 million shares**, plus up to 8.3 million shares from prior plans, with annual increases[140](index=140&type=chunk) | Stock Option Activity | Number of Options (in thousands) | Weighted Average Exercise Price Per Share | | :--------------------------------------- | :------------------------------- | :--------------------------------------- | | Balance as of December 31, 2021 | 1,345 | $ 0.79 | | Stock options exercised | (162) | $ 0.80 | | Stock options forfeited, canceled, or expired | (40) | $ 0.80 | | **Balance as of September 30, 2022** | **1,143** | **$ 0.79** | | RSU Activity | Share (in thousands) | Weighted Average Grant Date Fair Value per Share | | :--------------------------------------- | :------------------- | :----------------------------------------------- | | Nonvested balance as of December 31, 2021 | 6,170 | $ 2.11 | | RSUs granted | 13,281 | $ 9.08 | | RSUs forfeited | (516) | $ 5.58 | | RSUs vested | (4,450) | $ 1.06 | | **Nonvested balance as of September 30, 2022** | **14,485** | **$ 8.02** | | Stock-Based Compensation Expense (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | | Sales and marketing | $ 2,146 | $ 9 | | Research and development | $ 4,219 | $ 184 | | General and administrative | $ 4,529 | $ 9 | | **Total stock-based compensation expense** | **$ 10,894** | **$ 202** | | Stock-Based Compensation Expense (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :---------------------------------------------- | :----------------------------- | :----------------------------- | | Sales and marketing | $ 3,038 | $ 59 | | Research and development | $ 11,011 | $ 339 | | General and administrative | $ 12,708 | $ 54 | | **Total stock-based compensation expense** | **$ 26,757** | **$ 452** | - Total stock-based compensation expense for the nine months ended September 30, 2022, includes **$7.1 million** recognized upon the closing of the Merger[150](index=150&type=chunk) [NOTE 12. INCOME TAXES](index=30&type=section&id=NOTE%2012.%20INCOME%20TAXES) This note explains the company's income tax provision and the status of its deferred tax assets - The company recorded a tax provision of **$0.2 million** and **$0.4 million** for the three and nine months ended September 30, 2022, respectively, compared to no tax provision in the prior year periods[151](index=151&type=chunk) - A **valuation allowance** has been recorded against substantially all of the company's net deferred tax assets due to its history of losses, indicating it is not more likely than not that these assets will be realized[151](index=151&type=chunk) [NOTE 13. NET LOSS PER SHARE OF COMMON STOCK](index=30&type=section&id=NOTE%2013.%20NET%20LOSS%20PER%20SHARE%20OF%20COMMON%20STOCK) This note presents the calculation of net loss per share and details anti-dilutive securities | Net Loss Per Share | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net loss (in thousands) | $ (28,765) | $ (6,163) | $ (55,022) | $ (18,589) | | Weighted-average shares outstanding – basic and diluted | 140,302 | 13,598 | 118,560 | 12,094 | | Net loss per share – basic and diluted | $ (0.21) | $ (0.45) | $ (0.46) | $ (1.54) | - Basic and diluted net loss per share were the same for all periods presented due to net losses, which made the effect of potentially dilutive securities **anti-dilutive**[153](index=153&type=chunk) | Anti-Dilutive Common Share Equivalent Securities (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Private Warrants | 5,167 | — | 5,167 | — | | Stock options | 1,143 | 1,199 | 1,143 | 1,199 | | Convertible preferred stock | — | 85,741 | — | 85,741 | | RSUs | 14,485 | — | 14,485 | — | | Unvested Common Stock | — | 675 | — | 675 | | **Total** | **20,795** | **87,615** | **20,795** | **87,615** | [NOTE 14. COMMITMENTS AND CONTINGENCIES](index=31&type=section&id=NOTE%2014.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses the company's significant financial commitments and potential contingent liabilities - The company committed to a **$25.0 million** refundable contribution to Atlas Renewable LLC for the construction of its first Gravity Energy Storage System (GESS), with **$22.5 million** remitted as of September 30, 2022[156](index=156&type=chunk) - As of September 30, 2022, there was **$24.9 million** in letters of credit issued under the company's credit facilities, held by banks as collateral[157](index=157&type=chunk) - The company's non-cancellable purchase obligations totaled approximately **$23.9 million** as of September 30, 2022[233](index=233&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations [Our Business](index=32&type=section&id=Our%20Business) The company develops and deploys grid-scale energy storage solutions, including gravity and battery systems - Energy Vault develops sustainable, grid-scale energy storage solutions, including Gravity Energy Storage Systems (GESS), Battery Energy Storage Systems (BESS), and Energy Management Software (EMS), to facilitate the transition to a carbon-free power grid[160](index=160&type=chunk)[162](index=162&type=chunk) - The company's gravity-based solutions (EVx) offer long-duration energy storage (4-12 hours) with **over 80% round-trip efficiency**, utilizing custom composite blocks made from low-cost, locally sourced materials[162](index=162&type=chunk)[163](index=163&type=chunk)[166](index=166&type=chunk) - Energy Vault's BESSs provide short-duration energy storage (1-4 hours) with expected lives of 10-20 years, featuring a purpose-built AC block system and modular inverters[167](index=167&type=chunk) - The Energy Management Software (EVS) platform uses artificial intelligence and predictive analytics to optimize the economic dispatching of energy generation and storage assets, offered as SaaS or bundled with storage assets[168](index=168&type=chunk) [Recent Developments](index=33&type=section&id=Recent%20Developments) This section highlights key recent events, including major contracts, financing, and warrant redemption - In February 2022, Energy Vault announced a **$50.0 million IP licensing agreement** with Atlas Renewable LLC for gravity energy storage technology deployment in China, with **$45.0 million** collected as of September 30, 2022[169](index=169&type=chunk) - The company purchased a **$2.0 million convertible promissory note** from DG Fuels, LLC in April 2022, bearing an annual interest rate of 10.0%[172](index=172&type=chunk) - All outstanding public warrants were redeemed on August 1, 2022, resulting in **no public warrants remaining outstanding** as of September 30, 2022[173](index=173&type=chunk) - In August and September 2022, Energy Vault secured contracts with Jupiter Power and Wellhead Electric Company for battery energy storage projects totaling **385.2 MWh**, with expected completion in 2023[174](index=174&type=chunk)[175](index=175&type=chunk) [Business Combination and Public Company Costs](index=34&type=section&id=Business%20Combination%20and%20Public%20Company%20Costs) This section discusses the financial impact of the merger and the increased costs of being a public entity - The Merger with Novus Capital Corporation II on February 11, 2022, was accounted for as a **reverse recapitalization**, making Energy Vault a publicly reporting company trading on the NYSE under 'NRGV'[176](index=176&type=chunk)[177](index=177&type=chunk) - The company raised **$235.8 million in gross proceeds** from the Merger and PIPE financing, resulting in **$191.0 million in net cash proceeds** after $44.8 million in transaction costs[178](index=178&type=chunk)[179](index=179&type=chunk) - As a public company, Energy Vault expects to incur additional annual expenses for directors' and officers' liability insurance, director fees, and increased internal and external accounting, legal, and administrative resources[180](index=180&type=chunk) [Key Factors and Trends Affecting our Business](index=35&type=section&id=Key%20Factors%20and%20Trends%20Affecting%20our%20Business) This section discusses market trends and key factors influencing business performance and costs - The company's cost projections are highly dependent on raw materials (e.g., steel), equipment (e.g., motors, inverters), and