ESS Tech, Inc.

ESS TECH, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business—ESS Tech, Inc. (“ESS” or the “Company”) is a long-duration energy storage company specializing in iron flow battery technology. ESS designs and produces long-duration iron flow batteries predominantly using earth-abundant materials to provide more clean energy to utilities, independent power producers, and commercial industrial customers by offering reliable, safe, long-duration energy storage solutions.

The Company was founded in 2011 (“Legacy ESS”) and became a publicly traded company through a business combination with a special purpose acquisition company named ACON S2 Acquisition Corp. (“STWO”) which changed its name to ESS Tech, Inc. upon closing (the “Business Combination”). As a result of the Business Combination, Legacy ESS survived and became a wholly owned subsidiary of ESS Tech, Inc. On March 31, 2024, Legacy ESS merged with ESS Tech, Inc. leaving ESS Tech, Inc. as the sole remaining legal entity.

Basis of Presentation—The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Basis and Principles of Consolidation—The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Project New Horizon, LLC, which was formed in October of 2025 and is wholly owned and controlled by the Company. The subsidiary and its activity is immaterial to the results and financial position of the Company as of March 31, 2026. All intercompany accounts and transactions have been eliminated upon consolidation.

Condensed Consolidated Financial Statements—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of the Company’s management, necessary in order to make the condensed consolidated financial statements not misleading. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These condensed consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC on March 5, 2026.

Reclassifications—Certain immaterial prior year amounts have been reclassified to conform with the current year presentation. Inventory write-down and losses on noncancellable purchase commitments separately disclosed within the Statement of Cash Flows within the 2025 Q1 Form 10-Q were reclassified to Changes in inventory and Changes in accounts payable herein. This reclassification had no effect on the net cash used in operating activities.

Liquidity and Capital Resources—The Company has incurred operating losses and cash outflows from operations since inception and the Company anticipates that losses will continue in the near term. During the three months ended March 31, 2026, the Company incurred net losses of $15.9 million and used $13.5 million of cash in operating activities. As of March 31, 2026, the Company had unrestricted cash and cash equivalents of $15.5 million and short-term investments of $6.0 million, or total liquid assets of $21.5 million.

The continuation of the Company as a going concern is dependent upon its ability to obtain additional debt or equity financing and to generate profit from its operations. Management is evaluating various strategies to obtain additional funding, which may include additional offerings of equity, issuance of debt, or other capital sources. There is no assurance that the Company will be able to generate sufficient profits, obtain such financings at all, or obtain them on favorable terms. Any such financing activities are subject to market conditions and accordingly involve factors that are outside the Company’s control. These uncertainties cause substantial doubt to exist as to the Company’s ability to continue as a going concern for 12 months from the issuance of these financial statements. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.

• 9 -

2. SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies have not changed from those disclosed in the annual audited financial statements and accompanying notes in the Annual Report on Form 10-K for the fiscal year ended December 31, 2025 other than as described below.

Recently Issued Accounting Pronouncements—Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures, and in January 2025 issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which clarified the effective date of ASU 2024-03. ASU 2024-03 requires entities to disaggregate operating expenses into specific categories within the notes to the financial statements to provide enhanced transparency. The ASU will be effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and may be applied retrospectively or prospectively. The Company is currently evaluating the effect of this new standard on the Company’s disclosures.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which establishes authoritative guidance on the accounting for government grants received by business entities. The ASU will be effective for fiscal years beginning after December 15, 2028. The Company is currently evaluating the effect of this new standard on the Company’s disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, clarify interim disclosure requirements and the applicability of Topic 270. The amendments are effective for fiscal years beginning after December 15, 2027. The Company is currently evaluating the effect of this new standard on the Company’s disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which makes Codification updates to a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments within the ASU are effective for fiscal years beginning after December 15, 2026. The Company is currently evaluating the effect of this new standard on the Company’s disclosures.

