SES AI Corp

Notes to Condensed Consolidated Financial Statements

(Dollars in thousands, unless otherwise stated)

Note 1. Nature of Business

Organization

SES AI Corporation and its consolidated subsidiaries (together the “Company” or “SES”), is a leading developer and manufacturer of high-performance, artificial intelligence (“AI”)-enhanced Lithium-Metal (“Li-Metal”) and Lithium-ion (“Li-ion”) rechargeable battery technologies for electric vehicles (“EVs”), Urban Air Mobility (“UAM”), drones, robotics, Energy Storage Systems (“ESS”) and other applications. The Company’s mission is to accelerate the world’s energy transition through AI-enhanced material discovery and battery management. SES accelerates its pace of innovation by utilizing superintelligent AI across the spectrum of our business, from research and development, materials sourcing, cell design, engineering and manufacturing, to battery health and safety monitoring. The Company’s headquarters are located in Woburn, Massachusetts with research and development facilities located there, in Shanghai and Shenzhen, China, and in Chungju, South Korea. Principal operations have commenced, and the Company has derived revenue from its principal business activities starting in October 2024.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the condensed consolidated financial statements for the interim periods presented. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year or any other future interim or annual periods. All intercompany balances and transactions have been eliminated in consolidation. The Company’s fiscal year ends on December 31.

The year-end balance sheet data was derived from audited consolidated financial statements. These unaudited interim condensed consolidated financial statements do not include all of the annual disclosures required by U.S. GAAP; accordingly, they should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2025 included in the 2025 Annual Report on Form 10-K.

Use of estimates

The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of commitments and contingencies, and the reported amounts of revenues, if any, and expenses. The Company bases its estimates on available historical experience and on various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from those estimates.

Significant estimates and assumptions include those related to the valuation of (i) certain equity awards including, the Sponsor Earn-Out Shares (as defined below), and performance stock units, (ii) revenue from customers, (iii) deferred tax assets and uncertain income tax positions, (iv) the measurement of operating lease liabilities, (v) the evaluation of the recoverability of long-lived assets and intangible assets, including goodwill, (vi) fair value measurement of acquired intangible assets and deferred consideration, and (vii) warranty reserve. On an ongoing basis, the Company evaluates these judgments and estimates for reasonableness.

Accounts Receivable

As of December 31, 2024, our accounts receivable was$1.0 million.

Inventories

Inventory is stated at the lower of average cost or net realizable value on a first-in, first-out basis. Inventory costs include purchase of materials, freight, storage, hauling, and certification costs. The cost-basis of the Company’s inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions. Once established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory and cannot be reversed due to subsequent increases in demand forecasts. As of June 30, 2026 and December 31, 2025, the Company didnot have excess or obsolete inventory reserves.

Inventories consisted of the following:

Fair Value Measurements

Fair value is defined as an exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.

The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. GAAP establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:

Level 1 Observable inputs such as quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3 Unobservable inputs in which there are little or no market data and which require the Company to develop its own assumptions.

Certain of the Company’s financial instruments, including cash and cash equivalents, accounts payable, accrued expenses and other current liabilities are carried at cost, which approximates their fair value because of their short-term nature. The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:

(1) Fair value was determined using publicly quoted market prices obtained from third-party sources in their respective markets.

(2) Fair value was determined using the Black Scholes option pricing formula capped call and capped put methodology using risk adjusted discount rate for the revenue and adjusted revenue forecasts.

There wereno transfers in or out of Level 3 measurements during the three and six months ended June 30, 2026 and 2025.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03,Disaggregation of Income Statement Expenses, which requires more detailed information about the types of expenses included in certain expense captions presented on the consolidated statements of operations. Additionally, this amendment requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and the disclosure of the total amount of selling expenses. The new standard is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact of adoption on our consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05,Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows for a practical expedient election to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset in the development of a reasonable and supportable forecast as part of estimating expected credit losses. The new standard is effective for annual periods beginning after December 15, 2025, with early adoption permitted. We are currently evaluating the impact of adoption on our consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06,Targeted Improvements to the Accounting for Internal-Use Software, which removes references to project stages and clarifies the timing of capitalizing costs based on certain thresholds. Additionally, this amendment requires certain disclosures in the notes to the financial statements regardless of financial statement presentation of software costs. The new standard is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods with early adoption permitted. We are currently evaluating the impact of adoption on our consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-10,Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which adds guidance to ASC 832 on the recognition, measurement, and presentation of government grants. The new standard is effective for annual periods beginning after December 15, 2028, and interim periods within those annual reporting periods with early adoption permitted. We are currently evaluating the impact of adoption on our consolidated financial statements.

