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STATES\n\nSECURITIES AND EXCHANGE COMMISSION\n\nWashington, D.C. 20549\n\nFORM 10-Q\n\n ☒\nQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\n\nFor the quarterly period ended March 31, 2026\n\nOR\n\n☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\n\nFor the transition period from   to\n\nCommission file number 001-39291\n\nEOS ENERGY ENTERPRISES, INC.\n\n(Exact name of registrant as specified in its charter)\n\nDelaware84-4290188\n\n(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)\n\n3920 Park Avenue\nEdisonNJ08820\n\n(Address of Principal Executive Offices)(Zip Code)\n\n(732) 225-8400\n\nRegistrant’s telephone number, including area code\n\nSecurities registered pursuant to Section 12(b) of the Act:\n\nTitle of each classTrading Symbol(s)Name of each exchange on which registered\n\nCommon stock, par value $0.0001 per shareEOSEThe Nasdaq Stock Market LLC\n\nIndicate 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  ☐\n\nIndicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes  ☒  No  ☐\n\nIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):\n\nLarge accelerated filer☐Accelerated filer☐\n\nNon-accelerated filer☒Smaller reporting company\n☐\n\nEmerging growth company\n☐\n\nIf 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.     ☐\n\nIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes   ☐     No  ☒\n\nThe registrant had outstanding 339,514,027 shares of common stock as of May 11, 2026.\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nTable of Contents\n\nPage\n\n[PART I - FINANCIAL INFORMATION](#i218a01d03bb545c9964edc723a032d0f_13)\n\n[Item 1.](#i218a01d03bb545c9964edc723a032d0f_16)\n\n[Financial Statements](#i218a01d03bb545c9964edc723a032d0f_16)\n\n[4](#i218a01d03bb545c9964edc723a032d0f_16)\n\nUnaudited [Condensed Consolidated Balance Sheets as of](#i218a01d03bb545c9964edc723a032d0f_19)March 31, 2026[and](#i218a01d03bb545c9964edc723a032d0f_19)December 31, 2025\n\n[4](#i218a01d03bb545c9964edc723a032d0f_19)\n\nUnaudited [Condensed Consolidated Statements of Operations and Comprehensive](#i218a01d03bb545c9964edc723a032d0f_22)[Income](#i218a01d03bb545c9964edc723a032d0f_22)[for the](#i218a01d03bb545c9964edc723a032d0f_22)Three[Months Ended](#i218a01d03bb545c9964edc723a032d0f_22)March 31, 2026[and](#i218a01d03bb545c9964edc723a032d0f_22)2025\n\n[6](#i218a01d03bb545c9964edc723a032d0f_22)\n\nUnaudited [Condensed Consolidated Statements of Shareholders’ Deficit for the](#i218a01d03bb545c9964edc723a032d0f_25)Three[Months Ended](#i218a01d03bb545c9964edc723a032d0f_25)March 31, 2026 [and](#i218a01d03bb545c9964edc723a032d0f_22)2025\n\n[7](#i218a01d03bb545c9964edc723a032d0f_25)\n\n[Unaudited Condensed Consolidated Statements of Cash Flows for the](#i218a01d03bb545c9964edc723a032d0f_28) Three Months Ended March 31, 2026 and 2025\n\n[8](#i218a01d03bb545c9964edc723a032d0f_28)\n\n[Notes to the Unaudited Condensed Consolidated Financial Statements](#i218a01d03bb545c9964edc723a032d0f_31)\n\n[10](#i218a01d03bb545c9964edc723a032d0f_31)\n\n[Item 2.](#i218a01d03bb545c9964edc723a032d0f_109)\n\n[Management](#i218a01d03bb545c9964edc723a032d0f_109)’[s Discussion and Analysis of Financial Condition and Results of Operations](#i218a01d03bb545c9964edc723a032d0f_109)\n\n[40](#i218a01d03bb545c9964edc723a032d0f_109)\n\n[Item 3.](#i218a01d03bb545c9964edc723a032d0f_133)\n\n[Quantitative and Qualitative Disclosures About Market Risk](#i218a01d03bb545c9964edc723a032d0f_133)\n\n[46](#i218a01d03bb545c9964edc723a032d0f_133)\n\n[Item 4.](#i218a01d03bb545c9964edc723a032d0f_136)\n\n[Controls and Procedures](#i218a01d03bb545c9964edc723a032d0f_136)\n\n[46](#i218a01d03bb545c9964edc723a032d0f_136)\n\n[PART II - OTHER INFORMATION](#i218a01d03bb545c9964edc723a032d0f_139)\n\n[Item](#i218a01d03bb545c9964edc723a032d0f_142)1.\n\n[Legal Proceedings](#i218a01d03bb545c9964edc723a032d0f_142)\n\n[48](#i218a01d03bb545c9964edc723a032d0f_142)\n\n[Item 1a.](#i218a01d03bb545c9964edc723a032d0f_145)\n\n[Risk Factors](#i218a01d03bb545c9964edc723a032d0f_145)\n\n[48](#i218a01d03bb545c9964edc723a032d0f_145)\n\n[Item 2.](#i218a01d03bb545c9964edc723a032d0f_148)\n\n[Unregistered Sales of Equity Securities and Use of Proceeds](#i218a01d03bb545c9964edc723a032d0f_148)\n\n[48](#i218a01d03bb545c9964edc723a032d0f_148)\n\n[Item 3.](#i218a01d03bb545c9964edc723a032d0f_151)\n\n[Defaults Upon Senior Securities](#i218a01d03bb545c9964edc723a032d0f_151)\n\n[48](#i218a01d03bb545c9964edc723a032d0f_151)\n\n[Item 4](#i218a01d03bb545c9964edc723a032d0f_154).\n\n[Mine Safety Disclosures](#i218a01d03bb545c9964edc723a032d0f_154)\n\n[48](#i218a01d03bb545c9964edc723a032d0f_154)\n\n[Item 5.](#i218a01d03bb545c9964edc723a032d0f_157)\n\n[Other Information](#i218a01d03bb545c9964edc723a032d0f_157)\n\n[48](#i218a01d03bb545c9964edc723a032d0f_157)\n\n[Item 6.](#i218a01d03bb545c9964edc723a032d0f_163)\n\n[Exhibits](#i218a01d03bb545c9964edc723a032d0f_163)\n\n[49](#i218a01d03bb545c9964edc723a032d0f_163)\n\n[Signatures](#i218a01d03bb545c9964edc723a032d0f_166)\n\n[51](#i218a01d03bb545c9964edc723a032d0f_166)\n\n1\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nFORWARD-LOOKING INFORMATION\n\nAll statements included in this Quarterly Report on Form 10-Q (“Quarterly Report”), other than statements or characterizations of historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions, as they relate to us, are intended to identify forward-looking statements. These statements appear in a number of places in this Quarterly Report and include statements regarding the intent, belief or current expectations of Eos Energy Enterprises, Inc. Forward-looking statements are based on our management’s beliefs, as well as assumptions made by and information currently available to, them. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. Factors which may cause actual results to differ materially from current expectations include, but are not limited to:    \n\n•changes adversely affecting the business in which we are engaged;\n\n•our ability to forecast trends accurately;\n\n•our ability to generate cash, service indebtedness and incur additional indebtedness;\n\n•our ability to raise financing in the future;\n\n•our customer's ability to secure project financing;\n\n•risks associated with the Credit Agreement (defined below), including risks of default, dilution of outstanding common stock, consequences for failure to meet milestones and contractual lockup of shares;\n\n•the amount of final tax credits available to our customers or to Eos pursuant to the Inflation Reduction Act including potential impacts from any repeal or modification of the legislation;\n\n•the timing and availability of future funding under the Department of Energy Loan Facility;\n\n•our ability to continue to develop efficient manufacturing processes to scale and to forecast related costs and efficiencies accurately;\n\n•fluctuations in our revenue and operating results;\n\n•competition from existing or new competitors;\n\n•our ability to convert firm order backlog and pipeline to revenue;\n\n•risks associated with security breaches in our information technology systems;\n\n•risks related to legal proceedings or claims;\n\n•risks associated with evolving energy policies in the United States and other countries and the potential costs of regulatory compliance;\n\n•risks associated with changes to the U.S. trade environment;\n\n•our ability to maintain the listing of our shares of common stock on NASDAQ;\n\n•our ability to grow our business and manage growth profitably, maintain relationships with customers and suppliers and retain our management and key employees;\n\n•risks related to adverse changes in general economic conditions, including inflationary pressures and increased interest rates;\n\n•risk from supply chain disruptions and other impacts of geopolitical conflict;\n\n•changes in applicable laws or regulations; and\n\n•other factors detailed under the section titled “Risk Factors” herein.\n\n2\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nShould 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. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements and, except as required by law, the Company assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. See also Part I, Item 1A, “Risk Factors” disclosures contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 for additional discussion of the risks and uncertainties that could cause the Company’s actual results to differ materially from those expressed or implied in its forward-looking statements.\n\n3\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nPart I - Financial Information\n\nEOS ENERGY ENTERPRISES, INC.\n\nUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS\n\n(In thousands, except share and per share amounts)\n\nMarch 31,\n2026December 31,\n2025\n\nASSETS \n\nCurrent assets:  \n\nCash and cash equivalents$410,660 $567,992 \n\nRestricted cash39,770 34,636 \n\nAccounts receivable, net 3,832 6,779 \n\nInventory\n58,745 59,026 \n\nVendor deposits12,061 11,756 \n\nContract assets, current39,438 13,972 \n\nPrepaid expenses3,389 2,701 \n\nGrant receivable, net\n21,369 11,028 \n\nOther current assets701 590 \n\nTotal current assets589,965 708,480 \n\nProperty, plant and equipment, net145,774 114,415 \n\nIntangible assets, net1,287 979 \n\nGoodwill4,331 4,331 \n\nOperating lease right-of-use asset, net21,469 20,420 \n\nLong-term restricted cash21,938 21,938 \n\nOther assets, net\n14,560 14,634 \n\nTotal assets$799,324 $885,197 \n\nLIABILITIES\n\nCurrent liabilities:\n\nAccounts payable $77,079 $99,915 \n\nAccrued expenses39,196 25,794 \n\nOperating lease liability, current 1,996 1,960 \n\nLong-term debt, current — 372 \n\nContract liabilities, current 6,718 14,975 \n\nOther current liabilities326 524 \n\nTotal current liabilities125,315 143,540 \n\nLong-term liabilities:\n\nOperating lease liability21,374 19,182 \n\nLong-term debt506,399 662,467 \n\nNotes payable - related party\n113,120 150,427 \n\nContract liabilities, long-term2,234 2,506 \n\nWarrants liability\n112,777 313,253 \n\nWarrants liability - related party\n203,485 470,715 \n\nOther liabilities394 427 \n\nTotal long-term liabilities959,783 1,618,977 \n\nTotal liabilities1,085,098 1,762,517 \n\n4\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS\n\n(In thousands, except share and per share amounts)\n\nMarch 31,\n2026December 31,\n2025\n\nCOMMITMENTS AND CONTINGENCIES (NOTE 14)\n\nSERIES B PREFERRED STOCK - related party582,664 1,361,542 \n\nSHAREHOLDERS' DEFICIT\n\nCommon stock, $0.0001 par value, 600,000,000 shares authorized, 339,459,021 and 337,132,374 shares outstanding on March 31, 2026 and December 31, 2025, respectively\n32 32 \n\nAdditional paid in capital1,247,734 427,722 \n\nAccumulated deficit(2,026,936)(2,535,819)\n\nAccumulated other comprehensive loss - related party(89,268)(130,807)\n\nAccumulated other comprehensive income— 10 \n\nTotal shareholders' deficit(868,438)(2,238,862)\n\nTotal liabilities, preferred stock and shareholders' deficit\n$799,324 $885,197 \n\nThe accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.\n\n5\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME\n\n(In thousands, except share and per share amounts)\n\nThree Months Ended\nMarch 31,\n\n 20262025\n\nRevenue$56,963 $10,457 \n\nCost of goods sold101,390 34,996 \n\nGross profit (loss)\n(44,427)(24,539)\n\nOperating expenses\n\nResearch and development expenses10,719 6,837 \n\nSelling, general and administrative expenses24,095 20,995 \n\nLoss from write-down of property, plant and equipment71 561 \n\nTotal operating expenses\n34,885 28,393 \n\nOperating income (loss)(79,312)(52,932)\n\nOther income (expense)\n\nInterest expense(12,242)(978)\n\nInterest expense - related parties\n— (5,781)\n\nInterest income2,787 814 \n\nChange in fair value of debt - related party\n(4,232)(5,933)\n\nChange in fair value of warrants\n168,725 45,925 \n\nChange in fair value of derivatives165,935 — \n\nChange in fair value of derivatives - related parties\n267,230 34,586 \n\nOther expense(3)(560)\n\nIncome before income taxes508,888 15,141 \n\nIncome tax expense5 5 \n\nNet income attributable to shareholders508,883 15,136 \n\nRemeasurement of Preferred Stock - related party\n778,878 79,997 \n\nNet income applicable to common stock$1,287,761 $95,133 \n\nOther comprehensive income\n\nChange in fair value of debt - credit risk - related party\n$41,539 $— \n\nForeign currency translation adjustment\n(10)7 \n\nComprehensive income attributable to common shareholders$1,329,290 $95,140 \n\nNet income available to common shareholders (NOTE 19)$826,557 $95,133 \n\nBasic and diluted income per share attributable to common shareholders\n\nBasic$2.43 $0.42 \n\nDiluted$0.12 $(0.20)\n\nWeighted average shares of common stock\n\nBasic339,602,063 225,474,247 \n\nDiluted544,828,933 436,368,282 \n\nThe accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.