3. INVENTORY

Inventory consists of the following (in thousands):

The balance of the Company’s inventory was written down by $7.2 million and $7.0 million from its cost to its net realizable value as of March 31, 2026 and December 31, 2025, respectively. Additionally, the Company has lower of cost or net realizable value (“LCNRV”) losses related to noncancellable purchase commitments which were $0.1 million as of both March 31, 2026 and December 31, 2025. These LCNRV losses related to noncancellable purchase commitments are reflected in the materials and related purchases component of accrued and other liabilities on the condensed consolidated balance sheets. For further details, refer to Note 9, Commitments and Contingencies.

• 10 -

4. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following (in thousands):

Depreciation expense related to property and equipment, net was $2.3 million and $1.5 million for the three months ended March 31, 2026 and 2025, respectively.

During the first quarter of 2026, management concluded it was necessary to reevaluate the usefulness of fixed assets based on the current stage of the Company’s ongoing research and development activities to support the Energy Base product offering and related technologies. The assessment resulted in an abandonment charge of $0.8 million, substantially all of which was recognized within cost of revenue in the consolidated statement of operations and comprehensive loss, based on the nature of the underlying assets. When an asset has been abandoned, the estimated useful life of the asset is updated to reflect the cease use date, and the remaining carrying value of the asset is amortized ratably between the commitment date and the cease use date. The abandonment charge was determined based on specific review of the underlying assets.

5. INTANGIBLE ASSETS, NET

In September 2023, the Company acquired patent rights valued at $5.0 million under a Patent License Agreement with UOP LLC (“UOP”), an affiliate of Honeywell International Inc. (“Honeywell”), a related party. These patent rights were recorded at fair value based on the value of the IP Warrants issued, as defined in Note 11, Common Stock Warrants, and are amortized over an average useful life of 19 years based on the remaining useful lives of the patents acquired. Amortization expense for the three months ended March 31, 2026 and 2025 was $67 thousand and $67 thousand, respectively.

Intangible assets, net consisted of the following (in thousands):

6. ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities consist of the following (in thousands):

• 11 -

7. ACCRUED PRODUCT WARRANTIES

The following table summarizes product warranty activity (in thousands):

8. FINANCING OBLIGATIONS

On July 10, 2025, the Company entered into a Sale and Leaseback Agreement with UOP, an affiliate of Honeywell, a related party, pursuant to which UOP agreed to purchase the stack assembly line used to build power module stacks for the Company’s products, including Energy Base, for a purchase price of $10.5 million (comprised of $4.0 million in cash and $6.5 million applied to certain pre-payments from UOP), and to lease such equipment back to the Company (the sale of the property and simultaneous leaseback is referred to as a “sale-leaseback”). The lease term is for 7 years unless terminated early. During the lease term, the monthly lease payment from the Company to UOP is $186 thousand, which is split between a reduction of principal and interest expense using the effective interest rate of 11%.

The Company assessed the transaction in accordance with ASC 842, Leases, to determine whether it qualified as a sale and leaseback. However, because the underlying lease agreement met the qualifications to be classified as a finance lease, control of the equipment is not considered to be transferred to the buyer/lessor and thus the transaction does not qualify as a sale and leaseback under ASC 842. As such, the related financing obligation is accounted for in accordance with ASC 470, Debt.

As of March 31, 2026, the carrying value of the financing obligation to UOP was $10.1 million.

Remaining future cash payments related to the financing liability, for the remainder of 2026 and thereafter are as follows (in thousands):

Promissory Note

On October 14, 2025, the Company entered into a promissory note agreement with YA II PN, Ltd. (“Yorkville)” for an aggregate principal amount of $40 million and an original issue discount of 8% (the “Promissory Note”). The Promissory Note was structured intwo tranches, with the first tranche of $30 million (“Tranche 1”) drawn as of the date of the Promissory Note and the second tranche of $10 million (“Tranche 2”) available to be drawn until December 12, 2025.