The Company has reviewed all accounting pronouncements issued during the three months ended June 30, 2026 and concluded that they were either not applicable or not expected to have a material impact on the Company’s condensed consolidated financial statements.

Note 3. Acquisitions

Acquisition of Shenzhen UZ Energy Co. Ltd.

On July 25, 2025, our wholly owned subsidiary, SES AI International I Pte Ltd, entered into a Share Transfer and Share Purchase Agreement (the “Agreement”) with UZ Energy and its shareholders to acquire 100% of the share capital of Shenzhen UZ Energy Co. Ltd. (“UZ Energy”), a China-based battery energy storage system manufacturer. The acquisition closed on September 15, 2025 (the “Closing”). The acquisition of UZ Energy wasaccounted for as a business combination and the results of UZ Energy’s operations from the date of closing have been included in our condensed consolidated financial statements.

The aggregate consideration for the acquisition of UZ Energy was approximately* *RMB 183.5 million ($25.8 million), consisting of the purchase consideration of approximately RMB 93.5 million ($13.1 million) and a capital contribution of RMB 90.0 million ($12.6 million) made by the Company in exchange for newly issued shares of UZ Energy. Purchase consideration consisted of cash payments of approximately RMB 23.5 million ($3.3 million), which was paid during the fourth quarter of 2025, and deferred consideration of approximately RMB 70.0 million ($8.0 million) tied to performance targets, assuming such targets are met but not exceeded. At the Closing, total purchase consideration was valued at RMB 83.3 million ($12.0 million), reflecting the acquisition date fair value of the deferred cash payments. The capital contribution was excluded from purchase consideration as the proceeds will remain with UZ Energy and will be used for working capital requirements.

The deferred consideration is contingent on UZ Energy meeting specified thresholds relating to revenue and cash balances for fiscal years 2025 and 2026. As of the Closing, the fair value of the deferred consideration was estimated using a Black-Scholes option-pricing model. As of June 30, 2026, the possible outcomes for the range of deferred cash payments, on an undiscounted basis, are from $1.5 million to $12.2 million. The analysis considered, among other items, contractual terms of the Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue and cash balance thresholds required for payment of the deferred consideration will be achieved. The Company recorded the acquisition date fair value of the short-term portion of the deferred payment liability within deferred consideration, current.

The purchase price was allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill. Goodwill is primarily attributed to the expected synergies from future expected economic benefits, including enhanced revenue growth from expanded products and capabilities related to ESS, as well as substantial cost savings from duplicative overheads, streamlined operations and enhanced efficiency. Goodwill isnot deductible for tax purposes. The following table summarizes the preliminary allocation of the purchase price (in thousands):

The above fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the reporting date. The fair values include Level 3 unobservable inputs and were determined using generally accepted valuation techniques. The Company’s allocation of the purchase price to certain assets acquired and liabilities assumed is provisional and the Company will continue to adjust those estimates as additional information pertaining to events or circumstances present as of the closing becomes available and final valuation and analysis are completed. The Company will finalize the purchase price allocation no later than one year from the acquisition date.

The following table presents a reconciliation of the deferred consideration liability:

The deferred consideration liability, which was measured at fair value on the Closing, and was remeasured to fair value for actual 2025 results and expected 2026 results. The change in fair value was recorded within miscellaneous expense, net of the Company’s Consolidated Statements of Operations and Comprehensive Loss.

The following table sets forth the components of the identifiable intangible assets acquired and their estimated fair values and useful lives as of the date of the acquisition:

The amount of revenue and pre-tax loss the Company recognized from the acquired company during the period ended June 30, 2026, which is included in the consolidated statements of operations and comprehensive loss, was approximately $9.5 million and $1.3 million, respectively.

The Company has not included pro-forma financial information for the acquisition of UZ Energy in these condensed consolidated financial statements. It was determined that the preparation of such information is impracticable as UZ Energy was a foreign, privately held entity that did not historically maintain financial statements in accordance with the U.S. GAAP. The Company has, however, included the results of UZ Energy's operations in its condensed consolidated financial statements from the Closing date forward.