\n\n6\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT\n\n(In thousands, except share and per share amounts)\n\nCommon StockAdditional Paid in capital\nAccumulated Other Comprehensive Income (Loss)\nAccumulated DeficitTotal\n\nSharesAmount\n\nBalances on December 31, 2024\n221,791,205 $23 $534,726 $(43,496)$(1,561,716)$(1,070,463)\n\nStock-based compensation— — 7,447 — — 7,447 \n\nExercise of warrants\n4,393,102 — 25,862 — — 25,862 \n\nExercise of stock options198,398 — 319 — — 319 \n\nRelease of restricted stock units749,416 — — — — — \n\nCancellation of shares used to settle payroll tax withholding(82,438)— (488)— — (488)\n\nRemeasurement of Preferred Stock - related party\n— — 79,997 — — 79,997 \n\nForeign currency translation adjustment— — — 7 — 7 \n\nNet income\n— — — — 15,136 15,136 \n\nBalances on March 31, 2025\n227,049,683 $23 $647,863 $(43,489)$(1,546,580)$(942,183)\n\nBalances on December 31, 2025\n337,132,374 $32 $427,722 $(130,797)$(2,535,819)$(2,238,862)\n\nStock-based compensation— — 6,100 — — 6,100 \n\nExercise of warrants\n2,050,000 — 35,031 — — 35,031 \n\nExercise of stock options\n320 — 3 — — 3 \n\nRelease of restricted stock units276,327 — — — — — \n\nRemeasurement of Preferred Stock - related party\n— — 778,878 — — 778,878 \n\nForeign currency translation adjustment— — — (10)— (10)\n\nChange in fair value of debt - credit risk - related party\n— — — 41,539 — 41,539 \n\nNet income— — — — 508,883 508,883 \n\nBalances on March 31, 2026\n339,459,021 $32 $1,247,734 $(89,268)$(2,026,936)$(868,438)\n\nThe accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.\n\n7\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS\n\n(In thousands, except share and per share amounts)\n\nThree Months Ended\nMarch 31,\n\n \n2026\n\n2025\n\nCash flows from operating activities  \n\nNet income$508,883 $15,136 \n\nAdjustment to reconcile net income to net cash used in operating activities\n\nStock-based compensation5,902 7,574 \n\nDepreciation and amortization5,394 2,680 \n\nLoss from write-down of property, plant and equipment 71 561 \n\nAmortization of right-of-use assets780 373 \n\nNon-cash interest expense8,730 899 \n\nNon-cash interest expense - related parties\n— 2,457 \n\nChange in fair value of debt - related party\n4,232 5,933 \n\nChange in fair value of warrants\n(168,725)(45,925)\n\nChange in fair value of derivatives\n(165,935)— \n\nChange in fair value of derivatives - related parties\n(267,230)(34,586)\n\nOther(205)(821)\n\nChanges in operating assets and liabilities:\n\nPrepaid expenses(688)(337)\n\nInventory571 (6,101)\n\nAccounts receivable2,878 (4,107)\n\nVendor deposits(2,613)(1,681)\n\nContract assets(25,531)(140)\n\nGrant receivable\n(10,341)(1,799)\n\nAccounts payable(14,814)8,130 \n\nAccrued expenses7,213 (380)\n\nInterest payable - related parties\n— 3,324 \n\nOperating lease liabilities399 (445)\n\nContract liabilities(8,529)17,064 \n\n   Other (177)3,267 \n\nNet cash used in operating activities(119,735)(28,924)\n\nCash flows from investing activities\n\nInvestment in internally developed software\n(76)— \n\nPurchases of property, plant and equipment(35,062)(4,918)\n\nNet cash used in investing activities(35,138)(4,918)\n\nCash flows from financing activities\n\nPrincipal payments on finance lease obligations(20)(11)\n\nProceeds from exercise of stock options\n3 319 \n\nProceeds from exercise of warrants\n3,280 7,029 \n\nProceeds received from Credit and Securities Purchase Transaction, net - related party— 38,475 \n\nPayment of debt issuance costs (468)(2,250)\n\nRepayment of equipment financing facility(122)(912)\n\n8\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS\n\n(In thousands, except share and per share amounts)\n\nThree Months Ended\nMarch 31,\n\n \n2026\n\n2025\n\nRepurchase of shares from employees for income tax withholding purposes— (488)\n\nNet cash provided by financing activities2,673 42,162 \n\nEffect of exchange rate changes on cash, cash equivalents and restricted cash2 12 \n\nNet (decrease) increase in cash, cash equivalents and restricted cash(152,198)8,332 \n\nCash, cash equivalents and restricted cash, beginning of the period624,566 103,362 \n\nCash, cash equivalents and restricted cash, end of the period$472,368 $111,694 \n\nNon-cash investing and financing activities\n\nAccrued and unpaid capital expenditures$20,666 $730 \n\nAccrued and unpaid investment in internally developed software$323 $— \n\nPaid-in kind interest added to principal\n$1,102 $789 \n\nAccrued and unpaid debt issuance costs$51 $1,581 \n\nRemeasurement of preferred stock - related party\n$(778,878)$(79,997)\n\nRight-of-use operating lease assets in exchange for lease liabilities$1,829 $25 \n\nSupplemental disclosures\n\nCash paid for interest$5 $73 \n\nThe accompanying notes are an integral part of these Unaudited Condensed Consolidated Financial Statements.\n\n9\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n1.Overview\n\nNature of Operations\n\nEos Energy Enterprises, Inc. (the “Company,” “we,” “us,” “our,” and “Eos”) designs, develops, manufactures and markets innovative energy storage solutions for utility-scale, microgrid and commercial & industrial (“C&I”) applications. Eos developed a broad range of intellectual property with multiple patents covering unique battery chemistry, mechanical product design, energy block configuration and a software operating system (Battery Management System). The Company has only one operating and reportable segment. See Note 20, Segment Reporting, for further discussion.\n\n2. Summary of Significant Accounting Policies\n\nBasis of Presentation\n\nThe accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its 100% owned, direct and indirect subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All intercompany transactions and balances have been eliminated in the preparation of the Unaudited Condensed Consolidated Financial Statements. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The interim financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in our 2025 Annual Report on Form 10-K. These interim results are not necessarily indicative of results for the full year.\n\nUse of Estimates\n\nThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.\n\nRecently Adopted Accounting Pronouncements\n\nIn July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326). The amendments in this update introduce a practical expedient aimed at simplifying the estimation of expected credit losses for current accounts receivable and current contract assets. The update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption was permitted. The Company adopted the ASU effective January 1, 2026 on a prospective basis and elected the practical expedient for the calculation of current expected credit losses. The adoption of this ASU did not have a material impact on the Company’s financial statements.\n\nRecently Issued Accounting Pronouncements\n\nIn November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. In January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update is effective for fiscal years beginning after December 15, 2027. Early adoption is permitted. Entities should apply the amendments in this update retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the potential impact this amendment could have on its financial statements and disclosures.\n\n10\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n2. Summary of Significant Accounting Policies (cont.)\n\nIn September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Improvements to the Accounting for Internal-Use Software. The amendments in this update clarify and refine the guidance for capitalizing costs related to internal-use software, including development phases and implementation activities. The update is effective for annual periods beginning after December 15, 2027, including interim periods within those fiscal years. Early adoption is permitted beginning in fiscal year 2026. The Company is currently assessing its plans for adoption and evaluating the potential impact this amendment could have on its financial statements and related disclosures.\n\nOn December 4, 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which adds guidance to ASC 832 on the recognition, measurement, and presentation of government grants. In the absence of such guidance, many for-profit entities historically have analogized to other GAAP, including IAS 20 or ASC 958-605, when accounting for government grants. The amendments in this update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2028, for public business entities, Early adoption is permitted. The Company is currently assessing its plans for adoption and evaluating the potential impact this amendment could have on its financial statements and related disclosures.\n\nOn December 8, 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which is intended to improve the navigability of the guidance in ASC 270 and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides “interim financial statements and notes in accordance with GAAP.” The amendment also addresses the form and content of such financial statements, adds lists to ASC 270 of the interim disclosures required by all other Codification topics, and establishes a principle under which an entity must “disclose events since the end of the last annual reporting period that have a material impact on the entity.” As the Board stated in the proposed guidance and reiterates in the update, the amendments are not intended to “change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements”. The amendments in this update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities, early adoption is permitted. The Company is currently assessing its plans for adoption and evaluating the potential impact this amendment could have on its financial statements and related disclosures.\n\nOn December 17, 2025, the FASB issued ASU 2025-12 “Codification Improvements” to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to U.S. GAAP. The update represents changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. The amendments make the Codification easier to understand and apply. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The Company is currently assessing its plans for adoption and evaluating the potential impact this amendment could have on its financial statements and related disclosures.\n\n3. Revenue Recognition\n\nThe Company primarily earns revenue from sales of its energy storage systems and services including installation, commissioning and extended warranty services. Product revenues, which are generally recognized at a point in time, and service revenues, which are generally recognized over time, are as follows:\n\nThree Months Ended March 31,\n\n20262025\n\nProduct revenue$56,734 $9,927 \n\nService revenue229 530 \n\nTotal revenues$56,963 $10,457 \n\nFor the three months ended March 31, 2026, the Company had three customers who individually accounted for greater than 10% of total revenue and collectively accounted for approximately 93.3% of the total revenue.\n\nFor the three months ended March 31, 2025, the Company had two customers who individually accounted for\n\n11\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n3. Revenue Recognition (cont.)\n\ngreater than 10% of total revenue and collectively accounted for approximately 96.2% of the total revenue.\n\nContract assets and Contract liabilities\n\nThe following table provides information about contract assets and contract liabilities from contracts with customers. Contract assets, current, Contract liabilities, current and Contract liabilities, long-term are included separately on the Unaudited Condensed Consolidated Balance Sheets and contract assets expected to be recognized in greater than twelve months are included under Other assets, net.\n\n \nMarch 31, 2026\nDecember 31, 2025\n\nContract assets$40,993 $15,488 \n\nContract liabilities$8,952 $17,481 \n\nContract assets increased by $25,505, net, during the three months ended March 31, 2026, due to recognition of revenues for which invoicing has not yet occurred.\n\nThe following table provides information about changes in Contract liabilities:\n\nThree Months Ended March 31,\n\n20262025\n\nContract liabilities, beginning of the period\n$17,481 $26,349 \n\nAmounts in beginning balance recognized in revenue\n(10,241)(2,512)\n\nRevenue recognized in current period\n(24,074)(3,987)\n\nAdvance payments received from customers\n25,786 23,563 \n\nContract liabilities, end of the period\n$8,952 $43,413 \n\nContract liabilities of $6,718 as of March 31, 2026, are expected to be recognized within the next twelve months and long-term contract liabilities of $2,234 are expected to be recognized as revenue in greater than twelve months. Contract assets of $39,438 as of March 31, 2026, are expected to be reclassified to accounts receivable within the next twelve months and long-term contract assets of $1,555 are expected to be reclassified to accounts receivable in greater than twelve months.\n\nRemaining Performance Obligations\n\nRemaining performance obligations (“RPO”) represent the allocated transaction price of unsatisfied or partially unsatisfied performance obligations. The Company expects to recognize revenue related to the RPOs as the performance obligations are satisfied in accordance with the Company’s revenue recognition policy, which can be found in Note 2, Summary of Significant Accounting Policies, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. As of March 31, 2026, the Company's remaining performance obligations, excluding contracts satisfied in less than on year, were approximately $30,997. The Company expects to recognize revenue of approximately 82% of the remaining performance obligations over the next twelve months, with the remainder recognized thereafter.