The Promissory Note was subsequently amended to allow Tranche 2 to be drawn until February 28, 2026. The Company drew Tranche 2 on February 27, 2026, and signed a third amendment to the Promissory Note revising the Tranche 2 repayment schedule to be payable in 12 periodic payments, with a final maturity date of February 27, 2027. The remaining terms and provisions of the Promissory Note are unchanged.

In connection with the Promissory Note, the Company issued common stock warrants to Yorkville (the “Yorkville Promissory Note Warrants”) which were deemed legally detachable and separately exercisable. See Note 11, Common

• 12 -

Stock Warrants. The net proceeds of $36.5 million (after discount and issuance costs) were allocated between the Promissory Note and the Yorkville Promissory Note Warrants on the basis of relative fair value.

Early repayment is permitted. In the event of a default, the interest rate is increased to 18%. The effective interest rate on the outstanding balance and revised repayment schedule is 29%. Interest expense recognized on the Promissory Note during the three months ended March 31, 2026 was $2.4 million, of which $0.1 million was attributable to contractual interest and $2.3 million to amortization of the discount on the Promissory Note. As of March 31, 2026, the net carrying amount of the Promissory Note and the associated discount were $8.5 million and $0.6 million, respectively. The aggregate amount of principal outstanding of $8.5 million is due within 2026.

9. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company, from time to time, is a party to various claims, legal actions, and complaints arising in the ordinary course of business. The Company is not aware of any material legal proceedings or other claims, legal actions, or complaints through the date of issuance of these condensed consolidated financial statements.

Letters of Credit

The Company has a standby letter of credit with Bank of America for $0.6 million as security for the performance and payment of the Company’s obligations under a customer agreement. The letter of credit is in effect until the date on which the warranty period under the agreement expires, which is anticipated to be more than a year from the balance sheet date. As of March 31, 2026, $0.6 million was pledged as collateral for the letter of credit and recorded as restricted cash, non-current. There wereno draws against the letter of credit during either of the three months ended March 31, 2026 and 2025.

The Company has a standby letter of credit with Bank of America for $0.2 million in support of the Company’s customs and duties due on imported materials. The letter of credit is in effect until May 19, 2026. As of March 31, 2026, $0.1 million was pledged as collateral for the letter of credit and recorded as restricted cash, current. There wereno draws made against the letter of credit during the three months ended March 31, 2026 nor 2025.

The Company has a standby letter of credit with Bank of America for $0.3 million as security for its subsidiary’s performance under a 2025 customer agreement. The letter of credit is in effect through the expiration of the customer agreement, which is anticipated to be more than a year from the balance sheet date. As of March 31, 2026, $0.3 million was pledged as collateral for the letter of credit and recorded as restricted cash, non-current. There wereno draws against the letter of credit during the three months ended March 31, 2026 or since its inception.

Credit Agreement

On November 1, 2024, the Company entered into a Credit Agreement with Export-Import Bank of the United States (“EXIM”), as lender, and related agreements related to the financing oftwo production lines. The Credit Agreement provides for a secured loan facility in an aggregate principal amount of up to $22.7 million, of which $20.0 million is available to be borrowed for equipment financing and the balance will be used to finance an exposure fee and transaction expenses. The loan facility has a maturity date of June 30, 2031. Half of the proceeds of the loan facility may be used on a retroactive basis for the financing of the Company’s existing automated battery assembly line and the remainder may be used for the financing or refinancing of an additional line upon the closing of an equity raise milestone. As of March 31, 2026, the Company hadno outstanding borrowings under the Credit Agreement. Any obligations under the Credit Agreement are secured pursuant to a security agreement granting EXIM a first priority security interest in the financed equipment and a securities account containing collateral consisting of cash and cash equivalents in an amount equal to a substantial portion of the disbursements under the Credit Agreement, reportable as restricted cash, that decreases upon the equity raise milestone.

