Eos Energy Enterprises Inc
For the period ended Sep 30, 2024. Filed Nov 5, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 5, 2024
EOSE$1.74-7.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001805077-24-000094
Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-05.
0001805077-24-000109
Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 108 previous paragraphs and 111 current paragraphs.
69 unchanged; 30 reworded; 11 added; 8 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 15 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
•In July 2024, the Company and Indian Energy announced an agreement to expand its existing relationship. The expanded agreement with Indian Energy added 25 MWh of storage to the existing 35 MWh order for an overall project size of 60 MWh.
Current report
•In July 2024, the Company regained compliance with the minimum continued listing criteria set forth in Nasdaq Listing Rule 5550(a)(2) as of July 9, 2024, based on the closing bid price of the Company’s common stock being at or above $1.00 per share for the 10 consecutive business days from June 24, 2024 to July 8, 2024.
Current report
•In August 2024, the Company successfully achieved all four of the first performance milestones previously agreed upon between Eos and Cerberus as part of Cerberus’s strategic investment in the Company. Achieving these specific performance milestones allowed the Company to draw an additional $30 million on the Delayed Draw Term Loan from Cerberus to fund ongoing operations and production expansion to meet the growing demand for long duration energy storage solutions.
Current report
•In October 2024, the Company successfully achieved all four of the performance milestones for the October Draw previously agreed upon between Eos and Cerberus as part of Cerberus’s strategic investment in the Company. Achieving these specific performance milestones allowed the Company to draw an additional $65.0 million on the Delayed Draw Term Loan from Cerberus.
Current report
For the three months ended September 30, 2024, Cost of goods sold increased by $4.5 million or 21% from $21.3 million. For the nine months ended September 30, 2024, Cost of goods sold increased by $8.7 million or 15% from $59.4 million.
Current report
The increase for the three months ended September 30, 2024 was primarily driven by an inventory reserve adjustment in 2024 due to lower of cost or market (“LCM”) amounting to approximately $6.7 million, since the Company has negative gross margins for the period.
Current report
For the three months ended September 30, 2024, Selling, general and administrative expenses increased by $4.7 million or 36% from $13.1 million. For the nine months ended September 30, 2024, Selling, general and administrative expenses increased by $3.2 million or 8% from $40.2 million. The increase for the three and nine months was primarily driven by higher legal and advisory fees related to the Credit and Securities Purchase Transaction and payroll costs.
Current report
The Company incurred a loss of $3.2 million and $1.0 million from write-down of property, plant and equipment for the three months ended September 30, 2024 and 2023, respectively, and a loss of $3.5 million and $7.2 million for the nine months ended September 30, 2024 and 2023, respectively. The 2023 write-downs were mainly due to replacement of equipment, outsourcing of certain production processes and the shift in production from the Gen 2.3 battery system to the Z3™ battery system. The 2024 write-downs were primarily related 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.
Current report
Other (expense) income
Current report
Income tax (benefit) expense
Current report
As disclosed in Note 3, Credit and Securities Purchase Transaction, on June 21, 2024, the Company entered into a financing transaction with CCM Denali Debt Holdings, LP, an affiliate of Cerberus Capital Management LP (herein after referred to as “Cerberus”, “Denali”, “Lender”, “Holder”). As a result of this transaction, Cerberus agreed to provide a $210.5 million secured multi-draw facility to be made in four installments (the “Delayed Draw Term Loan”) as well as a $105.0 million revolving credit facility (“Revolving Facility”), to be made available beginning June 21, 2026, at Cerberus’ sole discretion and only if the Delayed Draw Term Loan is fully funded.
Removed paragraphs (8)
Previous report
For the three months ended June 30, 2024, Selling, general and administrative expenses decreased by $1.8 million or 14% from $13.1 million. For the six months ended June 30, 2024, Selling, general and administrative expenses decreased by $1.6 million or 6% from $27.1 million. The decrease was driven by lower legal expenses and stock compensation costs, partially offset by an increase in facility costs.
Previous report
The Company incurred a loss of $0.3 million and $5.4 million from write-down of property, plant and equipment for the three months ended June 30, 2024 and 2023, respectively, and a loss of $0.3 million and $6.2 million for the six months ended June 30, 2024 and 2023, respectively. The write-down is due to obsolete equipment and tooling that was used to manufacture the Gen 2.3 BESS but cannot be repurposed for the next generation Eos Z3 battery.
