Energy Vault Holdings, Inc.

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Energy Vault Holdings, Inc., which together with its subsidiaries is referred to herein as “Energy Vault” or the “Company”, develops and deploys utility-scale energy storage solutions designed to aid in the global transition to a clean energy future. The Company’s mission is to provide energy storage solutions to accelerate the global transition to renewable energy.

The Company primarily relies on two models for project delivery, which are (i) EPC delivery and (ii) EEQ delivery. Under the EPC model, we generally rely on third-party EPC firms to construct our storage systems, under our supervision with dedicated teams tasked with project management. Under the EEQ model, we are responsible for the delivery of the equipment we provide, as well as resolving issues within our scope of supply.

Our current business model options include:

•Selling energy storage products to third-parties, including constructing and delivering fully operational energy storage systems under an EPC model and delivering energy storage equipment under an EEQ model;

•Building, operating, and holding energy storage systems as equity (co-) sponsor that may provide recurring revenue in the future;

•Taking a minority stake in an energy storage project where we provide EPC, EEQ, or long-term services, allowing us to participate in the project’s long-term economics while strengthening alignment with strategic customers;

•Recurring software revenue through licensing software for asset management and use case applications;

•Recurring service revenue through long term service agreements, and;

•IP licenses and royalties associated with our energy storage technologies that may provide recurring revenues in the future.

Energy Vault was originally incorporated under the name Novus Capital Corporation II as a special purpose acquisition company in the state of Delaware in September 2020 with the purpose of effecting a merger with one or more operating businesses. On September 8, 2021, Novus announced that it had entered into a merger agreement with Legacy Energy Vault that would result in a merger (the “Merger”). Upon the closing of the Merger on February 11, 2022, Novus was immediately renamed to “Energy Vault Holdings, Inc.” The Merger between Novus and Legacy Energy Vault was accounted for as a reverse recapitalization.

Throughout the notes to the consolidated financial statements, unless otherwise noted, the “Company,” “we,” “us,” or “our” and similar terms refer to Legacy Energy Vault and its subsidiaries prior to the consummation of the Merger, and Energy Vault and its subsidiaries after the consummation of the Merger.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared on an accrual basis of accounting in accordance with GAAP and applicable rules and regulations of the SEC regarding financial reporting.

Principles of Consolidation

These consolidated financial statements include Energy Vault Holdings, Inc., its wholly owned subsidiaries, and a majority owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation.

Emerging Growth Company

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s consolidated financial statement with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Use of Estimates

The preparation of the consolidated financial statements, in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company evaluates its assumptions on an ongoing basis. The Company’s management believes that the estimates, judgment, and assumptions used are reasonable based upon information available at the time they are made. Estimates made by management include, among others, revenue recognition, provision for credit losses, warranty accruals, and stock-based compensation. Due to the inherent uncertainty involved in making assumptions and estimates, changes in circumstances could result in actual results differing from those estimates, and such differences could be material to the Company’s consolidated financial condition and results of operations.

Liquidity

The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the normal course of business.

Since our inception in October 2017, we have incurred significant net losses and have used significant cash in our business. As of December 31, 2024 and 2023, we had accumulated deficits of $383.8 million and $248.1 million, respectively, and net losses of $135.8 million and $98.4 million, respectively, for the years ended December 31, 2024 and 2023. We anticipate that we will incur net losses for the foreseeable future and there is no guarantee that we will achieve or maintain profitability.

The assessment of liquidity requires management to make estimates of future activity and judgments about whether the Company can meet its obligations and have adequate liquidity to operate. Subsequent to December 31, 2024, the Company took various actions to enhance its liquidity position, which included:

•Executing Calistoga Resiliency Center hybrid energy storage system financing arrangements for an aggregate principal amount of $27.8 million.

•Executing a Tax Credit Transfer Commitment with a third-party purchaser pursuant to which the Company agreed to sell the ITC generated by the Calistoga Resiliency Center hybrid energy storage system associated with above project financing. The agreement also allows the Company to sell the ITCs for the Cross Trails BESS and Snyder CDU microgrid, pending project financing and completion of the construction capital expenditures.

•Executing an Equity Purchase Agreement with an Equity Investor, in which the Company has the right at its sole discretion, but not the obligation, to sell to the Equity Investor, and the Equity Investor is obligated to purchase, up to $25.0 million of newly issued shares of the Company’s common stock.

Management believes that its cash, cash equivalents, and restricted cash on hand as of the filing date of this Annual Report, along with the actions taken subsequent to December 31, 2024, will be sufficient to fund our operating activities for at least the next twelve months. Refer to Note 21 -Subsequent Events for further details on the transactions executed subsequent to December 31, 2024.

Segment Reporting

The Company reports its operating results and financial information inone operating and reportable segment. Our chief operating decision maker (“CODM”), which is our chief executive officer, reviews our operating results on a consolidated basis and uses that consolidated financial information to make operating decisions, assess financial performance, and allocate resources.

Concentration of Credit and Other Risks

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, accounts receivable, and customer financings receivable.

Risks associated with cash and cash equivalents and restricted cash are mitigated by banking with creditworthy institutions. Such balances with any one institution may, at times, be in excess of federally insured amounts.

As of December 31, 2024, one customer accounted for 100% of accounts receivable. As of December 31, 2023, one customer accounted for 92% of accounts receivable.

As of December 31, 2024 and 2023, one customer accounted for 100% of the customer financing receivable.

Revenue from two customers accounted for 75% and 19% of total revenue, respectively, for the year ended December 31, 2024 and revenue from three customers accounted for 64%,22%, and 13% of total revenue, respectively, for the year ended December 31, 2023.

Foreign Currency

Assets and liabilities denominated in a foreign currency are translated into U.S dollars using the exchange rates in effect at the balance sheet date. Revenue and expense accounts are translated at the average exchange rates during the periods. The impact of exchange rate fluctuations from translation of assets and liabilities is included in accumulated other comprehensive loss, a component of stockholders’ equity. As of December 31, 2024, accumulated other comprehensive loss included a $0.1 million loss related to currency translation adjustments. As of December 31, 2023, accumulated other comprehensive loss included a $0.3 million loss related to currency translation adjustments.

Gains and losses resulting from foreign currency transactions are included in other income (expense), net in the accompanying consolidated statements of operations and comprehensive loss.

Fair Value Measurements

ASC 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Level I — Inputs which include quoted prices in active markets for identical assets and liabilities.

Level II — Inputs other than Level I that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level III — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Revenue Recognition

The Company recognizes revenue from contracts with customers in accordance with ASC 606, Revenue from Contracts with Customers(“ASC 606”). Under ASC 606, revenue is recognized when, or as, control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for the goods and services transferred. The Company determines revenue recognition through the following steps:

(1)Identification of the contract, or contracts, with a customer.

(2)Identification of the performance obligations in the contract.

(3)Determination of the transaction price.

(4)Allocation of the transaction price to the performance obligations in the contract.

(5)Recognition of revenue when, or as, a performance obligation is satisfied.

Once a contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses if these options provide a material right to the customer and if so, they are considered performance obligations. The identification of material rights requires judgments related to the determination of the value of the underlying good or service relative to the option exercise price.

The Company assesses whether each promised good or service is distinct for the purposes of identifying performance obligations in the contract. This assessment involves subjective determination and requires management to make judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship. Promised goods and services are considered to be distinct provided that: (i) the customer can benefit from the good or service either on its own or together with the other resources that are readily available to the customer (that is, the good or service is capable of being distinct) and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract). The Company also considers the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, an entity is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct.

The transaction price is determined and allocated to the identified performance obligations in proportion to their stand-alone selling prices (“SSP”) on a relative SSP basis. SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Determining the SSP for performance obligations requires significant judgment. In developing the SSP for a performance obligation, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs.

In determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing. When a contract provides the customer with a significant benefit of financing, the Company recognizes a customer financing receivable and recognizes interest income separate from the revenue recognized on the contracts with customers. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment and the transfer of the promised goods or services will be one year or less.

The Company recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time. Over time revenue recognition is based on the use of an output or input method.