technical/construction service providers, which are significantly impacted by **global supply chain disruptions**, economic uncertainties, and high inflation[182](index=182&type=chunk) - To date, only the Commercial Demonstration Unit (CDU) has operated; there are **no commercial installations** of the EVx system, and the EVx and EVRC platform designs are not yet finalized[183](index=183&type=chunk) - Future revenue growth is tied to the adoption of renewable energy storage systems, and the business depends on the **market acceptance** of its gravity-based technology against dominant alternatives like lithium-ion batteries[184](index=184&type=chunk) - The COVID-19 pandemic has caused economic uncertainty and delays in CDU construction, and its evolving factors may continue to impact the company's business, operations, and financial results[185](index=185&type=chunk) [Components of Results of Operations](index=35&type=section&id=Components%20of%20Results%20of%20Operations) This section breaks down the key components of the company's revenue and expense streams - Revenue is expected from four programs: Storage Asset Owners (customer owns system), Storage Service Customers (company retains ownership, sells power), Software as a Service (EMS), and Intellectual Property License and Royalty Agreements[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk) - Cost of revenue primarily includes subcontractor costs, direct labor, and consulting expenses for constructing energy storage systems and providing construction support services[191](index=191&type=chunk) - Sales and marketing, research and development, and general and administrative expenses are expected to increase due to expanded headcount, public company operating costs, and continued investment in product development[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - Asset impairment charges in 2022 relate to the dismantling of the Commercial Demonstration Unit (CDU) and production equipment for the EV1 Tower[195](index=195&type=chunk)[196](index=196&type=chunk) - Other income (expense) includes interest expense, changes in the fair value of warrant liability (primarily for private warrants after public warrant redemption), transaction costs related to the Merger, and net other income/expense from interest and foreign exchange[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [Key Operating Metrics](index=37&type=section&id=Key%20Operating%20Metrics) This section presents key performance indicators, including bookings and backlog, for the business | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | $ Change (3 Months) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | $ Change (9 Months) | | :---------------- | :------------------------------ | :------------------------------ | :------------------ | :----------------------------- | :----------------------------- | :------------------ | | Bookings [MWh] | 495 | — | 495 | 495 | — | 495 | | Bookings [$] | $ 206,794 | $ — | $ 206,794 | $ 256,794 | $ — | $ 256,794 | - Backlog, representing expected future revenue from uncompleted contracts and IP licensing, totaled **$211.5 million** as of September 30, 2022, with the majority expected to be realized within the next twelve months[202](index=202&type=chunk)[203](index=203&type=chunk) - The timing of revenue for construction projects in backlog is subject to change due to customer, regulatory, or other delays (e.g., supply chain, inflation, COVID-19), making backlog an **uncertain indicator** of future revenue and earnings[203](index=203&type=chunk) [Results of operations](index=38&type=section&id=Results%20of%20operations) This section provides a comparative analysis of the company's operational results over recent periods [Consolidated Comparison of Three and Nine Months Ended September 30, 2022 to September 30, 2021](index=38&type=section&id=Consolidated%20Comparison%20of%20Three%20and%20Nine%20Months%20Ended%20September%2030,%202022%20to%20September%2030,%202021) This section provides a detailed table comparing financial results for the three and nine-month periods | Item | 3 Months Ended Sep 30, 2022 (in thousands) | 3 Months Ended Sep 30, 2021 (in thousands) | $ Change (3 Months) | 9 Months Ended Sep 30, 2022 (in thousands) | 9 Months Ended Sep 30, 2021 (in thousands) | $ Change (9 Months) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------ | :--------------------------------------- | :--------------------------------------- | :------------------ | | Revenue | $ 1,694 | $ — | $ 1,694 | $ 45,555 | $ — | $ 45,555 | | Cost of revenue | $ 1,623 | $ — | $ 1,623 | $ 2,194 | $ — | $ 2,194 | | Sales and marketing | $ 3,758 | $ 169 | $ 3,589 | $ 8,287 | $ 443 | $ 7,844 | | Research and development | $ 16,731 | $ 1,697 | $ 15,034 | $ 36,155 | $ 4,920 | $ 31,235 | | General and administrative | $ 12,960 | $ 3,759 | $ 9,201 | $ 33,434 | $ 8,620 | $ 24,814 | | Asset impairment | $ 2,828 | $ (11) | $ 2,839 | $ 2,828 | $ 2,733 | $ 95 | | **Loss from operations** | **$ (36,206)** | **$ (5,614)** | **$ (30,592)** | **$ (37,343)** | **$ (16,716)** | **$ (20,627)** | | Change in fair value of warrant liability | $ 6,706 | $ — | $ 6,706 | $ 2,061 | $ — | $ 2,061 | | Transaction costs | $ — | $ — | $ — | $ (20,586) | $ — | $ (20,586) | | Other income (expenses), net | $ 920 | $ (549) | $ 1,469 | $ 1,205 | $ (1,866) | $ 3,071 | | **Loss before income taxes** | **$ (28,580)** | **$ (6,163)** | **$ (22,417)** | **$ (54,664)** | **$ (18,589)** | **$ (36,075)** | [Revenue](index=38&type=section&id=Revenue) This section details the sources of revenue for the reported three and nine-month periods - Revenue for the three months ended September 30, 2022, was **$1.7 million**, primarily from building and transferring energy storage products for Jupiter (68%) and construction support services for Atlas (32%)[207](index=207&type=chunk) - Revenue for the nine months ended September 30, 2022, was **$45.6 million**, primarily from **$42.9 million** related to the transfer of intellectual property to Atlas (97% of total revenue)[209](index=209&type=chunk)[210](index=210&type=chunk) [Operating expenses](index=39&type=section&id=Operating%20expenses) This section analyzes the changes and drivers for various operating expense categories - Cost of revenue was **$1.6 million** (Q3 2022) and **$2.2 million** (9M 2022), primarily from subcontractor and direct labor costs on battery storage projects with Jupiter and construction support services for Atlas[211](index=211&type=chunk)[212](index=212&type=chunk) - Sales and marketing expenses increased by **$3.6 million** (Q3) and **$7.9 million** (9M) in 2022, mainly due to increased personnel-related expenses and marketing/public relations costs[213](index=213&type=chunk)[214](index=214&type=chunk) - Research and development expenses increased by **$15.0 million** (Q3) and **$31.3 million** (9M) in 2022, driven by personnel costs, depreciation (CDU), engineering, and software expenses[215](index=215&type=chunk)[216](index=216&type=chunk) - General and administrative expenses increased by **$9.2 million** (Q3) and **$24.8 million** (9M) in 2022, primarily due to increased personnel-related expenses, legal/professional fees (public company costs), and insurance[217](index=217&type=chunk)[219](index=219&type=chunk) - Asset impairment was **$2.8 million** for both the three and nine months ended September 30, 2022, related to the dismantling of the CDU and brick machines[220](index=220&type=chunk) [Other Income (Expense)](index=40&type=section&id=Other%20Income%20(Expense)) This section explains non-operating income and expenses, including warrant value changes and transaction costs - The company recognized a gain of **$6.7 million** (Q3 2022) and **$2.1 million** (9M 2022) related to the change in fair value of warrant liability due to a decrease in the fair value of outstanding warrants[222](index=222&type=chunk) - Transaction costs of **$20.6 million** related to the consummation of the Merger were recognized during the nine months ended September 30, 2022[223](index=223&type=chunk) - Other income (expense), net, improved by **$1.4 million** (Q3) and **$3.1 million** (9M) in 2022, primarily