Eos Energy Enterprises, Inc.

Previous wording

The following discussion should be read in conjunction with the accompanying Unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 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 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.

Previous wording

On November 26, 2024, the Company entered into the DOE Loan Facility. The DOE Loan Facility is a key step in advancing the Company's Project American Made Zinc Energy ("AMAZE") and is expected to fund the expansion of Eos’ manufacturing capacity to 8 GWh by 2027 to meet the growing demand for longer duration battery energy storage systems. The DOE Loan Facility provides for up to $303.5 million in funding, including capitalized interest.

Current wording

On November 26, 2024, the Company entered into the DOE Loan Facility. The DOE Loan Facility is a key step in advancing the Company's Project American Made Zinc Energy ("AMAZE") and is expected to fund the expansion of Eos’ manufacturing capacity to 8 GWh by 2027 to meet the growing demand for longer duration battery energy storage systems.

Previous wording

Through March 31, 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 $102.0 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").

Current 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”).

Previous wording

•In March 2025, the Company announced Nathan Kroeker’s transition from Chief Financial Officer role to become Eos' Chief Commercial Officer. In conjunction with this strategic transition, the Company has appointed Eric Javidi as its new Chief Financial Officer, bringing extensive investing, operating and organizational leadership experience in the energy and energy infrastructure spaces. Nathan's background as Chief Financial Officer gives him a unique advantage in understanding both the financial and commercial landscapes of the industry, allowing him to create customer-centric solutions that are not only impactful, but also financially sustainable.

Current wording

•In March 2025, the Company announced Nathan Kroeker’s transition from Chief Financial Officer role to become Eos' Chief Commercial Officer. Nathan's background as Chief Financial Officer gives him a unique advantage in understanding both the financial and commercial landscapes of the industry, allowing him to create customer-centric solutions that are not only impactful, but also financially sustainable.

Previous wording

For the three months ended March 31, 2025, Revenue increased by $3.9 million or 58% from $6.6 million. The increase for the three months is due to higher product sales and higher selling price.

Current 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.

Previous wording

For the three months ended March 31, 2025, Cost of goods sold increased by $6.8 million or 24% from $28.2 million. The increase for the three months ended March 31, 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 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.

Previous wording

For the three months ended March 31, 2025, Research and development costs increased by $1.6 million or 31% from $5.2 million. The increase for the three 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 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.

Previous wording

For the three months ended March 31, 2025, Selling, general and administrative expenses increased by $6.8 million or 47% from $14.2 million. The increase for the three 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.

Current 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.

Previous wording

The Company incurred a loss of $0.6 million and $0.1 million from write-down of property, plant and equipment for the three months ended March 31, 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 $0.2 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.

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 months ended March 31, 2025, Interest expense, net decreased $4.1 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.

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 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.

Previous wording

The change in the fair value of debt - related party of $5.9 million for the three months ended March 31, 2025, relates to the Delayed Draw Term Loan.

Current wording

The change in the fair value of debt - related party of $31.6 million and $25.7 million for the three and six months ended June 30, 2025, respectively, relates to the Delayed Draw Term Loan.

Previous wording

For the three months ended March 31, 2025 and 2024, the change in fair value of warrants was composed of the items below:

Current 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:

Previous wording

For the three months ended March 31, 2025, compared to the three months ended March 31, 2024, Other (expense) income increased by $0.7 million, respectively, primarily due to recognition of financing issuance costs from the Credit and Securities Purchase Transaction.

Current 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.

Previous wording

The Company incurred income tax expense for the three months ended March 31, 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 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.

Previous wording

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. As of the date the accompanying Unaudited Condensed Consolidated Financial Statements were issued (the “issuance date”), the Delayed Draw Term Loan was fully funded. As part of the Credit and Securities Purchase Transaction, Cerberus received warrants and preferred stock resulting in a 33% ownership position in the Company as of the issuance date. This ownership percentage represents $814.3 Million in market capitalization based on the May 01, 2025 closing share price of the Company’s common stock.

Current wording

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. As of the date the accompanying Unaudited Condensed Consolidated Financial Statements were issued (the “issuance date”), the Delayed Draw Term Loan was fully funded. As part of the Credit and Securities Purchase Transaction, Cerberus received warrants and preferred stock resulting in a 33% ownership position in the Company as of January 24, 2025, the most recent milestone measurement date.

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. Through March 31, 2025, the Company had drawn down $68.3 million under Tranche 1.

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 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.

Previous wording

•Since its inception, the Company has incurred significant losses and negative cash from operations in order to fund its development. During the three months ended March 31, 2025, the Company had net income of $15.1 million, Adjustments to reconcile net income 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 $60.9 million. The Company incurred negative cash flows from operations of $28.9 million and had an accumulated deficit of $1,546.6 million as of March 31, 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 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.

Previous wording

•As of March 31, 2025, the Company had $82.6 million of unrestricted cash and cash equivalents available to fund the Company’s operations and working capital of $94.8 million.

Current 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.

Previous wording

•On June 21, 2024, upon closing of the Credit and Securities Purchase Transaction, Cerberus funded the Company $75.0 million of the initial draw, and the Company received $71.3 million, net of the 5.0% original issue discount. On August 29, 2024, Cerberus funded the Company $30.0 million (“August Draw”), and the Company received $28.5 million, net of the 5.0% original issue discount. 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 $61.8 million, net of the 5.0% original issue discount. On January 24, 2025, Cerberus funded the Company the final $40.5 million and the Company received $38.5 million, net of the 5.0% original issue discount, related to the January 31, 2025 tranche (“January 2025 Draw”). Subsequent to the January 2025 Draw, the Delayed Draw Term Loan has been fully funded.