Previous report
Other expense
Previous report
Income tax expense
Previous report
As discussed in Note 3, Credit and Securities Purchase Transaction, on June 21, 2024, the Company entered into a Credit and Guaranty Agreement (the “Credit Agreement”) with CCM Denali Debt Holdings, LP., an affiliate of Cerberus Capital Management LP, (the “Lender”, also acting as administrative and collateral agent) to provide:
Previous report
a secured multi-draw facility in an aggregate principal amount of $210.5 million (the “Delayed Draw Term Loan”) to be made in four installments ($75.0 million, the Initial Draw which was funded on June 21, 2024, and the remaining three tranches which may be drawn in the amounts of $30.0 million, $65.0 million and $40.5 million on August 31, 2024, October 31, 2024, and January 31, 2025, respectively, upon the Company’s achievement of certain applicable funding milestones), and
Previous report
a $105.0 million revolving credit facility available to be drawn by the Company beginning June 21, 2026 at the Lender’s sole discretion and only after the Delayed Draw Term Loan is fully funded.
Previous report
In addition, Eos utilized a portion of the proceeds of the Delayed Draw Term Loan to extinguish its existing $100.0 million Senior Secured Term Loan, resulting in a gain on debt extinguishment in the amount of $68.5 million.
Reworded paragraphs (30)
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, 2024 and 2023 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, 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, 2024 and 2023 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, including the financial statements and notes thereto.
Previous wording
In August 2023, the DOE issued a Conditional Commitment Letter to the Company for a loan of an aggregate principal amount of up to $398.6 million through the DOE’s Clean Energy Financing Program. The Conditional Commitment Letter follows an extensive technical, financial and commercial due diligence process by the DOE. If finalized, the loan is expected to fund 80% of eligible costs of the Company’s planned manufacturing expansion in Turtle Creek, Pennsylvania.
Current wording
In August 2023, the DOE issued a Conditional Commitment Letter to the Company for a loan of an aggregate principal amount of up to $398.6 million through the DOE’s Clean Energy Financing Program. The Conditional Commitment Letter follows an extensive technical, financial and commercial due diligence process by the DOE. If finalized, the loan is expected to fund 80% of eligible costs of the Company’s planned manufacturing expansion in and around Turtle Creek, Pennsylvania.
Previous wording
•For the three months ended June 30, 2024, the Company recognized $0.1 million of grant income related to the IRA PTC.
Current wording
•For the three months ended September 30, 2024, the Company recognized $0.2 million of grant income related to the IRA PTC.
Previous wording
For the three months ended June 30, 2024, Revenue increased by $0.6 million or 261% from $0.2 million. The increase for the three months is due to higher product component and commissioning sales. For the six months ended June 30, 2024, Revenue decreased by $1.6 million or 17% from $9.1 million. The decrease for the six months is due to reduced production and deliveries due to the installation of the Company’s new manufacturing line.
Current wording
For the three months ended September 30, 2024, Revenue increased by $0.2 million or 25% from $0.7 million. The increase for the three months is due to higher product component and commissioning sales. For the nine months ended September 30, 2024, Revenue decreased by $1.4 million or 14% from $9.8 million. The decrease for the nine months is due to reduced production and deliveries due to the installation of the Company’s new manufacturing line.
Previous wording
Cost of goods sold primarily consists of direct costs relating to labor, material and overhead directly tied to product manufacturing, engineering, procurement and construction (“EPC”), project delivery, commissioning and start-up test procedures. Indirect costs included in cost of goods sold are manufacturing overhead such as manufacturing engineering, equipment maintenance, environmental health and safety, quality and production control procurement, transportation, logistics, depreciation and facility-related costs. As a nascent technology with a new manufacturing process that is early in its product lifecycle, the Company still faces significant costs associated with production start-up, commissioning of various components, modules and subsystems and other related costs. The Company expects its cost of goods sold to exceed revenues in the near term as it continues to scale production and prepares battery energy storage systems delivered to customers to go-live.
Current wording
Cost of goods sold primarily consists of direct costs relating to labor, material and overhead directly tied to product assembly, procurement and construction (“EPC”), project delivery, commissioning and start-up test procedures. Indirect costs included in cost of goods sold are manufacturing overhead such as equipment maintenance, environmental health and safety, quality and production control procurement, transportation, logistics, depreciation and facility-related costs. As a nascent technology with a new manufacturing process that is early in its product lifecycle, the Company still faces significant costs associated with production start-up, commissioning of various components, modules and subsystems and other related costs. The Company expects its cost of goods sold to exceed revenues in the near term as it continues to scale production and prepares battery energy storage systems delivered to customers to go-live.