Sale of Energy Storage Products: The Company sells its energy storage products to utility companies and independent power producers. The Company enters into (i) engineering, procurement, and construction (“EPC”) contracts to design, construct, install, and transfer fully operational energy storage systems and (ii) engineered equipment (“EEQ”) contracts to design and deliver energy storage equipment. Each storage project is customized depending on the customer’s energy storage needs.

Customer payments are due upon meeting certain milestones that are consistent with contract-specific phases of a project. The Company determines the transaction price based on the consideration expected to be received, which includes estimates of liquidated damages or other variable consideration. Generally, each EPC contract contains one performance obligation to design, construct, install, and deliver a fully operational energy storage system. Generally each EEQ contract contains multiple performance obligations, including separate performance obligations (i) to supply equipment and (ii) to provide specialized technical services. Multiple contracts entered into with the same customer and near the same time are combined in accordance with ASC 606. In these situations, the contract prices are aggregated and then allocated to each performance obligation based upon their relative stand-alone selling price.

For EPC contracts, the Company recognizes revenue over time as a result of the continuous transfer of control of its products to the customer. The continuous transfer of control to the customer is supported by clauses in the contracts that provide enforceable rights to payment of the transaction price associated with work performed to date for products that do not have an alternative use to the Company and/or the project is built on the customer’s land that is under the customer’s control. For equipment sales in EEQ contracts, the Company recognizes revenue at a point in time, which corresponds to delivery of the equipment to the customer. For technical services provided in EEQ contracts, the Company recognizes revenue over time as the Company performs the required services.

Revenue for performance obligations satisfied over time is recognized using the percentage of completion method based on cost incurred as a percentage of total estimated contract costs. Contract costs include all direct materials and labor costs related to contract performance. Pre-contract costs with no future benefit are expensed in the period in which they are incurred. Since the revenue recognition of these contracts depends on estimates, which are assessed continually during the term of the contract, recognized revenues and profit are subject to revisions as the contract progresses to completion. The cumulative effects of revisions of estimated total contract costs and revenues, together with any contract reserves which may be deemed appropriate, are recorded in the period in which the facts and changes in circumstances become known. Due to uncertainties inherent in the estimation process, it is reasonably possible that these estimates will be revised in a different period. When a loss is forecasted for a contract, the full amount of the anticipated loss is recognized in the period in which it is determined that a loss will incur.

The Company’s contracts generally provide customers the right to liquidated damages (“LDs”) against Energy Vault in the event specified milestones are not met on time, or certain performance metrics are not met upon or after the substantial completion date. LDs are accounted for as variable consideration, and the contract price is reduced by the expected penalty or LD amount when recognizing revenue. Variable consideration is included in the transaction price only to the extent that it is improbable that a significant reversal in the amount of cumulative revenue recognized will occur when the uncertainty is resolved. Estimating variable consideration requires certain estimates and assumptions, including whether and by how much a project will be delayed. The existence and measurement of liquidated damages may also be impacted by the Company’s judgment about the probability of favorable outcomes of customer disputes involving whether certain events qualify as force majeure or the reason for the events that caused project delays. Variable consideration for LDs is estimated using the expected value of the consideration to be received. If Energy Vault has a claim against the customer for an amount not specified in the contract, such claim is recognized as an increase to the contract price when it is legally enforceable, which is usually upon signing a respective change order or equivalent document confirming the claim acceptance by the customer.

The Company offers limited warranties on its energy storage products which provide the customer assurance that the products will function as the parties intended because it complies with agreed-upon specifications and are free from defects. These assurance-type warranties are not treated as a separate revenue performance obligation and are accounted for as guarantees under GAAP.

Own and Operate Energy Storage Projects: To date, the Company has not recognized any revenue from its owned energy storage systems. The Company has entered into tolling agreements in which the Company will sell the energy produced by its energy storage systems. These arrangements are expected to be accounted for under ASC 842, Leases, and accounting recognition does not begin until an energy storage system is made available to a customer. This method of revenue recognition will be finalized upon the commencement of one of the Company’s owned energy storage projects.

Software Licensing: The Company licenses its energy management software solutions to customers. Software licensing customers do not receive legal title or ownership of the software. Customers receive access to the software platform and related support services as part of a software licensing contract. We consider these obligations to be a series of distinct services that comprise a single performance obligation because they are substantially the same and have the same pattern of transfer. Revenue is recognized over time on a straight-line basis over the term of the contract.

Long-Term Service Arrangements: The Company enters into long-term service arrangements to provide operation and maintenance services to customer-owned energy storage systems. The Company accounts for this service as a separate performance obligation from the sale of energy storage products. Revenue is recognized over time on a straight-line basis over the term of the contract. The Company believes using a time-based method to measure progress is appropriate as the performance obligation is satisfied evenly over the term of the services.

Licensing of IP: The Company enters into licensing agreements of its IP that are within the scope of ASC 606. The terms of such licensing agreements include the license of functional IP, given the functionality of the IP is not expected to change substantially as a result of the licensor’s ongoing activities. The transaction price allocated to the licensing of IP is recognized as revenue at a point in time when the licensed IP is made available for the customer’s use and benefit. Certain licensing agreements contain a significant financing component due to the customer having extended payment terms. The amounts due from customers under extended payment terms are included in the line item, customer financing receivable, on the consolidated balance sheets.

Royalty Revenue: In connection with entering into IP licensing agreements, the Company also enters into royalty agreements whereby the customer agrees to pay the Company a percentage of the customer’s future sales revenue that is generated by using the Company’s IP. The Company has not recognized any royalty revenue to date, but will recognize royalty revenue at the point in time when the customer’s sales occur.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less to be cash equivalents. At December 31, 2024, the Company maintained investments in money market accounts totaling $9.9 million, including $9.5 million in U.S. government money market funds. At December 31, 2023, the Company maintained money market funds totaling $98.4 million, including $98.0 million in U.S. government money market funds.

Restricted cash as of December 31, 2024 and 2023 primarily consisted of cash held by banks as collateral for the Company’s letters of credit.

Accounts Receivable

Accounts receivable represents amounts that have an unconditional right to consideration, have been billed to customers, and do not bear interest. Receivables are carried at the original invoiced amount, less an allowance for any potential uncollectible amounts.

Customer Financing Receivable

Customer financing receivable includes amounts due from a customer related to a licensing agreement under extended payment terms which contains a significant financing component. An interest rate is not stated in this agreement and is imputed using the effective interest method when recognizing interest income. The imputed interest rate on the note is 8.5%. Interest income on the customer financing receivable was $0.8 million and $0.9 million for the years ended December 31, 2024 and 2023, respectively.

Effective December 31, 2024, the Company placed the customer financing receivable on non-accrual status and has discontinued the accrual of future interest income. The Company placed the customer financing receivable in non-accrual status because the customer did not make its first two installment payments in 2024, and both installments are more than 90 days past due as of December 31, 2024.

The amortized cost basis for the Company’s customer financing receivable was $11.5 million and $10.7 million as of December 31, 2024 and 2023, respectively.

Allowance for Credit Losses

The Company estimates expected uncollectible amounts related to its accounts receivable, customer financing receivable, and contract asset balances as of the end of each reporting period, and presents those financial asset balances net of an allowance for expected credit losses in the consolidated balance sheets. Due to the Company’s limited operating history, the Company generally utilizes a probability-of-default (“PD”) and loss-given-default (“LGD”) methodology to calculate the allowance for credit losses for each customer by type of financial asset. The Company derives its PD and LGD rates using historical rates for corporate bonds as published by Moody’s. The Company uses PD and LGD rates that correspond to the customer’s credit rating and period of time in which the financial asset is expected to remain outstanding.

For significantly past due receivables, such as the customer financing receivable and refundable contribution (defined in Note 3), the Company determines specific allowances for each receivable.

Inventory

Inventory consists of equipment and spare parts, which are used in ongoing battery storage projects for sale. Inventory is stated at the lower of cost or net realizable value with cost being determined by the specific identification method. Costs include the cost of purchase and other costs incurred in bringing the inventories to their present location and condition. The Company periodically reviews its inventory for potential obsolescence and write down of its inventory, as appropriate, to net realizable value based on its assessment of market conditions.