Current wording

•On June 21, 2024, upon closing of the Credit and Securities Purchase Transaction, Cerberus funded the Company $75.0 million of the initial draw, and the Company received $71.3 million net of the 5.0% original issue discount. On August 29, 2024, Cerberus funded the Company $30.0 million (“August Draw”), and the Company received $28.5 million, net of the 5.0% original issue discount. On November 1, 2024, Cerberus funded the Company $65.0 million related to the October 31, 2024 tranche (“October Draw” or “October Tranche”), and the Company received $61.8 million, net of the 5.0% original issue discount. On January 24, 2025, Cerberus funded the Company the final $40.5 million and the Company received $38.5 million, net of the 5.0% original issue discount, related to the January 31, 2025 tranche (“January 2025 Draw”). Subsequent to the January 2025 Draw, the Delayed Draw Term Loan has been fully funded.

Previous wording

•Through March 31, 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 $102.0 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.

Current 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.

Previous wording

•The Credit and Securities Purchase Transaction and the DOE Loan Facility contain certain quarterly financial covenants, which include (a) Minimum Liquidity, (b) Minimum Consolidated EBITDA, and (c) Minimum Consolidated Revenue (collectively, the “financial covenants”). As of March 31, 2025, the only financial covenant in effect was Minimum Liquidity. As of March 31, 2025, the Company was in compliance with this covenant and non-financial covenants, and the Company expects to remain in compliance with the Minimum Liquidity covenant over the next twelve months beyond the issuance date. The Minimum Consolidated EBITDA and Minimum Consolidated Revenue financial covenants become effective beginning December 31, 2025. As of March 31, 2025, the Company expects that it may be unable to remain in compliance with the Minimum Consolidated EBITDA and Minimum Consolidated Revenue financial covenants beginning December 31, 2025, absent the Company’s ability to secure a waiver or amend the Credit and Securities Purchase Transaction and the DOE Loan Facility. The Company continues to be in regular communication with Cerberus and DOE regarding these covenants. In the event the Company is unable to comply with the financial and non-financial covenants beginning December 31, 2025, and the Company is unable to secure a waiver, Cerberus and the DOE may, at their discretion, enter into a forbearance agreement with the Company and/or exercise any and all of their existing rights and remedies, which may include, among other things, asserting their rights in the Company’s assets securing the loans. Moreover, the Company’s other lenders may exercise similar rights and remedies under the cross-default provisions of their respective borrowing agreements with the Company.

Current wording

•The Credit and Securities Purchase Transaction and the DOE Loan Facility contain certain quarterly financial covenants, which include (a) Minimum Liquidity, (b) Minimum Consolidated EBITDA, and (c) Minimum Consolidated Revenue (collectively, the “financial covenants”). As of June 30, 2025, the only financial covenant in effect was Minimum Liquidity. As of June 30, 2025, the Company was in compliance with this covenant and non-financial covenants, and the Company expects to remain in compliance with the Minimum Liquidity covenant over the next twelve months beyond the issuance date. The applicability of the Consolidated Revenue and EBITDA financial covenants were deferred until March 31, 2027.

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 three months ended March 31, 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 six months ended June 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 three months ended March 31, 2025 and March 31, 2024 were $4.9 million and $4.0 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 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.

Previous wording

Net cash used in operating activities of $28.9 million for the three months ended March 31, 2025, adjusted for non-cash items of $60.9 million, primarily related to changes in fair value of warrants and derivatives and partially offset by stock compensation expense relating to expanded headcount in engineering, sales, manufacturing engineering and R&D. Additionally, offsets included depreciation and amortization, non-cash interest expense and the change in fair value of debt. The net cash inflows from changes in operating assets and liabilities was $16.8 million, primarily driven by an increase in contract liabilities of $17.1 million due to customer cash receipts and increase in accounts payable of $8.1 million, partially offset by an increase in inventory of $6.1 million for future production and increased 2025 volumes, increase in accounts receivable of $4.1 million due to customer invoicing and increase in grant receivable of $1.8 million.

Current 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.

Previous wording

Net cash used in operating activities was $40.5 million for the three months ended March 31, 2024, primarily driven by a net loss of $46.7 million, adjusted for non-cash items of $3.5 million, primarily related to stock compensation expense, depreciation and amortization, non-cash interest expense and changes in fair value of warrants and derivatives. The net cash inflows from changes in operating assets and liabilities was $2.7 million, primarily driven by increase in accrued expenses of $6.2 million, increase in interest payable of $2.9 million, decrease in inventory of $2.7 million, partially offset by increase in contract assets of $4.6 million, decrease in accounts payable of $2.6 million and increase in grant receivable of $1.5 million.

Current 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.

Previous wording

Net cash flows used in investing activities for the three months ended March 31, 2025 and March 31, 2024 was $4.9 million and $4.0 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 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.

Previous wording

Net cash provided by financing activities was $42.2 million for the three months ended March 31, 2025, primarily due to the proceeds received from the Credit and Securities Purchase Transaction of $38.5 million and from the exercise of warrants of $7.0 million. The proceeds were partially offset by payments on the equipment financing facility of $0.9 million and share repurchases from employees for tax withholding of $0.5 million.

Current 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.

Previous wording

•Future lease payments, including interest, under non-cancellable operating and financing leases of $3.6 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 $3.5 million. The leases expire at various dates prior to 2030.