due to an increase in interest income and positive fluctuations in foreign currency transactions[224](index=224&type=chunk)[225](index=225&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity, capital sources, and contractual obligations [Merger and PIPE](index=41&type=section&id=Merger%20and%20PIPE) This section specifies the net proceeds received from the business combination and PIPE financing - The Merger and PIPE financing completed on February 11, 2022, provided net proceeds of **$191.0 million**[227](index=227&type=chunk) [Short-Term Liquidity](index=41&type=section&id=Short-Term%20Liquidity) This section evaluates the company's ability to meet its short-term financial obligations | Item | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Cash, cash equivalents, and restricted cash | $ 274,735 | $ 105,125 | | Restricted cash | $ 25,086 | $ — | | **Cash and cash equivalents - end of period** | **$ 249,649** | **$ 105,125** | - Management believes its cash, cash equivalents, and restricted cash on hand as of September 30, 2022, will be **sufficient to fund operating activities** for at least the next twelve months[229](index=229&type=chunk) - The company may seek additional capital through equity and/or debt financings for future growth, which could result in dilution to stockholders or impose significant restrictions on operations[231](index=231&type=chunk) [Contractual Obligations](index=41&type=section&id=Contractual%20Obligations) This section summarizes the company's principal financial commitments and purchase obligations - Principal commitments as of September 30, 2022, include obligations under operating leases, finance leases, deferred pensions, a **$25.0 million** refundable contribution to Atlas (with $22.5 million remitted), and approximately **$23.9 million** in non-cancellable purchase obligations[232](index=232&type=chunk)[233](index=233&type=chunk) [Cash Flows](index=41&type=section&id=Cash%20Flows) This section analyzes the cash flows from operating, investing, and financing activities [Operating Activities](index=41&type=section&id=Operating%20Activities) This section details the cash used in the company's principal revenue-producing activities - Net cash used in operating activities totaled **$47.8 million** for the nine months ended September 30, 2022, negatively impacted by a net loss of $55.0 million and a $55.2 million increase in operating assets (contract assets, accounts receivable, prepaid expenses)[235](index=235&type=chunk) - Operating cash flows were positively impacted by **$35.5 million in non-cash charges** (stock-based compensation, depreciation, asset impairments) and a **$27.0 million increase in operating liabilities** (contract liabilities)[236](index=236&type=chunk) [Investing Activities](index=42&type=section&id=Investing%20Activities) This section details cash flows related to the acquisition of long-term assets and other investments - Net cash used in investing activities totaled **$2.7 million** for the nine months ended September 30, 2022, primarily for the purchase of a convertible note ($2.0 million) and property and equipment ($0.7 million)[238](index=238&type=chunk) [Financing Activities](index=42&type=section&id=Financing%20Activities) This section details cash flows from transactions with owners and creditors, including the merger proceeds - Net cash provided by financing activities totaled **$220.2 million** for the nine months ended September 30, 2022, mainly from proceeds from the reverse recapitalization and PIPE financing ($235.9 million) and warrant exercises ($7.9 million)[239](index=239&type=chunk) - These inflows were partially offset by **$20.7 million** in transaction cost payments related to the reverse recapitalization and **$3.0 million** in tax payments for equity awards[239](index=239&type=chunk) [Non-GAAP Financial Measure](index=42&type=section&id=Non-GAAP%20Financial%20Measure) This section presents and reconciles Adjusted EBITDA, a non-GAAP metric, to the GAAP net loss | Item | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net loss (GAAP) | $ (28,765) | $ (6,163) | $ (55,022) | $ (18,589) | | Interest income, net | $ (1,024) | $ (21) | $ (1,355) | $ (36) | | Income tax expense | $ 185 | $ — | $ 358 | $ — | | Depreciation and amortization | $ 5,158 | $ 529 | $ 7,562 | $ 976 | | Stock-based compensation expense | $ 10,894 | $ 202 | $ 26,757 | $ 452 | | Change in fair value of warrant liability | $ (6,706) | $ — | $ (2,061) | $ — | | Transaction costs | $ — | $ — | $ 20,586 | $ — | | Asset impairment | $ 2,828 | $ (11) | $ 2,828 | $ 2,733 | | Foreign exchange (gains) and losses | $ 219 | $ 550 | $ 163 | $ 1,889 | | **Adjusted EBITDA (non-GAAP)** | **$ (17,211)** | **$ (4,914)** | **$ (184)** | **$ (12,575)** | - **Adjusted EBITDA** is presented as a supplemental measure to GAAP net loss, excluding items like interest, taxes, depreciation, stock-based compensation, warrant liability changes, transaction costs, asset impairment, and foreign exchange gains/losses to better reflect continuing operations[243](index=243&type=chunk) - Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for GAAP measures, as it does not reflect cash expenditures, working capital needs, or all non-cash items[245](index=245&type=chunk) [Off-Balance Sheet Commitments and Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Commitments%20and%20Arrangements) This section confirms the absence of any off-balance sheet arrangements - The company has not entered into off-balance sheet arrangements as defined by SEC rules and regulations as of September 30, 2022[246](index=246&type=chunk) [Critical Accounting Policies and Use of Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) This section highlights accounting policies that require significant management judgment and estimation - Key critical accounting policies include **revenue recognition (ASC 606)**, stock-based compensation, defined benefit pension obligation, and warrant liability, all requiring significant management judgments, estimates, and assumptions[247](index=247&type=chunk)[249](index=249&type=chunk)[256](index=256&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk) - Revenue recognition for building energy storage projects uses the **percentage of completion method**, with estimates for variable consideration like liquidated damages[252](index=252&type=chunk)[254](index=254&type=chunk) - Stock-based compensation expense is measured based on estimated fair values using the **Black-Scholes option-pricing model**, with assumptions for expected term, volatility, risk-free interest rate, and dividend yield[258](index=258&type=chunk)[259](index=259&type=chunk) [Recently Adopted and Issued Accounting Pronouncements](index=46&type=section&id=Recently%20Adopted%20and%20Issued%20Accounting%20Pronouncements) This section discusses the impact of recently adopted and pending accounting standards - The company adopted ASU 2020-06 (simplifying accounting for convertible instruments) and ASU 2019-12 (simplifying income taxes) on January 1, 2022, with **no material impact** on its condensed consolidated financial statements[76](index=76&type=chunk)[77](index=77&type=chunk) - ASU 2016-13 (credit losses) will be effective for the fiscal year beginning January 1, 2023, and is **not expected to have a material impact**[75](index=75&type=chunk) - As an 'emerging growth company,' Energy Vault has elected to take advantage of the **extended transition period** for new or revised accounting standards[261](index=261&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to foreign currency and inflation risks - **Foreign currency risk** arises from international operations and definitive agreements denominated in currencies other than the U.S. dollar (e.g., Euro, Australian dollar, Brazilian real, Saudi riyal), where a strengthening U.S. dollar could increase solution costs for international customers[264](index=264&type=chunk) - **Inflation risk** primarily stems from higher material, labor, and construction costs, which, if not offset by price increases or other measures, could adversely affect the company's business, financial condition, and results