Assets held for sale

The Company classifies assets to be disposed of as held for sale in the period in which they are available for sale in their present condition and when the sale is probable and expected to be completed within one year. Assets classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell. Further, the Company does not record depreciation and amortization expense on assets that are classified as held for sale.

Property and Equipment, Net

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. Maintenance and repairs are charged to expense as incurred. When assets are retired or sold, the cost and related accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in operating expenses in the period realized.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, primarily comprised of property and equipment, intangible assets, and operating right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the carrying amount to the future undiscounted net cash flows which the assets are expected to generate. If the carrying value of the assets exceeds the sum of the estimated future cash flows, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceed their fair value.

Intangible Assets

The Company’s intangible assets consist of software development costs related to software to be sold or leased externally. These development costs are capitalized upon the establishment of technological feasibility for a product in accordance with ASC 985-20, Software - Costs of Software to be Sold, Leased, or Marketed. Amortization of capitalized software costs begins at the time that each software product becomes available for general release to customers. Once a software application is available for general release and is placed in service, the Company amortizes the capitalized costs on a product basis by the greater of the straight-line method over the estimated economic life of the product, or the ratio that current gross revenues for a product bear to the total current and anticipated future gross revenues for that product. The useful life of our external-use software development costs is generally expected to be 5 years.

Investment in Equity Securities

During 2022 and 2023, the Company made a strategic investment and purchased equity securities in KORE, a U.S. manufacturer of battery cells and modules. The Company’s ownership in KORE does not provide the Company with the ability to exercise significant influence. These equity securities do not have a readily determinable fair value and are recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with unrealized gains and losses included in earnings. The carrying value of the Company’s investment in equity securities is included in the line item, investments, long term portion, in the consolidated balance sheets.

Leases

The Company determines if a contract contains a lease at its inception based on whether or not the Company has the right to control the asset during the contract period and other facts and circumstances. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

ROU assets are classified as either operating or finance leases. Upon commencement of the lease, a ROU asset and corresponding lease liability are recognized for all operating and finance leases. The Company has elected the short-term lease exemption, which does not require a ROU asset or lease liability to be recognized when the lease term is 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Upon commencement of the lease, ROU assets are recognized based on the initial measurement of the lease liability and adjusted for any lease payments made before commencement date of the lease, less any lease incentives and including any initial direct costs incurred. Lease liabilities are initially measured at the present value of future minimum lease payments over the lease term.

The discount rate used to determine the present value is the rate implicit in the lease unless that rate cannot be determined, in which case Company’s incremental borrowing rate is used, which is based on the estimated interest rate for collateralized borrowing over a similar term of the lease at commencement date.

Rights to extend or terminate a lease are included in the lease term when there is reasonable certainty the right will be exercised. Factors used to assess reasonable certainty of rights to extend or terminate a lease include current and forecasted lease improvement plans, anticipated changes in development strategies, historical practice in extending similar contracts and current market conditions.

Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease ROU assets are amortized on a straight-line basis over the lesser of the lease term or the estimated useful life of the leased asset. Amortization of finance lease ROU assets is included in depreciation and amortization.

Operating lease ROU assets are recognized on the consolidated balance sheets in the line item, operating lease right-of-use assets, and finance lease ROU assets are recognized on the consolidated balance sheets within the line item, property and equipment, net.

Defined Benefit Pension Obligation

The Company’s wholly owned subsidiary in Switzerland has a defined benefit pension obligation covering retirement and other long-term benefits of the local employees. Accrued pension costs are developed using actuarial principles and assumptions which consider a number of factors, including estimates for the discount rate, expected long-term rate of return on assets and mortality. Changes in these estimates would impact the amounts that the Company records in the consolidated financial statements.

Warrants

The Company accounts for warrants for shares of the Company’s common stock that are not indexed to its own stock as liabilities at fair value on the consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized in the Company’s consolidated statements of operations and comprehensive loss. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in-capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss in the consolidated statements of operations and comprehensive loss.

Earn-Out Shares

In connection with the Merger, eligible Legacy Energy Vault stockholders immediately prior to the Closing, have the contingent right to receive an aggregate of 9.0 million shares of the Company’s common stock (“Earn-Out Shares”) upon the Company achieving each Earn-Out Triggering Event (defined below) during the period beginning on the 90th day following the closing of the Merger and ending on the third anniversary of such date. An “Earn-Out Triggering Event” means the date on which the closing price of the Company’s common stock quoted on the NYSE is greater than or equal to certain specified prices for any 20 trading days within a 30 consecutive day trading period.

The Earn-Out Shares were recognized at fair value upon the closing of the Merger and classified in stockholders’ equity. Because the Merger was accounted for as a reverse recapitalization, the issuance of the Earn-Out Shares was treated as a deemed dividend and since the Company does not have retained earnings, the issuance was recorded within additional-paid-in capital (“APIC”) and had a net nil impact on APIC.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development costs consist of salaries and other personnel related expenses, engineering expenses, product development costs and facility costs.

Advertising Costs

Advertising costs are expensed as incurred and are reflected in the line item, sales and marketing, in the consolidated statements of operations and comprehensive loss. Advertising expenses were $0.2 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively.

Stock-Based Compensation

The Company issues stock-based compensation awards to employees, directors, and non-employees in the form of stock options and restricted stock units (“RSUs”). The Company measures and recognizes compensation expense for stock-based awards based on the award’s fair value on the date of the grant. The Company accounts for forfeitures of stock-based awards when they occur. The fair value of RSUs that vest based on service conditions is measured using the fair value of the Company’s common stock on the date of the grant. The fair value of RSUs that vest based on market conditions is measured using a Monte Carlo simulation model on the date of the grant. The fair value of stock options that vest based on service conditions is measured using the Black-Scholes option pricing model on the date of the grant. The Monte Carlo simulation model and the Black-Scholes option pricing model require the input of highly subjective assumptions, including the fair value of the Company’s common stock, the expected term of the award, the expected volatility of the Company’s common stock, risk-free interest rates, and the expected dividend yield of the Company’s common stock. This assumption used to determine the fair value of the awards represent management’s best estimates. These estimates involve inherit uncertainties and the application of management’s judgment.

The fair value of awards is recognized on a straight-line basis over the requisite service period. The fair value of the market-based RSUs is recognized over the requisite service period regardless of whether or not the RSUs ultimately vest and convert to common stock.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 prescribes the use of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse.

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent the Company believes they will not be realized.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions, if any, in the income tax provision.

Net Loss Per Share

Basic net loss per share of common stock is calculated by dividing net loss by the weighted average number of common shares outstanding for the applicable period. Diluted net loss is computed based on the weighted average number of common shares outstanding increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, including any dilutive effect from outstanding warrants, outstanding stock options, or unvested RSUs, and reduced by the number of shares the Company could have repurchased with the proceeds from the issuance of the potentially dilutive shares. Potentially dilutive instruments are excluded from the per share calculation because the Company is in a net loss position and they would therefore be anti-dilutive.

Non-controlling interest

In May 2024, the Company’s consolidated subsidiary, Cetus Energy, Inc. (“Cetus”), issued a share-based payment award to an employee of Cetus, representing a non-controlling interest. A non-controlling interest in a subsidiary is considered an ownership interest in a majority-owned subsidiary that is not attributable to the parent. The Company includes non-controlling interest as a component of stockholders’ equity on the Company’s consolidated balance sheets. The Company owns 85% of Cetus.

Recently Adopted Accounting Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280) — Improvements to Reportable Segment Disclosures. The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted this standard effective for the reporting periods noted above, with retrospective application to all prior periods presented in the financial statements. The adoption of this standard did not have any impact on the Company’s financial condition, results of operations and comprehensive loss, or cash flows, but resulted in enhancements to our segment disclosures, primarily related to our significant segment expenses. See Note 17, Segment Reporting, for further information.

Recent Accounting Standards Issued, But Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topics 740): Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes. Upon adoption we will be required to disclose additional specified categories in the rate reconciliation in both percentage and dollar amounts. We will also be required to disclose the amount of income taxes paid disaggregated by jurisdiction, among other disclosure requirements. The standard can be applied either prospectively or retrospectively. We will adopt the standard in our 2025 annual period and are currently assessing the effect that the updated standard will have on our financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40) — Disaggregation of Income Statement Expenses. The ASU requires the disclosure of additional information about specific costs and expense categories in the notes to the consolidated financial statements. The standard is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The standard should be applied on a prospective basis with the option to apply the standard retrospectively. We are currently evaluating the impact of this standard on our disclosures.

