Eos Energy Enterprises, Inc.

Previous wording

The following discussion should be read in conjunction with the accompanying Unaudited Condensed Consolidated Financial Statements for the six months ended June 30, 2025 and 2024 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, including the financial statements and notes thereto.

Current wording

The following discussion should be read in conjunction with the accompanying Unaudited Condensed Consolidated Financial Statements for the nine months ended September 30, 2025 and 2024 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, including the financial statements and notes thereto.

Previous wording

Through June 30, 2025, the Company has received funding under the DOE Loan Facility for an aggregate amount of $68.3 million, at an interest rate of 4.791% for eligible project costs incurred through December 6, 2024. These costs are a portion of Tranche 1 of the DOE Loan Facility. Tranche 1 provides up to $90.9 million for eligible costs in connection with the design, construction, installation, startup and shakedown of a battery automation line and related tools, with a projected annual production capacity of approximately 1.25 GWh ("Line 1"). The DOE Loan Facility provides for up to $303.5 million in funding, including capitalized interest. On June 12, 2025, the Company delivered to the DOE and the FFB a second advance request, and on July 1, 2025, the FFB funded $22.7 million under the DOE Loan Facility (the “second loan advance”).

Current wording

Through September 30, 2025, the Company has received funding under the DOE Loan Facility for an aggregate amount of $90.9 million. The initial draw of $68.3 million was made at an interest rate of 4.791%, for eligible project costs incurred through December 6, 2024. The second draw of $22.7 million was made at an interest rate of 4.286%, for eligible project costs incurred through June 4, 2025. These costs are a portion of Tranche 1 of the DOE Loan Facility. Tranche 1 provides up to $90.9 million for eligible costs in connection with the design, construction, installation, startup and shakedown of a battery automation line and related tools, with a projected annual production capacity of approximately 1.25 GWh ("Line 1"). The DOE Loan Facility provides for up to $303.5 million in funding, including capitalized interest. On June 12, 2025, the Company delivered to the DOE and the FFB a second advance request, and on July 1, 2025, the FFB funded $22.7 million under the DOE Loan Facility (the “second loan advance”).

Previous wording

Production Tax Credits under Internal Revenue Code 45X (“PTC”) can be claimed on battery components manufactured in the U.S. and sold to U.S. or foreign customers. These tax credits available to manufacturers include a credit for ten percent of the cost incurred to make electrode active materials in addition to credits of $35 per kWh of capacity of battery cells and $10 per kWh of capacity of battery modules. These credits are cumulative, meaning that companies will be able to claim each of the available tax credits based on the battery components produced and sold through 2029, after which the PTC will begin to gradually phase down through 2032. In April 2024, the IRS issued final regulations related to applicable tax credit transferability and direct pay provisions of the Inflation Reduction Act. The Company has reviewed these regulations and believes they do not have a material impact on the financial statements.

Current wording

Production Tax Credits under Internal Revenue Code 45X (“PTC”) can be claimed on battery components manufactured in the U.S. and sold to U.S. or foreign customers. These tax credits available to manufacturers include a credit for ten percent of the cost incurred to make electrode active materials in addition to credits of $35 per kWh of capacity of battery cells and $10 per kWh of capacity of battery modules. These credits are cumulative, meaning that companies will be able to claim each of the available tax credits based on the battery components produced and sold through 2029, after which the PTC will begin to gradually phase down through 2032.

Previous wording

The OBBBA also introduces new limitations related to the sourcing of materials from foreign entities of concern (“FEOCs”) starting after December 31, 2025. These provisions restrict eligibility for credits where material assistance is received from such entities. Based on the Company’s current operations and supplier relationships, no material impact is expected from these provisions.

Current wording

The OBBBA also introduces new limitations related to the sourcing of materials from foreign entities of concern (“FEOCs”) starting after December 31, 2025. These provisions restrict eligibility for credits where material assistance is received from such entities. The Company is evaluating the future impact of the OBBBA; however, it does not anticipate a material impact from either the material sourcing or ownership-related provisions. The Company will evaluate additional guidance as it becomes available.