of operations[265](index=265&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of disclosure controls and ongoing remediation of material weaknesses - Management concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2022, ensuring timely and accurate reporting of required information[267](index=267&type=chunk) - Previously identified **material weaknesses** in internal control over financial reporting related to the accounting treatment of warrants and the classification of Class A common stock subject to possible redemption[269](index=269&type=chunk)[270](index=270&type=chunk) - Remediation plans are underway, including hiring additional finance and accounting personnel, developing formal policies, and implementing new technological solutions, but these efforts are **not yet complete**[271](index=271&type=chunk) - The effectiveness of control systems is subject to inherent limitations, providing **reasonable assurance**, not absolute assurance, of achieving control objectives[273](index=273&type=chunk) [Part II - Other Information](index=48&type=section&id=Part%20II%20-%20Other%20Information) This part contains other required information, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings not expected to have a material adverse effect - Energy Vault is involved in legal proceedings arising in the ordinary course of business, which are **not expected to have a material adverse effect** on its business, financial condition, and results of operations[275](index=275&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This section details various factors that could materially and adversely affect the company's business [Risk Factor Summary](index=48&type=section&id=Risk%20Factor%20Summary) This section summarizes the most significant risks facing the company's business and operations - The company is an early-stage entity with a **history of losses**, expecting significant expenses and continuing losses, with no guarantee of future profitability[278](index=278&type=chunk)[280](index=280&type=chunk) - **Limited operating history** and a rapidly evolving industry make it difficult to evaluate the business, risks, and future prospects[278](index=278&type=chunk)[283](index=283&type=chunk) - Systems are in continuous refinement, with **no assurance of successful implementation** of improvements on schedule or that complex software/technology will perform as expected without defects[278](index=278&type=chunk)[285](index=285&type=chunk)[291](index=291&type=chunk) - Reliance on non-binding letters of intent, lengthy sales and installation cycles, and potential customer hesitancy towards novel technology could harm the business and lead to significant expenses without offsetting revenues[278](index=278&type=chunk)[289](index=289&type=chunk)[306](index=306&type=chunk)[347](index=347&type=chunk) - Dependence on suppliers for components and raw materials exposes the company to risks of delays, cancellations, and penalties due to **supply chain disruptions**[278](index=278&type=chunk)[319](index=319&type=chunk) [Risks Related to Energy Vault's Business and Industry](index=49&type=section&id=Risks%20Related%20to%20Energy%20Vault's%20Business%20and%20Industry) This section details operational, financial, and market risks inherent to the company's business - The company has incurred significant net losses since inception (accumulated deficit of **$124.0 million** as of Sep 30, 2022) and expects to continue incurring losses due to investments in manufacturing, sales, marketing, R&D, and infrastructure[280](index=280&type=chunk) - Ability to utilize net operating loss (NOL) carryforwards and other tax attributes may be **limited by ownership changes** under Sections 382 and 383 of the Internal Revenue Code, potentially increasing future tax liabilities[286](index=286&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk) - Customers may be hesitant to adopt the company's novel gravity-based energy storage technology over established alternatives like lithium-ion batteries, and there is **no assurance that complex systems will perform as expected** without defects[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk) - The capital-intensive business requires additional funding, and if adequate capital is not available on attractive terms, it could create substantial doubt about the company's ability to achieve profitability or **continue as a going concern**[303](index=303&type=chunk)[305](index=305&type=chunk) - **Lengthy sales and installation cycles** (18-36 months or more) for energy storage systems lead to significant expenses without guaranteed revenue and potential quarterly operating result fluctuations due to timing, cancellations, and external factors[306](index=306&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - Reliance on a limited number of third-party suppliers for raw materials and components (e.g., steel, microchips) exposes the company to **supply chain disruptions**, quality issues, and cost volatility, which could lead to installation delays, cancellations, and reputational damage[319](index=319&type=chunk)[320](index=320&type=chunk) - The company operates in **highly competitive energy markets** with larger, more resourced competitors, and its growth depends on maintaining relationships with third-party EPC firms and strategic partners, which may not be based on enforceable agreements or meet expectations[355](index=355&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk) - Changes in business, economic, or political conditions (e.g., cyclical downturns, global uncertainties like the war in Ukraine, inflation) are beyond the company's control and could impact demand for offerings, leading to lower revenues and adverse effects on operating results[379](index=379&type=chunk)[381](index=381&type=chunk)[382](index=382&type=chunk) - The **COVID-19 pandemic** has adversely affected operations, causing delays and increased costs, and its future impact remains uncertain; facilities and systems are also vulnerable to damage from other disasters[383](index=383&type=chunk)[385](index=385&type=chunk)[386](index=386&type=chunk)[388](index=388&type=chunk) - Future acquisitions are subject to risks like diversion of management resources, failure to generate expected financial results, and potential dilution; as a public company, significant increased expenses and administrative burdens are expected, and failure to maintain effective internal control over financial reporting could impair financial reporting and investor confidence[389](index=389&type=chunk)[390](index=390&type=chunk)[391](index=391&type=chunk)[392](index=392&type=chunk)[394](index=394&type=chunk)[395](index=395&type=chunk) [Risks Related to Government Regulation](index=68&type=section&id=Risks%20Related%20to%20Government%20Regulation) This section outlines risks associated with government regulations, incentives, and environmental compliance - The business relies heavily on government rebates, tax credits (e.g., **26% Investment Tax Credit** for combined storage projects), and other financial incentives, which are subject to reduction or elimination, potentially reducing demand for EVx systems[396](index=396&type=chunk)[397](index=397&type=chunk) - The company could be liable for **environmental damage** from its operations, impacting its reputation and financial results, especially given customers' high sustainability standards[398](index=398&type=chunk) - Actions by governmental authorities and local residents to restrict construction or use of systems (due to zoning, permitting, land use) could harm the business, causing delays and increased costs[399](index=399&type=chunk) - Changes in energy and environmental regulation, or enforcement policies, could adversely impact profitability, limit business activities, or expose the company to additional costs; licensing and operational requirements incur substantial compliance costs[400](index=400&type=chunk)[401](index=401&type=chunk)[402](index=402&type=chunk) - Litigation, regulatory actions, and compliance issues, including those related to privacy, information security, and data protection (e.g., GDPR), could lead to significant