\n\n4. Cash, Cash Equivalents and Restricted Cash\n\nRestricted cash - current as of March 31, 2026, consists of (i) accounts related to the DOE Loan Facility for reserves related to warranty claims, debt servicing, the Davis Bacon Act, secured letters of credit, escrow deposits related to U.S. Custom Bonds insurance and escrow deposits related to our credit card program agreements and (ii) the interest reserve account maintained pursuant to the second Limited Consent Agreement between the Company and the DOE (the “Second DOE Limited Consent Agreement”), which is equivalent to twelve months of interest payments of the May 2025 Convertible Notes and the November 2025 Convertible Notes.\n\nRestricted cash - current as of March 31, 2025, consists of accounts related to the DOE Loan Facility for reserves related to warranty claims, debt servicing, the Davis Bacon Act and secured letters of credit.\n\n13\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n4. Cash, Cash Equivalents and Restricted Cash (cont.)\n\nLong-term restricted cash as of March 31, 2026, relates to, as defined in the credit and guaranty agreement (“Credit Agreement”), the Minimum Liquidity covenant. Under the Minimum Liquidity covenant, as defined in the Credit Agreement and the DOE Loan Facility, the Company shall not permit cash and cash equivalents at any time be less than $15,000. The remainder of Long-term restricted cash relates to an interest reserve account maintained pursuant to the Second DOE Limited Consent Agreement equivalent to six months of interest payments of the May 2025 Convertible Notes and the November 2025 Convertible Notes. Restricted cash per the Second DOE Limited Consent Agreement shall be reduced by the amounts of any actual interest payments made for the May 2025 Convertible Notes and the November 2025 Convertible Notes, but shall not be less than all interest payments on the May 2025 Convertible Notes and the November 2025 Convertible Notes due within 12 months.\n\nLong-term restricted cash as of March 31, 2025, relates to the Minimum Liquidity covenant, prior to the first tranche funding the Minimum Liquidity covenant, the Company shall not permit cash and cash equivalents at any time be less than $15,000.\n\nThe following table reconciles reported amounts from the Unaudited Condensed Consolidated Balance Sheets to Cash, Cash Equivalents and Restricted Cash reported within the Unaudited Condensed Consolidated Statements of Cash Flows:\n\nMarch 31, 2026\n\nMarch 31, 2025\n\nCash and cash equivalents$410,660 $82,553 \n\nRestricted cash - current39,770 14,141 \n\nLong-term restricted cash21,938 15,000 \n\n    Total cash, cash equivalents and restricted cash $472,368 $111,694 \n\n5. Inventory\n\nThe following table provides information about Inventory balances:\n\n \nMarch 31, 2026\nDecember 31, 2025\n\nRaw materials$46,950 $44,501 \n\nWork-in-process11,396 13,701 \n\nFinished goods399 824 \n\n     Total Inventory\n$58,745 $59,026 \n\n6. Property, Plant and Equipment, Net\n\nThe following table provides information about Property, plant and equipment, net balances:\n\n Estimated Useful lives\nMarch 31, 2026\nDecember 31, 2025\n\nEquipment\n5\n-10 years$85,478 $79,272 \n\nFurniture\n5\n-10 years3,578 3,149 \n\nLeasehold improvementsLesser of useful life/\nremaining lease14,153 14,146 \n\nTooling\n2\n-3 years16,926 16,192 \n\nConstruction in progress (“CIP”)\n65,231 36,644 \n\n     Total185,366 149,403 \n\nLess: Accumulated depreciation (39,592)(34,988)\n\nTotal property, plant and equipment, net$145,774 $114,415 \n\nDepreciation expense related to property, plant and equipment was $5,303 and $2,656 for the three months ended March 31, 2026 and 2025, respectively.\n\n14\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n6. Property, Plant and Equipment, Net (cont.)\n\nThe Company recorded a loss from write-down of property, plant and equipment of $71 and $561 for the three months ended March 31, 2026.and 2025, respectively. The write-downs were mainly due to design changes from the Z3-Phase 1 to Z3-Phase 2 production in which the Phase 1 production assets could not be utilized or repurposed for Phase 2 production. Additionally, the loss from write-down of property, plant and equipment contains costs for disposal of miscellaneous equipment and tooling that cannot be repurposed.\n\nFor the three months ended March 31, 2026, capitalized interest costs recognized was $1,024. There were no capitalized interest costs recognized for the three months ended March 31, 2025.\n\n7. Intangible Assets\n\nIntangible assets consisted of various patents and internal-use software. The patents are determined to have useful lives and are amortized into the results of operations over ten years. The internal-use software has a useful life and is amortized into the results of operations over three years.\n\nMarch 31, 2026\nDecember 31, 2025\n\nGross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount\n\nPatents$400 $290 $110 $400 $280 $120 \n\nInternal-Use Software1,484 307 1,177 1,085 226 859\n\nTotal Intangible Assets$1,884 $597 $1,287 $1,485 $506 $979 \n\nThe Company recorded amortization expense of $91 and $24 for the three months ended March 31, 2026 and 2025, respectively.\n\nEstimated future amortization expense of intangible assets as of March 31, 2026 are as follows:\n\nAmortization Expense\n\nRemainder of 2026$368 \n\n2027485 \n\n2028401 \n\n202933 \n\n2030— \n\nThereafter— \n\n$1,287 \n\n15\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n8. Accrued Expenses\n\nAccrued expenses were as follows:\n\nMarch 31, 2026\n\nDecember 31, 2025\n\nAccrued payroll$7,192 $4,471 \n\nWarranty reserve (1)\n9,533 9,469 \n\nAccrued legal and professional expenses1,482 1,570 \n\nProvision for contract losses5,979 6,138 \n\nAccrued interest4,659 1,196 \n\nAccrued capital expenditures7,072 500 \n\nOther\n3,279 2,450 \n\nTotal accrued expenses$39,196 $25,794 \n\n(1) Refer to the table below for the warranty reserve activity for the three months ended March 31, 2026.\n\nThe following table summarizes warranty reserve activity:\n\nThree Months Ended March 31,\n\n20262025\n\nWarranty reserve - beginning of period$9,469 $5,102 \n\nAdditions for current period deliveries2,089 407 \n\nChanges in the warranty reserve estimate(1,915)— \n\nWarranty costs incurred(110)(756)\n\nWarranty reserve - end of period$9,533 $4,753 \n\n9. Government Grants\n\nOne Big Beautiful Bill Act (“OBBBA”)\n\nOn July 4, 2025, President Trump signed the One Big Beautiful Bill Act into law, introducing several modifications to the energy-related tax incentives originally established under the Inflation Reduction Act. The OBBBA maintained tax credits available to manufacturers and include a credit for ten percent of qualified costs incurred to make electrode active materials in addition to credits of $35 per kWh of capacity for eligible battery cells and $10 per kWh of capacity for eligible battery modules. These credits are cumulative, meaning that companies are able to claim each of the available tax credits based on the battery components produced and sold through 2029, after which the PTC will begin to gradually phase down through 2032. The OBBBA introduces new limitations related to the sourcing of materials from a prohibited foreign entity starting after December 31, 2025. These provisions restrict eligibility for credits where material assistance is received from such entities. Additionally, the OBBBA includes ownership and effective control related provisions concerning 'specified foreign entities' and 'foreign-influenced entities. The Company has evaluated the OBBBA and determined there is no impact on the financial statements. The Company will evaluate additional guidance as it becomes available.\n\n16\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n9. Government Grants (cont.)\n\nSince the PTC is a refundable credit (i.e., a credit with a direct-pay option available), the PTC is outside the scope of ASC 740. Therefore, the Company accounts for the PTC under a government grant model. GAAP does not currently address the accounting for government grants received by a business entity that are outside the scope of ASC 740. The Company’s accounting policy is to analogize to IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, under IFRS Accounting Standards. Under IAS 20, once it is reasonably assured that the entity will comply with the conditions of the grant, the grant money is recognized on a systematic basis over the periods in which the entity recognizes the related expenses or losses for which the grant money is intended to compensate. The Company recognizes grants once it is probable that both of the following conditions will be met: (1) the Company is eligible to receive the grant and (2) the Company is able to comply with the relevant conditions of the grant.\n\nThe PTC is recorded as the applicable items become finished goods and the conditions in the preceding paragraph are met.\n\nThe Company recognized PTC credits of $10,341 and $1,799 for three months ended March 31, 2026 and 2025, respectively as a reduction of cost of goods sold on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. As of March 31, 2026, and December 31, 2025, grant receivable related to the PTC in the amount of $21,369 and $11,028, respectively, is recorded in the Unaudited Condensed Consolidated Balance Sheets.\n\n10. Related Party Transactions\n\nCredit and Securities Purchase Transaction\n\nOn June 21, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with CCM Denali Equity Holdings, LP. Additionally, the Company also entered into a Credit Agreement with CCM Denali Debt Holdings, LP, an affiliate of Cerberus Capital Management LP (“Cerberus”, “Lender”). The SPA and the Credit and Guaranty Agreement are collectively referred to as the “Credit and Securities Purchase Transaction”. Pursuant to the terms and conditions of Credit and Securities Purchase Transaction, Cerberus and CCM Denali Equity Holdings, LP, are considered related parties as result of the transactions.\n\nDuring the three months ended March 31, 2026 and March 31, 2025, the Company incurred advisory fees of $668 and $670, respectively. During the three months ended March 31, 2026 and March 31, 2025 the Company incurred manufacturing costs of $0 and $241, respectively. The fees are from two vendors affiliated with Cerberus and are included in Cost of goods sold, Selling, general and administrative expenses in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income and Intangible assets, net in the Unaudited Condensed Consolidated Balance Sheets.\n\nAs of March 31, 2026 and December 31, 2025, amounts due to these vendors affiliated with Cerberus were $453 and $285, respectively. These amounts are included in Accounts payable and Accrued expenses in the Unaudited Condensed Consolidated Balance Sheets.\n\n17\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings\n\nThe Company’s debt obligations consist of the following:\n\nMarch 31, 2026\n\nDecember 31, 2025\n\nMaturity DateEffective Interest Rate  Principal OutstandingCarrying Value*Principal OutstandingCarrying Value*\n\nDelayed Draw Term Loan\n\nJune 2034(1)\nN/A$197,851 $113,120 $194,419 $150,427 \n\nNotes payable - related party\n197,851 113,120 194,419 150,427 \n\nEquipment financing facilityApril 202616.2 %— — 372 372 \n\nMay 2025 Convertible NotesJune 20307.8 %50,000 48,125 50,000 48,044 \n\nNovember 2025 Convertible NotesDecember 203114.2 %600,000 372,215 600,000 530,096 \n\nDOE Loan Facility\nJune 2034(1)\n\n7.7%(2)\n95,787 86,059 94,685 84,327 \n\n    Total borrowings943,638 619,519 939,476 813,266 \n\nCurrent portion— — 372 372 \n\nTotal borrowings, non-current$943,638 $619,519 $939,104 $812,894 \n\n*Carrying value includes unamortized deferred financing costs, unamortized discounts and fair value of embedded derivative liabilities, except for the Delayed Draw Term Loan, which is carried at fair value.\n\n(1) The DDTL and DOE Loan Facility contain Springing Maturity dates that could make the debt due March 14, 2030.\n\n(2) This represents a weighted average of both draws under the DOE Loan facility The first draw has a effective interest rate of 7.6% and the second draw has an effective interest rate of 8.0%.\n\n2021 Convertible Note Payable – Related Party\n\nOn July 6, 2021, the Company entered into an investment agreement with Spring Creek Capital, LLC, a wholly-owned, indirect subsidiary of Koch Industries. This investment agreement was entered into with B. Riley Securities, Inc., a related party, acted as a placement agent. The investment agreement provides for the issuance and sale to Koch Industries of the 2021 Convertible Note in the aggregate principal amount of $100,000. The maturity date of the 2021 Convertible Notes was June 30, 2026, subject to earlier conversion, redemption or repurchase.