Previous wording

For the three months ended June 30, 2025, Revenue increased by $14.3 million or 1,597% from $0.9 million. For the six months ended June 30, 2025, Revenue increased by $18.2 million or 243% from $7.5 million. The increase for the three and six months is due to higher product sales and higher selling price.

Current wording

For the three months ended September 30, 2025, Revenue increased by $29.7 million or 3,473% from $0.9 million. For the nine months ended September 30, 2025, Revenue increased by $47.9 million or 573% from $8.4 million. The increase for the three and nine months was due to higher product sales and higher selling price.

Previous wording

For the three months ended June 30, 2025, Cost of goods sold increased by $32.1 million or 227% from $14.1 million. For the six months ended June 30, 2025, Cost of goods sold increased by $38.8 million or 92% from $42.4 million. The increase for the three and six months ended June 30, 2025 was primarily due to an increase in product sales volume, partially offset by a decrease in unit production cost.

Current wording

For the three months ended September 30, 2025, Cost of goods sold increased by $38.7 million or 150% from $25.8 million. For the nine months ended September 30, 2025, Cost of goods sold increased by $77.5 million or 114% from $68.1 million. The increase for the three and nine months ended September 30, 2025 was primarily due to an increase in product sales volume, partially offset by a decrease in unit production cost.

Previous wording

For the three months ended June 30, 2025, Research and development costs increased by $3.0 million or 69% from $4.3 million. For the six months ended June 30, 2025, Research and development costs increased by $4.6 million or 49% from $9.5 million. The increase for the three and six months was driven by higher payroll, stock based compensation and consulting costs for key growth areas in support of scaling the business.

Current wording

For the three months ended September 30, 2025, Research and development costs decreased by $0.5 million or 7% from $7.4 million. For the nine months ended September 30, 2025, Research and development costs increased by $4.1 million or 24% from $16.9 million. The decrease for the three months was driven by a reduction in materials and supplies costs. The increase for the nine months was driven by higher payroll, stock based compensation and consulting costs for key growth areas in support of scaling the business, partially offset by a reduction in materials and supplies costs.

Previous wording

For the three months ended June 30, 2025, Selling, general and administrative expenses increased by $14.2 million or 126% from $11.3 million. For the six months ended June 30, 2025, Selling, general and administrative expenses increased by $20.9 million or 82% from $25.5 million. The increase for the three and six months was primarily driven by payroll and stock based compensation costs relating to expanded headcount in key growth areas in support of scaling the business. The increase in Selling, general, and administrative expenses for the three and six months ended June 30, 2025 includes one-time costs of $3.7 million, which the Company does not expect to incur in future periods.

Current wording

For the three months ended September 30, 2025, Selling, general and administrative expenses increased by $2.0 million or 11% from $17.8 million. For the nine months ended September 30, 2025, Selling, general and administrative expenses increased by $22.9 million or 53% from $43.3 million. The increase for the three and nine months was primarily driven by payroll and stock based compensation costs relating to expanded headcount in key growth areas in support of scaling the business. The increase in Selling, general and administrative expenses for the three and nine months ended September 30, 2025 includes one-time costs of $0.2 million and $3.9 million, respectively, which the Company does not expect to incur in future periods.

Previous wording

The Company incurred a loss of $0.2 million and $0.3 million from write-down of property, plant and equipment for the three months ended June 30, 2025 and 2024, respectively, and a loss of $0.8 million and $0.3 million for the six months ended June 30, 2025 and 2024, respectively. The write-downs were mainly due to design changes from the Z3™-Phase 1 to Z3™-Phase 2 production in which the Phase 1 production assets could not be utilized or repurposed for Phase 2 production. Additionally, the loss from write-down of property, plant and equipment contains costs for disposal of miscellaneous equipment and tooling that cannot be repurposed for more automated processes.