Note 4. Revenue

We disaggregate our revenue from customers by the type of arrangement, primarily from the sale of battery products and energy storage system products as well as from providing research and development services, as this depicts how the nature, amount, timing, and cash flows are affected by economic factors. The following table summarizes the Company’s disaggregated revenue:

During the three months ended June 30, 2026, the Company recognized a constraint on variable consideration of $0.8 million for deferred income expected to be earned over the next three years. The constraint was recognized because the multi-year contract has not been executed and SES only has the right to bill for first year consideration. We expect this fully constrained balance to reverse in future periods upon the execution of the contract.

Contract Assets

The Company records accounts receivable when the right to consideration is unconditional, subject only to the passage of time. Contract assets primarily relate to product shipments. The Company does not have the right to bill and collect revenue for certain performance obligations until the milestone is complete. Estimated revenue related to certain product shipments cannot be billed or collected until customer acceptance of the product is completed. Contract assets are included in prepaid and other current assets in the Company's consolidated balance sheets. The following table reflects the change in contract assets for the three and six months ending June 30, 2026 and 2025, respectively:

Contract Liabilities

Contract liabilities primarily relate to the advance consideration received from customers. Contract liabilities are included in accrued expenses and other current liabilities in the Company’s consolidated balance sheets. The following table reflects the change in contract liabilities for the three and six months ending June 30, 2026 and 2025, respectively:

Warranty Liability

Warranty expense is recorded in cost of revenues and the related liabilities are record in accrued expenses and other current liabilities and other liabilities based on expected warranty term. The following table reflects the change in warranty liability for the three and six months ending June 30, 2026:

Note 5. Cash and Cash Equivalents

Cash, cash equivalents, and restricted cash consisted of the following:

Restricted cash includes cash held in checking and money market funds as collateral to secure certain insurance policies and a letter of credit for corporate lease activity.

Note 6. Short-Term Investments

Marketable Securities

The following table provides amortized costs, gross unrealized gains and losses, and fair values for the Company’s investments in available-for-sale U.S. treasury securities as of June 30, 2026 and December 31, 2025, which have maturity dates that range from 2 month to 7 months and 1 month to 10 months, respectively. Fair value was determined using market prices obtained from third-party sources. Realized gains or losses were insignificant for the three and six months ended June 30, 2026 and 2025.

The Company has an available-for-sale equity security investment with an initial cost of$0.5 million. As of June 30, 2026 and December 31, 2025, the investment had a fair value of$0.7 million and$0.9 million, respectively. The Company recorded an unrealized loss of$0.2 million and an unrealized gain of$0.3 million for the six months ended June 30, 2026 and 2025, respectively, andno change and a$0.1 million unrealized gain in fair value for the three months ended June 30, 2026, and 2025, respectively. This change in fair value is recorded within miscellaneous (expense) income, net in the condensed consolidated statements of operations and comprehensive loss.

Note 7. Accrued Expenses and Other Current Liabilities

The components of accrued expenses and other current liabilities consisted of the following:

Note 8. Government Grant

In December 2022, the Company was awarded a grant (the “Grant”) from certain Korean government agencies. The incentives received under the Grant, which is in the form of cash, can be used for facilities related expenses and the purchase of property and equipment. The Company is required toadhere to the following conditions attached to the incentives, which include purchase of a government grant guarantee insurance policy, required minimum investments into specified spending categories and the creation of a minimum amount of permanent full-time jobs in a certain geographical location over the next five years, with the option to extend to 10 years by remaining in a certain geographical location. If determined that we were ineligible to receive the Grant, we could be required to repay the Grant in entirety with interest. The Company has yet to fulfill the required minimum investment and minimum employment conditions hence interest payable was recorded. Compliance with these conditions will continue to be monitored over the remaining grant period.

As of June 30, 2026 and December 31, 2025, the Company has received, but not yet earned, cash grants of 12.0 billion Korean won. These principal balances are equivalent to $7.7 million and $8.1 million, after translation, as of June 30, 2026 and December 31, 2025, respectively, which after including interest, is disclosed as unearned government grant in the condensed consolidated balance sheets.

