PART I. FINANCIAL INFORMATION Item 1. Financial Statements For the six months ended June 30, 2025, ESS Tech, Inc. reported total revenue of $3.0 million, a slight decrease from $3.1 million in the prior year period, and a net loss of $29.1 million, an improvement from a $40.3 million loss. The balance sheet shows a significant decline in liquidity, with cash and cash equivalents dropping to $0.8 million from $13.3 million at year-end 2024. The company used $30.6 million in cash from operations. Crucially, the report raises substantial doubt about the company's ability to continue as a going concern due to recurring losses and insufficient cash to fund operations for the next 12 months - The company's financial statements have been prepared on a going concern basis, but management has identified substantial doubt about its ability to continue as a going concern for the next 12 months due to recurring operating losses, negative cash flows, and a low cash balance of $0.8 million as of June 30, 20253233 Condensed Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $797 | $13,341 | | Short-term investments | $0 | $18,263 | | Total current assets | $11,167 | $43,364 | | Total assets | $39,617 | $71,813 | | Liabilities & Equity | | | | Total current liabilities | $23,957 | $27,602 | | Total liabilities | $36,313 | $42,929 | | Total stockholders' equity | $3,304 | $28,884 | Condensed Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $2,358 | $348 | $2,957 | $3,086 | | Gross profit (loss) | $(5,101) | $(11,400) | $(13,248) | $(19,788) | | Loss from operations | $(11,557) | $(23,125) | $(29,703) | $(42,619) | | Net loss | $(11,056) | $(21,940) | $(29,082) | $(40,250) | | Net loss per share | $(0.90) | $(1.87) | $(2.39) | $(3.45) | Condensed Statement of Cash Flows Summary (in thousands) | Cash Flow Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(30,597) | $(34,131) | | Net cash provided by investing activities | $16,920 | $50,187 | | Net cash provided by financing activities | $803 | $57 | | Net change in cash, cash equivalents and restricted cash | $(12,874) | $16,113 | - Subsequent to the quarter end, the company engaged in several critical financing activities, including a $25.0 million Standby Equity Purchase Agreement (SEPA), a $10.5 million sale and leaseback of a production line with UOP, and $0.9 million in bridge financing from directors and management949596 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on its iron flow battery technology and recent strategic developments aimed at improving liquidity, including a Standby Equity Purchase Agreement (SEPA), a sale-leaseback transaction, and bridge financing. The analysis highlights a 578% increase in revenue for Q2 2025 YoY, driven by related-party sales, but a 4% decrease for the six-month period. Operating expenses decreased significantly due to cost-saving initiatives. The company reiterates the substantial doubt about its ability to continue as a going concern, citing recurring losses and a critical need for additional financing to meet near-term operating cash flow requirements, despite implementing cost reduction measures like employee furloughs - The company is focused on establishing attractive margin unit economics by reducing production costs through design optimization, supply chain projects, and manufacturing automation for its Energy Base product110 - Recent developments post-quarter end include a $25.0 million Standby Equity Purchase Agreement (SEPA), a $10.5 million sale and leaseback of a production line with UOP, and $0.9 million in bridge financing to improve liquidity102103104 Results of Operations Comparison (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,358 | $348 | 578% | $2,957 | $3,086 | (4)% | | Gross profit (loss) | $(5,101) | $(11,400) | (55)% | $(13,248) | $(19,788) | (33)% | | Total operating expenses | $6,456 | $11,725 | (45)% | $16,455 | $22,831 | (28)% | | Net loss | $(11,056) | $(21,940) | (50)% | $(29,082) | $(40,250) | (28)% | - The company has implemented significant cost reduction and cash conservation measures, including an employee furlough as of May 30, 2025, to align costs with business continuity. Despite these measures, substantial doubt exists about its ability to continue as a going concern without additional financing143144 - The Inflation Reduction Act (IRA) and the One Big Beautiful Bill Act (OBBB) are expected to positively impact gross margins through Production Tax Credits (PTC), though legislative changes create some uncertainty for customers116117 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide the information for this item - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, ESS Tech, Inc. is not required to provide quantitative and qualitative disclosures about market risk165 Item 4. Controls and Procedures Management, including the principal executive officer and principal financial officer, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025. There were no material changes in internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2025167 - There were no changes in the company's internal control over financial reporting during the fiscal quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls168 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings, nor is it aware of any material legal proceedings threatened against it - The company reports that it is not currently a party to any material legal proceedings and is not aware of any material legal proceedings being threatened against it171 Item 1A. Risk Factors The company outlines numerous significant risks, with key concerns including its early stage of commercialization, reliance on third-party suppliers, and potential for manufacturing delays and quality control issues. A major risk highlighted is the company's history of losses and the substantial doubt about its ability to continue as a going concern, which necessitates raising additional capital in the near future. Other risks involve the ability to control costs, achieve profitability, market acceptance of its technology over competitors like lithium-ion, potential product recalls, and failure to convert non-binding orders into sales - The company faces significant barriers in producing its energy storage products at a commercial scale and is in the early stages of commercialization, with risks that it may not generate significant revenues or achieve profitability173175 - There is substantial doubt about the company's ability to continue as a 'going concern' due to a history of losses and the need to raise additional capital in the near future, which may not be available on acceptable terms178214 - The business depends on third-party suppliers for key components and is vulnerable to delays, quality issues, and cost increases in its supply chain, which could harm manufacturing and commercialization efforts173181 - The company's ability to become profitable is impaired if it cannot adequately control operational costs, reduce its cost structure, and effectively scale its manufacturing operations173190 - On March 24, 2025, the company received a notice from the NYSE for non-compliance with the minimum market capitalization standard, and failure to regain compliance could result in delisting376377378 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no sales of equity securities during the period that were not registered under the Securities Act and not previously reported on a Form 8-K - The company reports no unregistered sales of equity securities during the period covered by the report that were not previously disclosed in a Form 8-K394 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None395 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable396 Item 5. Other Information During the three months ended June 30, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025397 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including the company's articles of incorporation, bylaws, warrant agreements, and various certifications by the CEO and CFO
ESS Tech(GWH) - 2025 Q2 - Quarterly Report