Current wording

The Company incurred a loss of $0.6 million and $3.2 million from write-down of property, plant and equipment for the three months ended September 30, 2025 and 2024, respectively, and a loss of $1.4 million and $3.5 million for the nine months ended September 30, 2025 and 2024, respectively. The write-downs were mainly due to design changes from the Z3™-Phase 1 to Z3™-Phase 2 production in which the Phase 1 production assets could not be utilized or repurposed for Phase 2 production. Additionally, the loss from write-down of property, plant and equipment contains costs for disposal of miscellaneous equipment and tooling that cannot be repurposed for more automated processes.

Previous wording

Interest expense, net includes expenses for accrued interest, amortization of debt issuance costs and debt discounts, partially offset by capitalized interest costs on CIP assets. For the three and six months ended June 30, 2025, Interest expense, net decreased by $1.4 million and $5.5 million, respectively, mainly due to lower interest expense recognized from the Senior Secured Term Loan due to the payoff of the Atlas Credit Facility in 2024.

Current wording

Interest expense, net includes expenses for accrued interest, amortization of debt issuance costs and debt discounts, partially offset by capitalized interest costs on CIP assets. For the three months ended September 30, 2025, Interest expense, net increased by $4.7 million primarily due to interest expense relating to the 2025 Convertible Notes. For the nine months ended September 30, 2025, Interest expense, net decreased by $0.8 million, mainly due to lower interest expense recognized from the Senior Secured Term Loan due to the payoff of the Atlas Credit Facility in 2024, offset by interest expense relating to the 2025 Convertible Notes.

Previous wording

For the three and six months ended June 30, 2025 and 2024, the change in fair value of warrants was composed of the items below:

Current wording

For the three and nine months ended September 30, 2025 and 2024, the change in fair value of warrants was composed of the items below:

Previous wording

For the three and six months ended June 30, 2025, the Company recognized a loss on debt extinguishment of $49.1 million from the payoff of the 2021 Convertible Notes and prepayment of the Delayed Draw Term Loan.

Current wording

For the three months ended September 30, 2025, the Company recognized a loss on debt extinguishment of $3.6 million from the modification of the non-affiliate portion of the AFG Convertible Notes. For the nine months ended September 30, 2025, the Company recognized a loss on debt extinguishment of $52.7 million from the payoff of the 2021 Convertible Notes, prepayment of the Delayed Draw Term Loan and modification of the non-affiliate portion of the AFG Convertible Notes.

Previous wording

For the three and six months ended June 30, 2024, the Company recognized a gain on debt extinguishment of $68.5 million from the payoff of the Senior Secured Term Loan.

Current wording

For the nine months ended September 30, 2024, the Company recognized a gain on debt extinguishment of $68.5 million from the payoff of the Senior Secured Term Loan.

Previous wording

For the three months ended June 30, 2025, Other expense of $0.6 million primarily relates to costs associated with professional fees related to the Cerberus Amendments and extinguishment of the 2021 Convertible Notes. For the six months ended June 30, 2025, Other expense of $1.2 million primarily relates to costs associated with professional fees related to the Cerberus Amendments, extinguishment of the 2021 Convertible Notes and recognition of financing issuance costs from the Credit and Securities Purchase Transaction.

Current wording

For the three months ended September 30, 2025, Other expense of $0.3 million primarily relates to costs associated with professional fees related to the amendment of the AFG Convertible Notes. For the nine months ended September 30, 2025, Other expense of $1.5 million primarily relates to costs associated with professional fees related to the Cerberus Amendments, extinguishment of the 2021 Convertible Notes, recognition of financing issuance costs from the Credit and Securities Purchase Transaction and professional fees associated with the amendment of the AFG Convertible Notes.

Previous wording

For the three and six months ended June 30, 2024, Other expense of $3.3 million and $3.1 million, respectively, primarily relates to recognition of financing issuance costs from the Credit and Securities Purchase Transaction.

Current wording

For the three and nine months ended September 30, 2024, Other expense of $1.6 million and $4.7 million, respectively, primarily relates to recognition of financing issuance costs from the Credit and Securities Purchase Transaction.

Previous wording

The Company incurred income tax expense for the three and six months ended June 30, 2025 and 2024, attributable to taxable earnings from the Company’s foreign operations which were insignificant for all periods presented.