Previous wording
For the three months ended June 30, 2024, Cost of goods sold increased by $2.9 million or 26% from $11.2 million. For the six months ended June 30, 2024, Cost of goods sold increased by $4.2 million or 11% from $38.2 million. The increase for the three and six months ended June 30, 2024 was primarily due to an increase in project commissioning costs on previously delivered projects, along with the underutilization and absorption of labor and overhead associated with implementing the new line.
Current wording
The increase for the nine months ended September 30, 2024 was primarily due to an increase in project commissioning costs on previously delivered projects, revaluations of inventory balances, along with the underutilization and absorption of labor and overhead associated with implementing the new line.
Previous wording
For the three months ended June 30, 2024, Research and development costs decreased by $0.8 million or 15% from $5.0 million. For the six months ended June 30, 2024, Research and development costs decreased by $1.0 million or 10% from $10.5 million. The decrease for the three and six months was driven by lower spending on materials and supplies, partially offset by an increase in payroll and personnel costs and stock compensation costs.
Current wording
For the three months ended September 30, 2024, Research and development costs increased by $4.2 million or 130% from $3.2 million. For the nine months ended September 30, 2024, Research and development costs increased by $3.2 million or 23% from $13.7 million. The increase for the three and nine months was driven by higher spending on materials and supplies related to the implementation of the automated line, as well as an increase in payroll and personnel costs and stock compensation costs.
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 (see Note 7, Property, Plant and Equipment for further discussion). For the three and six months ended June 30, 2024, Interest expense, net decreased $1.4 million and $1.9 million, respectively, due to the capitalized interest on CIP assets recognized in 2024 and lower interest expense recognized from the Senior Secured Term Loan.
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 and nine months ended September 30, 2024, Interest expense, net decreased $4.9 million and $6.8 million, respectively, mainly due to lower interest expense recognized from the Senior Secured Term Loan.
Previous wording
The change in the fair value of debt of $0.2 million for the three and six months ended June 30, 2024 relates to the Delayed Draw Term Loan.
Current wording
The change in the fair value of debt - related party of $3.0 million and $3.3 million for the three and nine months ended September 30, 2024, respectively, relates to the Delayed Draw Term Loan.
Previous wording
The change in the fair value of embedded derivatives - related parties, was due to our convertible debt (See Note 13, Borrowings) and the change in fair value of warrants - related parties was due to changes of our SPA Warrant and contingent warrants (See Note 14, Warrants Liability).
Current wording
The change in the fair value of embedded derivatives - related parties, was due to our convertible debt (See Note 13, Borrowings) and the change in fair value of warrants - related parties was due to changes in fair value of our SPA Warrant and contingent warrants (See Note 14, Warrants Liability).
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 and six months ended June 30, 2023, the Company recognized a loss on debt extinguishment of $1.9 million and $3.5 million, respectively, from the issuance of common stock upon Yorkville's redemption of their convertible promissory notes.
Current wording
For the nine months ended September 30, 2023, the Company recognized a loss on debt extinguishment of $3.5 million from the issuance of common stock upon Yorkville's redemption of their convertible promissory notes.
Previous wording
For the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, Other expense increased by $2.4 million and $2.2 million, respectively, primarily due 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, compared to the three and nine months ended September 30, 2023, Other (expense) income increased by $2.0 million and $4.3 million, respectively, primarily due 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, 2024 and 2023 in relation to the pre-tax income from the Company’s international subsidiaries.
Current wording
The Company incurred income tax (benefit) expense for the three and nine months ended September 30, 2024 and 2023 in relation to state margin tax adjustments and pre-tax income from the Company’s international subsidiaries.
Previous wording
As a growth company in the early commercialization stage of its lifecycle, Eos is subject to inherent risks and uncertainties associated with the development of an enterprise. In this regard, substantially all of the Company’s efforts to date have been devoted to the development and manufacturing of battery energy storage systems and complimentary products and services, recruitment of management and technical staff, deployment of capital to expand the Company’s operations to meet customer demand and raising capital to fund the Company’s development. However, as a result of these efforts, the Company has incurred significant losses and negative cash flows from operations since its inception and expects to continue to incur such losses and negative cash flows for the foreseeable future until such time that the Company can reach a scale of profitability to sustain its operations.
