ghw-20240630

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to ________

Commission file number 001-39525

ESS Tech, Inc.

(Exact name of registrant as specified in its charter)


Delaware			98-1550150
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
26440 SW Parkway Ave., Bldg. 83
Wilsonville, Oregon			97070
(Address of Principal Executive Offices)			(Zip Code)

(855) 423-9920

Registrant's telephone number, including area code

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $0.0001 par value per share

GWH

New York Stock Exchange

Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50

GWH.W

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Table of Contents

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 9, 2024, the registrant had 176,825,064 shares of common stock, par value $0.0001, issued and outstanding.

Table of Contents

TABLE OF CONTENTS


		Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		2
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	4
	Condensed Balance Sheets	4
	Condensed Statements of Operations and Comprehensive Loss	5
	Condensed Statements of Stockholders' Equity	6
	Condensed Statements of Cash Flows	7
	Notes to Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	61
SIGNATURES		62

- 1 -

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including, without limitation, statements in “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “possible,” “may,” “might,” “will,” “potential,” “projects,” “predicts,” “continue,” “could,” “would” or “should,” or, in each case, their negative or other variations or comparable terminology. These words and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business.

These statements are based on management’s current expectations, but actual results may differ materially due to various factors, risks, and uncertainties, including, but not limited to:

•our financial and business performance, including financial projections and business metrics;

•our ability to satisfy certain New York Stock Exchange (“NYSE”) listing requirements and maintain a trading market for our common stock;

•changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;

•the implementation, market acceptance and success of our technology implementation and business model;

•our ability to scale in a cost-effective manner;

•developments and projections relating to our competitors and industry;

•the impact of the Russia-Ukraine conflict, geopolitical tensions involving China, conflict in the Middle East, and similar macroeconomic events, including global supply chain challenges, foreign currency fluctuations, instability in the financial markets, elevated inflation and interest rates and monetary policy changes, upon our and our customers’, contractors’, suppliers’ and partners’ respective businesses;

•our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

•our future capital requirements and sources and uses of cash;

•our ability to obtain funding for our operations;

•our business, expansion plans and opportunities;

•our relationships with third parties, including our customers, contractors, and suppliers;

•issues related to the shipment, installation, and operation of our products;

•issues related to contract execution, including customer acceptance of our products;

•our ability to recognize the benefits of strategic partnerships;

•the outcome of any known and unknown litigation and regulatory proceedings;

•our ability to successfully deploy the proceeds from the Business Combination (as defined herein) and any other investments in our Company;

•expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act (“JOBS Act”); and

•other risks and uncertainties discussed in “Part II—Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or

- 2 -

Table of Contents

implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in “Part II—Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described in “Part II—Item 1A. Risk Factors” may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods.

- 3 -

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ESS Tech, Inc.

Condensed Balance Sheets

(unaudited)

(in thousands, except share data)


	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	36,744	$	20,165
Restricted cash, current	906		1,373
Accounts receivable, net	981		1,990
Short-term investments	37,695		87,899
Inventory	4,425		3,366
Prepaid expenses and other current assets	3,908		3,305
Total current assets	84,659		118,098
Property and equipment, net	17,758		16,266
Intangible assets, net	4,790		4,923
Operating lease right-of-use assets	2,195		2,167
Restricted cash, non-current	946		945
Other non-current assets	785		833
Total assets	$	111,133	$	143,232
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	5,833	$	2,755
Accrued and other current liabilities	9,669		10,755
Accrued product warranties	3,240		2,129
Operating lease liabilities, current	1,572		1,581
Deferred revenue, current	5,689		2,546
Total current liabilities	26,003		19,766
Operating lease liabilities, non-current	884		957
Deferred revenue, non-current	—		3,835
Deferred revenue, non-current - related parties	14,400		14,400
Common stock warrant liabilities	802		917

Total liabilities	42,089		39,875
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock ($0.0001 par value; 200,000,000 shares authorized, none issued and outstanding as of June 30, 2024 and December 31, 2023)	—		—
Common stock ($0.0001 par value; 2,000,000,000 shares authorized, 176,822,039 and 174,211,911 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)	18		18
Additional paid-in capital	805,433		799,496
Accumulated deficit	(736,407)		(696,157)
Total stockholders’ equity	69,044		103,357
Total liabilities and stockholders’ equity	$	111,133	$	143,232

See accompanying notes to the condensed financial statements

- 4 -

Table of Contents

ESS Tech, Inc.

Condensed Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue:
Revenue	$	342	$	2,826	$	2,556	$	3,197
Revenue - related parties	6		1		530		2
Total revenue	348		2,827		3,086		3,199
Cost of revenue	11,748		—		22,874		—
Gross profit (loss)	(11,400)		2,827		(19,788)		3,199
Operating expenses:
Research and development	2,836		19,450		6,382		37,181
Sales and marketing	2,711		1,739		4,745		3,592
General and administrative	6,178		5,845		11,704		11,132
Total operating expenses	11,725		27,034		22,831		51,905
Loss from operations	(23,125)		(24,207)		(42,619)		(48,706)
Other income (expenses), net:
Interest income, net	1,052		1,330		2,291		2,582
Gain (loss) on revaluation of common stock warrant liabilities	115		(115)		115		573
Other income (expense), net	18		63		(37)		721
Total other income, net	1,185		1,278		2,369		3,876
Net loss and comprehensive loss to common stockholders	$	(21,940)	$	(22,929)	$	(40,250)	$	(44,830)

Net loss per share - basic and diluted	$	(0.12)	$	(0.15)	$	(0.23)	$	(0.29)

Weighted-average shares used in per share calculation - basic and diluted	175,758,584		154,900,330		175,136,561		154,514,265

See accompanying notes to the condensed financial statements

- 5 -

Table of Contents

ESS Tech, Inc.

Condensed Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share data)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of December 31, 2022	153,821,339	$	16	$	755,537	$	(618,579)	$	136,974
Issuance of common stock under stock-based compensation plans, net of stock withheld for taxes	523,591	—		104		—		104
Stock-based compensation expense	—	—		2,059		—		2,059
Net loss	—	—		—		(21,901)		(21,901)
Balance as of March 31, 2023	154,344,930	$	16	$	757,700	$	(640,480)	$	117,236
Issuance of common stock under stock-based compensation plans, net of stock withheld for taxes	1,225,658	—		268		—		268
Stock-based compensation expense	—	—		2,725		—		2,725
Net loss	—	—		—		(22,929)		(22,929)
Balance as of June 30, 2023	155,570,588	$	16	$	760,693	$	(663,409)

SEC Form 10-Q filed by ESS Tech Inc.