fines, penalties, and negative publicity[404](index=404&type=chunk)[405](index=405&type=chunk)[406](index=406&type=chunk) [Risks Related to Intellectual Property](index=70&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This section discusses risks related to protecting and defending the company's intellectual property - The company may be unable to protect, defend, maintain, or enforce its intellectual property (patents, trade secrets) against competitors, potentially leading to similar products, increased costs, or substantial liability from **third-party infringement claims**[407](index=407&type=chunk)[408](index=408&type=chunk)[412](index=412&type=chunk) - Pending patent applications may not result in issued patents or provide adequate protection, and **foreign patent enforcement can be less effective**, hindering the ability to prevent competitors from selling similar products[410](index=410&type=chunk) - Third-party claims of infringement, misappropriation, or other IP violations could be time-consuming and costly to defend, potentially requiring the company to cease selling products, pay damages, obtain licenses, or redesign products[412](index=412&type=chunk) [Risks Related to Ownership of Energy Vault's Securities](index=72&type=section&id=Risks%20Related%20to%20Ownership%20of%20Energy%20Vault's%20Securities) This section details risks for investors, including ownership concentration and potential stock price volatility - **Concentration of ownership** among executive officers, directors, and their affiliates (approximately **41.5%** as of Sep 30, 2022) may prevent new investors from influencing significant corporate decisions and could delay or prevent a change of control[414](index=414&type=chunk) - The company accounts for outstanding warrants as a **warrant liability**, requiring quarterly fair value determination, which could materially impact financial position and operating results and potentially affect the market price of common stock[415](index=415&type=chunk) - **Material weaknesses in internal control** over financial reporting (inherited from Novus) related to warrant accounting and stock classification could lead to litigation, loss of investor confidence, and a decline in stock price[416](index=416&type=chunk)[417](index=417&type=chunk)[418](index=418&type=chunk) - **Anti-takeover provisions** in the company's certificate of incorporation, bylaws, and Delaware law could make an acquisition more difficult and prevent attempts by stockholders to replace or remove current management[431](index=431&type=chunk)[433](index=433&type=chunk) - The exercise of outstanding warrants (**5,166,666 private warrants** as of Aug 2, 2022) would increase the number of shares eligible for future resale, resulting in **dilution to stockholders** and potentially adversely affecting the market price[434](index=434&type=chunk) - The company has **no current plans to pay cash dividends** on its common stock for the foreseeable future, meaning investors may not receive any return on investment unless they sell shares for a price greater than paid[425](index=425&type=chunk) - The issuance of additional shares of common stock or other equity securities (e.g., from the 2022 Equity Incentive Plan) would **dilute existing ownership interests** and may depress the market price of common stock[426](index=426&type=chunk)[427](index=427&type=chunk) - The sale or possibility of sale of additional securities by selling security holders (e.g., Novus's Founders, Legacy Energy Vault stockholders) at prices significantly less than $10.00 per share may negatively impact the market price of common stock[427](index=427&type=chunk)[428](index=428&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Information regarding unregistered sales of equity securities is incorporated by reference from Form 8-K - Information required by Item 2 is contained in the company's Current Report on Form 8-K, originally filed on February 14, 2022, and amended on March 31, 2022[435](index=435&type=chunk) [Item 3. Defaults Upon Senior Securities](index=76&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities for the period - No defaults upon senior securities were reported[436](index=436&type=chunk) [Item 4. Mine Safety Disclosures](index=76&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Item 4. Mine Safety Disclosures is not applicable to the company[437](index=437&type=chunk) [Item 5. Other Information](index=76&type=section&id=Item%205.%20Other%20Information) This section details the adoption of an inducement award plan and new executive employment agreements - The company adopted the 2022 Employment Inducement Award Plan, reserving **8,000,000 shares** of common stock for issuance to newly hired or rehired employees as a material inducement[438](index=438&type=chunk) - Robert Piconi (President and CEO) entered a new employment agreement with an annual base salary of **$690,000**, a target annual discretionary bonus of 100% of base salary, and annual equity awards at least four times the sum of his base salary and target bonus[440](index=440&type=chunk) - Jan Kees Van Gaalen (CFO, effective Nov 16, 2022) has an annual base salary of **$375,000**, a target annual cash bonus of 100% of base salary, and RSU awards covering 250,000 shares (time-based) and 350,000 shares (performance-based)[444](index=444&type=chunk)[445](index=445&type=chunk) - Marco Terruzzin (Chief Commercial and Product Officer) entered a new employment agreement with an annual base salary of **$375,000** and a target annual cash bonus of 50% of base salary[449](index=449&type=chunk) - Executive employment agreements include severance provisions for qualifying terminations, with enhanced benefits (e.g., accelerated vesting, increased cash payments) if termination occurs within 18 months following a change in control[441](index=441&type=chunk)[442](index=442&type=chunk)[446](index=446&type=chunk)[450](index=450&type=chunk) [Item 6. Exhibits](index=79&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of all exhibits filed with the Quarterly Report on Form 10-Q - Exhibits include offer letters for Robert Piconi, Jan Kees Van Gaalen, and Marco Terruzzin, detailing their employment terms[453](index=453&type=chunk) - The 2022 Employment Inducement Award Plan and related stock option/RSU grant notices and agreements are filed as exhibits[453](index=453&type=chunk) - Certifications of the Principal Executive Officer and Chief Financial Officer, required under SEC rules and the Sarbanes-Oxley Act, are included as Exhibits 31.1, 31.2, 32.1, and 32.2[453](index=453&type=chunk) [SIGNATURES](index=81&type=section&id=SIGNATURES) This section contains the official signatures of the company's certifying officers - The report is duly signed on behalf of Energy Vault Holdings, Inc. by Robert Piconi, Chief Executive Officer, and David Hitchcock, Interim Chief Financial Officer, on November 14, 2022[459](index=459&type=chunk)

Energy Vault Holdings, Inc. (NYSE:NRGV) Q2 2022 Results Conference Call August 8, 2022 8:00 AM ET Company Participants Laurence Alexander - CMO Robert Piconi - Chairman, CEO David Hitchcock - Interim CFO Conference Call Participants Joseph Osha - Guggenheim Partners Stephen Gengaro - Stifel Thomas Boyes - Cowen Brian Lee - Goldman Sachs Noel Parks - Tuohy Brothers Operator Ladies and gentlemen, good morning, and welcome to the Energy Vault Q2 FY '22 Earnings Conference Call. At this time, all participants a ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________ Commission file number 001-39982 ___________________________________ ENERGY VAULT HOLDINGS, INC. _____________________ ...

Energy Vault Holdings, Inc. (NYSE:NRGV) Q1 2022 Earnings Conference Call May 16, 2022 5:00 PM ET Company Participants Robert Piconi ??? Co-Founder, Chief Executive Officer David Hitchcock ??? Interim Chief Financial Of???cer Laurence Alexander ??? Chief Marketing Officer Conference Call Participants Stephen Gengaro ??? Stifel Financial Corp. Thomas Boyes Jr. Jr. ??? Cowen and Company Joseph Osha ??? Guggenheim Partners Brian J. Lee ??? Goldman Sachs Noel Parks ??? Touhy Brothers Investment Research Inc. Ope ...

[Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements regarding future operations, financial condition, business strategy, and plans, which are subject to known and unknown risks and uncertainties - This report contains forward-looking statements regarding future operations, financial condition, business strategy, and plans, which are subject to known and unknown risks and uncertainties that may cause actual results to differ materially[10](index=10&type=chunk)[11](index=11&type=chunk) - Key areas covered include expected benefits of the Merger, changes in strategy, expansion plans, customer opportunities, future financial position, projected costs, market acceptance, brand development, competitive landscape, impact of health epidemics, intellectual property protection, emerging growth company status, future capital requirements, and business opportunities[10](index=10&type=chunk)[13](index=13&type=chunk) Part I - Financial Information [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Energy Vault Holdings, Inc., including balance sheets, statements of operations and comprehensive loss, statements of convertible preferred stock and stockholders' deficit, and statements of cash flows, along with detailed notes explaining the company's organization, significant accounting policies, and specific financial items [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section details the company's financial position, highlighting significant changes in cash, total assets, liabilities, and stockholders' equity over the period Condensed Consolidated Balance Sheets (In thousands) | (In thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $303,518 | $105,125 | | Accounts receivable | $30,002 | — | | Total current assets | $338,061 | $110,663 | | Total Assets | $351,534 | $125,294 | | **Liabilities, Convertible Preferred Stock, and Stockholders' Equity (Deficit)** | | | | Accounts payable | $3,516 | $1,979 | | Accrued expenses | $1,305 | $4,704 | | Total current liabilities | $5,486 | $7,343 | | Deferred revenue | $8,616 | $1,500 | | Warrant liability | $40,075 | — | | Total liabilities | $56,299 | $11,251 | | Convertible preferred stock (Dec 31, 2021) | — | $182,709 | | Convertible preferred stock (Mar 31, 2022) | $675 | — | | Total stockholders' equity (deficit) | $295,235 | $(68,666) | | Total Liabilities, Convertible Preferred Stock, and Stockholders' Equity (Deficit) | $351,534 | $125,294 | - Cash and cash equivalents **increased significantly by $198,393 thousand** from December 31, 2021, to March 31, 2022[15](index=15&type=chunk) - Total assets **increased by $226,240 thousand**, driven primarily by the increase in cash and the recognition of accounts receivable[15](index=15&type=chunk) - Total liabilities **increased by $45,048 thousand**, largely due to the new warrant liability of **$40,075 thousand** and an increase in deferred revenue[15](index=15&type=chunk) - Stockholders' equity **shifted from a deficit of $(68,666) thousand to a positive equity of $295,235 thousand**, reflecting the impact of the reverse recapitalization and PIPE financing[15](index=15&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) This section outlines the company's financial performance, including revenue, operating expenses, and net loss, for the specified periods Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data) | (In thousands except per share data) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenue | $42,884 | $— | | Sales and marketing | $2,580 | $85 | | Research and development | $9,661 | $1,021 | | General and administrative | $9,806 | $1,855 | | Income (loss) from operations | $20,837 | $(2,961) | | Change in fair value of derivative | $— | $(24,102) | | Change in fair value of warrant liability | $(20,237) | $— | | Transaction costs | $(20,586) | $— | | Net loss | $(20,079) | $(28,995) | | Net loss per share of common stock — basic and diluted | $(0.25) | $(2.67) | | Weighted average shares of common stock — basic and diluted | 80,806 | 10,861 | | Total comprehensive loss | $(19,895) | $(27,579) | - The company recognized **$42.9 million in revenue** for the three months ended March 31, 2022, compared to no revenue in the prior year period[17](index=17&type=chunk) - Operating expenses **increased significantly across all categories year-over-year**, with sales and marketing up **2,935.3%**, R&D up **846.2%**, and G&A up **428.6%**[17](index=17&type=chunk)[168](index=168&type=chunk) - Net loss **improved to $(20.1) million** in Q1 2022 from **$(29.0) million** in Q1 2021, despite new expenses related to warrant liability changes and transaction costs, due to revenue generation and the absence of derivative fair value changes[17](index=17&type=chunk) [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Deficit](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Deficit) This section details changes in the company's convertible preferred stock and stockholders' deficit, reflecting the impact of the reverse recapitalization and PIPE financing - The balance of convertible preferred stock at December 31, 2021, was **$182,709 thousand**, which was largely converted into common stock and additional paid-in capital during Q1 2022 due to the reverse recapitalization[20](index=20&type=chunk) - Additional paid-in capital **increased substantially from $713 thousand** at December 31, 2021, to **$383,821 thousand** at March 31, 2022, reflecting the impact of the reverse recapitalization and PIPE financing[20](index=20&type=chunk) - Accumulated deficit **increased from $(68,966) thousand to $(89,045) thousand**, primarily due to the net loss incurred during the three months ended March 31, 2022[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities, showing the overall change in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (In thousands) | (In thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(16,811) | $(6,004) | | Net cash used in investing activities | $(83) | $(3) | | Net cash provided by financing activities | $215,304 | $14,674 | | Net increase in cash | $198,393 | $10,728 | | Cash and cash equivalents – end of the period | $303,518 | $20,779 | - Net cash used in operating activities **increased to $(16.8) million** in Q1 2022 from **$(6.0) million** in Q1 2021, primarily due to a net loss and an increase in operating assets (accounts receivable)[22](index=22&type=chunk)[185](index=185&type=chunk) - Net cash provided by financing activities **significantly increased to $215.3 million** in Q1 2022, driven by **$235.9 million** from the reverse recapitalization and PIPE financing, partially offset by **$20.7 million** in transaction costs[22](index=22&type=chunk)[188](index=188&type=chunk) - The company experienced a net increase in cash of **$198.4 million** in Q1 2022, resulting in an ending cash balance of **$303.5 million**[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's organization, significant accounting policies, and specific financial items supporting the consolidated financial statements - Energy Vault develops sustainable, grid-scale energy storage solutions, focusing on proprietary gravity-based technology and energy management software, aiming to accelerate decarbonization[24](index=24&type=chunk)[134](index=134&type=chunk) - The company completed a reverse recapitalization on February 11, 2022, through a merger with Novus Capital Corporation II, resulting in Energy Vault Holdings, Inc. becoming a public company[26](index=26&type=chunk)[66](index=66&type=chunk)[144](index=144&type=chunk) - In Q1 2022, the company recognized **$42.9 million** in intellectual property licensing revenue from Atlas Renewable LLC, an investor in its PIPE financing[55](index=55&type=chunk)[57](index=57&type=chunk)[169](index=169&type=chunk) - The company assumed **9.6 million** Public Warrants and **5.2 million** Private Warrants upon the Merger closing, which are classified as liabilities and remeasured at fair value each period, resulting in a **$20.2 million** change in fair value expense in Q1 2022[100](index=100&type=chunk)[112](index=112&type=chunk)[175](index=175&type=chunk) - Total stock-based compensation expense for Q1 2022 was **$9.2 million**, a significant increase from **$7 thousand** in Q1 2021, including **$7.1 million** recognized upon the Merger closing[126](index=126&type=chunk) - The company has committed to a **$25.0 million** refundable contribution to Atlas Renewable LLC during the construction of its first gravity energy storage system, which will be refunded upon substantial completion and performance metric achievement[132](index=132&type=chunk)[182](index=182&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Energy Vault's financial performance, including a business overview, recent developments, key factors influencing the business, a detailed comparison of operating results for the three months ended March 31, 2022 and 2021, and an analysis of liquidity and capital resources - Energy Vault's core business involves developing gravity-based energy storage technology (EVx and EVRC systems) and AI-driven energy management software to address renewable energy intermittency and grid reliability[134](index=134&type=chunk)[135](index=135&type=chunk)[137](index=137&type=chunk) - The company completed a License and Royalty agreement with Atlas Renewable LLC in February 2022, generating **$42.9 