\n\nInterest expense recognized on the 2021 Convertible Note is as follows:\n\nThree Months Ended March 31,\n\n2026\n\n2025\n\nContractual interest expense$— $1,843 \n\nAmortization of debt discount— 1,915 \n\nAmortization of debt issuance costs— 184 \n\n    Total$— $3,942 \n\nTermination of the 2021 Convertible Notes\n\nOn June 3, 2025, the Company repurchased the full $122,868 aggregate principal amount, in addition to $3,072 of interest payable outstanding for $131,000 inclusive of a repurchase premium in a privately negotiated transaction. The holder of the 2021 Convertible Notes was contingently required to reimburse the Company for up to $5,000 of the repurchase premium based on the holders overall return on its investment in the Company. On June 13, 2025, the Company received the $5,000 repurchase premium. Neither the holder of the 2021 Convertible Notes, nor the Company have any outstanding contractual obligations. Absent termination, the 2021 Convertible Notes would have matured on June 30, 2026.\n\n18\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings (cont.)\n\nAFG Convertible Notes - Related Party\n\nIn January 2023, the Company issued and sold $13,750 in aggregate principal amount of 26.5% Convertible Senior PIK Notes due 2026 (“AFG Convertible Notes”) to Great American Insurance Company, Ardsley Partners Renewable Energy, LP, CCI SPV III, LP, Denman Street LLC, John B. Bending Irrevocable Children’s Trust, John B. Berding and AE Convert, LLC (the \"Affiliated Purchasers\") (together, the “Purchasers”). AE Convert LLC, a Delaware limited liability company was managed by Russell Stidolph, a related party as Mr. Stidolph was a director of the Company. The AFG Convertible Notes bear interest at a rate of 26.5% per annum, as amended, to be reduced to 7.0%, commencing on June 30, 2026 (the “Original Maturity Date”), which is entirely paid-in-kind (“PIK Interest”) semi-annually in arrears on June 30 and December 30. It was expected that the AFG Convertible Notes would have matured on September 30, 2034, subject to earlier conversion, redemption or repurchase. The AFG Convertible Notes are convertible into shares of the Company’s common stock, par value $0.0001 per share, based on an initial conversion price of approximately $1.67 per share subject to customary anti-dilution and other adjustments. The Company has the right to settle conversions in shares of common stock, cash, or any combination thereof.\n\nConversion of AFG Convertible Notes\n\nOn August 1, 2025, the Company issued a Notice of Redemption of Non-Affiliated Holders for all outstanding AFG Convertible Notes, pursuant to which the Company intended to fully redeem the AFG Convertible Notes (other than those held by the Affiliated Purchaser) on August 18, 2025 for a redemption price equal to the then current capitalized principal amount of the AFG Convertible Notes (other than those held by the Affiliated Purchaser) plus the aggregate amount of all accrued and unpaid or uncapitalized interest payments on the capitalized principal amount of the AFG Convertible Notes (other than those held by the Affiliated Purchaser) that the holders of the AFG Convertible Notes to be redeemed would have been entitled to receive had the AFG Convertible Notes remained outstanding to June 30, 2026. In accordance with the terms of the AFG Indenture and the Notice of Redemption of Non-Affiliated Holders, each of the holders of the AFG Convertible Notes (other than those held by the Affiliated Purchaser) opted to exercise its conversion right to convert all of such holder’s outstanding AFG Convertible Notes into shares of Common Stock at a conversion rate equal to 598.8024 shares of Common Stock per $1,000 capitalized principal amount of AFG Convertible Notes. During the third quarter of 2025, the Company issued 16,578,810 shares of Common Stock in the aggregate to such holders of the AFG Convertible Notes (other than those held by the Affiliated Purchaser).\n\nAt the Special Meeting of Stockholders of the Company, held on October 16, 2025, the Company’s stockholders approved, for purposes of complying with Nasdaq Listing Rules, including, but not limited to, Rule 5635, the Company’s issuance of shares of the Company’s common stock to the Affiliated Purchaser upon redemption or conversion of the AFG Convertible Notes pursuant to the AFG Indenture as supplemented by the First Supplemental Indenture. After obtaining the stockholder approval the Company issued a notice of redemption to the Affiliated Purchaser on October 24, 2025 for all outstanding AFG Convertible Notes held by the Affiliated Purchaser, pursuant to which the Company intended to fully redeem the remaining AFG Convertible Notes on November 10, 2025 for a redemption price equal to the then current capitalized principal amount of the AFG Convertible Notes plus the aggregate amount of all accrued and unpaid or uncapitalized interest payments on the capitalized principal amount of the AFG Convertible Notes that the Affiliated Purchaser would have been entitled to receive had the AFG Convertible Notes remained outstanding at the Original Maturity Date. On October 28, 2025, in accordance with the terms of the AFG Indenture and the notice of redemption, the Affiliated Purchaser opted to exercise its conversion right to convert all of its outstanding AFG Convertible Notes into shares of Common Stock at a conversion rate equal to 598.8024 shares of Common Stock per $1,000 capitalized principal amount of AFG Convertible Notes. During the fourth quarter of 2025, the Company issued 2,863,291 shares of Common Stock to the Affiliated Purchaser.\n\n19\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings (cont.)\n\nInterest expense recognized on the AFG Convertible Notes is as follows:\n\nThree Months Ended March 31,\n\n2026\n\n2025\n\nContractual interest expense$— $1,481 \n\nAmortization of debt discount— 279 \n\nAmortization of issuance costs\n— 79 \n\n    Total$— $1,839 \n\nDelayed Draw Term Loan (“DDTL”)\n\nUnder the terms of the Credit Agreement the Company entered into a multi-draw facility (the “Delayed Draw Term Loan” or “DDTL”) on June 21, 2024, with CCM Denali Debt Holdings, LP, the Company drew an aggregate principal amount of $210,500 through multiple tranches upon satisfaction of the applicable milestone requirements. The draws were subject to a 5.0% original issue discount and applicable lender fees. The total net proceeds of approximately $198,800. Additionally, as part of the strategic investment under the Credit and Guaranty Agreement, the Company may access a $105,000 revolving facility at the sole discretion of the Lenders’ as the Delayed Draw Term Loan has been fully funded as of January 24, 2025.\n\nCovenants\n\nOn May 28, 2025, the Company amended the Credit Agreement, by and among the Company, certain of the Company’s subsidiaries as guarantors party thereto and the Lender, pursuant to which among other things, the applicability of the Minimum Consolidated Revenue and Minimum Consolidated Earnings before interest, tax, depreciation and amortization (\"EBITDA\") financial covenants were deferred until March 31, 2027 and certain provisions were amended to conform with comparable provisions in the DOE Loan Facility.\n\nThe Credit Agreement, as amended, contains the following financial covenants, including (each as defined in the Credit Agreement, as amended):\n\n•Minimum Consolidated EBITDA - not applicable for March 31, 2026.\n\n•Minimum Consolidated Revenue - not applicable for March 31, 2026.\n\n•Minimum Liquidity\n\nAs of and for the three months ended March 31, 2026, the Company was in compliance with the Minimum Liquidity financial covenant.\n\nThe facilities are subject to certain events of default which can be triggered by, among other things, (i) breach of payment obligations and other obligations and representations in the Credit Agreement or related documents, (ii) default under other debt facilities with a principal above a predetermined amount, (iii) failure to perform or comply with certain covenants in the Credit Agreement, (iv) entry into a decree or order for relief in respect of the Company or any of its subsidiaries in an involuntary case under the Bankruptcy Code of the United States or under any other debtor relief law, (v) any money judgment, writ or warrant of attachment or similar process involving in the aggregate at any time an amount in excess of $2,500, (vi) any order, judgment or decree entered against the Company or the Guarantors decreeing the dissolution or split up of such entity, (vii) the failure of the common stock to be listed on an internationally recognized stock exchange in the United States and (viii) a change of control.\n\nThe Company elected the fair value option to account for all draws under the DDTL for operational purposes. The financial liability was initially measured at its issue-date fair value and is subsequently remeasured at fair value on a recurring basis at each reporting period date.\n\n20\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings (cont.)\n\nThree Months Ended March 31,\n\n2026\n\n2025\n\nLoss on change in fair value(a)\n$(4,232)$(5,933)\n\nGain attributable to changes in instrument-specific credit risk(b)\n$41,539 $— \n\n(a) This is included in Change in fair value of debt - related party on the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.\n\n(b)This is included in Change in fair value of debt - credit risk - related party in Accumulated other comprehensive (loss) income.\n\nThe Company did not separately report interest expense attributable to the DDTL because such interest was included in the determination of the fair value of the Note. See Note 13, Fair Value Measurement for the assumptions used to determine the fair value the Delayed Draw Term Loan at issuance and at March 31, 2026.\n\nContractual Interest Rates - Borrowings under the Credit Agreement bear interest at an annual rate equal to 7.0% per annum (as amended), subject to the following increases: (i) an additional 5.0% per annum upon the occurrence of an event of default under the Credit Agreement. The Company may elect to add accrued and unpaid interest on the loans to the principal amount of the loans (capitalized interest).\n\nMaturity - The Maturity Date is defined as the earlier of (i) June 15, 2034, and (ii) the date that all the loans shall become due and payable in full, whether by acceleration or otherwise; provided that, if on any Springing Maturity Date any Convertible Notes remain outstanding, the Maturity Date shall instead be the Springing Maturity. The Springing Maturity Date is defined as the 91st day prior to the date on which any convertible note may be redeemed, repurchased, converted, or exchanged in satisfaction of the obligations (“Convertible Note Maturity”). As of March 31, 2026, the May 2025 Convertible Notes and November 2025 Convertible Notes, remain outstanding and are scheduled to mature on June 15, 2030 and December 1, 2031 respectively.\n\nEquipment Financing facility\n\nThe Company entered into an agreement on September 30, 2021 with Trinity Capital Inc. (“Trinity”) for a $25,000 equipment financing facility, the proceeds of which will be used to acquire certain manufacturing equipment, subject to Trinity’s approval. Each draw is executed under a separate payment schedule (a “Schedule”) that constitutes a separate financial instrument. The financing fees included in each Schedule are established through monthly payment factors determined by Trinity. Such monthly payment factors are based on the Prime Rate reported in The Wall Street Journal in effect on the first day of the month in which a Schedule is executed. The Company has drawn a portion of the facility as follows:\n\nDate of Draw\nGross Amount of Initial Draw\nCoupon Interest RateDebt Issuance Costs\n\nSeptember 2021$7,000 14.3%$175 \n\nSeptember 20224,216 16.2%96 \n\n    Total Equipment Financing loans$11,216 $271 \n\nAs of March 31, 2026 and December 31, 2025, total equipment financing carrying value was $0 and $372, respectively of which $0 and $372 are recorded as a current liability on the Unaudited Condensed Consolidated Balance Sheets, respectively. As of March 31, 2026 the Equipment Financing Facility has been terminated.\n\nInterest expense attributable to the equipment financing agreement was $52 and $82 for the three months ended March 31, 2026 and 2025, respectively.\n\n21\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings (cont.)\n\nMay 2025 Convertible Notes\n\nOn June 3, 2025, the Company issued $225,000 principal amounts of its May 2025 Convertible Notes. The Company granted initial purchasers an option to purchase, for settlement within a period of thirteen days from the date the May 2025 Convertible Notes were first issued, up to an additional $25,000 principal amounts which were exercised in full. The May 2025 Convertible Notes will accrue interest at a rate of 6.75% per annum, payable semi-annually in arrears on June 15 and December 15, beginning on December 15, 2025.\n\nMaturity- The May 2025 Convertible Notes will mature on June 15, 2030, absent conditions described below.