NOTE 3. REVENUE RECOGNITION

The Company recognized revenue for the product and service categories as follows for the years ended December 31, 2024 and 2023 (amounts in thousands):

(1) For the year ended December 31, 2023, $0.4 million in revenue from the sale of spare energy system parts has been reclassified from “other” to “sale of energy storage products.”

For the year ended December 31, 2024, approximately 29% of the Company’s revenue was recognized over time and approximately 71% was recognized at a point in time. For the year ended December 31, 2023,100% of the Company’s revenue was recognized over time.

The following table summarizes the Company’s revenue disaggregated by geographic region, which is determined based on the customer’s location, for the years ended December 31, 2024 and 2023 (amounts in thousands):

Remaining Performance Obligations

Remaining performance obligations represent the amount of unearned transaction prices under contracts for which work is wholly or partially unperformed. As of December 31, 2024, the amount of the Company’s remaining performance obligations was $42.0 million. The Company generally expects to recognize approximately 90% of the remaining performance obligations as revenue over the next 12 months and the remainder more than 12 months from December 31, 2024.

Contract Balances

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

Contract assets consist of a refundable contribution, unbilled receivables, and retainage. The refundable contribution was to be refunded upon the customer’s first gravity energy storage solution obtaining substantial completion, subject to adjustments for potential liquidated damages if certain performance metrics are not met. During the second quarter of 2024, the Company signed a contract amendment with the customer removing the substantial completion condition for repayment, however as of December 31, 2024, the Company had not received payment under the terms of the amendment. Accordingly, the Company has increased the allowance for credit losses associated with this receivable. The Company is continuing to work with our customer and is actively pursuing collection.

Unbilled receivables represent the estimated value of unbilled work for projects with performance obligations recognized over time. Retainage represents a portion of the contract amount that has been billed, but for which the contract allows the customer to retain a portion of the billed amount until final contract settlement. Retainage is not considered to be a significant financing component because the intent is to protect the customer.

Contract liabilities consist of deferred revenue. Under certain contracts, the Company may be entitled to invoice the customer and receive payments in advance of performing the related contract work. In those instances, the Company recognizes a liability for advance billings in excess of revenue recognized, which is referred to as deferred revenue. Deferred revenue is not considered to be a significant financing component because it is generally used to meet working capital demands that can be higher in the early stages of a contract. For the years ended December 31, 2024 and 2023, the Company recognized revenue of $1.1 million and $46.0 million, respectively, related to amounts that were included in deferred revenue as of the beginning of their respective years.

NOTE 4. ALLOWANCE FOR CREDIT LOSSES

Activity in the allowance for credit losses was as follows for the years ended December 31, 2024 and 2023 (amounts in thousands):

NOTE 5. FAIR VALUE MEASUREMENTS

Carrying amounts of certain financial instruments, including cash, accounts payable, and accrued liabilities approximate their fair value due to their relatively short maturities and market interest rates, if applicable.

The Company’s financial assets and liabilities that were measured at fair value on a recurring basis were as follows as of December 31, 2024 and 2023 (amounts in thousands):

(1) Refer to Note 7 -Investments for further information.

(2) Refer to Note 14 -Warrants for further information.

The Company’s financial assets that were measured at fair value on a non-recurring basis were as follows as of December 31, 2024 (amounts in thousands):

(1) Refer to Note 7 -Investments for further information.

NOTE 6. RELATED PARTY TRANSACTIONS

In May 2019, the Company received a $1.5 million deposit for a gravity-based system from a customer that was owned by one of its primary stockholders. The deposit and order were received before the owner of the customer became one of the Company’s primary shareholders and the deposit was recognized in the line item, contract liabilities, long-term portion, in the consolidated balance sheet as of December 31, 2023. During 2024, the Company concluded it was no longer obligated to provide a gravity-based system to the customer and that the deposit was nonrefundable. As a result, the Company derecognized the $1.5 million contract liability and recognized it as a gain within the line item, other income (expense), net, in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2024.

During the years ended December 31, 2024 and 2023, the Company paid $1.1 million and $1.7 million, respectively, in marketing and sales costs to a company owned by an immediate family member of an officer of the Company. As of December 31, 2024 and 2023, the Company had payables of $0.1 million and $0.2 million, respectively, due to this related party.

In May 2023, the Company signed a technology license option agreement with a company affiliated with a member of Energy Vault’s Board of Directors (“Board”). The agreement permitted the customer to exercise options to enter into licensing agreements in certain territories to use the Company’s gravity storage technology for a fee of $0.5 million. The customer exercised its option for one territory on June 30, 2023 and paid a licensing fee of $0.5 million. The customer’s option to exercise additional territories expired on June 30, 2024. Immediately prior to the expiration of the option agreement, the Company had $0.3 million in deferred revenue related to that agreement. The Company agreed to refund the customer $0.3 million of the option fee upon expiration of the option agreement in exchange for software that supports gravity storage efforts. As of December 31, 2024, the Company did not have any remaining deferred revenue related to the option agreement. The Company terminated the license agreement for the territory that was exercised by the customer effective June 30, 2024, and the Company will not collect any additional licensing fees from this customer.

NOTE 7. INVESTMENTS

The following table provides a reconciliation of investments to the Company’s consolidated balance sheets (amounts in thousands):

Investment in Equity Securities

In November 2022, the Company purchased $9.0 million of equity securities in KORE, a U.S. manufacturer of battery cells and modules. In February 2023, the Company purchased an additional $6.0 million of equity securities, increasing the Company’s total investment in KORE to $15.0 million.

These equity securities do not have a readily determinable fair value and are recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with unrealized gains and losses included in earnings. For the year ended December 31, 2024, the Company recognized $11.7 million in impairment charges on its investment in KORE due to a decline in KORE’s financial performance. The Company estimated the value of KORE using an approach that utilized Level 3 inputs. The Company estimated the fair value of KORE using publicly traded comparable company values, however the valuation used inputs from KORE that are not publicly available.

The significant unobservable inputs used in the valuation of KORE include the following:

A reconciliation of the beginning and ending investment in equity securities balance in KORE is as follows (amounts in thousands):

As of December 31, 2023, the carrying value of these equity securities was equal to its cost basis of $15.0 million.

Convertible Note Receivable

In October 2021, the Company entered into a convertible promissory note purchase agreement with DG Fuels, LLC (“DG Fuels”) and purchased a promissory note with a principal balance of $1.0 million (“DG Fuels Tranche 1 Note”). In April 2022, the Company purchased an additional promissory note from DG Fuels with a principal balance of $2.0 million. (“DG Fuels Tranche 2 Note”) (collectively, the “DG Fuels Note”).

The maturity date of the DG Fuels Note is the earlier of (i)30 days after a demand for payment is made by the Company at any time after thetwo year anniversary of the date of issuance of the note; (ii) thefour year anniversary of the date of issuance of the note; (iii)five days following a Financial Close (“Financial Close” means a project finance style closing by DG Fuels or its subsidiary of debt and equity capital to finance the construction of that certain biofuel facility currently under development by DG Fuels), or (iv) upon an event of default determined at the discretion of the Company. The DG Fuels Note has an annual interest rate of 10.0%. Per the conversion terms, the Company can convert the principal balance and unpaid accrued interest into equity securities of DG Fuels at a 20% discount.

The discounted conversion rate in the DG Fuels Note is considered a redemption feature that is an embedded derivative, which requires bifurcation and separate accounting at its estimated fair value under ASC 815, Derivative and Hedging. The embedded derivative upon the purchase of the DG Fuels Tranche 1 Note was an asset of $0.4 million and the embedded derivative upon the purchase of the DG Fuels Tranche 2 Note was an asset of $0.7 million. The estimated fair value of the derivative instruments was recognized as a derivative asset on the consolidated balance sheets, with an offsetting discount to the DG Fuels Note. The Company amortizes the discount on the Note into interest income using the effective interest method. The Company recognized interest incomeof$0.6 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively, from the DG Fuels Note. Interest income on the DG Fuels Note includes income from the amortization of the debt discount of $0.3 million and $0.2 million for theyears ended December 31, 2024 and 2023, respectively.

