Business Description

DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND CONSOLIDATION, AND RISKS AND UNCERTAINTIES Description of Business —ESS Tech, Inc. (“ESS” or the “Company”) is a long-duration energy storage company specializing in iron flow battery technology. ESS develops long-duration iron flow batteries for commercial and utility-scale energy storage applications requiring up to twelve hours of flexible energy capacity predominantly using earth-abundant materials. The Company was founded in 2011 (“Legacy ESS”) and became a publicly traded company through a business combination with a special purpose acquisition company named ACON S2 Acquisition Corp. (“STWO”) which changed its name to ESS Tech, Inc. upon closing (the “Business Combination”). As a result of the Business Combination, Legacy ESS survived and became a wholly owned subsidiary of ESS Tech, Inc. On March 31, 2024, Legacy ESS merged with ESS Tech, Inc. leaving ESS Tech, Inc. as the sole remaining legal entity. Basis of Presentation —The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Basis and Principles of Consolidation —The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Project New Horizon, LLC, which was formed in October of 2025 and is wholly owned and controlled by the Company. The subsidiary and its activity is immaterial to the results and financial position of the Company as of December 31, 2025. All intercompany accounts and transactions have been eliminated upon consolidation. Risks and Uncertainties —The Company is subject to a number of risks associated with companies of similar size in its industry, including, but not limited to, the need for successful development of products, the need for additional capital and financing to fund operations, competition from substitute products and services from larger companies, legal protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes in information technology. Concentration of Credit Risk —Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents and restricted cash. The Company’s cash and cash equivalents include cash in bank accounts, money market funds, and investments with a maturity of three months or less at the date of purchase. The Company’s restricted cash includes collateral associated with a standby letter of credit and a performance and payment bond. Deposits held with banks may exceed the amount of insurance provided on such deposits. Liquidity and Capital Resources —The Company has incurred operating losses and cash outflows from operations since inception and the Company anticipates that losses will continue in the near term. During the year ended December 31, 2025, the Company incurred net losses of $63.4 million and used $50.3 million of cash in operating activities. As of December 31, 2025, the Company had unrestricted cash and cash equivalents of $14.5 million and short-term investments of $7.5 million, or total liquid assets of $22.0 million. The continuation of the Company as a going concern is dependent upon its ability to obtain additional debt or equity financing and to generate profit from its operations. Management is evaluating various strategies to obtain additional funding, which may include additional offerings of equity, issuance of debt, or other capital sources. There is no assurance that the Company will be able to generate sufficient profits, obtain such financings at all, or obtain them on favorable terms. Any such financing activities are subject to market conditions and accordingly involve factors that are outside the Company’s control. These uncertainties cause substantial doubt to exist as to the Company’s ability to continue as a going concern for 12 months from the issuance of these financial statements. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.