\n\nConversion Rights - The May 2025 Convertible Notes can be converted into shares of our common stock under certain conditions before March 15, 2030:\n\n•Stock Price Trigger: If, during any calendar quarter starting after September 30, 2025, our stock price closes above 130% of the conversion price for at least 20 out of the last 30 trading days of that quarter.\n\n•Trading Price Condition: If, during a 10-day period, the trading price of the notes falls below 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day, then conversion is allowed during the five business days that follow.\n\n•Corporate Events: Upon the occurrence of certain corporate events or distributions on our common stock, as described in this offering memorandum.\n\n•Redemption: If the Company calls such notes for redemption on or after June 20, 2028, then the holders may choose to convert them at that time.\n\nBeginning March 15, 2030, the notes can be converted at any time until two trading days prior to maturity.\n\nThe initial conversion price is approximately $5.10 per share, and the Company may choose to settle conversions in stock, cash or a mix of both. The conversion price is subject to customary adjustments upon the occurrence of certain events. If a make-whole fundamental change (as defined in the May 2025 Convertible Notes Indenture) occurs, the conversion rate may temporarily increase to provide additional value.\n\nRedemption - The May 2025 Convertible Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after June 20, 2028 and on or before the 41st scheduled trading day immediately before the maturity date, but only if certain liquidity conditions are satisfied and the last reported sale price per shares of the Company’s common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the thirty consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such redemption notice. However, the Company may not redeem less than all of the outstanding notes unless at least $75,000 aggregate principal amount of notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice. The redemption price is equivalent to the principal amount of the May 2025 Convertible Notes called for redemption, plus accrued and unpaid interest. In addition, calling any note for redemption will constitute a make-whole fundamental change with respect to that note, in which case the conversion rate applicable to the conversion of that note will be increased in certain circumstances if it is converted after it is called for redemption.\n\nEmbedded Derivatives - The May 2025 Convertible Notes include certain embedded features, such as provisions for fundamental change, additional interest, special interest and indemnification. In accordance with ASC 815, the Company assessed these embedded features to determine whether bifurcation and separate accounting as derivatives was required. Although these features are not clearly and closely related to the host debt contract and meet the definition of a derivative under ASC 815, the Company determined that the combined fair value of these embedded derivatives is de minimis. Accordingly, these features have not been bifurcated from the host contract and are not accounted for separately. The Company will continue to evaluate these features for any changes in facts or circumstances that may warrant reconsideration of this assessment.\n\n22\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings (cont.)\n\nAdditionally, the conversion feature embedded in the May 2025 Convertible Notes qualifies for the scope exception under ASC 815-40 and, therefore, is not required to be bifurcated and accounted for separately.\n\nInterest expense recognized on the May 2025 Convertible Notes is as follows:\n\nThree months ended March 31, 2026\n\nContractual interest expense$844 \n\nAmortization of debt discount\n74 \n\nAmortization of debt issuance costs6 \n\n    Total$924 \n\nThe carrying value for the May 2025 Convertible Notes is as follows:\n\nMarch 31, 2026\nDecember 31, 2025\n\nPrincipal\n$50,000 $50,000 \n\nUnamortized debt discount\n(1,724)(1,799)\n\nUnamortized debt issuance costs(151)(157)\n\n     Aggregate carrying value$48,125 $48,044 \n\nThe Company is obligated to repay all contractual interest attributable to the May 2025 Convertible Notes on a semi-annual basis in cash. As of March 31, 2026 and December 31, 2025, $984 and $141, respectively, of interest payable attributable for the May 2025 Convertible Notes was included in Accrued expenses in the Unaudited Condensed Consolidated Balance Sheets.\n\nNovember 2025 Convertible Notes\n\nOn November 24, 2025, the Company issued $525,000 principal amounts of its November 2025 Convertible Notes. The Company granted initial purchasers an option to purchase, for settlement within a period of thirteen days from the date the November 2025 Convertible Notes were first issued, up to an additional $75,000 principal amounts which were exercised in full on November 24, 2025. The November 2025 Convertible Notes will accrue interest at a rate of 1.75% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on June 1, 2026.\n\nMaturity- The November 2025 Convertible Notes will mature on December 1, 2031, absent conditions described below.\n\nConversion Rights - The November 2025 Convertible Notes can be converted into shares of our common stock under certain conditions before September 3, 2031:\n\n•Stock Price Trigger: If, during any calendar quarter starting after June 30, 2026, our stock price closes above 130% of the conversion price for at least 20 out of 30 trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice.\n\n•Trading Price Condition: If, during a 10-day period, the trading price of the notes falls below 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day, then conversion is allowed during the five business days that follow.\n\n•Corporate Events: Upon the occurrence of certain corporate events or distributions on our common stock, as described in this offering memorandum.\n\n•Redemption: If the Company calls such notes for redemption on or after December 5, 2028, then the holders may choose to convert them at that time.\n\nBeginning September 3, 2031, the notes can be converted at any time until two trading days prior to maturity.\n\n23\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings (cont.)\n\nThe initial conversion price is approximately $16.29 per share, and the Company may choose to settle conversions in stock, cash or a mix of both. The conversion price is subject to customary adjustments upon the occurrence of certain events. If a make-whole fundamental change (as defined in the November 2025 Convertible Notes Indenture) occurs, the conversion rate may temporarily increase to provide additional value.\n\nRedemption - The November 2025 Convertible Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after December 5, 2028 and on or before the 41st scheduled trading day immediately before the maturity date, but only if certain liquidity conditions are satisfied and the last reported sale price per shares of the Company’s common stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the thirty consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such redemption notice. However, the Company may not redeem less than all of the outstanding notes unless at least $75,000 aggregate principal amount of notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice. The redemption price is equivalent to the principal amount of the November 2025 Convertible Notes called for redemption, plus accrued and unpaid interest. In addition, calling any note for redemption will constitute a make-whole fundamental change with respect to that note, in which case the conversion rate applicable to the conversion of that note will be increased in certain circumstances if it is converted after it is called for redemption. Prior to obtaining shareholder approval for the issuance of common stock upon conversion, the Company will be required to settle all conversions in cash.\n\nEmbedded Derivatives - The November 2025 Convertible Notes include certain embedded features, such as provisions for fundamental change, additional interest, special interest, conversion feature and indemnification. In accordance with ASC 815, the Company assessed these embedded features to determine whether bifurcation and separate accounting as derivatives was required. The Company concluded the embedded features meet the bifurcation criteria because the economic characteristics and the risks of the embedded features are not clearly and closely related to the debt host, the host is not remeasured at fair value and the embedded features would meet the definition of a derivative if freestanding. The Company also evaluated indexation and equity classification guidance with respect to the conversion feature. Although the conversion feature is considered indexed to the Company's own stock, it does not qualify for equity classification at issuance, as prior to the first date on which the Company reserves the maximum number of convertible shares, and before shareholder approval is obtained to authorize additional shares, all conversions are required to be cash-settled, and shareholder approval to increase authorized shares is not solely within the Company's control. As a result, the conversion feature did not qualify for the derivative scope exception in ASC 815 at issuance. At issuance, the Company recognized the embedded derivative at its fair value, with an offset to debt discount. The embedded derivative is remeasured at fair value each reporting period, and changes in fair value are recognized in Change in fair value of derivatives on the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. The Company will continue to evaluate these features for any changes in facts or circumstances that may warrant reconsideration of this assessment.\n\nInterest expense recognized on the November 2025 Convertible Notes is as follows:\n\nThree months ended March 31, 2026\n\nContractual interest expense$2,625 \n\nAmortization of debt discount\n8,045 \n\nAmortization of debt issuance costs9 \n\n    Total$10,679 \n\nThe carrying value for the November 2025 Convertible Notes is as follows:\n\n24\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings (cont.)\n\nMarch 31, 2026\nDecember 31, 2025\n\nPrincipal\n$600,000 $600,000 \n\nUnamortized debt discount\n(290,252)(298,297)\n\nUnamortized debt issuance costs(317)(326)\n\nEmbedded conversion feature\n62,784 228,719 \n\n     Aggregate carrying value$372,215 $530,096 \n\nThe Company is obligated to repay all contractual interest attributable to the November 2025 Convertible Notes on a semi-annual basis in cash. As of March 31, 2026 and December 31, 2025, $3,675 and $1,050, respectively, of interest payable attributable for the November 2025 Convertible Notes was included in Accrued expenses in the Unaudited Condensed Consolidated Balance Sheets.\n\nDOE Loan Facility\n\nOn November 26, 2024, the Company entered into a loan agreement with the United States Federal Financing Bank (\"FFB\") and the United States DOE Loan Programs Office (“LPO”) (“the DOE Loan Facility\"). The loan provides for a principal amount of up to $277,497 of borrowings and capitalized interest amount of up to $25,953.\n\nThe DOE Loan Facility provides for a multi draw term loan facility under a series of at least two tranches and, if the Company elects, up to four tranches of the loan (each, a “Tranche”), subject to the achievement of certain funding conditions. Each Tranche corresponds to the production, maintenance, development, and operation of a given production line to be funded using the proceeds of such Tranche. The principal amount of each Tranche consists of a maximum principal amount designated for such Tranche in the DOE Loan Facility. Each Tranche provides the Company funding for 80% of the Eligible Project Costs. Eligible Project Costs means Project Costs that satisfy each of the following conditions: (a) DOE has determined the Project Costs to be eligible costs in accordance with Sections 609.2 and 609.10 of the Applicable Regulations; (b) the Project Costs have not been paid and are not expected to be paid any time after the First Advance Date with: (i) any federal grants, assistance, or loans (excluding the DOE Loan Facility); or (ii) other funds guaranteed by the Federal Government; (c) the Project Costs are identified in the Construction Budget; (d) the Project Costs do not constitute Cost Overruns; and (e) the Project Costs were incurred after the Eligibility Effective Date.) associated with the corresponding production line, with the Company responsible for funding the remaining 20% of the Project Costs.\n\nOn April 16, 2025, the Company amended the DOE Loan Facility in order to clarify the maximum Tranche Commitment principal amounts by excluding capitalized interest (Tranche 1: $90,945; Tranche 2: $106,733; Tranche 3: $67,529; and Tranche 4: $12,290). The Amendment did not materially alter rights, obligations, or meaning of the DOE Loan Facility.\n\nThe DOE Loan Facility draw-downs were as follows:\n\nDate of DrawGross Amount of Initial Draw\nInterest Rate\n\nBeginning Balance Tranche 1$90,945 \n\n   Draw-downs received November 2024(68,279)4.791 %\n\n   Draw-downs received July 2025(22,666)4.286 %\n\nRemaining Balance available on Tranche 1$— \n\nThe Company has not drawn on Tranches 2, 3 or 4 as of March 31, 2026.