Purchase Commitments

The Company purchases materials from numerous suppliers and has entered into agreements with various contract manufacturers, which include cancellable and noncancellable purchase commitments. As of both March 31, 2026 and December 31, 2025, total unfulfilled noncancellable purchase commitments were $0.1 million. In addition, total unfulfilled cancellable purchase commitments amounted to $0.8 million and $0.9 million as of March 31, 2026, and December 31, 2025, respectively.

Joint Development Agreement

In September 2023, the Company entered into a Joint Development Agreement (“JDA”) with UOP, an affiliate of Honeywell, a related party, under which the parties agreed to work collaboratively to engage in certain research and

• 13 - development activities generally related to flow battery technology. Pursuant to the JDA, the Company agreed to reimburse UOP a minimum of $8.0 million for research and development expenses incurred through December 31, 2028. To date, $0.1 million of expenses have been incurred under the JDA. No expenses were incurred under the JDA during the three months ended March 31, 2026 nor March 31, 2025.

10. STOCKHOLDERS’ EQUITY

Baird ATM Program

On March 31, 2025, the Company entered into an at-the-market sales agreement with Robert W. Baird & Co. Incorporated (“Baird”), pursuant to which the Company sold 616,264 shares for total proceeds, net of commission fees, of $0.7 million. The continuous offering under the ATM prospectus supplement dated March 31, 2025 related to the ATM Offering was terminated on July 11, 2025.

Yorkville Standby Equity Purchase Agreement

On July 9, 2025, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with YA II PN, LTD. (the “Investor”), pursuant to which and subject to the satisfaction of certain conditions, the Investor committed to purchase shares of the Company’s common stock in increments up to an aggregate gross sales price of up to $25 million during the 36 months following the date of the SEPA. The Company had the right, but not the obligation, to direct the Investor to purchase a specified number of shares of common stock by delivering written notice to the Investor (an “Advance Notice”). The Company paid a commitment fee in an amount equal to $250 thousand by issuing 157,768 shares of common stock.

The shares of common stock purchased pursuant to an Advance Notice were purchased at a price equal to 97% of the lowest daily VWAP of the shares during the three consecutive trading days commencing on the date of the delivery of the Advance Notice. The Company may establish a minimum acceptable price in each Advance Notice below which it will not be obligated to make any sales to the Investor. The Company fully utilized the SEPA program as of December 31, 2025.

Yorkville ATM Program

On November 13, 2025, in connection with an at-the-market offering program, the Company entered into a sales agreement with Yorkville Securities, BMO Capital Markets Corp., Canaccord Genuity LC, Needham & Company, LLC and Stifel, Nicolaus & Company, Incorporated. During the three months ended March 31, 2026, the Company sold 1,151,647 shares of common stock for total proceeds, net of commission fees, of $2.1 million.

Registered Direct Offering

In January 2026, the Company issued an aggregate of 3,471,428 shares of common stock and pre-funded warrants to purchase an aggregate of 5,100,000 shares of common stock in a registered direct offering pursuant to a shelf registration statement on Form S-3 registered under the Securities Act (the “RDO”). The RDO closed on January 30, 2026. Total proceeds, net of issuance costs, were $13.6 million.

11. COMMON STOCK WARRANTS

The following tables summarize the number of shares of common stock issuable upon exercise of the respective warrants and the activities in the number of shares of common stock as of the dates indicated:

• 14 -

Public Warrants

As part of STWO’s initial public offering,8,333,287 warrants to purchase common stock (the “Public Warrants”) were sold. Simultaneously with STWO’s initial public offering, STWO issued in a private placement 4,666,667 warrants to purchase common stock (the “Private Warrants”) to STWO’s sponsor. In connection with the Business Combination, STWO’s sponsor agreed to forfeit 583,333 Private Warrants. Of the remaining 4,083,334 Private Warrants,3,500,000 were immediately vested and 583,334 warrants (the “Earnout Warrants”) were vested upon meeting certain earnout milestone events on November 9, 2021. The Private Warrants, including the Earnout Warrants, automatically converted on a 1:1 basis into Public Warrants upon the transfer of such warrants by the initial holder to a third party during the fourth quarter of 2023.