Current wording
As a growth company in the early commercialization stage of its lifecycle, Eos is subject to inherent risks and uncertainties associated with the development of an enterprise. In this regard, substantially all of the Company’s efforts to date have been devoted to the development and manufacturing of battery energy storage systems and complementary products and services, recruitment of management and technical staff, deployment of capital to expand the Company’s operations to meet customer demand and raising capital to fund the Company’s development. However, as a result of these efforts, the Company has incurred significant losses and negative cash flows from operations since its inception and expects to continue to incur such losses and negative cash flows for the foreseeable future until such time that the Company can reach a scale of profitability to sustain its operations.
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, 2024, the Company incurred a net loss of $74.9 million, incurred negative cash flows from operations of $66.8 million and had an accumulated deficit of $950.7 million as of June 30, 2024.
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, 2024, the Company incurred a net loss of $417.7 million, incurred negative cash flows from operations of $111.3 million and had an accumulated deficit of $1,293.6 million as of September 30, 2024.
Previous wording
•As of June 30, 2024, the Company had $52.5 million of unrestricted cash and cash equivalents available to fund the Company’s operations and working capital of $115.1 million,which includes loan commitment assets of $76.1 million classified as current assets on the Unaudited Condensed Consolidated Balance Sheets.
Current wording
•As of September 30, 2024, the Company had $23.0 million of unrestricted cash and cash equivalents available to fund the Company’s operations and working capital of $74.1 million, which includes loan commitment assets of $58.5 million classified as current assets on the Unaudited Condensed Consolidated Balance Sheets.
Previous wording
•The Company is required to remain in compliance with certain quarterly financial covenants under its Credit Agreement. These financial covenants include (a) minimum EBITDA, (b) Revenue, and (c) a Liquidity covenant (collectively, the “financial covenants”). While the Company was in compliance with these covenants as of June 30, 2024, the Company may be unable to remain in compliance with these covenants as of September 30, 2024, and thereafter, absent the Company’s ability to draw under the Delayed Draw Term Loan or secure a waiver from the Lender. In the event the Company is unable to remain in compliance with the financial covenants and the other nonfinancial covenants required by Credit Agreement and the Company is further unable to cure such noncompliance or secure a waiver, the Lender may, at its discretion, exercise any and all of its existing rights and remedies, which may include, among other things, entering into a forbearance agreement with the Company and/or asserting its rights in the Company’s assets securing the loan. Moreover, the Company’s other lenders may exercise similar rights and remedies under the cross-default provisions of their respective borrowing arrangements with the Company.
Current wording
•The Company is required to remain in compliance with certain quarterly financial covenants under its Credit Agreement. These financial covenants include, as defined in the Credit Agreement, (a) Minimum Consolidated EBITDA, (b) Minimum Consolidated Revenue, and (c) Minimum Liquidity (collectively, the “financial covenants”). As of September 30, 2024, the Company was in compliance with all financial covenants and non-financial covenants, except for the September 30, 2024 Minimum Consolidated Revenue financial covenant. The Company secured a waiver of non-compliance from Cerberus for the quarter ended September 30, 2024. The Company expects it may be unable to remain in compliance with the Minimum Consolidated Revenue financial covenant beginning December 31, 2024, absent the Company’s ability to secure a waiver or amend the Credit Agreement. In the event the Company is unable to comply with the financial and the non-financial covenants as of December 31, 2024, and the Company is unable to secure another waiver, Cerberus may, at its discretion, enter into a forbearance agreement with the Company and/or exercise any and all of its existing rights and remedies, which may include, among other things, asserting its rights in the Company’s assets securing the loan. Moreover, the Company’s other lenders may exercise similar rights and remedies under the cross-default provisions of their respective borrowing arrangements with the Company.
Previous wording
•In the event the Company does not achieve the funding milestones, the Lender chooses not to continue funding, and the Company’s ongoing efforts to raise additional outside capital prove unsuccessful, the Company will be unable to meet its obligations as they become due over the next twelve months beyond the issuance date. In such an event, management will be required to seek other strategic alternatives, which may include, among others, a significant curtailment in the Company’s operations, a sale of certain of the Company’s assets, a sale of the entire Company to strategic or financial investors and/or allowing the Company to become insolvent.