\n\n25\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings (cont.)\n\nInterest expense recognized on the DOE Loan Facility is as follows:\n\nThree Months Ended March 31,\n\n2026\n\n2025\n\nContractual interest expense$1,092 $808 \n\nAmortization of debt issuance costs141 91 \n\nAmortization of debt discount\n381 — \n\n    Total$1,614 $899 \n\nThe carrying value for the DOE Loan Facility is as follows:\n\nMarch 31, 2026\nDecember 31, 2025\n\nPrincipal (life to date draw-downs)\n$90,945 $90,945 \n\nCapitalized PIK Interest\n4,842 3,740 \n\nUnamortized debt issuance costs(2,609)(2,749)\n\nUnamortized debt discount(7,119)(7,609)\n\n     Aggregate carrying value$86,059 $84,327 \n\nThe DOE Loan Facility bears interest at the applicable U.S. Treasury rate plus a spread equal to 0.375%. The interest is paid in-kind (\"Capitalized PIK Interest\") on a quarterly basis, in accordance with the terms under the DOE Loan Facility. Cash payment of the Capitalized PIK Interest on the DOE Loan Facility commences in 2028.\n\nCovenants\n\nOn May 28, 2025, the Company and the DOE entered into a Limited Consent Agreement (“DOE Limited Consent Agreement”), pursuant to which among other things, the applicability of the Minimum Consolidated Revenue and Minimum Consolidated EBITDA financial covenants were deferred until March 31, 2027 and certain provisions were added to conform with comparable provisions in the Delayed Draw Term Loan. Additionally, the DOE Limited Consent Agreement requires the Company to reserve 24 months of interest expense for the May 2025 Convertible Notes. Refer to Note 4, Cash, Cash Equivalents and Restricted Cash for further information.\n\nOn November 18, 2025, the Company and the DOE entered into the Second DOE Limited Consent Agreement, allowing the Company to, among other things, (i) offer common stock and new convertible unsecured senior notes, (ii) issue securities related to those offerings, (iii) issue common stock if the November 2025 Convertible Notes are converted, (iv) make cash payments on the November 2025 Convertible Notes and (v) confirm that the November 2025 Convertible Notes count as permitted indebtedness under the DOE Loan Facility.\n\nUnder the Second DOE Limited Consent Agreement, following the issuance of the November 2025 Convertible Notes, the company must maintain adequate cash reserves to cover all interest payments due on both the May 2025 Convertible Notes and November 2025 Convertible Notes for a period of 18 months. This reserve will decrease as interest payments are made, but shall not be less than all interest payments on the May 2025 Convertible Notes and the November 2025 Convertible Notes due within 12 months. Refer to Note 4, Cash, Cash Equivalents and Restricted Cash for further information.\n\nThe DOE Loan facility, as amended, contains the following financial covenant, (as defined in the DOE Loan facility) Minimum Liquidity. As of March 31, 2026, the Company was in compliance with the Minimum Liquidity financial covenant.\n\nIn addition, the DOE Loan Facility contains certain representations and warranties customary for the facilities extended under the DOE Loan Facility, including, among other things, representations and warranties regarding: (i) the organization and existence of the Company, (ii) authority and the absence of any conflicts, (iii) capitalization, (iv) solvency and (v) compliance with applicable law and the DOE Loan Program.\n\n26\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n11. Borrowings (cont.)\n\nMaturity - The Maturity Date is defined as the earlier of (i) June 15, 2034, and (ii) the date that all the loans shall become due and payable in full, whether by acceleration or otherwise; provided that, if on any Springing Maturity Date any Convertible Notes remain outstanding, the Maturity Date shall instead be the Springing Maturity. The Springing Maturity Date is defined as the 91st day prior to the Convertible Note Maturity. As of March 31, 2026, the May 2025 Convertible Notes and November 2025 Convertible Notes, remain outstanding and are scheduled to mature on June 15, 2030 and December 1, 2031, respectively.\n\n12. Warrants Liability\n\nThe amount of warrants outstanding and fair value for all warrants as of March 31, 2026 and December 31, 2025 are as follows:\n\nMarch 31, 2026\n\nDecember 31, 2025\n\nExercise PriceNumber of Warrants OutstandingFair ValueNumber of Warrants OutstandingFair Value\n\nWarrants liability\n\nApril 2023 warrants$3.1416,000,000 $58,240 16,000,000 $153,440 \n\nMay 2023 warrants$2.503,601,980 13,400 3,601,980 35,263 \n\nDecember 2023 warrants$1.609,960,566 41,137 12,010,566 124,550 \n\nTotal\n29,562,546 $112,777 31,612,546 $313,253 \n\nWarrants liability - related party\n\nSPA Warrant\n$0.011 $203,485 1 $470,715 \n\nTotal\n1 $203,485 1 $470,715 \n\nThe change in fair value for April 2023 Warrants, May 2023 Warrants and December 2023 Warrants have been recognized in Change in fair value of warrants on the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. The fair value for these warrants is included in Warrants liability on the Unaudited Condensed Consolidated Balance Sheets. The change in fair value for the SPA Warrant has been recognized in Change in fair value of derivatives - related parties on the Company’s Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. The fair value for these warrants is included in Warrants liability - related party on the Unaudited Condensed Consolidated Balance Sheets. See Note 13, Fair Value Measurements for further information.\n\nWarrants liability\n\nIn April 2023, the Company issued 16,000,000 shares of common stock and 16,000,000 private placement warrants to purchase shares of common stock. In May 2023, the Company issued another 3,601,980 shares of common stock and 3,601,980 private placement warrants to purchase shares of common stock (the “April 2023 warrants” and “May 2023 warrants”, respectively).\n\nIn December 2023, the Company issued in a combined public offering 34,482,759 shares of common stock and 34,482,759 accompanying common warrants to purchase shares of common stock (the \"December 2023 warrants\"). For the three months ended March 31, 2026, 2,050,000 of the December 2023 warrants were exercised. For the three months ended March 31, 2025, 4,393,102 of the December 2023 warrants were exercised.\n\nThe 2023 warrants do not qualify for equity classification guidance in ASC 815-40 and are measured at fair value at each reporting period.\n\n27\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n12. Warrants Liability (cont.)\n\nWarrants liability - related party\n\nSPA Warrant\n\nOn June 21, 2024, the Company entered into a Securities Purchase Agreement with CCM Denali Equity Holdings, LP (the “Purchaser”). The Company issued to the Purchaser, one warrant to purchase 43,276,194 shares of common stock. The warrant has a ten-year term, $0.01 per share exercise price, and is exercisable at the Purchaser’s discretion for cash or on a cashless basis. The SPA Warrant is subject to automatic cashless exercise on the expiration date if the fair market value of one share is greater than the exercise price then in effect. Upon an acceleration under the Credit Agreement, the Company may be required to purchase the SPA Warrant from the holder at an amount equal to the closing sale price of underlying common stock less the SPA Warrant exercise price at the request of the holder. The SPA Warrant meets the criteria for liability classification under ASC 480 and is recognized at fair value with changes in fair value included in Change in fair value of derivatives - related parties in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income.\n\nContingent Warrants\n\nFollowing the initial draw of the DDTL, on three separate predetermined draw dates upon the achievement of the corresponding performance milestone for each such draw date, the Company received additional funds under the Credit Agreement and issued securities under the SPA in an amount equal to the applicable percentage, up to an aggregate of 33.0% ownership limitation on a fully-diluted basis as of the time the DDTL was fully drawn. Although these contingent warrants were not issued or exercisable until additional draws occurred, they met the guidance under ASC 480 and were recognized at fair value with changes in fair value reported in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income. The Company has achieved all performance milestones and no Contingent Warrants remain outstanding.\n\n13. Fair Value Measurement\n\nAccounting standards establish a hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:\n\nLevel 1 - Quoted prices in active markets for identical assets or liabilities.\n\nLevel 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.\n\nLevel 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.\n\nThe carrying value of cash and cash equivalents, restricted cash, accounts receivable, contract assets, contract liabilities, accounts payable and DOE Loan Facility are considered to be representative of their fair value.\n\n28\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n13. Fair Value Measurement (cont.)\n\nThe following tables set forth the Company's financial liabilities measured at fair values based on the fair value hierarchy, as described above. These should also be read with Note 2, Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.\n\nMarch 31, 2026\n\nDecember 31, 2025\n\nLevel 1Level 2Level 3Level 1Level 2Level 3\n\nLiabilities\n\nSPA Warrant (a)\n$— $— $203,485 $— $— $470,715 \n\nApril, May and December 2023 Warrants— — 112,777 — — 313,253 \n\nDelayed Draw Term Loan— — 113,120 — — 150,427 \n\nEmbedded derivatives(b)\n— — 62,784 — — 228,719 \n\nTotal liabilities\n$— $— $492,166 $— $— $1,163,114 \n\n(a) Included in Warrants liability - Related party on the Unaudited Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025.\n\n(b) Included in Notes Payable - Related Party on the Unaudited Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025.\n\nApril 2023 warrants, May 2023 warrants and December 2023 warrants\n\nThe April 2023 warrants, May 2023 warrants and December 2023 warrants all are valued using the Black-Scholes model at inception and on subsequent valuation dates. This model incorporates inputs such as the stock price of the Company, risk-free interest rate, volatility and time to expiration. The volatility is a significant unobservable input classified as Level 3 of the fair value hierarchy.\n\nThe inputs used to determine the fair value of the April 2023 warrants, May 2023 warrants, and the December 2023 warrants are as follows:\n\n29\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n13. Fair Value Measurement (cont.)\n\nApril 2023 warrants\nMarch 31, 2026\nDecember 31, 2025\n\nTime to expiration2.54 years2.79 Years\n\nCommon stock price$4.96 $11.46 \n\nRisk-free interest rate3.8 %3.5 %\n\nVolatility115.0 %105.0 %\n\nMay 2023 warrants\nMarch 31, 2026\nDecember 31, 2025\n\nTime to expiration2.29 Years2.54 Years\n\nCommon stock price$4.96 $11.46 \n\nRisk-free interest rate3.8 %3.5 %\n\nVolatility115.0 %105.0 %\n\nDecember 2023 warrants\n\nMarch 31, 2026\nDecember 31, 2025\n\nTime to expiration2.71 Years2.96 Years\n\nCommon stock price$4.96 $11.46 \n\nRisk-free interest rate3.8 %3.5 %\n\nVolatility115.0 %105.0 %\n\nEmbedded derivatives\n\nThe Company estimated the fair value of the embedded conversion features in the November 2025 Convertible Note using a binomial lattice model at inception and on subsequent valuation dates. This model incorporates inputs such as the stock price of the Company, dividend yield, risk-free interest rate, the effective debt yield and expected volatility. The effective debt yield and volatility involve unobservable inputs classified as Level 3 of the fair value hierarchy.\n\nThe inputs used to determine the fair value of the embedded derivative liabilities are as follows:\n\nNovember 2025 Convertible NoteMarch 31, 2026December 31, 2025\n\nTerm5.67 Years5.92 Years\n\nDividend yield— %— %\n\nRisk-free interest rate3.9 %3.8 %\n\nVolatility60.0 %60.0 %\n\nEffective debt yield16.9 %11.7 %\n\n30\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n13. Fair Value Measurement (cont.)\n\nQuantitative information about all significant unobservable inputs used in the fair value measurement for recurring level 3 measurements:\n\nThe fair value of each draw of the Delayed Draw Term Loan was estimated using a discounted cash flow (“DCF”) method, based on the contractual cash flows discounted at a debt yield and considering the probability of achieving certain milestones.\n\nThe fair value for the SPA warrant is estimated based on its intrinsic value, using the Eos common stock closing price adjusted by a discount for lack of marketability (“DLOM”), less the exercise price of $0.01 for the SPA Warrant. A DLOM was applied considering the SPA Warrants are unregistered.