ESS Tech, Inc. (GWH) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This Quarterly Report on Form 10-Q covers the period ended June 30, 2026. ESS Tech, Inc. develops and manufactures non-lithium energy storage solutions, specifically sodium-ion and iron flow battery technologies. The company is currently pivoting its strategic focus toward its sodium-ion product line (Bridge™ BESS) while streamlining operations for its iron flow products (Energy Base). As of June 30, 2026, the company had 32,970,025 shares of common stock outstanding.
Key Financial Metrics
| Metric (in thousands) | Q2 2026 | Q2 2025 | 6 Months 2026 | 6 Months 2025 |
|---|---|---|---|---|
| Total Revenue | $73 | $2,358 | $201 | $2,957 |
| Cost of Revenue | $7,494 | $7,459 | $14,660 | $16,205 |
| Gross Loss | $(7,421) | $(5,101) | $(14,459) | $(13,248) |
| Net Loss | $(15,553) | $(11,056) | $(31,475) | $(29,082) |
| Net Loss Per Share (Basic/Diluted) | $(0.46) | $(0.90) | $(1.00) | $(2.39) |
| Cash and Cash Equivalents (Unrestricted) | $10,848 | $14,477 | As of June 30, 2026 | |
| Net Cash Used in Operating Activities | N/A (Quarterly) | $(22,402) | $(30,597) | |
| Total Debt / Financing Obligations | N/A (Quarterly) | $14,480 | As of June 30, 2026 |
Note: Financing obligations include $5.8M current and $8.7M non-current. Total liabilities exceed total assets, resulting in a stockholders' deficit of $(2.7M).
Material Changes vs. Prior Period
- Revenue Collapse: Total revenue decreased 97% year-over-year in Q2 2026 ($73k vs $2.4M) and 93% for the six-month period. This decline is attributed to the wind-down of existing contracts and lower sales volumes as the company transitions to new product offerings.
- Asset Abandonment: Cost of revenue included a $4.3 million charge related to the abandonment of fixed assets deemed no longer useful for the company's current manufacturing focus. This significantly impacted the gross loss.
- Increased Interest Expense: Net interest expense was $0.6 million for Q2 2026 compared to $30k of interest income in Q2 2025, driven by the Yorkville Promissory Note and sale-leaseback financing obligations.
- Stock-Based Compensation: Total stock-based compensation expense decreased to $0.6 million in Q2 2026 from $1.7 million in Q2 2025, reflecting cost reduction measures.
Guidance, Outlook, Risks, and Contingencies
- Going Concern Warning: Management has concluded there is substantial doubt about the company's ability to continue as a going concern for 12 months from the issuance of the report. The company has an accumulated deficit of $877.3 million and requires additional debt or equity financing to meet near-term operating cash flow requirements.
- Liquidity Strategy: The company is actively pursuing additional funding through equity offerings (ATM program, Registered Direct Offerings) and debt. It has implemented cost reduction measures, including workforce reductions and minimized material purchases.
- NYSE Listing Compliance: The company received notice from the NYSE regarding non-compliance with minimum share price requirements (average closing price below $1.00) and minimum market capitalization standards. The company has submitted a plan to regain compliance, which may include a reverse stock split.
- Legal Contingencies: A contingent loss of $1.75 million has been recorded related to a demand letter from a supplier alleging damages based on purchase commitments. The company believes it has meritorious defenses but acknowledges the unpredictability of the outcome.
- Strategic Pivot: Future revenue is expected to be generated primarily from Bridge™ sodium-ion and Energy Base BESS sales. The company is reallocating resources to sodium-ion development while reducing headcount and expenses related to iron flow operations.
Key Facts for Investor Verification
- Cash Runway: Verify the sufficiency of the $10.8 million unrestricted cash balance against the $22.4 million operating cash burn over the last six months.
- Financing Milestones: Monitor the status of the $22.7 million EXIM Credit Agreement (currently undrawn) and the $40 million Yorkville Promissory Note (partially repaid, with remaining balance carrying a 29% effective interest rate).
- Delisting Risk: Track the company's progress in regaining NYSE compliance regarding share price and market capitalization to avoid delisting to OTC markets.
- Asset Write-downs: Assess the impact of the $4.3 million asset abandonment charge on future depreciation and operational capacity.
- Related Party Transactions: Review the $5.3 million non-refundable deposit from Honeywell (UOP) recorded as deferred revenue and the terms of the Joint Development Agreement.