Note 9. Sponsor Earn-Out Liabilities

The Sponsor Earn-Out shares in Tranche 2 through Tranche 5 have been measured at their estimated fair value using a Monte Carlo simulation valuation model. Inherent in the valuation model are assumptions related to expected stock price volatility, risk-free interest rate, expected term, and dividend yield. The key inputs used in the Monte Carlo simulation model at their respective measurement dates were as follows:

The stock price is based on the closing price of the Company’s Class A common stock as of the valuation date and simulated through the end of the earn-out period following Geometric Brownian Motion. The Company estimates the volatility of its common stock by using a weighted average of historical volatilities of SES’s shares and warrants and select peer companies’ common stock that matches the expected term of the awards (range of the weighted average of volatility was 92.9% -99.9% and 96.2% -101.2% as of June 30, 2026 and December 31, 2025, respectively). The expected term is derived from a probability weighted model, considering a number of inputs, including the probability of a change in control. The risk-free interest rate is based on the yield curve for zero-coupon U.S. Treasury notes with maturities corresponding to the expected term of the awards. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.

The following table provides a reconciliation of the beginning and ending balances for the Sponsor Earn-Out liabilities:

Note 10. Commitments and Contingencies

Commitments

In December 2021, the Company amended the lease agreement for an office space in Woburn, Massachusetts. The amendment includes an obligation for the Company to pay monthly relinquishment charges (equal to the total rental obligation for the duration of the lease term) only if the new tenant does not pay the monthly rental amount and the lessor has provided a notice to collect the relinquishment charges from the Company. As of June 30, 2026, the Company assessed the probability of any liability to be incurred for relinquishment charges as remote.

Deferred Consideration

Under the terms of the acquisition agreement for UZ Energy, the Company recognized contingent liabilities related to purchase consideration payments to UZ Energy shareholders. These payments are contingent onmeeting specified thresholds relating to revenue and cash balances for fiscal years 2025 and 2026, which are further detailed in Note 3.

Legal Contingencies

From time-to-time, the Company may be subject to claims arising in the ordinary course of business or become involved in litigation or other legal proceedings.

Securities Class Action Litigation

On April 27, 2026, a putative class action lawsuit was filed in the United States District Court for the District of Massachusetts against the Company and certain of the Company’s current officers, by alleged shareholders of the Company on behalf of purchasers of Class A Common Stock between January 2025 and March 2026. The complaint alleges claims under Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 thereunder, and alleges that the Company made false statements and/or omissions in its SEC and other public disclosures about its business prospects, and, as a result, the plaintiff suffered damages in an unspecified amount. The Company intends to defend itself vigorously against the claims and to take the necessary steps to endeavor to have them dismissed. Based on information available at the litigation’s current stage, the Company cannot reasonably predict its outcome or any potentially associated losses, which are inherently uncertain.

Shareholder Derivative Litigation

On July 6, 2026, a shareholder derivative action was filed in the United States District Court for the District of Massachusetts against certain of the Company’s current and former directors, with the Company as nominal defendant, by alleged shareholders of the Company. The complaint alleges that the individual defendants breached various duties to the Company and contains additional similar allegations based on the same general allegations in the class action described under “Securities Class Action Litigation.” The Company intends to defend itself vigorously against the claims and to take the necessary steps to endeavor to have them dismissed. Based on information available at the litigation’s current stage, the Company cannot reasonably predict its outcome or any potentially associated losses, which are inherently uncertain.

On August 3, 2026, a second shareholder derivative lawsuit was filed in the United States District Court for the District of Massachusetts against certain of the current and former members of the Board of Directors, with the Company as nominal defendant, by alleged shareholders of the Company. The complaint alleges that the individual defendants breached various duties to the Company and contains additional similar allegations based on the same general allegations in the class action described under "Securities Class Action Litigation".

The Company intends to defend itself vigorously against the claims and to take the necessary steps to endeavor to have them dismissed. Based on information available at the litigation’s current stage, the Company cannot reasonably predict its outcome or any potentially associated losses, which are inherently uncertain

Indemnifications

The Company enters into indemnification provisions under agreements with other companies in the ordinary course of business, including, but not limited to, partnerships, landlords, vendors, and contractors. Pursuant to these arrangements, the Company agrees to indemnify, defend, and hold harmless the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification provisions. In addition, the Company indemnifies its officers, directors, and certain key employees against claims made with respect to matters that arise while they are serving in their respective capacities as such, subject to certain limitations set forth under applicable law, and applicable indemnification agreements. The Company maintains insurance, including commercial general liability insurance, product liability insurance, and directors and officers insurance to offset certain potential liabilities under these indemnification provisions. To date, there have been no claims under these indemnification provisions.