\n\nDelayed Draw Term Loan\nMarch 31, 2026\nDecember 31, 2025\n\nDebt yield\n17.1 %11.9 %\n\nSPA Warrant\n\nMarch 31, 2026\nDecember 31, 2025\n\nDiscount for lack of marketability5.0 %5.0 %\n\nLevel 3 Rollforward for Liabilities Measured at Fair Value on a Recurring Basis\n\nThe following table summarizes the changes in the fair value of liabilities that are included within the Company’s accompanying Unaudited Condensed Consolidated Balance Sheets and are designated as Level 3:\n\nThree Months Ended March 31,\n\n2026\n\n2025\n\nDelayed Draw Term Loan\n\nBalance at beginning of the period$150,427 $76,188 \n\nAdditions - January Draw\n— 17,312 \n\nChange in fair value of Term Loan(37,307)5,933 \n\nBalance at end of the period$113,120 $99,433 \n\nSPA Warrant and Contingent Warrants\n\nBalance at beginning of the period$470,715 $266,630 \n\nConversion to preferred stock\n— (102,185)\n\nChange in fair value of warrants(267,230)(17,652)\n\nBalance at end of the period$203,485 $146,793 \n\nApril, May, and December 2023 Warrants\n\nBalance at beginning of the period$313,253 $189,322 \n\nExercised warrants\n(31,751)(18,768)\n\nChange in fair value of warrants(168,725)(45,788)\n\nBalance at end of the period$112,777 $124,766 \n\nEmbedded derivatives\n\nBalance at beginning of the period$228,719 $44,396 \n\nChange in fair value of derivatives\n(165,935)(16,934)\n\nBalance at end of the period$62,784 $27,462 \n\n31\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n13. Fair Value Measurement (cont.)\n\nThe estimated fair value of financial instruments not carried at fair value in the Unaudited Condensed Consolidated Balance Sheets was as follows:\n\nLevel in fair value hierarchy\nMarch 31, 2026\n\nDecember 31, 2025\n\nCarrying ValueFair ValueCarrying ValueFair Value\n\nMay 2025 Convertible Notes3$48,125 $66,686 $48,044 $123,000 \n\nNovember 2025 Convertible Notes*\n3372,215 352,300 530,096 586,237 \n\nEquipment financing facility3— — 372 375 \n\nPreferred Stock\n3582,664 600,035 1,361,542 1,292,216 \n\nDOE Loan Facility\n386,059 95,760 84,327 95,427 \n\n  Total$1,089,063 $1,114,781 $2,024,381 $2,097,255 \n\n*Includes the embedded derivative liabilities.\n\n14. Commitments and Contingencies\n\nIn February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act. As a result of this ruling, we may be eligible for a refund of tariffs previously paid on imported materials. As the recoverability and timing of any such refund remains uncertain, we have not recognized a receivable and corresponding offset to expense or asset as of March 31, 2026, and will not until such amounts are realized or realizable. We continue to monitor these developments and their potential impact on our results of operations.\n\nLegal Proceedings\n\nClass Action Complaints\n\nOn March 6, 2026, a class action lawsuit (the “Yung Complaint”) was filed in the United States District Court of New Jersey by plaintiff Shui Shing Yung against the Company and two individual officers: the Company’s Chief Executive Officer and its Chief Financial Officer (with the Company, the “Yung Defendants”). The Yung Complaint alleges that the Yung Defendants violated federal securities laws by making knowingly false or misleading statements about the Company’s manufacturing capabilities and financial outlook. The Company intends to vigorously contest this matter.\n\nOn March 13, 2026, a shareholder derivative lawsuit (the “Berger Complaint”) was filed in the United States District Court of the District of New Jersey by plaintiff Paul Berger against certain defendants including the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and nine of the Company’s current Directors (the “Berger Defendants”). The Berger Complaint alleges that the Berger Defendants breached their fiduciary duties to the Company by allowing the Company to make knowingly false or misleading statements about the Company’s manufacturing capabilities and financial outlook. The Company intends to vigorously contest this matter.\n\nOn March 25, 2026, a shareholder derivative lawsuit (the “Skaff Complaint”) was filed in the United States District Court of the District of New Jersey by plaintiff Ronald F. Skaff against certain defendants including the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, and nine of the Company’s current Directors (the “Skaff Defendants”). The Skaff Complaint alleges that the Skaff Defendants breached their fiduciary duties to the Company by allowing the Company to make knowingly false or misleading statements about the Company’s manufacturing capabilities and financial outlook. The Company intends to vigorously contest this matter.\n\n32\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n15. Stock-Based Compensation\n\nStock-based compensation expense included in the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income was as follows:\n\nThree Months Ended March 31,\n\n2026\n\n2025\n\nRestricted stock units$5,257 $3,482 \n\nPerformance-based restricted stock units\n645 4,092 \n\nTotal$5,902 $7,574 \n\nThe stock compensation expense has been recorded in cost of goods sold, research and development expenses and selling, general and administrative expenses.\n\nRestricted Stock Units (“RSU”)\n\nEligible employees are granted restricted stock that generally vest over three years from the date of grant. Under the directors plan, restricted stock generally vest one year from the date of grant. As of March 31, 2026, there was $39,450 of unrecognized compensation expense attributable to unvested RSUs, expected to be recognized over a weighted-average remaining vesting period of 2.2 years.\n\nPerformance-Based Restricted Stock Units (“PRSU”)\n\nDuring the third quarter of 2024, the Company granted contingent shares to select key executives that may be earned based on the Company’s total shareholder return (“TSR”) over a two and three-year period following the grant date (“2024 TSR Awards”). During the second quarter of 2025, the Company also granted contingent shares to select key employees that may be earned based on the Company’s TSR over three individual one-year periods and a cumulative three-year period following the grant date (“2025 TSR Awards”).\n\nTSR awards are paid out in stock at the end of the vesting period based on the Company’s stock performance. The performance is measured by determining the percentile rank of the total shareholder return of the Company’s common stock relative to the TSR of the Russell 2000 index peer group for the two and three-year period following the grant date. This peer group includes the entire Russell 2000 index as it existed at the beginning of the performance period, excluding any companies that were removed from the index during the performance period. The payment of awards following the two and three-year award period is based on performance achieved in accordance with the scale set forth in the plan agreement and may range from 0% to 200% of the initial grant. The fair value of the TSR awards is estimated using a Monte Carlo simulation in an option pricing framework.\n\nDuring the second quarter of 2025, the Company granted shares contingent upon the achievement of certain performance targets for fiscal year 2025 and continued employment through the vesting period.\n\nAs of March 31, 2026, there was $3,319 of unrecognized compensation expense attributable to unvested PRSUs, expected to be recognized over a weighted-average remaining vesting period of 1.8 years.\n\n16. Income Taxes\n\nIncome tax expense was $5 for the three months ended March 31, 2026 and 2025, related to taxable earnings from foreign operations. The income tax expense differs from the amount computed by applying the statutory U.S. federal income tax rate of 21% to the loss before income taxes. This is due to fair value adjustments - derivatives and warrants, Section 162(m) disallowance, foreign operations and pre-tax losses for which no tax benefit can be recognized for U.S. income tax purposes.\n\nThe Company estimates and applies the annual effective tax rate to its ordinary earnings each interim period. Any significant unusual or infrequent items are not included in the estimation of the annual effective tax rate; instead, these items and their related income tax expense are separately stated in the interim period in which they occur.\n\n33\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n16. Income Taxes (cont.)\n\nAt each balance sheet date, management assesses the likelihood that the Company will be able to realize its deferred tax assets. Management considered all available positive and negative evidence in assessing the need for a valuation allowance. The realization of deferred tax assets depends on the generation of sufficient taxable income of the appropriate character and in the appropriate taxing jurisdiction during the future periods in which the related temporary differences become deductible. Management has determined that it is unlikely that the Company will be able to utilize its U.S. deferred tax assets at March 31, 2026 and December 31, 2025 due to cumulative losses. Therefore, the Company has a valuation allowance against its net U.S. deferred tax assets.\n\nAs of March 31, 2026 and December 31, 2025, the Company has unrecognized tax benefits associated with uncertain tax positions that, if recognized, would not affect the effective tax rate on income from continuing operations. The Company is currently under examination by the IRS related to tax year 2022. The Company is not under examination by any other taxing jurisdictions and none of the unrecognized tax benefits are expected to reverse within the next 12 months.\n\nThe Company files income tax returns in U.S. federal and various state jurisdictions, as well as in Italy and India. The open tax years for federal returns are 2022 and forward, and open tax years for state returns are generally 2020 and forward. In addition, net operating losses generated in closed years and utilized in open years are subject to adjustment by the tax authorities.\n\n17. Shareholders’ Deficit\n\nPreferred Stock\n\nThe Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s Board of Directors. The preferred stock has a par value of $0.0001. As of March 31, 2026 and December 31, 2025, there were no shares of preferred stock issued or outstanding.\n\nCommon Stock\n\nThe Company is authorized to issue 600,000,000 shares of common stock at $0.0001 par value as of March 31, 2026. The holders of the Company’s common stock are entitled to one vote for each share held. At March 31, 2026 and December 31, 2025, there were 339,459,021 and 337,132,374, respectively, shares of common stock issued and outstanding, respectively.\n\nTreasury Stock\n\nThe Company recorded treasury stock of $0 and $488 for the three months ended March 31, 2026 and 2025, respectively, for shares withheld from employees to cover the payroll tax liability of RSUs vested. The treasury stock was immediately retired.\n\nDOE Warrants\n\nThe Company issued 570,000 warrants to the DOE in November 2025 to purchase shares of common stock at a price of $0.01 per share (the “DOE Warrants”). The DOE Warrants meet the requirements for equity classification guidance in ASC 815-40. The DOE Warrants are scheduled to expire November 21, 2030. There were 570,000 DOE Warrants outstanding as of March 31, 2026 and December 31, 2025.\n\n18. Redeemable Preferred Stock\n\nSeries B Preferred Stock\n\nEach Series B Preferred Stock has a par value of $0.0001 per share. The table below summarizes the Company’s outstanding Series B Preferred Stock as of December 31, 2025.\n\n34\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n18. Redeemable Preferred Stock (cont.)\n\nPreferred Stock\n\nIssuance Date\n\nShares Issued\n\nOriginal Issue Price\n\nShares Outstanding\n\nCommon Stock Equivalent\n\nSeries B-1 Preferred Stock9/12/202431.940063$841,999.99 31.94006331,940,063 \n\nSeries B-2 Preferred Stock\n9/12/202428.806463$2,322,000 28.80646328,806,463 \n\nSeries B-3 Preferred Stock\n11/1/202438.259864$3,358,000 38.25986438,259,864 \n\nSeries B-4 Preferred Stock\n1/24/202516.150528$5,990,000 16.15052817,305,070 \n\nConversion rights: The Series B Preferred Stock is convertible into common stock at a conversion ratio of 1.0 million shares of common stock per share of Series B Preferred Stock (“Conversion Ratio”). The Conversion Ratio is subject to antidilution protection that is triggered if the Company issues equity for a price per share that is less than the conversion price then in effect, subject to certain exceptions.\n\nDuring the second quarter of 2025, the Company’s issuance of the May 2025 Convertible Notes and common stock through the public offering triggered an adjustment to the Series B-4 Preferred Stock liquidation value under the terms of the Securities Purchase Agreement. The number of common shares issuable upon conversion of the Series B-4 increased by 1,154,542 to 17,305,070. The Company recorded a down round deemed dividend of $4,456 increasing additional paid-in capital and accumulated deficit on the Consolidated Statements of Shareholders' Deficit.\n\nDividends: Holders of the Series B Preferred Stock are entitled to receive dividends or distributions on each share of Series B Preferred Stock equal to dividends or distributions actually paid on each share of common stock on an as-converted basis.