The derivative financial instrument is recorded in other assets in the consolidated balance sheets. At each reporting period, the Company remeasures this derivative financial instrument to its estimated fair value. The change in the estimated fair value is recorded in other expense, net in the consolidated statements of operations and comprehensive loss.

A reconciliation of the beginning and ending asset balance for the embedded derivative in the DG Fuels Note is as follows (amounts in thousands):

The fair value of the embedded derivative asset was reduced in 2024 due to a decrease in the probability of the Company exercising its conversion option in DG Fuels.

Note Receivable

In October, 2024, the Company loaned AUD 0.5 million (or $0.3 million) to Stoney Creek to assist the company with purchasing a bond for a BESS project (“Tranche 1”). Tranche 1 has a stated interest rate of 8.0%. Principal and accrued interest are due in October 2025.

On March 7, 2025, the Company agreed to provide Stoney Creek with a bank guarantee of up to AUD 2.5 million (or $1.6 million) as security for a performance bond (“Tranche 2”). The Company has not issued this bank guarantee as of the filing date of this Annual Report.

Also on March 7, 2025, the Company loaned an additional AUD 0.5 million (or $0.3 million) to Stoney Creek to fund BESS project costs (“Tranche 3”). Tranche 3 has a stated interest rate of 8.0%. Principal and accrued interest are due in March 2026.

On March 17, 2025, the Company agreed to loan Stoney Creek, pending final governmental approval of the BESS project, up to an additional AUD 7.8 million (or $4.9 million) to fund development payments due to Stoney Creek’s owner and developer, Enervest Utility Pty Ltd (“Enervest”) (“Tranche 4”). The Company has loaned AUD 0.4 million (or $0.2 million) under Tranche 4 as of the filing date of this Annual Report. Principal and interest under Tranche 4 are due in September 2026.

If Stoney Creek’s BESS project is cancelled or does not obtain final governmental approval, any outstanding principal and interest owed to Energy Vault would immediately become due. In February 2025, Stoney Creek received preliminary approval by the Australian regulator and Stoney Creek was awarded a long-term service agreement.

Also on March 17 2025, the Company entered into a share purchase agreement to acquire Stoney Creek from Enervest for a nominal purchase price ofone hundred Australian dollars. The closing of the acquisition is subject to regulatory review and approval in Australia. Upon closing of the acquisition, the carrying value of the note receivable is expected to be incorporated as part of the total consideration.

NOTE 8. PROPERTY AND EQUIPMENT, NET

As of December 31, 2024 and 2023, property and equipment, net consisted of the following (amounts in thousands):

Machinery and equipment and construction in progress increased as of December 31, 2024 compared to December 31, 2023 primarily due to the construction of the Snyder CDU, the Cross Trails BESS, and a hybrid energy storage system being constructed in Calistoga, California.

In December 2023, the Company paid $6.3 million to acquire the land that the Snyder CDU is located on, and other related assets. At the time of purchase, the Company intended to resell the land that would not be used for the Snyder CDU and all of the other related assets. As such, the Company recorded $6.1 million of the purchase price as assets held for sale in the consolidated balance sheet as of December 31, 2023. In the second quarter of 2024, the Company decided it would keep the assets that were initially classified as held for sale and instead develop the Cross Trails BESS, a 56.9 MW/113.8 MWh BESS. Due to the change in management’s plans, the Company reclassified the assets held for sale to land and construction in progress during the second quarter of 2024.

The following tables shows property and equipment, net by geographical location as of December 31, 2024 and 2023 (amounts in thousands):

For the years ended December 31, 2024 and 2023, depreciation and amortization related to property and equipment was $0.7 million and $0.9 million, respectively.

For the year ended December 31, 2024, the Company recognized a loss on impairment and sale of long-lived assets of $0.3 million, comprised of $0.4 million in asset impairments and a $0.1 million gain on the sale of operating equipment. The impairment relates to the write-off of leasehold improvements in the Company’s Westlake Village office due to the Company relocating its corporate office. The Company didnot recognize any gains or losses from impairments or sales of equipment during the year ended December 31, 2023.

NOTE 9. INTANGIBLE ASSETS, NET

Intangible assets, net are stated at amortized cost and consist of the following (amounts in thousands):

Once a software application is available for general release and is placed in service, the Company amortizes the capitalized costs on a product basis by the greater of the straight-line method over the estimated economic life of the product, or the ratio that current gross revenues for a product bear to the total current and anticipated future gross revenues for that product. The useful life for our external-use software development costs isfive years. Amortization expense for the year ended December 31, 2024 was $0.4 million. There wasno amortization expense for the year ended December 31, 2023.

Future amortization expense for intangible assets is estimated as follows (amounts in thousands):

NOTE 10. DEBT

In July 2023, the Company entered into a financing agreement related to premiums under certain insurance policies. The Company was obligated to repay the lender an aggregate sum of $1.1 million through nine equal monthly payments, at an annual interest rate of 7.0%. Repayments began on July 15, 2023 and the financing arrangement was fully repaid during the first quarter of 2024.

In September 2023, the Company entered into a financing agreement related to premiums under certain insurance policies. The Company was obligated to repay the lender an aggregate sum of $0.2 million through four equal monthly payments, at an annual interest rate of 7.0%. Repayments began on September 15, 2023 and the financing arrangement was fully repaid during the first quarter of 2024.

In April 2024, the Company entered intotwo financing agreements related to premiums under certain insurance policies. For the first financing, the Company is obligated to repay the lender an aggregate sum of $1.4 million throughten equal monthly payments commencing on April 10, 2024. For the second financing, the Company is obligated to repay the lender an aggregate sum of $0.4 million through nine equal monthly payments commencing on May 10, 2024. Both financings have an annual interest rate of 7.4%.

In June 2024, the Company entered into a financing agreement related to premiums under certain insurance policies. The Company is obligated to repay the lender an aggregate sum of AUD 0.3 million (or $0.2 million) through 12 equal monthly payments of AUD 22 thousand (or $15 thousand), at an annual interest rate of 4.4%, commencing on June 25, 2024.

In July 2024, the Company entered into a financing agreement related to premiums under certain insurance policies. The Company is obligated to repay the lender an aggregate sum of $1.1 million through nine equal monthly payments, at an annual interest rate of 7.5%, commencing on August 15, 2024.

The carrying value of the Company’s debt as of December 31, 2024 and 2023 was $0.7 million and $0.4 million, respectively, and is included in the line item, accrued expenses, in the consolidated balance sheets.

Due to the fact that all debt was issued with, and retains maturities of less than 12 months, the carrying value is considered to approximate fair value.

NOTE 11. RETIREMENT PLANS

The Company has a defined benefit pension plan for its employees in its wholly owned Switzerland subsidiary. The plan is a statutory requirement in accordance with local regulations. The Swiss pension plans are governed by the Swiss Federal Law on Occupational Retirements, Survivors’ and Disability Pension plans. The Company used third party providers to administer these plans. Benefits provided by the pension plan are based on years of service and employees’ remuneration over their employment period. The Company uses December 31 as the year end measurement date for this plan.

The Company’s policy is to fund its pension obligations in conformity with the funding requirements under applicable laws and governmental regulations. The pension plans maintain investment policies that, among other things, establish a portfolio asset allocation methodology with percentage allocation bands for individual asset classes. The investment policies provide that investments are reallocated between asset classes as balances exceed or fall below the appropriate allocation bands.

The assumption used for the expected long-term rate of return on plan asset is based on the long-term expected returns for the investment mix of assets currently in the portfolio. Historical return trends for the various asset classes in the class portfolio are combined with current and anticipated future market conditions to estimate the rate of return for each class. These rates are then adjusted for anticipated future inflation to determine estimated nominal rates of return for each class.

The accumulated benefit obligation represents the obligations of a pension plan for past service as of the measurement date, which is the present value of benefits earned to date based on current compensation levels.