Current wording
•Cerberus funded the Company $30.0 million (“August Draw”), and the Company received $28.5 million, net of the 5.0% original issue discount, since the Company met the milestones for the August Draw as disclosed in Note 3, Credit and Securities Purchase Transaction. Subsequently, on November 1, 2024, Cerberus funded the Company $65 million related to the October 31, 2024 tranche (“October Draw” or “October Tranche”), and the Company received $61.75 million, which is net of the 5.0% original issue discount from the Delayed Draw Term Loan as disclosed in Note 21, Subsequent Events. In the event the Company does not achieve the remaining funding milestone, and Cerberus chooses not to continue funding, and the Company’s ongoing efforts to raise additional outside capital prove unsuccessful, the Company will be unable to meet its obligations as they become due over the next twelve months beyond the issuance date. In such an event, management will be required to seek other strategic alternatives, which may include, among others, a significant curtailment in the Company’s operations, a sale of certain of the Company’s assets, a sale of the entire Company to strategic or financial investors and/or allowing the Company to become insolvent.
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, 2024, 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, 2024, the Company closed on the following capital transactions:
Previous wording
•Under the ATM offering program, for the six months ended June 30, 2024, the Company sold 16,627,523 shares raising proceeds of $14.1 million, net of fees paid to Cowen, at an average selling price of $0.87 per share, included in the Condensed Consolidated Statement of Shareholders' Deficit.
Current wording
•Under the ATM offering program, for the nine months ended September 30, 2024, the Company sold 16,627,523 shares raising proceeds of $14.1 million, net of fees paid to Cowen, at an average selling price of $0.87 per share, included in the Condensed Consolidated Statement of Shareholders' Deficit.
Previous wording
•The Company secured a strategic investment of up to $315.5 million from an affiliate of Cerberus. The investment by Cerberus is structured as a $210.5 million Delayed Draw Term Loan to be made in four installments. On June 21, 2024 the first installment of $75.0 million was funded. Additional amounts totaling $135.5 million will be made available to the Company, subject to the achievement of certain milestones. As part of the strategic investment, a $105.0 Revolving Facility will be made available to the Company at the Lenders’ sole discretion and only if the Delayed Draw Term Loan is fully funded. The Company utilized a portion of the proceeds to retire its existing $100.0 million Senior Secured Term Loan on favorable terms, strengthening the Company’s balance sheet. See Note 3, Credit and Securities Purchase Transaction.
Current wording
•The Company secured a strategic investment of up to $315.5 million from Cerberus. The investment by Cerberus is structured as a $210.5 million Delayed Draw Term Loan to be made in four installments. On June 21, 2024 the first installment of $75.0 million was funded, and on August 29, 2024, the second draw of $30.0 million was funded. Additional amounts totaling $105.5 million will be made available to the Company, subject to the achievement of certain milestones. As part of the strategic investment, a $105.0 Revolving Facility will be made available to the Company at the Lenders’ sole discretion and only if the Delayed Draw Term Loan is fully funded.
Previous wording
The Company expects capital expenditures and working capital requirements to increase as it executes its growth strategy. Total capital expenditures for the six months ended June 30, 2024 and June 30, 2023 were $10.3 million and $10.1 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 executes its growth strategy. Total capital expenditures for the nine months ended September 30, 2024 and September 30, 2023 were $20.1 million and $21.2 million, respectively. See Note 7, Property, Plant and Equipment for further discussion.
Previous wording
Net cash used in operating activities of $66.8 million for the six months ended June 30, 2024 was 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 of $111.3 million for the nine months ended September 30, 2024 was 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 used in operating activities was $75.6 million for the six months ended June 30, 2023, primarily driven by a net loss of $203.2 million, adjusted for non-cash items of $140.3 million, primarily related to stock compensation expense, depreciation and amortization, non-cash interest expense, changes in fair value of warrants and derivatives and loss from the write-down of property, plant and equipment. The net cash outflows from changes in operating assets and liabilities was $12.7 million, primarily driven by an increase in accounts payable and accrued expenses of $11.0 million, increase in vendor deposits of $5.4 million, and decrease in contract liabilities of $1.5 million, partially offset by decrease in inventory of $6.6 million.
Current wording
Net cash used in operating activities was $107.6 million for the nine months ended September 30, 2023, primarily driven by a net loss of $188.3 million, adjusted for non-cash items of $89.5 million, primarily related to stock compensation expense, depreciation and amortization, non-cash interest expense, changes in fair value of warrants and derivatives and loss from the write-down of property, plant and equipment. The net cash outflows from changes in operating assets and liabilities was $8.7 million, primarily driven by decrease in accounts payable of $17.8 million and increase in vendor deposits of $4.0 million, partially offset by increase in accrued expenses of $12.3 million.