Current wording

The Company incurred income tax expense for the three and nine months ended September 30, 2025 and 2024, attributable to taxable earnings from the Company’s foreign operations which were insignificant for all periods presented.

Previous wording

As disclosed in Note 13, Borrowings, on November 26, 2024, the Company successfully closed on the DOE Loan Facility, which provides the Company with up to $303.5 million in funding, including capitalized interest, subject to the achievement of certain funding conditions. The DOE Loan Facility provides for a multi draw term loan facility under a series of at least two tranches and, if the Company elects, up to four tranches, subject to the achievement of certain conditions. Each tranche corresponds to the production, maintenance and development, and operation of a given production line to be funded using the proceeds of such tranche. The DOE Loan Facility specifies the maximum amount subject to each tranche (Tranche 1: $102.0 million; Tranche 2: $117.3 million; Tranche 3: $71.8 million; and Tranche 4: $12.3 million), and any amounts which are not withdrawn under a specified tranche cannot be allocated to another tranche. On April 16, 2025, the Company amended the DOE Loan Facility in order to clarify the maximum Tranche Commitment principal amounts by excluding capitalized interest (Tranche 1: $90.9 million; Tranche 2: $106.7 million; Tranche 3: $67.5 million; and Tranche 4: $12.3 million). The Amendment does not materially alter rights, obligations, or meaning of the DOE Loan Facility. Through June 30, 2025, the Company had drawn down $68.3 million under Tranche 1. See Note 22, Subsequent Events, for further discussion of Tranche 1 funding.

Current wording

As disclosed in Note 13, Borrowings, on November 26, 2024, the Company successfully closed on the DOE Loan Facility, which provides the Company with up to $303.5 million in funding, including capitalized interest, subject to the achievement of certain funding conditions. The DOE Loan Facility provides for a multi draw term loan facility under a series of at least two tranches and, if the Company elects, up to four tranches, subject to the achievement of certain conditions. Each tranche corresponds to the production, maintenance and development, and operation of a given production line to be funded using the proceeds of such tranche. The DOE Loan Facility specifies the maximum amount subject to each tranche (Tranche 1: $102.0 million; Tranche 2: $117.3 million; Tranche 3: $71.8 million; and Tranche 4: $12.3 million), and any amounts which are not withdrawn under a specified tranche cannot be allocated to another tranche. On April 16, 2025, the Company amended the DOE Loan Facility in order to clarify the maximum Tranche Commitment principal amounts by excluding capitalized interest (Tranche 1: $90.9 million; Tranche 2: $106.7 million; Tranche 3: $67.5 million; and Tranche 4: $12.3 million). The Amendment does not materially alter rights, obligations, or meaning of the DOE Loan Facility. Through September 30, 2025, the Company had drawn down $90.9 million under Tranche 1.

Previous wording

•Since its inception, the Company has incurred significant losses and negative cash from operations in order to fund its development. During the six months ended June 30, 2025, the Company had incurred a net loss of $207.8 million, Adjustments to reconcile net loss to cash used in operations are primarily from non-cash items on the Unaudited Condensed Consolidated Statements of Cash Flows. The non-cash items totaled $106.9 million. During the six months ended June 30, 2025, the Company incurred negative cash flows from operations of $95.0 million and had an accumulated deficit of $1,774.0 million as of June 30, 2025.

Current wording

•Since its inception, the Company has incurred significant losses and negative cash from operations in order to fund its development. During the nine months ended September 30, 2025, the Company had incurred a net loss of $849.2 million, Adjustments to reconcile net loss to cash used in operations are primarily from non-cash items on the Unaudited Condensed Consolidated Statements of Cash Flows. The non-cash items totaled $691.7 million. During the nine months ended September 30, 2025, the Company incurred negative cash flows from operations of $160.9 million and had an accumulated deficit of $2,415.4 million as of September 30, 2025.

Previous wording

•As of June 30, 2025, the Company had $120.2 million of unrestricted cash and cash equivalents available to fund the Company’s operations and working capital of $128.0 million.

Current wording

•As of September 30, 2025, the Company had $58.7 million of unrestricted cash and cash equivalents available to fund the Company’s operations and working capital of $85.4 million.