Obligations and Funded Status

The following table presents the defined benefit plans’ funded status and amount recognized in the consolidated balance sheets as of December 31, 2024 and 2023 (amounts in thousands):

Components of Net Periodic Benefit Cost

The components of net periodic pension benefit cost for the Company’s defined benefit pension plans for the years ended December 31, 2024 and 2023 were as follows (amounts in thousands):

Impact on Accumulated Other Comprehensive Loss

Amounts recognized in accumulated other comprehensive loss at December 31, 2024 and 2023 were as follows (amounts in thousands):

Changes in accumulated other comprehensive loss for the Company’s pension plan were as follows (amounts in thousands):

Assumptions

The assumptions used to measure the benefit obligation and net periodic benefit cost for the Company’s defined benefit pension plan were as follows:

Investment Strategy

As is customary with Swiss pension plans, the plan assets are invested in a Swiss collective fund (Profond Pension Fund, contract number 208.155) with multiple employers. The Company does not have rights to the individual assets of the plans nor does the Company have investment authority over the assets of the plans. The collective fund maintains a variety of investment positions primarily in equity securities and highly rated debt securities. The valuation of the collective fund assets as a whole is a level 3 measurement; however the individual investments of the fund are generally level 1 (equity securities and cash), level 2 (fixed income) and level 3 (real estate and alternative) investments. The Company determines the fair value of the plan assets based on information provided by the collective fund, through review of the collective fund’s annual financial statements, and the Company further considers whether there are other indicators that the investment balances reported by the fund could be impaired. The Company concluded that no such impairment indicators were present at December 31, 2024.

The Swiss pension plans’ actual asset allocation as compared to the plan administrators’ target asset allocations for fiscal years 2024 and 2023 were as follows:

Cash Flows

Estimated future benefit payments expected to be paid by the defined benefit pension plan at December 31, 2024 are as follows (amounts in thousands):

The estimated employer contribution to the defined benefit pension plan in fiscal year 2025 is $0.2 million.

Defined Contribution Plan

The Company sponsors a defined contribution retirement plan for its United States employees and makes matching contributions up to a maximum of 3.5% of compensation. The Company made $0.9 million and $0.8 million in matching contributions for the years ended December 31, 2024 and 2023.

NOTE 12. SUPPLEMENTAL BALANCE SHEETS DETAIL

NOTE 13. LEASES

The Company primarily has operating leases for its corporate offices, field offices, and vehicles. The Company recognizes a ROU asset and lease liability for operating leases based on the net present value of future minimum lease payments. Lease expense is recognized on a straight-line basis over the non-cancelable lease term and renewal periods that are considered reasonably certain.

The Company primarily has finance leases for vehicles. The Company recognizes a ROU asset and lease liability for finance leases based on the net present value of future minimum lease payments. Lease expense for the Company’s finance leases is comprised of the amortization of the right of use asset and interest expense recognized based on the effective interest method.

The components of lease expense for the years ended December 31, 2024 and 2023 are as follows (amounts in thousands):

Supplemental balance sheet information related to leases as of December 31, 2024 and 2023 is as follows:

Supplemental cash flow information related to leases for the fiscal years ended December 31, 2024 and 2023 is as follows (amounts in thousands):

Future maturities of operating and finance lease liabilities as of December 31, 2024 are as follows (amounts in thousands):

NOTE 14. WARRANTS

Upon the closing of the Merger, the Company assumed 5.2 million private warrants. Each whole warrant entitles the holder to purchaseone share of the Company’s common stock at an exercise price of $11.50 per share, subject to adjustments. The private warrants are exercisable on a cash or cashless basis, at the warrant holders’ option, and are not redeemable by the Company, in each case so long as the warrants are still held by Novus or their permitted transferees. The private warrants are exercisable until February 11, 2027. No private warrant activity has occurred since the closing of the Merger, and 5.2 million private warrants remain outstanding as of December 31, 2024.

The private warrants are classified as Level 3 measurements and the Company uses a Black Scholes model to determine their fair value. The primary significant unobservable input used to evaluate the fair value measurement of the Company’s private warrants is the expected volatility. A significant increase in the expected volatility in isolation would result in a significantly higher fair value measurement. The private warrants were valued at less than $0.01 per warrant and warrant liabilities was $2 thousand as of December 31, 2024 and 2023.

The following table provides the assumptions used to estimate the fair value of the Private Warrants as of December 31, 2024:

The change in the fair value of the Company’s Private Warrants during the years ended December 31, 2024 and 2023 was de minimis.

NOTE 15. STOCK-BASED COMPENSATION

2017 Stock Incentive Plan

In 2017, the Company adopted its 2017 Stock Incentive Plan (the “2017 Plan”) which provides for the granting of stock options, restricted stock, and RSUs to employees, directors, and consultants of the Company. Options granted under the 2017 Plan were either ISOs or Nonqualified Stock Options (“NSOs”). Awards under the 2017 Plan may be granted for periods of up toten years. Under the terms of the 2017 Plan, awards may be granted at an exercise price not less than the estimated fair value of the shares on the date of grant, as determined by the Company’s Board. For employees holding more than 10% of the voting rights of all classes of stock, the exercise price of ISOs and NSOs may not be less than 110% of the estimated fair value of the shares on the date of grant, as determined by the Board. Awards generally vest overone tofour years.

2020 Stock Incentive Plan

In 2020, the Company adopted its 2020 Stock Incentive Plan (the “2020 Plan”) which superseded the previous 2017 Plan. The 2020 Plan provides for the granting of stock options, restricted stock, and RSUs to employees, directors, and consultants of the Company. Options granted under the 2020 Plan may be either ISOs or NSOs. Awards under the 2020 Plan may be granted for periods of up toten years. Under the terms of the 2020 Plan, awards may be granted at an exercise price not less than the estimated fair value of the shares on the date of grant, as determined by the Company’s Board. For employees holding more than 10% of the voting rights of all classes of stock, the exercise price of ISOs and NSOs may not be less than 110% of the estimated fair value of the shares on the date of grant, as determined by the Board. Awards generally vest overone tofour years.

2022 Equity Incentive Plan

In 2022, the Company adopted its 2022 Equity Incentive Plan (the “2022 Incentive Plan”), which superseded the previous 2020 Plan, provides for the granting of stock options, stock appreciation rights (“SARs”), restricted stock, and RSUs to employees, non-employee directors, and consultants of the Company. Shares of common stock underlying awards that expire or are forfeited or canceled will again be available for issuance under the 2022 Incentive Plan.

The number of shares of the Company’s common stock reserved for issuance under the 2022 Incentive Plan is approximately 15.5 million, plus up to approximately 8.3 million shares subject to awards granted under the 2017 and 2020 Plans. Additionally, beginning on March 1, 2022 and ending on (and including) March 31, 2031, the number of shares of the Company’s common stock that may be issued under the 2022 Incentive Plan will increase by a number of shares equal to the lesser of (i)4.0% of the outstanding shares on the last day of the immediately preceding fiscal year or (ii) such lesser number of shares (including zero) that the Company’s Board determines for the purposes of the annual increase for that fiscal year.

2022 Inducement Plan

In 2022, the Company adopted its 2022 Inducement Plan, which provides for the granting of stock options, SARs, restricted stock, and RSUs to individuals who were not previously employees of Energy Vault, or following a bona fide period of non-employment, as inducement material to such individuals entering into employment with Energy Vault. Shares of common stock underlying awards that expire or are forfeited or canceled will again be available for issuance under the 2022 Inducement Plan.8.0 million shares of the Company’s common stock are reserved for issuance under the 2022 Inducement Plan.

2025 Inducement Plan

In February 2025, the Board approved the Company’s 2025 Inducement Plan, which provides for the granting of stock options, SARs, restricted stock, and RSUs to individuals who were not previously employees of Energy Vault, or following a bona fide period of non-employment, as inducement material to such individuals entering into employment with Energy Vault. Shares of common stock underlying awards that expire or are forfeited or canceled will again be available for issuance under the 2025 Inducement Plan.8.0 million shares of the Company’s common stock are reserved for issuance under the 2025 Inducement Plan.