The Public Warrants are listed on the NYSE under the ticker symbol “GWH.W.” Following the Reverse Stock Split, fifteen Public Warrants entitle the holder thereof to purchaseone share of common stock at a price of $172.50 per share, subject to adjustments. The Public Warrants may be exercised only for a whole number of shares of common stock. No fractional shares will be issued upon exercise of the warrants. The Public Warrants expire on October 8, 2026, five years after completion of the Business Combination, or earlier upon redemption or liquidation.

The Company may call the Public Warrants for redemption starting any time, in whole and not in part, at a price of $0.01 per warrant, so long as the Company provides no less than 30 days prior written notice of redemption to each warrant holder, and if, and only if, the reported last sale price of common stock equals or exceeds $270.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders provided there is an effective registration statement covering the shares of common stock issuable upon exercise of the warrants.

The Company may call the Public Warrants for redemption starting any time, in whole and not in part, at a price of $0.10 per warrant, so long as the Company provides no less than 30 days prior written notice of redemption to each warrant holder; provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive a number of shares determined based on the redemption date fair market value of the shares, and if, and only if, the reported last sale price of common stock equals or exceeds $150.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders provided there is an effective registration statement covering the shares of common stock issuable upon exercise of the warrants.

The Company’s common stock warrants were initially recorded at fair value upon completion of the Business Combination and are adjusted to fair value at each reporting date based on the market price of the Public Warrants, with the change in fair value recorded as a component of other income in the condensed consolidated statements of operations and comprehensive loss. For the three months ended March 31, 2026, the Company recorded a net decrease to the common stock warrant liabilities of $344 thousand. For the three months ended March 31, 2025, the Company recorded a net decrease to the common stock warrant liabilities of $115 thousand.

SMUD Warrant

On September 16, 2022, the Company entered into a warrant agreement with the Sacramento Municipal Utility District (“SMUD”), whereby the Company agreed to issue a warrant for up to 33,333 shares of the Company’s common stock at an exercise price of $64.44 per share. The vesting of the shares underlying the warrant are subject to the achievement of certain commercial milestones through December 31, 2030 pursuant to a related commercial agreement. As of March 31, 2026 and December 31, 2025,833 shares underlying the warrant were vested.

• 15 -

Honeywell Warrants

On September 21, 2023, the Company entered into a Common Stock and Warrant Purchase Agreement (the “Purchase Agreement”) with Honeywell ACS Ventures LLC (“Honeywell Ventures”), an affiliate of Honeywell, a related party. Pursuant to the Purchase Agreement, Honeywell invested $27.5 million in the Company and the Company issued 1,099,450 shares of common stock and a warrant to issue up to 708,775 shares of common stock (the “Investment Warrant”) to Honeywell Ventures. Pursuant to the Purchase Agreement and also as further consideration for the licensing by UOP, an affiliate of Honeywell, of certain intellectual property to the Company, the Company issued a warrant to issue up to 417,997 shares of common stock (the “IP Warrant”) to UOP, which UOP subsequently transferred to Honeywell Ventures. The Investment Warrant has an exercise price of $28.35, and the IP Warrant has an exercise price of $43.50. Each warrant will expire on September 21, 2028.

On September 21, 2023, the Company and UOP also entered into a Master Supply Agreement (the “Supply Agreement”), pursuant to which UOP may purchase equipment supplied by the Company. Pursuant to the Supply Agreement, the Company agreed to issue additional warrants to purchase common stock to UOP, consisting of (i) an initial performance warrant to issue up to 51,717 shares of common stock, issued on September 21, 2023 in exchange for a prepayment of equipment by UOP in the amount of $15 million, and (ii) additional performance warrants (not to exceed an aggregate value of $15 million based on target purchase amounts of up to $300 million by 2030) to be issued on an annual basis for thefive-year period beginning in 2026, based on UOP’s purchase of additional equipment after execution of the Supply Agreement (the “Performance Warrants”). The initial Performance Warrant has an exercise price of $21.75 and the additional Performance Warrants will have an exercise price equal to the volume-weighted average price of the Company’s common stock for the last fifteen (15) trading days of the relevant calendar year for which such Performance Warrant is being issued. The initial Performance Warrant will expire on September 21, 2028 and each additional Performance Warrant will have afive-year term from its respective date of issuance.