million** in IP licensing fees in Q1 2022 for deployment in mainland China and SARs[142](index=142&type=chunk)[169](index=169&type=chunk) - The Merger with Novus Capital Corporation II on February 11, 2022, resulted in **$191.0 million** in net cash proceeds and a reverse recapitalization accounting treatment, making Energy Vault a public company[144](index=144&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk) - Key factors affecting the business include product development and deployment challenges (e.g., supply chain impacts, design finalization), the nascent and competitive energy storage industry, and the ongoing uncertainties from the COVID-19 pandemic[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) Consolidated Comparison of Three Months Ended March 31, 2022 to March 31, 2021 (In thousands, except percentages) | | Three months ended March 31, 2022 | Three months ended March 31, 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $42,884 | $— | $42,884 | — % | | Sales and marketing | $2,580 | $85 | $2,495 | 2,935.3 % | | Research and development | $9,661 | $1,021 | $8,640 | 846.2 % | | General and administrative | $9,806 | $1,855 | $7,951 | 428.6 % | | Income (loss from operations) | $20,837 | $(2,961) | $23,798 | (803.7)% | | Change in fair value of derivative | $— | $(24,102) | $24,102 | (100.0) % | | Change in fair value of warrant liability | $(20,237) | $— | $(20,237) | — % | | Transaction costs | $(20,586) | $— | $(20,586) | — % | | Net loss before income taxes | $(19,951) | $(28,995) | $9,044 | (31.2)% | - The company's cash and cash equivalents **increased to $303.5 million** as of March 31, 2022, from **$105.1 million** at December 31, 2021, primarily due to the net proceeds from the Merger and PIPE financing[180](index=180&type=chunk) - Management believes current cash and cash equivalents are **sufficient to fund operating activities for at least the next twelve months**, but additional financing may be sought for future growth or business combinations[180](index=180&type=chunk)[181](index=181&type=chunk) Adjusted EBITDA Reconciliation (In thousands) | | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net loss (GAAP) | $(20,079) | $(28,995) | | Non-GAAP Adjustments: | | | | Interest income, net | $(47) | $(8) | | Income tax expense | $128 | $— | | Depreciation and amortization | $1,218 | $17 | | Stock-based compensation expense | $9,202 | $7 | | Change in fair value of warrant liability | $20,237 | $— | | Transaction costs | $20,586 | $— | | Foreign exchange (gains) and losses | $(11) | $1,940 | | Change in fair value of derivative liability | $— | $24,102 | | Adjusted EBITDA (non-GAAP) | $31,234 | $(2,937) | - Adjusted EBITDA **improved significantly to $31.2 million** in Q1 2022 from **$(2.9) million** in Q1 2021, reflecting the impact of revenue generation and non-cash adjustments[190](index=190&type=chunk) - Critical accounting policies include revenue recognition (ASC 606), stock-based compensation, defined benefit pension obligation, and warrant liability valuation[195](index=195&type=chunk)[196](index=196&type=chunk)[199](index=199&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, specifically foreign currency fluctuations and inflation, and their potential impact on financial performance - The company faces foreign currency risk as certain agreements may be denominated in non-U.S. dollar currencies (Euro, AUD, BRL, SAR), and a strengthening U.S. dollar could increase solution costs for international customers[207](index=207&type=chunk)[289](index=289&type=chunk) - A growing portion of operating expenses is incurred in foreign currencies (Euro, Swiss franc), making the company susceptible to exchange rate fluctuations[207](index=207&type=chunk)[289](index=289&type=chunk) - Inflation risk primarily stems from potential higher material, labor, and construction costs, which may not be fully offset by price increases, adversely affecting business and financial results[208](index=208&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures, addresses previously identified material weaknesses in internal control over financial reporting, and outlines the ongoing remediation efforts - Management concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2022[210](index=210&type=chunk) - Previously reported **material weaknesses** in internal control over financial reporting related to the accounting treatment of warrants and the classification of Class A common stock subject to possible redemption[211](index=211&type=chunk)[212](index=212&type=chunk) - Remediation plans include hiring additional finance and accounting personnel, developing formal policies and procedures, and adopting new technological solutions, though full remediation is still ongoing[213](index=213&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal proceedings that arise in the ordinary course of business, but the outcomes are not expected to have a material adverse effect on its business, financial condition, or results of operations - Energy Vault is involved in ordinary course legal proceedings[217](index=217&type=chunk) - The outcome of these proceedings is **not expected to have a material adverse effect** on the company's business, financial condition, or results of operations[217](index=217&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section details a comprehensive list of risk factors that could materially and adversely affect Energy Vault's business, financial condition, results of operations, and prospects, spanning across the company's business and industry, government regulation, intellectual property, and ownership of its securities [Risk Factor Summary](index=37&type=section&id=Risk%20Factor%20Summary) This section provides a high-level overview of the primary risks facing the company, including its early-stage nature, operational challenges, supply chain dependencies, and potential stock price impacts - The company is an early-stage company with a history of losses and expects continued losses, making future profitability **uncertain**[220](index=220&type=chunk)[228](index=228&type=chunk) - Challenges include continuous refinement of system engineering, **uncertainty** of non-binding agreements leading to sales, customer hesitation towards novel technology, potential defects in complex software/hardware systems, and lengthy sales/installation cycles[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) - Supply chain failures for necessary components or raw materials could cause installation delays and reputational damage[226](index=226&type=chunk) - The sale of securities by selling security holders may negatively impact the market price of common stock[227](index=227&type=chunk) [Risks Related to Energy Vault's Business and Industry](index=38&type=section&id=Risks%20Related%20to%20Energy%20Vault's%20Business%20and%20Industry) This section details risks inherent to the company's business and the energy storage industry, covering operational history, technology adoption, system defects, financing dependencies, international expansion, and pandemic impacts - The company has a **limited operating history** and has not yet deployed commercial EVx or EVRC systems, making future revenue and expense predictions difficult[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) - Ability to utilize net operating loss (NOL) carryforwards **may be limited** due to ownership changes, potentially increasing future tax obligations[234](index=234&type=chunk)[235](index=235&type=chunk) - Customer adoption of the company's novel gravity-based energy storage technology is **uncertain**, especially against established alternatives like lithium-ion batteries[236](index=236&type=chunk)[237](index=237&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) - The company **faces risks from potential defects** in complex software and technology systems, which could harm reputation, lead to lost revenue, and incur significant warranty expenses[238](index=238&type=chunk)[239](index=239&type=chunk)[242](index=242&type=chunk)[245](index=245&type=chunk) - Significant upfront costs of EVx systems mean customer purchases often **depend on third-party financing**, which may not always be available on attractive terms[277](index=277&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) - International expansion **exposes the company to risks** such as conformity with local customs, lack of government incentives, currency fluctuations, and compliance with diverse laws and regulations[285](index=285&type=chunk)[286](index=286&type=chunk)[289](index=289&type=chunk) - The ongoing COVID-19 pandemic has **adversely affected** global economic activity, causing construction delays and increased costs, and its future impact remains uncertain[330](index=330&type=chunk)[331](index=331&type=chunk)[333](index=333&type=chunk) [Risks Related to Government Regulation](index=58&type=section&id=Risks%20Related%20to%20Government%20Regulation) This section outlines risks associated with government regulations, including reliance on incentives, environmental liabilities, local restrictions, compliance costs, and evolving data protection laws - The business **relies on government rebates**, tax credits, and financial incentives, which if reduced or eliminated, could decrease demand and harm financial results[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) - The