\n\nAppointment of Directors: At all times when the holders of the Preferred Stock beneficially own at least 10%, 15% or 30% of the capital stock of the Company, the Preferred Stock shareholders, exclusively and voting together as a separate class, will have the right to appoint a maximum of 1, 2 or 3 Directors to the Board of Directors of the Company (the “Board”), respectively. At all times when the holders of the Preferred Stock beneficially own at least 40% of the capital stock of the Company, the Preferred Stock shareholders, exclusively and voting together as a separate class, will have the right to nominate a fourth director, who shall be nominated by the Board or the nominating committee of the Board to a class of common directors and thereafter stand for election as a common director on the Board. The Preferred Stock shareholders will have the right to nominate a fourth director to the Board only if such appointment does not result in a change of control under any Company governing documents or violate any applicable laws, including requirements of the SEC and Nasdaq and any such fourth director appointment shall be subject to and conditioned upon compliance by the holders of the Preferred Stock with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, including the submission of any required filings and the expiration or termination of any applicable waiting periods.\n\nPreemptive rights: The Series B Certificates of Designation contain customary preemptive rights that permit the Holders of Series B Preferred Stock to participate in certain future equity offerings by the Company.\n\nRights to distributions upon liquidation of the Company: In the event of a voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of the Series B Preferred Stock are entitled to receive distribution of any of the assets or surplus funds of the Company pro rata with the holders of the common stock and any other holders of the preferred stock of the Company issued pursuant to the SPA and the Credit Agreement (the “Investor Preferred Stock”), including the Series B Preferred Stock, in an amount equal to such amount per share as would have been payable had all shares of Series B Preferred Stock been converted to common stock.\n\nProtective provisions: The Company is prohibited from taking certain actions that could adversely affect the rights of the Preferred Stock without the affirmative vote of a majority of the outstanding shares of Preferred Stock until the later of (i) such time when the holders of Investor Preferred Stock shall no longer beneficially own at least 5% of the outstanding capital stock of the Corporation and (ii) June 21, 2029, in the case of the Series B-1 Preferred Stock, August 29, 2029, in the case of the Series B-2 Preferred Stock, November 1, 2029 in the case of the Series B-3 Preferred Stock or January 24, 2030 in the case of Series B-4 Preferred Stock.\n\n35\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n18. Redeemable Preferred Stock (cont.)\n\nRedemption Rights: At any time after June 21, 2029, in the case of the Series B-1 Preferred Stock, August 29, 2029, in the case of the Series B-2 Preferred Stock, November 1, 2029 in the case of the Series B-3 Preferred Stock or January 24, 2030 in the case of Series B-4 Preferred Stock, the outstanding shares of Series B Preferred Stock held by any holder become redeemable for cash at the redemption price. The redemption price will be an amount per share equal to the greater of (i) the B-1 Original Issue Price, the B-2 Original Issue Price, the B-3 Original Issue Price or the Series B-4 Preferred Stock Original Issue, as applicable, plus all accrued and unpaid dividends thereon, up to and including the date of redemption and (ii) the number of shares of common stock issuable upon conversion of the applicable Series B Preferred Stock multiplied by the average of the closing sale price of the common stock for the five (5) business days immediately prior to the date of redemption plus all accrued and unpaid dividends thereon, up to and including the date of redemption.\n\nAs of March 31, 2026 and December 31, 2025, all then outstanding shares of Series B Preferred Stock were classified as mezzanine equity on the Unaudited Consolidated Balance Sheets at its redemption value because it is probable of becoming redeemable. The Company recorded remeasurement of the Series B Preferred Stock, which reduces Additional paid-in capital, on the Unaudited Consolidated Statements of Shareholders' Deficit.\n\n19. Earnings Per Share\n\nThe following table provides the numerators and denominators used in computing basic and diluted net income (loss) per share for the three months ended March 31, 2026 and 2025. Generally, basic earnings per share (“EPS”) is computed by dividing earnings available to common shareholders by the weighted average number of shares of common stock outstanding during the period. In accordance with ASC 260, the DOE Warrants are included in basic EPS as the shares are issuable for little cash consideration. The SPA Warrant, Series B Preferred Stock, the warrants issued in 2023, May 2025 Convertible Notes and November 2025 Convertible Notes are participating securities that do not have the obligation to share in the losses of the Company. Therefore, the more dilutive of the “if-converted” and “two-class” method must be applied when calculating EPS for the common shares.\n\nFor purposes of basic EPS, the “two-class” method was applied and undistributed earnings were allocated to participating securities. These undistributed earnings were allocated based on each participating securities’ proportionate share of the total weighted-average shares outstanding.\n\nThree Months Ended March 31,\n\n20262025\n\nNumerator\n\nNet income available\n$1,287,761 $95,133 \n\nLess: Undistributed earnings allocated to participating securities(461,204)— \n\nNet income available to common shareholders\n$826,557 $95,133 \n\nDenominator\n\nWeighted average shares outstanding - basic339,602,063 225,474,247 \n\nEarnings per share:\n\nBasic$2.43 $0.42 \n\nFor purposes of diluted EPS, the more dilutive of the “treasury-stock method”, “if-converted” and “two-class” method must be applied when calculating dilutive EPS.\n\n36\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n19. Earnings Per Share (cont.)\n\nThree Months Ended March 31,\n\n20262025\n\nNumerator\n\nNet income available\n$1,287,761 $95,133 \n\nEffect of potentially dilutive shares:\n\nAdjustment for interest on convertible notes\n924 1,839 \n\nAdjustment for change in fair value on embedded derivatives for convertible notes\n— (15,922)\n\nAdjustment for change in fair value on SPA Warrant\n(267,230)(42,064)\n\nAdjustment for change in fair value on April, May and December 2023 Warrants\n(179,218)(46,896)\n\nAdjustment for remeasurement of Series B Preferred Stock\n(778,878)(79,997)\n\nNet income (loss) for diluted earnings per share\n$63,359 $(87,907)\n\nDenominator\n\nWeighted-average basic common shares outstanding\n339,602,063 225,474,247 \n\nDilutive effect of convertible notes\n11,074,195 13,385,305 \n\nDilutive effect of Series B Preferred Stock\n116,311,460 110,850,111 \n\nDilutive effect of warrants\n66,107,625 68,498,537 \n\nDilutive effect of RSUs\n7,981,966 8,621,012 \n\nDilutive effect of PRSUs\n2,175,288 8,017,961 \n\nDilutive effect of stock options\n1,576,336 1,521,109 \n\nWeighted-average dilutive common shares outstanding\n544,828,933 436,368,282 \n\nEarnings per share:\n\nDiluted\n$0.12 $(0.20)\n\nThe following potentially dilutive shares were excluded from the calculation of diluted net income (loss) per share because their effect would have been anti-dilutive.\n\nThree Months Ended March 31,\n\n20262025\n\nPublic and private placement warrants— 7,326,654 \n\nContingent warrants\n— 15,320,062 \n\nStock options\n42,628 1,585,056 \n\nRSUs1,799,126 — \n\nConvertible Notes (if converted)\n— 6,142,293 \n\nManagement has elected to recognize changes in the redemption value of the Series B Preferred Stock. At each balance sheet date, the redemption value of the Series B Preferred Stock will be calculated and remeasured to its redemption value. The remeasurement is recorded as a deemed dividend or contribution, which, in the absence of Retained earnings, is recognized within additional paid in capital and earnings available to common shareholders in computing basic and diluted EPS. Other potentially dilutive common shares and the related impact to earnings are considered when calculating EPS on a diluted basis.\n\n37\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n20. Segment Reporting\n\nThe Company’s chief operating decision-maker (“CODM”) is its Chief Executive Officer and President. Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the CODM in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. As such, the Company has determined that it operates in one operating and one reportable segment.\n\nThe Company designs, develops, manufactures, and markets innovative zinc-based energy storage solutions for utility-scale, microgrid and C&I applications. The Company operates and holds long-lived assets in a single geographical region, with nearly all of its revenue coming from customers in the United States.\n\nThe CODM reviews financial information on a consolidated basis and uses Gross profit (loss) and Net income (loss) to assess financial performance considering budget-to-actual variances when making key decisions on how to allocate company resources.\n\nThe Company’s segment information is summarized as follows:\n\nThree Months Ended March 31,\n\n20262025\n\nProduct revenue\n$56,734 $9,927 \n\nService revenue\n229 530 \n\nTotal revenue\n56,963 10,457 \n\nLess:\n\nCost of goods sold\n101,390 34,996 \n\nGross profit (loss)(44,427)(24,539)\n\nLess:\n\nResearch and development\n10,719 6,837 \n\nSelling, general and administrative24,095 20,995 \n\nOther segment items(a)\n(588,124)(67,507)\n\nNet income (loss)\n$508,883 $15,136 \n\n(a) Other segment items include loss from write-down of property, plant and equipment, interest expense, net, change in fair value of debt, change in fair value of warrants, change in fair value of derivatives, costs related to the Company’s debt transactions and other miscellaneous items.\n\n38\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)\n\nEOS ENERGY ENTERPRISES, INC.\n\nNOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS\n\n(In thousands, except share and per share amounts)\n\n20. Segment Reporting (cont.)\n\nAdditional segment financial information is summarized as follows:\n\nThree Months Ended March 31,\n\n20262025\n\nSegment assets$799,324 $263,283 \n\nDepreciation and amortization$5,394 $2,680 \n\nInterest income$2,787 $814 \n\nInterest expense$12,242 $6,759 \n\nCapital expenditures(b)\n$35,138 $4,918 \n\n(b) Includes Intangible assets.\n\nThe following geographic area data includes nets sales based on product shipment destination.\n\nThree Months Ended March 31,\n\n20262025\n\nUnited States$28,076 $10,457 \n\nUnited Kingdom28,887 — \n\nTotal$56,963 $10,457 \n\n21. Subsequent Events\n\nOn May 12, 2026, the Company entered into a binding term sheet with CCM Frontier JV Holdco, LLC, an affiliate of Cerberus Capital Management, L.P. (“CCM Frontier”), providing for the formation of a joint venture focused on the development of certain energy storage and power opportunities (the “Joint Venture”). The joint venture is expected to be organized through Frontier Power USA Parent, LLC (the “JV Company”). Closing of the transactions contemplated by the term sheet is subject to the negotiation and execution of definitive agreements and the satisfaction of customary and other conditions.\n\nPursuant to the term sheet, at or prior to closing, CCM Frontier is expected to (i) receive founder’s equity in the form of Class A‑1 units in exchange for certain contributed contracts, relationships and platform assets, (ii) contribute $100,000 in cash in exchange for Class A‑2 units of the JV Company, and (iii) receive a warrant to purchase shares of the Company’s common stock. Concurrently, the Company is expected to contribute an amount equal to the proceeds raised in a contemplated rights offering, targeted at $150,000, in exchange for Class B units of the JV Company.\n\nThe Company’s investment in the JV Company is expected to be funded through a rights offering to holders of the Company’s common stock and certain warrants. Participants in the rights offering are expected to receive common stock and warrants to purchase additional shares of common stock, with the warrants having an exercise price set at a discount to the volume‑weighted average price of the Company’s common stock at the time of launch. CCM Frontier is expected to receive a similarly priced warrant in consideration for its cash contribution.\n\nThe completion of the Joint Venture transactions is subject to several conditions, including, among others, (i) completion of the rights offering, (ii) approval by the Company’s stockholders of an increase in authorized shares of common stock, (iii) receipt of required third‑party approvals, including consent from the U.S. Department of Energy, and (iv) execution of definitive commercial and governance agreements.\n\n39\n\n[Table of Contents](#i218a01d03bb545c9964edc723a032d0f_7)"}