Previous wording

•Through June 30, 2025, under the DOE Loan Facility, the Company drew down $68.3 million for the eligible project cost that the Company had incurred through December 6, 2024. These costs are a portion of Tranche 1 of the DOE Loan Facility. Tranche 1 provides up to $90.9 million for eligible costs in connection with the design, construction, installation, startup and shakedown of a battery automation line and related tools. In the event the Company does not achieve certain funding milestone conditions and the DOE chooses not to continue funding, the Company would need to seek alternative sources of capital, which may not be available on favorable terms or at all. On June 12, 2025, the Company delivered to the DOE and the FFB a second advance request, and on July 1, 2025, the FFB funded $22.7 million under the DOE Loan Facility (the “second loan advance”). See Note 22, Subsequent Events, for further discussion of Tranche 1 funding.

Current wording

•As of September 30, 2025, the Company had drawn down $90.9 million under the DOE Loan Facility, utilizing the full commitment available for Tranche 1. The initial draw of $68.3 million was made to cover eligible project costs incurred through December 6, 2024, followed by a second draw of $22.7 million for eligible project costs incurred through June 4, 2025. Tranche 1 provided funding for eligible costs in connection with the design, construction, installation, startup and shakedown of a battery automation line and related tools. In the event the Company does not achieve certain funding milestone conditions and the DOE chooses not to continue funding for the remaining tranches, the Company would need to seek alternative sources of capital, which may not be available on favorable terms or at all.

Previous wording

The Company has historically relied on outside capital to fund its cost structure and expects this reliance to continue for the foreseeable future until the Company reaches profitability through its planned revenue generating activities. During the six months ended June 30, 2025, the Company closed on the following capital transactions:

Current wording

The Company has historically relied on outside capital to fund its cost structure and expects this reliance to continue for the foreseeable future until the Company reaches profitability through its planned revenue generating activities. During the nine months ended September 30, 2025, the Company closed on the following capital transactions:

Previous wording

The Company expects capital expenditures and working capital requirements to increase as it seeks to execute its growth strategy, total capital expenditures for the six months ended June 30, 2025 and June 30, 2024 were $12.0 million and $10.3 million, respectively. See Note 7, Property, Plant and Equipment for further discussion.

Current wording

The Company expects capital expenditures and working capital requirements to increase as it seeks to execute its growth strategy, total capital expenditures for the nine months ended September 30, 2025 and September 30, 2024 were $29.7 million and $20.1 million, respectively. See Note 7, Property, Plant and Equipment and Note 8, Intangible Assets for further discussion.

Previous wording

Net cash used in operating activities was $95.0 million for the six months ended June 30, 2025, adjusted for non-cash items of $106.9 million, primarily related to stock compensation expense, loss on debt extinguishment, and changes in fair value of debt, warrants and derivatives. The net cash inflows from changes in operating assets and liabilities was $5.8 million, primarily driven by an increase in contract liabilities of $13.2 million due to customer cash receipts and increase in accounts payable of $10.2 million, partially offset by an increase in vendor deposits of $5.1 million and increase in grant receivable of $4.3 million.

Current wording

Net cash used in operating activities was $160.9 million for the nine months ended September 30, 2025, adjusted for non-cash items of $691.7 million, primarily related to stock compensation expense, loss on debt extinguishment, and changes in fair value of debt, warrants and derivatives. The net cash outflows from changes in operating assets and liabilities was $3.4 million, primarily driven by an increase in grant receivable of $10.0 million, decrease in contract liabilities of $7.2 million, increase in inventory of $6.7 million and increase in vendor deposits of $5.0 million, partially offset by increase in accounts payable of $22.2 million.

Previous wording

Net cash used in operating activities was $66.8 million for the six months ended June 30, 2024, primarily driven by a net loss of $74.9 million, adjusted for non-cash items of $9.7 million, primarily related to stock compensation expense, depreciation and amortization, non-cash interest expense, gain on debt extinguishment, changes in fair value of debt, warrants and derivatives. The net cash outflows from changes in operating assets and liabilities was $1.6 million, primarily driven by an increase in contract assets of $4.6 million, decrease in accrued expenses of $2.0 million, increase in accounts receivable of $1.2 million, partially offset by increase in contract liabilities of $2.6 million and decrease in grant receivable of $1.8 million.