Previous wording
Net cash flows used in investing activities for the six months ended June 30, 2023 were composed of payments made for purchases of property, plant and equipment of $10.1 million.
Current wording
Net cash flows used in investing activities for the nine months ended September 30, 2024 and September 30, 2023 was $20.1 million and $21.2 million, respectively, for payments made for purchases of property, plant and equipment.
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
Net cash provided by financing activities was $92.6 million for the six months ended June 30, 2023, primarily due to the net proceeds received from the Yorkville Convertible Promissory Notes and AFG Convertible Notes of $48.1 million and from the issuance of common stock and warrants of $49.3 million. The proceeds were partially offset by equity issuance costs of $2.1 million, debt issuance costs related to the Yorkville Convertible Promissory Notes and AFG Convertible Notes of $1.1 million, payments on the equipment financing facility of $1.4 million and share repurchases from employees for tax withholding of $0.5 million.
Current wording
Net cash provided by financing activities was $170.6 million for the nine months ended September 30, 2023, primarily due to the net proceeds received from the Yorkville Convertible Promissory Notes and AFG Convertible Notes of $48.1 million and from the issuance of common stock and warrants of $131.1 million. The proceeds were partially offset by equity issuance costs of $2.1 million, debt issuance costs related to the Yorkville Convertible Promissory Notes, AFG Convertible Notes and Senior Secured Term Loan of $4.2 million, payments on the equipment financing facility of $2.1 million and share repurchases from employees for tax withholding of $0.6 million.
Previous wording
•Future lease payments, including interest, under non-cancellable operating and financing leases of $5.0 million. The leases expire at various dates prior to 2028.
Current wording
•Future lease payments, including interest, under non-cancellable operating and financing leases of $4.4 million. The leases expire at various dates prior to 2028.
Previous wording
The fair value of the Delayed Draw Term Loan was estimated using a discounted cash flow (“DCF”) method, based on the contractual cash flows discounted at a debt yield. The fair value for the SPA Warrant is estimated based on its intrinsic value, using the Eos common stock closing price adjusted by a discounted for lack of marketability (“DLOM”), less the exercise price of $0.01 for the SPA Warrant. A DLOM was applied considering the underlying shares of the SPA Warrants are unregistered. The fair value of the Contingent Warrants is estimated based on the underlying Eos common stock closing price adjusted by a DLOM and an allowance for certain redemption features using a Black-Scholes model, considering the probability of achieving certain milestones. A DLOM was applied considering the underlying shares of the Contingent Warrants are unregistered. The fair value for all these instruments are designated as level 3 measurements as they rely on significant unobservable inputs. The significant unobservable inputs for each of these instruments are detailed in Note 15, Fair Value Measurement), which include debt yield, DLOM, and milestones achievement expectations. The sensitivity of the fair value calculation to debt yield, DLOM, and milestones achievement expectations could create materially different results under different conditions or using different assumptions.
Current wording
The fair value of the Delayed Draw Term Loan was estimated using a discounted cash flow (“DCF”) method, based on the contractual cash flows discounted at a debt yield. The fair value for the SPA Warrant is estimated based on its intrinsic value, using the Eos common stock closing price adjusted by a discounted for lack of marketability (“DLOM”), less the exercise price of $0.01 for the SPA Warrant. A DLOM was applied considering the underlying shares of the SPA Warrants are unregistered. The fair value of the Contingent Warrants is estimated based on the underlying Eos common stock closing price adjusted by a DLOM and an allowance for certain redemption features using a Black-Scholes model, considering the probability of achieving certain milestones. A DLOM was applied considering the underlying shares of the Contingent Warrants are unregistered. The fair values for all these instruments are designated as level 3 measurements as they rely on significant unobservable inputs. The significant unobservable inputs for each of these instruments are detailed in Note 15, Fair Value Measurement), which include debt yield, DLOM, and milestones achievement expectations. The sensitivity of the fair value calculation to debt yield, DLOM, and milestones achievement expectations could create materially different results under different conditions or using different assumptions.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
•The Company retired its existing $100.0 million Senior Secured Term Loan on favorable terms, strengthening the Company’s balance sheet. See Note 3, Credit and Securities Purchase Transaction.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net cash flows used in investing activities for the six months ended June 30, 2024 were mainly composed of payments made for purchases of property, plant and equipment of $10.3 million.