Stock Option Activity

Stock option activity for the year ended December 31, 2024 and was as follows (amounts in thousands, except per share data):

The weighted average grant-date fair value of stock options granted during the year ended December 31, 2024 was $0.90. As of December 31, 2024, total unamortized stock-based compensation expense related to unvested awards that are expected to vest was $3.7 million. The weighted-average period over which such stock-based compensation expense will be recognized is approximately 1.8 years.

The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the closing stock price of the Company’s common stock on the NYSE as of December 31, 2024.

The Company uses the Black-Scholes option pricing model to determine the fair value of stock options. The following tables summarizes the assumptions used for estimating the fair value of stock options granted during the years ended December 31, 2024 and 2023.

Restricted Stock Units

Stock-based compensation expense for awards with only service conditions are recognized on a straight-line basis over the requisite service period of the award. Generally, awards granted under the 2022 Plan and 2022 Inducement Plan vest based solely on a service condition. RSUs granted under the 2020 Plan contain both a service-based vesting condition and liquidity event-based vesting condition. The liquidity event-based vesting condition was satisfied upon the closing of the Merger. The service-based vesting period for these awards is generally three orfour years, with a cliff vesting period ofone year, and continue to vest monthly or quarterly thereafter.

During 2024 and 2023, the Company granted RSUs to certain employees that vest based on a market-based condition. These RSUs will vest and convert to common stock if the Company’s stock price reaches certain price targets for 20 days in any 30 day trading window. The fair value of the RSUs are recognized as expense over the requisite service period regardless of whether or not the RSUs ultimately vest and convert to common stock. The fair value of these market-based RSUs were measured on their respective grant dates, using a Monte Carlo simulation model based on the following range and weighted-average assumptions:

RSU activity for the years ended December 31, 2024 and 2023 are as follows (amounts in thousands, except per share data):

As of December 31, 2024, unrecognized stock-based compensation expense related to these RSUs was $45.0 million which is expected to be recognized over the remaining weighted-average vesting period of approximately 1.6 years.

Stock-Based Compensation Expense

Total stock-based compensation expense for the years ended December 31, 2024 and 2023 is as follows (amounts in thousands):

NOTE 16. REORGANIZATION EXPENSES

The Company implemented a series of cost savings measures during 2024 and 2023 and recognized reorganization costs of $1.6 million and $0.6 million for the years ended December 31, 2024 and 2023, respectively. Reorganization expenses consist of personnel reduction costs related to these cost saving measures. The Company does not expect to incur additional charges related to these cost reduction measures.

Reorganization expenses for the years ended December 31, 2024 and 2023 is as follows (amounts in thousands):

A reconciliation of the beginning and ending liability balances for reorganization expenses included in the line item, accrued expenses, on the consolidated balance sheets is as follows (amounts in thousands):

NOTE 17. SEGMENT REPORTING

As a single reportable segment entity, the Company’s CODM uses the profit measure of net loss to allocate resources and assess performance of our business by comparing actual results to historical results and previously forecasted financial information. The measure of segment assets is reported on the consolidated balance sheets as total assets.

See Note 3 for the Company’s revenue disaggregated by product line.

The following table presents revenue, significant segment expenses provided to the CODM, and net loss for our consolidated segment (amounts in thousands):

(1) The significant segment expense categories and amounts presented align with the segment-level information that is regularly provided to the CODM.

(2) Represents sales and marketing, research and development, and general and administrative expenses, excluding personnel related costs.

(3) Represents the costs of employees’ salaries, benefits, and payroll taxes that are reported within sales and marketing, research and development, and general and administrative expenses in the consolidated statements of operations and comprehensive loss. This amount excludes stock-based compensation expense and personnel costs that were part of a reorganization plan.

(4) Represents certain other segment items that are not deemed significant segment expenses and primarily consists of provision for credit losses, reorganization expenses, impairment of equity securities, interest income, interest expense, and other income/expense items.

NOTE 18. INCOME TAXES

The components of pre-tax loss are as follows for the years ended December 31, 2024 and 2023 (amounts in thousands):

The following table presents the principal reasons for the difference between the effective tax rate and the federal statutory income tax rate:

The components of the provision (benefit) for income taxes are as follows (amounts in thousands):

The components of the deferred tax asset are as follows (amounts in thousands):

In 2024, the balance of the revenue recognition deferred tax asset was partially reduced due to changes in the tax treatment of IP licensing revenue from prior years. These changes have been accounted for in the current year, resulting in a decrease in the revenue recognition deferred tax asset, offset by adjustments to the net operating loss deferred tax asset and valuation allowance where applicable.

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the analysis of federal and state deferred tax balances, future tax projections and availability of taxable income in the carryback period, the Company recorded a valuation allowance against the federal, state, and international deferred tax assets of $48.1 million.

As of December 31, 2024, the Company had federal net operating losses of $122.8 million, state net operating losses of $35.8 million, and foreign net operating losses of $9.8 million. The federal net operating loss carryforwards do not expire, but are subject to a limitation on their use equal to 80% of the taxable income in the year of use. The state net operating loss carryforwards will begin to expire in 2038. $6.8 million of the foreign net operating loss carryforwards do not expire. The remaining foreign net loss carryforwards begin to expire in 2025.

At December 31, 2024, the Company had federal and state research tax credit carryforwards of $2.3 million and $0.6 million, respectively. The federal research tax credit carryforwards will begin to expire in 2042 and the state research tax credits do not expire.

At December 31, 2024 and 2023, the Company recorded $15.7 million, and $1.4 million, respectively, of unrecognized tax benefits. During the years ended December 31, 2024 and 2023, the Company recognizedno interest and penalties related to uncertain tax positions.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (amounts in thousands):

During 2024, the Company recorded an uncertain tax position for the historical and current Switzerland net operating loss, related to unrecorded transfer pricing charges between Switzerland and the United States. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of December 31, 2024 and 2023 waszero, due to the valuation allowance that would otherwise be recorded on the deferred tax asset associated with the recognized position.

The tax years ended December 31, 2021 through December 31, 2024 remain open to examination by the Internal Revenue Service and California Franchise Tax Board. In addition, the utilization of net operating loss carryforwards are subject to federal and state review for the periods in which those net losses were incurred. The Company is not under audit by any taxing jurisdictions at this time. The foreign entities have statute of limitations ranging between one and five years from the filing date of the tax return.

Utilization of the net operating losses and tax credit carryforwards may be subject to an annual limitation based on changes in ownership, as defined by Section 382 and 383 of the Internal Revenue Code (“IRC”) of 1986, as amended. Based on the Company’s Section 382 analysis, the Company has determined that none of the net operating losses will be permanently impaired due to 382 limitations.

The IRA was passed in August 2022, providing significant incentives for businesses to become more energy efficient by extending, increasing, or expanding credits applicable to the production of clean energy and fuels, as well as other provisions. These changes did not have a material impact on the tax provision of the Company.

NOTE 19. NET LOSS PER SHARE OF COMMON STOCK

Basic and diluted net loss per share attributable to common stockholders are calculated as follows (amounts in thousands, except per share amounts):

There wereno common share equivalents that were dilutive for the years ended December 31, 2024 and 2023. Due to net losses during those periods, basic and diluted net loss per common share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

The following outstanding balances of common share 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 (amounts in thousands):

9.0 million shares of common stock equivalents subject to the Earn-Out Shares are excluded from the anti-dilutive table above as of December 31, 2024 and 2023, as the underlying shares remain contingently issuable as the Earn-Out Triggering Events have not been satisfied.

NOTE 20. COMMITMENTS AND CONTINGENCIES

Our principal commitments as of December 31, 2024 consisted primarily of obligations under operating leases, finance leases, warranty liabilities, a deferred pension, and issued purchase orders. Our non-cancellable purchase obligations as of December 31, 2024 totaled $1.9 million.

Loss Contingencies:

In the ordinary course of business, the Company is regularly subject to various legal proceedings. The Company has identified certain legal matters where the Company believes an unfavorable outcome is not probable and, therefore, no reserve has been established. Although the Company currently believes that resolving claims against the Company, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the Company’s business, financial position, results of operations and comprehensive loss, or cash flows, these matters are subject to inherent uncertainties and the Company’s view of these matters may change in the future. The Company accrues legal costs as they are incurred.