Current wording

Net cash used in operating activities was $111.3 million for the nine months ended September 30, 2024, primarily driven by a net loss of $417.7 million, adjusted for non-cash items of $308.4 million, primarily related to stock compensation expense, depreciation and amortization, non-cash interest expense, gain on debt extinguishment, changes in fair value of debt, warrants and derivatives. The net cash outflows from changes in operating assets and liabilities was $1.9 million, primarily driven by an increase in inventory of $8.8 million and an increase in contract assets of $4.7 million, partially offset by an increase in contract liabilities of $5.4 million and an increase in interest payable - related party of $3.1 million.

Previous wording

Net cash flows used in investing activities for the six months ended June 30, 2025 and June 30, 2024 was $12.0 million and $10.3 million, respectively, for payments made for purchases of property, plant and equipment for the improvement of manufacturing facilities.

Current wording

Net cash flows used in investing activities for the nine months ended September 30, 2025 was $29.7 million, primarily related to $28.8 million of payments made for purchases of property, plant and equipment for the improvement of manufacturing facilities and $0.9 million of investment made for internally developed software.

Previous wording

Net cash provided by financing activities was $186.8 million for the six months ended June 30, 2025, primarily due to the proceeds received from the public offering of $81.1 million, from the issuance of the 2025 Convertible Notes of $240.0 million, from the Credit and Securities Purchase Transaction of $38.5 million and from the exercise of warrants of $7.8 million. The proceeds were partially offset by payoff of the 2021 Convertible Notes Payable and Delayed Draw Term Loan of $180.9 million, payments on the equipment financing facility of $0.9 million and share repurchases from employees for tax withholding of $0.5 million. Proceeds from the public offering and issuance of the 2025 Convertible Notes were used to repurchase the 2021 Convertible Notes and prepay a portion of the DDTL.

Current wording

Net cash provided by financing activities was $214.1 million for the nine months ended September 30, 2025, primarily due to the proceeds received from the following transactions: issuance of 2025 Convertible Notes of $240.0 million, public offering of $81.1 million, Credit and Securities Purchase Transaction of $38.5 million, DOE Loan of $22.7 million, and exercise of warrants of $14.2 million. The proceeds were partially offset by payoff of the 2021 Convertible Notes Payable and Delayed Draw Term Loan of $180.9 million, debt and equity issuance costs of $4.6 million, and payments on the equipment financing facility of $1.3 million. Proceeds from the public offering and issuance of the 2025 Convertible Notes were used to repurchase the 2021 Convertible Notes and prepay a portion of the DDTL.

Previous wording

Net cash provided by financing activities was $50.0 million for the six months ended June 30, 2024, primarily due to the proceeds received from the Credit and Securities Purchase Transaction of $70.1 million and from the issuance of common stock of $14.1 million. The proceeds were partially offset by payoff of the Senior Secured Term Loan of $19.9 million, debt issuance costs - related party of $12.2 million, payments on the equipment financing facility of $1.6 million and share repurchases from employees for tax withholding of $0.4 million.

Current wording

Net cash provided by financing activities was $77.3 million for the nine months ended September 30, 2024, primarily due to the proceeds received from the Credit and Securities Purchase Transaction of $98.6 million and from the issuance of common stock of $14.1 million. The proceeds were partially offset by payoff of the Senior Secured Term Loan of $19.9 million, debt issuance costs - related party of $12.2 million, payments on the equipment financing facility of $2.4 million and share repurchases from employees for tax withholding of $1.1 million.

Previous wording

•Future lease payments, including interest, under non-cancellable operating and financing leases of $3.5 million. The leases expire at various dates prior to 2030.

Current wording

•Future lease payments, including interest, under non-cancellable operating and financing leases of $3.2 million. The leases expire at various dates prior to 2030.