Bridge Financing Warrants

On July 10, 2025, the Company issued warrants exercisable for an aggregate number of up to 129,312 shares of common stock (the “Bridge Financing Warrants”) to certain directors, officers and other employees and the Investor. The warrants were issued at an exercise price of $3.48 per share, payable in cash or, under certain circumstances, pursuant to net exercise. The exercise period commenced on October 13, 2025, the date the shareholders approved the issuance of the shares issuable upon exercise of the Bridge Financing Warrants. The Bridge Financing Warrants will be exercisable until October 13, 2028.

Yorkville Promissory Note Warrants

On October 14, 2025, the Company issued the Yorkville Promissory Note Warrants exercisable for an aggregate number up to 1,052,104 shares of common stock to Yorkville, in connection with the Promissory Note issued on the same date. The warrants were issued at an exercise price of $9.98 per share, or, under certain circumstances, pursuant to net exercise. The exercise period commenced on October 14, 2025 and will be exercisable until the earlier of (i) October 14, 2030 or (ii) the acquisition of the Company by another entity or the sale, lease or other disposition of all or substantially all of the assets of the Company and its subsidiaries to any party not wholly-owned by the Company (if such events were to occur).

RDO Warrants

On January 30, 2026, the Company issued warrants exercisable for an aggregate number of up to 5,100,000 shares of common stock via the RDO which closed on the same date (the “RDO Warrants”). The warrants were pre-funded at an exercise price of $1.75, of which $1.74999 was paid via the pre-funding as of January 30, 2026. The warrants have no expiration date.

• 16 -

12. STOCK-BASED COMPENSATION

Stock-based compensation expense is allocated on a departmental basis based on the classification of the award holder. The following table presents the amount of stock-based compensation related to stock-based awards issued to employees on the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):

2021 Equity Incentive Plan

In October 2021, the Board of Directors of the Company adopted the ESS Tech, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan became effective upon consummation of the Business Combination. Stock awards under the plan may be issued as Incentive Stock Options (“ISO”), Non-statutory Stock Options (“NSO”), Stock Appreciation Rights, and Restricted Stock Awards (“RSU”). Only employees are eligible to receive ISO awards. Employees, directors, and consultants who provide continuous service to the Company are eligible to receive stock awards other than ISOs. The number of shares available for issuance under the 2021 Plan will be increased on the first day of each fiscal year beginning with the 2022 fiscal year and ending with the 2031 fiscal year, in an amount equal to the lesser of (i)1,017,333 shares, (ii) five percent (5%) of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Company no later than the last day of the immediately preceding fiscal year. As of January 1, 2026, the number of shares available for issuance under the 2021 Plan was increased by 1,017,333 shares in accordance with the plan and as approved by the Board. Under the 2021 Plan, the Company is authorized to issue 3,370,658 shares of common stock as of March 31, 2026.

Option prices for incentive stock options are set at the fair market value of the Company’s common stock at the date of grant. The fair market value of RSUs is set at the closing sales price of the Company’s common stock at the date of grant. Employee new hire grants generally cliff vest 1/4 th at the end of the first year and then vest 1/16 th each quarter over the remaining three years. All other grants generally vest quarterly over four years. Option grants expire 10 years from the date of grant.

As of March 31, 2026, there were 382,302 shares available for future grant under the 2021 Plan.