Warranty Liabilities:

The Company provides a limited warranty to its customers that purchase energy storage products assuring that the products are free from defects. The Company’s limited warranties are generally for a period oftwo orthree years after the substantial completion date of a project. These warranties are considered assurance-type warranties which provide a guarantee of quality of the products. For assurance-type warranties in EPC contracts, the Company records an estimate of future warranty costs over the period of construction. For assurance-type warranties in EEQ contracts, the Company records an estimate of future warranty costs upon the transfer of the equipment to the customer. Warranty costs are recorded as a component of cost of revenue in the Company’s consolidated statements of operations and comprehensive loss.

As of December 31, 2024 and 2023, the Company accrued the below estimated warranty liabilities, respectively (amounts in thousands):

The key inputs and assumptions used in calculating estimated warranty liabilities are reviewed by management each reporting period. The Company may make additional adjustments to the estimated warranty liability based on a comparison of actual warranty results to expected results for significant differences or based on performance trends or other qualitative factors. If actual failure rates or replacement costs differ from our estimates in future periods, changes to these estimates may be required, resulting in increases or decreases in the estimated warranty liability, which may be material.

Letters of Credit:

In the ordinary course of business and under certain contracts, the Company is required to post letters of credit for its customers, insurance carriers, and surety bond providers for project performance, and for its vendors for payment guarantees. Such letters of credit are generally issued by a bank or a similar financial institution. The letter of credit commits the issuer to pay specified amounts to the holder of the letter of credit under certain conditions. As of December 31, 2024, there was $16.5 million of letters of credit issued through the Company’s credit relationships. The Company is not aware of any material claims relating to its outstanding letters of credit.

Performance and Payment Bonds:

In the ordinary course of business, Energy Vault is required by certain customers to provide performance and payment bonds for contractual commitments related to its projects. These bonds provide a guarantee that the Company will perform under the terms of a contract and that the Company will pay its subcontractors and vendors. If the Company fails to perform under a contract or to pay its subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company must reimburse the surety for expenses or outlays it incurs. As of December 31, 2024, there were$109.0 million ofoutstanding performance and payment bonds.

Other Bonds:

In the ordinary course of business, Energy Vault is required to obtain other bonds, such as for insurance and government payments. These bonds provide a guarantee that the Company will post the necessary reserves as required by banks and tax or licensing authorities. Additionally, bonds are issued to banks as support for letters of credit provided by those banks. As of December 31, 2024, there were $23.5 million of outstanding other bonds.

NOTE 21. SUBSEQUENT EVENTS

Tax Credit Transfer Commitment

On March 28, 2025, the Company entered into a Tax Credit Transfer Commitment, on behalf of its wholly owned subsidiary companies, with a third-party purchaser pursuant to which the Company agreed to sell certain ITCs generated by the Calistoga Resiliency Center hybrid energy storage system, the Cross Trails BESS, and the Snyder CDU that are anticipated to be placed in service in 2025. The Tax Credit Transfer Commitment is subject to certain conditions set forth therein, and requires the Company to incur the remaining associated capital expenditures to complete the projects (via internal sources or external sources such as project financing). The third-party purchaser has agreed to purchase on or before December 15, 2025, all the eligible ITCs generated by the projects, in an amount to be finalized subject to final cost segregation reports. The purchase of the ITCs will be pursuant to a purchase agreement, as may be modified in the course of due diligence with respect to each project. The purchase agreement contains customary representations and warranties, covenants, and closing conditions regarding the existence and availability to transfer the ITCs, including opinions of counsel. Further, the purchase agreement requires the Company to procure tax credit insurance and indemnify the third-party purchaser if the ITCs are reduced, disallowed, or recaptured, among other matters.

Equity Purchase Agreement

On March 31, 2025, the Company entered into an equity purchase agreement (the “Equity Purchase Agreement”) with an Equity Investor (“the Equity Investor”). Pursuant to the Equity Purchase Agreement, the Company has the right at its sole discretion, but not the obligation, to sell to the Equity Investor, and the Equity Investor is obligated to purchase, up to $25.0 million of newly issued shares of the Company’s common stock, from time to time during the term of the Equity Purchase Agreement, subject to certain limitations and conditions. As consideration for the Equity Investor’s commitment to purchase shares of common stock under the Equity Purchase Agreement, we will pay the Equity Investor $0.2 million in origination fees. We have the right to terminate the Equity Purchase Agreement on or before May 15, 2025. The Equity Purchase Agreement contains customary representations, warranties and agreements by us, as well as customary indemnification obligations of the Company. The securities in this offering, to the extent offered, will be offered pursuant to our effective S-3/A shelf registration statement (File No. 333-273089), which was filed with the SEC on July 14, 2023 and declared effective on July 20, 2023 or, a registration statement that will be filed with the SEC by May 15, 2025. If we don’t terminate the Equity Purchase Agreement on or before May 15, 2025, we will issue the Equity Investor shares of our common stock equivalent to 0.3% of our outstanding common stock and then have the right to sell shares to the Equity Investor at a market discount. As of the filing date of this Annual Report, the Company has not sold any shares under this agreement.

Short-Term Loan

On March 31, 2025, the Calistoga Resiliency Center, LLC, a wholly-owned indirect subsidiary of the Company (the “Borrower”), entered into a credit agreement with Jefferies Finance LLC, as administrative agent, collateral agent and lender, in an aggregate principal amount of $27.8 million (“Short-Term Loan”), which provides short-term financing while the Borrower pursues a long-term debt financing. The Short-Term Loan matures on April 23, 2025 and bears interest at an annual rate of 9.5% until April 4, 2025 and at an annual rate of 15.5% after April 5, 2025. Interest is payable at maturity. The Borrower has the option to prepay the Short-Term Loan at any time. The Short-Term Loan is secured by an escrow account that will hold the loan proceeds, subject to disbursement upon meeting certain conditions subsequent (the “Escrow Release”). Upon the Escrow Release, the Short-Term Loan would be secured by a pledge of substantially all assets of the Borrower, and an equity pledge in the Borrower.

The Short-Term Loan contains affirmative and negative covenants, certain of which become effective upon Escrow Release, including covenants restricting the Borrower’s ability to incur certain liens and indebtedness, enter into certain transactions and merge or consolidate with any other entity or the Company ceasing to own the Borrower, which, in each case, will be subject to certain limitations and exceptions. The Short-Term Loan contains mandatory repayments, representations and warranties and events of default customary for a financing of this nature.

Senior Secured Notes

Subsequent to December 31, 2024, the Calistoga Resiliency Center, LLC, entered into a financing arrangement consisting of the issuance of Senior Secured Notes due April 4, 2032 (the “Senior Notes”). The aggregate principal amount of the Senior Notes to be issued is $27.8 million, with a purchase price of 99.25% of par value. The Senior Notes will be purchased by Eagle Point Credit (the “Investor”), and Jefferies Finance, LLC served as agent for the transaction. The Company expects that the Investor will fund the purchase of the Senior Notes on or about April 4, 2025, by purchasing the Short-Term Loan from Jefferies and converting the Short-Term Loan principal into Senior Notes.

The Senior Notes will bear interest at a rate of 12.5% per annum, until the earlier of (i) the Company’s receipt of any tax credit transfer proceeds and (ii) December 31, 2025, and thereafter at a rate of 9.50% per annum. The Senior Notes will be senior secured obligations of Calistoga Resiliency Center, LLC, and will be secured by a first-priority pledge of all assets and equity interests in the Borrower. The Senior Notes contain affirmative and negative covenants, including minimum cash reserves and a minimum debt service coverage ratio.

The Senior Notes will amortize over their term, with scheduled principal and interest payments occurring on February 28 and August 31 of each year. The amortization schedule includes an initial principal payment of $12.9 million on August 31, 2025, followed by periodic payments as detailed in the financing agreement. A final balloon payment of $7.0 million is due on April 4, 2032.

The Company may, at its option, redeem the Senior Notes in whole or in part prior to maturity, subject to specified call protection provisions and prepayment premiums as outlined in the agreement. In the event of a change of control, the Company may be required to offer to repurchase the Senior Notes at a specified price.