company **could be liable for environmental damage** from operations, leading to cleanup costs, fines, and reputational harm, especially given customers' high sustainability standards[344](index=344&type=chunk) - Local government and resident actions to restrict construction or use of systems (e.g., zoning, height restrictions) **could substantially harm business** and financial results[345](index=345&type=chunk) - Compliance with numerous federal, state, and local laws and regulations, including licensing and operational requirements, **incurs substantial costs**, and failure to comply could lead to legal penalties[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk) - Evolving laws and regulations related to privacy, information security, and data protection (e.g., GDPR) **could increase costs** and adversely affect business opportunities[352](index=352&type=chunk) [Risks Related to Intellectual Property](index=60&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This section addresses risks concerning the company's intellectual property, including challenges in protection, enforcement, and potential infringement claims from third parties - The company may be **unable to protect, defend, maintain, or enforce its intellectual property** (patents, trade secrets, trademarks) against competitors, potentially leading to similar products and hindering growth[353](index=353&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk) - Pending patent applications may not result in issued patents or provide adequate protection, and foreign patent enforcement can be **less effective** than in the U.S[356](index=356&type=chunk) - The company may **face third-party claims of infringement** or misappropriation of intellectual property, which could be costly to defend and result in substantial liability, including damages or injunctions[358](index=358&type=chunk)[359](index=359&type=chunk) [Risks Related to Ownership of Energy Vault's Securities](index=62&type=section&id=Risks%20Related%20to%20Ownership%20of%20Energy%20Vault's%20Securities) This section covers risks related to owning the company's securities, such as concentrated ownership, warrant accounting volatility, internal control weaknesses, disclosure exemptions, management experience, dividend policy, and stock price volatility - Concentrated ownership by executive officers, directors, and affiliates (approximately **38.5%** as of April 1, 2022) may **limit new investors' influence** on significant corporate decisions[361](index=361&type=chunk) - The accounting treatment of warrants as liabilities requires quarterly fair value remeasurement, which could **materially impact financial position** and operating results due to volatility[362](index=362&type=chunk) - Previously identified material weaknesses in internal control over financial reporting (warrant valuation, Class A common stock classification) could lead to litigation and **negatively impact investor confidence**[363](index=363&type=chunk)[364](index=364&type=chunk)[365](index=365&type=chunk) - As an 'emerging growth company' and 'smaller reporting company,' the company takes advantage of disclosure exemptions, which may make its securities **less attractive to investors** and its performance harder to compare[368](index=368&type=chunk)[369](index=369&type=chunk)[370](index=370&type=chunk) - The company's management has **limited experience operating a public company**, potentially leading to increased time devoted to regulatory compliance and higher operating costs[371](index=371&type=chunk) - The company has **no current plans to pay cash dividends**, meaning investors may only receive a return on investment by selling common stock at a higher price[373](index=373&type=chunk) - Issuance of additional common stock or equity securities (e.g., from warrants, incentive plans) could **dilute existing ownership interests** and depress the market price[374](index=374&type=chunk)[375](index=375&type=chunk) - The market price of the company's stock **may be volatile** due to various factors unrelated to operating performance, leading to potential investment losses[378](index=378&type=chunk)[379](index=379&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section refers to information regarding unregistered sales of equity securities and the use of proceeds, which is detailed in the company's Current Report on Form 8-K filed on February 14, 2022, and subsequently amended - Information on unregistered sales of equity securities and use of proceeds is contained in the Current Report on Form 8-K filed on February 14, 2022, and amended on March 31, 2022[385](index=385&type=chunk) [Item 3. Defaults Upon Senior Securities](index=66&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports that there have been no defaults upon senior securities during the period - There are no defaults upon senior securities[386](index=386&type=chunk) [Item 4. Mine Safety Disclosures](index=66&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Energy Vault Holdings, Inc - Mine Safety Disclosures are not applicable to the company[387](index=387&type=chunk) [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) This section provides an update on the Energy Storage System Agreement with DG Fuels LLC, detailing a planned expansion of the Louisiana project and an increase in total energy storage capacity - The Energy Storage System Agreement with DG Fuels LLC was amended on May 10, 2022[388](index=388&type=chunk) - The Louisiana project is planned to expand to up to **1,168 MWh** in storage capacity[388](index=388&type=chunk) - Energy Vault has agreed to provide up to **2.2 GWh** of energy storage for all projects associated with the DG Fuels Agreement[388](index=388&type=chunk) [Item 6. Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists all documents filed as exhibits to the Form 10-Q, including corporate governance documents, key agreements, and certifications - Key exhibits include Amended and Restated Bylaws and Certificate of Incorporation, Amended and Restated Registration Rights Agreement, 2022 Equity Incentive Plan, and an Amendment to the Energy Storage System Agreement with DG Fuels LLC[390](index=390&type=chunk) - Certifications from the Principal Executive Officer and Chief Financial Officer are included, as required by the Securities Exchange Act and Sarbanes-Oxley Act[390](index=390&type=chunk) [Signatures](index=71&type=section&id=Signatures) This section formally certifies the accuracy and completeness of the report by the principal executive and financial officers - The report is signed by Robert Piconi, Chief Executive Officer, and David Hitchcock, Interim Chief Financial Officer, on May 16, 2022[398](index=398&type=chunk)

Financial Performance - For the year ended December 31, 2021, the company reported a net loss of $3,338,538, which included formation and operational costs of $1,247,217 and a change in fair value of warrant liability of $1,865,833 [281]. - Cash used in operating activities for the year ended December 31, 2021, was $1,153,887, with a net loss impacted by interest earned on marketable securities of $15,823 [285]. IPO and Fundraising - The company completed its IPO on February 8, 2021, raising gross proceeds of $287,500,000 from the sale of 287,500,000 Units at $10.00 per Unit [283]. - The company incurred $6,224,714 in transaction costs related to the IPO, including $5,750,000 in underwriting fees [284]. Cash and Securities - As of December 31, 2021, the company had cash and marketable securities held in the trust account totaling $287,515,823, intended for completing a business combination [287]. - The company had cash of $396,295 held outside the trust account as of December 31, 2021, primarily for identifying and evaluating target businesses [288]. Debt and Financing - The company has no long-term debt or off-balance sheet financing arrangements as of December 31, 2021 [292]. Acquisition Plans - The company anticipates incurring significant costs in pursuing acquisition plans and cannot assure the success of completing a business combination [278]. - The company does not expect to generate operating revenues until after completing its initial business combination [279]. Equity Classification - The company’s Class A common stock subject to possible redemption is classified as temporary equity, reflecting certain redemption rights [300].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents (I.R.S. Employer Identification No.) Delaware 85-3230987 For the transition period from to Commission file number: 001-39982 8556 Oakmont Lane NOVUS CAPITAL CORPORATION II Indianapolis, IN 46260 (Address of principal executive offices) (Exact Name of Registrant as Specified in Its Charter) (State or other juri ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-39982 NOVUS CAPITAL CORPORATION II (Exact Name of Registrant as Specified in Its Charter) Delaware 85-3230987 (State or ot ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 2021 ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-39982 (Address of principal executive offices) (317) 590-6959 NOVUS CAPITAL CORPORATION II (Exact Name of Registrant as Specified in Its Ch ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-39982 Novus Capital Corporation II (Exact name of Registrant as specified in its Charter) | Delaware | 85-3230987 | | --- | --- | | (St ...