Stock Options and Restricted Stock Units

Stock option and RSU activity, prices, and values during the three months ended March 31, 2026 are as follows (in thousands, except for share, per share, and contractual term data):

• 17 -

The aggregate intrinsic value of stock options is the fair market value on the reporting date less the exercise price for each option. The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes Merton option-pricing model. For options granted during the three months ended March 31, 2026, the weighted average estimated fair value using the Black-Scholes Merton option pricing model was $1.57 per option. No options were granted during the three months ended March 31, 2025.

In accordance with ASC 718, the fair value of each option grant during the three months ended March 31, 2026 has been estimated as of the date of grant using the following weighted average assumptions:

As of March 31, 2026, there was approximately $4.2 million of unamortized stock-based compensation expense related to unvested stock options and RSUs, which is expected to be recognized over a weighted-average period of 3.79 years.

Employee Stock Purchase Plan

In May 2022, the Company commenced its first offering period under the ESS Tech, Inc. Employee Stock Purchase Plan (the “ESPP”), which assists employees in acquiring a stock ownership interest in the Company. The ESPP permits eligible employees to purchase common stock at a discount through payroll deductions during specified offering periods. No employee may purchase more than $25,000 worth of stock in any calendar year. The price of shares purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. Total ESPP expense for the three months ended March 31, 2026 and March 31, 2025 was $19 thousand and $51 thousand, respectively.

The number of shares available for issuance under the ESPP will be increased on the first day of each fiscal year beginning with the 2022 fiscal year and ending with the 2041 fiscal year, in an amount equal to the lesser of (i)204,000 shares, (ii) one percent (1%) of the outstanding shares on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Company no later than the last day of the immediately preceding fiscal year. As of January 1, 2026, the number of shares available for issuance under the 2021 Plan was increased by 204,000 shares in accordance with the plan and as approved by our compensation committee of our board of directors. As of March 31, 2026, there were 239,176 shares available for future grant under the 2021 ESPP Plan.

Stock-based Payments to Nonemployees

The Company compensated certain vendors and third parties, including MZHCI, LLC pursuant to an agreement to provide investor relations consulting services to the Company, for services rendered and assets purchased partially through issuance of common stock. Stock-based compensation expense to nonemployees for the three months ended March 31, 2026 was $0.3 million. No stock-based compensation expense to nonemployees was incurred for the three months ended March 31, 2025.

• 18 -

13. FAIR VALUE MEASUREMENTS

The following tables present the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis (in thousands):

The following tables present the Company’s fair value hierarchy for its financial liabilities measured at fair value on a recurring basis (in thousands):

There were no transfers among Level 1, Level 2, or Level 3 categories during the periods presented. The carrying amounts of the Company’s accounts payable approximate their fair values due to their short maturities.

• 19 -

Level 1 Assets: The Company invests in money market funds and U.S. Treasury securities. These assets are valued using observable inputs that reflect quoted prices for securities with identical characteristics.

Level 2 Assets: The Company invests in commercial paper. These assets are valued using observable inputs that reflect quoted prices for securities with similar characteristics and other observable inputs (such as interest rates that are observable at commonly quoted intervals).

Level 1 Liabilities: The Company values its public common stock warrants based on the market price of the warrants.

For trading securities held at the reporting date, net losses recorded during the three months ended March 31, 2026 and 2025 were immaterial.

14. INCOME TAXES

The Company didnot record an income tax provision for the three months ended March 31, 2026 and 2025, respectively, due to the Company’s history of losses, and accordingly, has recorded a valuation allowance against substantially all of the Company’s net deferred tax assets. The Company records a valuation allowance when it is more likely than not that some portion, or all, of the Company’s deferred tax assets will not be realized.

15. REVENUE

Disaggregated Revenue

The following table presents the Company’s revenue, disaggregated by source (in thousands):

The majority of the Company’s revenue is derived from product sales of energy storage systems and from extended warranty services.

