Eos Energy Enterprises(EOSE) - 2024 Q2 - Quarterly Report

Legal and Litigation Matters - A class action lawsuit was settled with a payment of 8,500, fully funded by the company's D&O liability insurance policies, with the company retaining approximately 1,000 for legal fees[136] - Another class action lawsuit alleges violations of federal securities laws, with the company denying the allegations and vigorously defending against the action[137] Financial Performance and Expenses - Revenue for Q2 2024 increased by $0.6 million (261$0.9 million, driven by higher product component and commissioning sales[167] - Cost of goods sold for Q2 2024 increased by $2.9 million (26$14.1 million, primarily due to project commissioning costs and new manufacturing line implementation[168] - Research and development expenses decreased by $0.8 million (15$4.3 million in Q2 2024, driven by lower spending on materials and supplies[170] - Selling, general, and administrative expenses decreased by $1.8 million (14$11.3 million in Q2 2024, primarily due to lower legal expenses and stock compensation costs[173] - Interest expense related to the 2021 Convertible Note Payable was $3.48 million for Q2 2024, compared to$3.01 million in Q2 2023[175] - Total interest expense related to parties was $4.91 million for Q2 2024, a significant decrease from$14.76 million in Q2 2023[175] - The company recognized a gain on debt extinguishment of $68.5 million in Q2 2024 from the payoff of the Senior Secured Term Loan[179] - Other expense increased by$2.4 million in Q2 2024 compared to Q2 2023, primarily due to financing issuance costs[181] - Income tax expense was $8,000 for Q2 2024, up from$2,000 in Q2 2023[182] - Net cash used in operating activities was $66.8 million for the six months ended June 30, 2024, driven by a net loss of$74.9 million[194] - Net cash provided by financing activities was $50.0 million for the six months ended June 30, 2024, primarily due to proceeds from the Credit and Securities Purchase Transaction of$70.1 million[197] - Total capital expenditures for the six months ended June 30, 2024 were $10.3 million, compared to$10.1 million in the same period in 2023[191] - Net cash used in investing activities for the six months ended June 30, 2024 was $10.3 million, primarily for purchases of property, plant, and equipment[196] - The company's net cash used in operating activities for the six months ended June 30, 2023 was$75.6 million, driven by a net loss of $203.2 million[195] Stock and Compensation - Stock-based compensation expense for the three months ended June 30, 2024, was$1,857, with $90 from stock options and$1,767 from restricted stock units[138] - Total unrecognized compensation expense as of June 30, 2024, was $10,529 attributable to unvested restricted stock units, expected to be recognized over a weighted-average remaining vesting period of 2.0 years[140] Debt and Financing - The company entered into a Credit Agreement for a$210.5 million Delayed Draw Term Loan and a $105.0 million revolving credit facility[185] - Future debt obligations as of June 30, 2024 include$161.5 million for the Delayed Draw Term Loan and $134.3 million for the 2021 Convertible Note[200] - The fair value of the Delayed Draw Term Loan was estimated using a discounted cash flow method, with significant unobservable inputs such as debt yield and DLOM[204] Liquidity and Cash Position - The company had$52.5 million in unrestricted cash and cash equivalents as of June 30, 2024[187] - The company's liquidity and ability to continue as a going concern is subject to substantial doubt[188] - The company raised $14.1 million through the sale of 16,627,523 shares under the ATM offering program at an average price of$0.87 per share[189] - Secured a strategic investment of up to $315.5 million from Cerberus, with the first installment of$75.0 million funded on June 21, 2024[189] Supply Agreements and Partnerships - The company entered into a long-term supply agreement with a minimum volume commitment in June 2022, and is currently negotiating an extension to the agreement[135] - The company entered into a supply agreement with TETRA Technologies for electrolyte products and a pricing agreement with SABIC for conductive composite thermoplastic[165] Technology and Product Development - The company's Znyth™ technology battery energy storage system is designed to manage grid complexity and price volatility, with the Z3 battery module being the core of its innovative systems[158] - The company's growth strategy includes increasing sales of battery energy storage systems and related software and services through a direct sales team and sales channel partners[159] - The Z3 battery reduces cost and weight, improves manufacturability, and offers 2x energy density per square foot with 50% fewer cells and 98% fewer welds compared to Gen 2.3[160] - The Z3 battery transition is underway, with the first semi-automated manufacturing line installed and commercial production started[160] - The company expects the Z3 battery to enable multiple daily cycles with the same safety, reliability, and recyclability as previous models[160] Government and Tax Incentives - The company received a Conditional Commitment Letter from the DOE for a loan of up to $398.6 million to fund 80$398.6 million through the Clean Energy Financing Program[187] Leases and Future Obligations - The company has future lease payments of $5.0 million under non-cancellable operating and financing leases, expiring prior to 2028[199] Accumulated Deficit - The company has an accumulated deficit of$950.7 million as of June 30, 2024[187]