Note 11. Income Taxes

The Company’s effective tax rate for the three and six months ended June 30, 2026 was (0.6)% and (1.5)%, respectively, compared with (3.4)% and (2.1)% for the three and six months ended June 30, 2025. The difference between the provision for income taxes and the income tax determined by applying the statutory federal income tax rate of 21% principally results from income taxes on earnings from its foreign tax jurisdictions offset by losses generated in the U.S. where no benefit was recorded because the Company had fully reserved its deferred tax assets as of June 30, 2026 and December 31, 2025 and the recording of uncertain tax positions and interest expense.

Note 12. Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing net loss, as adjusted for changes in fair value recognized in earnings from equity contracts classified as liabilities, by the weighted average number of common shares outstanding and, when dilutive, common share equivalents from outstanding stock options and restricted stock units (using the treasury-stock method). The weighted-average number of common shares used in the computation of basic and diluted net loss per share were as follows:

The number of common stock equivalents excluded from the computation of diluted net loss per share because either the effect would have been anti-dilutive, or the performance criteria related to such shares and awards had not been met, were as follows:

Note 13. Segment and Geographic Information

Operating Segments

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates inone operating and reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. The CODM uses operating income (loss) as the measure of financial performance and for resource allocation decisions.

Significant Expenses

The Company concluded it operates asone operating and reportable segment based on the information regularly reviewed by the CODM for decision making, resource allocation, and evaluating financial performance. The information regularly reviewed by the CODM is summarized into the following significant expense categories:

Geographic & Concentration Information

For the three and six months ended June 30, 2026, revenue outside of the United States, based on customer billing address, was 90% and 89% of total revenue, respectively. For the three and six months ended June 30, 2026, there was no significant revenue concentration. As of June 30, 2026, there were two customers that accounted for 29% and 12% of accounts receivable, respectively.

Note 14. Variable Interest Entities

A variable interest entity ("VIE") is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of owning a controlling financial interest. When SES determines that it has a variable interest in a VIE, a qualitative evaluation is performed to assess which interest holders have the power to direct the activities that most significantly impact the economic performance of the entity and have the obligation to absorb losses or receive benefits that could be significant to the entity. The evaluation considers the purpose and design of the business, the risks that the business was designed to create and pass along to other entities, the activities of the business that can be directed and which party can direct them, and the expected relative impact of those activities on the economic performance of the business through its life. SES has the power to direct the activities of an entity when it has the ability to make key operating and financing decisions, including, but not limited to, capital investment and the issuance of debt. Based on the evaluation of these criteria, SES has determined it is the primary beneficiary of certain entities and as such is required to account for the VIEs on a consolidated basis.

Hisun VIE

On October 29, 2025, SES entered into an agreement (the “Agreement”) with Hisun New Energy Material Ltd Co. (“Hisun”) to form Molecular Universe Materials Pte. Ltd. (the “MUMPL”), a Singapore private limited company, to supply and sell battery electrolytes globally. The JVC was formed in April 2026 upon SES’s initial $3.0 million cash contribution.

Total initial equity capitalization is expected to be $5.0 million, of which SES is required to contribute $4.5 million, or 90%, and Hisun is required to contribute $0.5 million, or 10%. As of June 30, 2026, SES had funded $3.0 million with the remaining $1.5 million required to be funded by Q3 2026. No non-cash assets or intellectual property were contributed as equity capital. Intellectual property and services provided by SES and Hisun are made available to the MUMPL under separate commercial agreements.

The JVC is a variable interest entity because its equity investment at risk is not sufficient to permit it to finance its activities without additional subordinated financial support, as SES is contractually obligated to fund all working capital reasonably required for its operations. SES concluded it is the primary beneficiary because it has the contractual right to appoint a majority of the MUMPL's board of directors and its senior management and therefore directs the activities that most significantly impact the MUMPL's economic performance. Hisun's board and consent rights are protective and are not substantive participating rights. Accordingly, SES consolidates the MUMPL from the date of formation, and Hisun's 10% interest is presented as a noncontrolling interest within permanent equity.

SES holds a unilateral option, exercisable beginning on the third anniversary of the Agreement, to purchase Hisun's shares at fair market value. The option is not accounted for as a derivative because the underlying shares are not readily convertible to cash.

As of June 30, 2026, the JVC's assets consisted of $1.7 million of cash and cash equivalents, $1.4 million of accounts receivable, $0.3 million in prepaids, and liabilities of $0.4 million in accounts payable and other current liabilities, each included in the corresponding captions of the condensed consolidated balance sheet. Other than the initial contributions and working capital funding obligation described above, SES has not provided, and is not contractually required to provide, financial support to the JVC.