Contract Balances

Contract assets relate to unbilled amounts resulting from contract arrangements in which the related revenue recognition performance obligations have been satisfied, however invoicing to the customer has not yet occurred. Deferred revenue (or contract liabilities) relates to consideration received from customers in advance of the Company satisfying the revenue recognition performance obligations under the related contractual arrangements. Contract balances are reported in a net contract asset or deferred revenue liability position on a contract-by-contract basis at the end of each reporting period. Contract assets are included in prepaid expenses and other current assets and deferred revenue is presented separately on the condensed consolidated balance sheets.

The following table provides information about contract assets and deferred revenue from contracts with customers (in thousands):

Contract assets increased by $115 thousand during the three months ended March 31, 2026 due to the recognition of revenues for which invoicing had not yet occurred. See further discussion in Note 18, Segment and Other Information. Deferred revenue decreased by $13 thousand during the three months ended March 31, 2026 reflecting the recognition of revenue that was included in the deferred revenue balance at the beginning of the period.

Deferred revenue of $0.3 million is expected to be recognized within the next 12 months and non-current deferred revenue of $5.3 million is expected to be recognized thereafter as firm orders are received and fulfilled. Additionally, contracted but unsatisfied performance obligations that had not yet been billed to the customer or included in deferred revenue were $0.9 million as of March 31, 2026, for which timing of recognition is uncertain.

• 20 -

16. RELATED PARTY TRANSACTIONS

During the three months ended March 31, 2026 and March 31, 2025, the Company recognized revenue of $6 thousand and $28 thousand, respectively, for reimbursable expenses and extended warranty services provided to related parties.

As of March 31, 2026, the Company had $189 thousand of deferred revenue for extended warranty services and equipment purchases to related parties. As of December 31, 2025, the Company had $194 thousand of deferred revenue for extended warranty services provided to related parties andno outstanding accounts receivable from related parties.

As of March 31, 2026 and December 31, 2025, the Company recorded a non-refundable deposit for future equipment purchases by Honeywell of $5.3 million within non-current deferred revenue. As of March 31, 2026 and December 31, 2025, the value of the initial Performance Warrant issued to Honeywell was $0.6 million, and included within other non-current assets in the condensed consolidated balance sheets. The value of the initial Performance Warrant will be recognized as an offset to revenue in the period in which revenue is earned.

See also Note 5, Intangible Assets, Net, Note 8, Financing Obligationsand Note 11, Common Stock Warrants.

17. NET LOSS PER SHARE

The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):

Due to the net losses for the three months ended March 31, 2026 and 2025, basic and diluted net loss per common share were the same, as the effect of potentially dilutive securities would have been anti-dilutive. In accordance with ASC 260, Earnings Per Share, the 5,100,000 shares of common stock underlying the pre-funded RDO Warrants were considered outstanding common shares as of January 30, 2026, the date the warrants were issued, given they are do not contain vesting conditions and are issuable for little cash consideration. As of March 31, 2026,4,350,000 of the RDO Warrants remained unexercised but are included in common shares outstanding in the calculation of loss per share. See Note 11, Common Stock Warrants.

The following outstanding balances of equivalent securities have been excluded from the calculation of diluted weighted-average common shares outstanding because the effect is anti-dilutive for the periods presented:

18. SEGMENT AND OTHER INFORMATION

The Company has determined that its Chief Executive Officer is its chief operating decision maker (“CODM”). The Company operates as a single business operating segment, which includes all activities related to the design, engineering, and manufacturing of the Company’s long duration energy storage products. Accordingly, the CODM uses gross loss and net loss as reported in the statements of operations to assess financial performance and inform decisions on how to allocate resources. The financial information provided to the CODM does not contain significant disaggregated expenses outside of what is already disclosed in the statements of operations. The CODM does not evaluate results using asset or liability information.

• 21 -

During the three months ended March 31, 2026 and March 31, 2025, one customer accounted for 96% and 94% of total revenue, respectively. The Company’s revenue is derived from U.S. and international customers but during the three months ended March 31, 2026 was derived only from customers in the U.S.

• 22 -