Revenue surges 351% to $68.8M; operating loss widens 31% as net income of $233M driven by non-operating fair-value gains

New securities class action filed March 6, 2026, alleging false or misleading statements about manufacturing capabilities and financial outlook. Lead plaintiff motions are pending. The allegations differ from the prior dismissed Houck case, which concerned customer contracts and backlog.

New shareholder derivative lawsuit filed March 13, 2026, alleging breach of fiduciary duty by officers and nine directors for allowing false statements about manufacturing and outlook. Seeks governance reforms and damages.

Second derivative lawsuit filed March 25, 2026, with similar allegations to Berger. The two derivative cases were consolidated May 13, 2026, and stayed pending resolution of the Yung class action. This procedural consolidation and stay is standard when derivative claims depend on the same underlying facts as a parallel securities class action.

The company announced formation of FPUSA, a joint venture with CCM Frontier and HBC, to develop and operate long-duration battery energy storage projects as an Independent Power Producer. FPUSA is expected to enhance the company's ability to convert its commercial pipeline into booked orders by providing an integrated financing solution including sponsor equity, institutional debt supported by Technology Performance Insurance, and project-level debt facilities.

The company announced a $150 million rights offering to fund its capital contribution to the FPUSA joint venture. Each right entitles eligible holders to purchase approximately 0.071193 of a Unit at $5.481 per whole Unit (approximately 10% discount to June 29, 2026 closing price). Each Unit consists of one share of common stock and 0.4388 of a warrant exercisable at $5.481 per share, expiring 10 years after closing.

The company completed a $75 million registered direct offering to HBMF, issuing 13.7 million shares of common stock and 6.0 million warrants exercisable at $5.481 per share. This capital raise occurred concurrently with the rights offering announcement.

The company launched commercial production at its second Z3 manufacturing line at the Thorn Hill facility in Marshall Township, Pennsylvania in June 2026. This expansion demonstrates a repeatable production model and enhances operational flexibility to support growing customer demand.

The company introduced DawnOS in 2025, a software platform that serves as the intelligence layer for its BESS. DawnOS manages battery modules in real time, provides precise balancing and dynamic switching, and is designed to increase usable energy per cycle while reducing field service requirements.

The company introduced Eos Indensity in 2026, a high-density energy storage architecture targeting up to 1 GWh per acre (roughly four times incumbent footprints). The system integrates Z3 battery modules with DawnOS controls and can be deployed indoors or outdoors, addressing use cases across data centers, military bases, manufacturing facilities, and critical infrastructure with a domestic FEOC-compliant supply chain.

The company now references the One Big Beautiful Bill Act (OBBBA) alongside the Inflation Reduction Act as a source of legislative incentives, including production tax credits for domestically manufactured battery components and tax credits for customers meeting domestic content requirements.

Total revenue for the six months ended June 30, 2026 increased 389% to $125.7 million from $25.7 million in the prior year. The current period includes $55.0 million of related-party revenue (not present in the baseline), driven by increased deliveries, higher average selling prices, and higher revenue from third-party materials, partially offset by a decline in service revenue.

Cost of goods sold for the six months ended June 30, 2026 increased 170% to $219.0 million from $81.2 million in the prior year, driven by significantly higher cube deliveries, higher direct and indirect labor, higher field service costs, and higher volume-driven warranty accruals. The company recognized $22.8 million in production tax credits for the six months ended June 30, 2026 (up from $6.4 million in the prior year), which partially offset the increase.

The company commenced commercial production from its second battery line on June 16, 2026 at the Turtle Creek facility. However, labor and overhead absorption continued to be impacted by operating at partial production levels as the expanded facility ramps toward planned capacity. The company expects utilization, fixed-cost absorption, and manufacturing efficiencies to improve as production volumes increase.

Field-related costs increased during the quarter as the company's installed base grew and as it advanced deployment of DawnOS upgrades across legacy customer systems. These activities support long-term product performance and customer experience but increased service and support costs during the period.

Inventory balances increased during the quarter to support higher production levels and anticipated customer deliveries. Consistent with the company's negative gross profit position, the related inventory reserve increased during the period.

R&D expenses for the six months ended June 30, 2026 increased 51% to $21.2 million from $14.0 million in the prior year, primarily attributable to higher facility costs, materials and supplies, outside services, and payroll-related costs. The prior year increase was driven by higher payroll, stock-based compensation, and consulting costs for key growth areas.

Interest expense for the six months ended June 30, 2026 increased $20.3 million to $24.2 million from $4.0 million in the prior year, primarily due to an increased principal balance under the DOE Loan Facility and interest associated with the May 2025 Convertible Notes and November 2025 Convertible Notes, which were outstanding for the entire period. The prior year saw a decrease due to the payoff of the Atlas Credit Facility in 2024.

The change in fair value of debt - related party (DDTL) was $8.8 million income for the six months ended June 30, 2026 compared to $25.7 million expense in the prior year. For the current period, the primary factor was accretion from the passage of time. For the prior year, the primary factor was a decrease in the DDTL interest rate from 15% to 7% per annum and a decrease in the loan balance due to prepayment.

The change in fair value of warrants for the six months ended June 30, 2026 was $146.1 million income compared to $12.0 million expense in the prior year, largely driven by the company's common stock price movement for the periods presented.

The company recognized a $95.5 million income from change in fair value of derivatives for the six months ended June 30, 2026, related to the embedded derivative associated with the November 2025 Convertible Notes. On June 3, 2026, stockholders approved an amendment to increase authorized common shares from 600 million to 800 million, allowing the conversion feature to qualify for the derivative scope exception under ASC 815 and eliminating the requirement for subsequent fair value remeasurement.

The change in fair value of derivatives - related parties for the six months ended June 30, 2026 was $216.7 million income compared to $41.9 million expense in the prior year, largely driven by the company's common stock price movement. The 2021 Convertible Note Payable and AFG Convertible Notes were not outstanding for the current period.

The company recognized a $35.7 million loss on contingently issuable securities for the six months ended June 30, 2026, due to the securities to be issued in connection with the registered direct offering. The loss is driven by the fair value of securities to be issued compared to the consideration to be received.

The company reported net income of $233.2 million for the six months ended June 30, 2026, compared to a net loss of $207.8 million in the prior year. However, the company incurred negative cash flows from operations of $191.8 million (compared to $95.0 million in the prior year), with non-cash items totaling $370.8 million (compared to $106.9 million in the prior year). The accumulated deficit increased to $2,302.6 million from $1,774.0 million.

The company's unrestricted cash and cash equivalents increased to $305.5 million as of June 30, 2026 from $120.2 million as of June 30, 2025. Working capital increased to $356.1 million from $128.0 million. The company also had $58.6 million of restricted cash as of June 30, 2026.

The company drew down the full $90.9 million under Tranche 1 of the DOE Loan Facility through June 30, 2026 (up from $68.3 million as of June 30, 2025). The company has approximately $186.6 million of availability remaining under the DOE Loan Facility. The company notes that if it does not achieve certain funding conditions and the DOE chooses not to continue funding, it may need to seek alternative sources of capital.

Capital expenditures for the six months ended June 30, 2026 increased to $70.6 million from $12.0 million in the prior year, reflecting the company's growth strategy and expansion of manufacturing facilities at its Warrendale location.

Net cash used in operating activities for the six months ended June 30, 2026 increased to $191.8 million from $95.0 million in the prior year. The current period was driven by net cash outflows from changes in operating assets and liabilities of $54.1 million (compared to net cash inflows of $5.8 million in the prior year), primarily due to increases in grant receivable ($22.8 million), inventory ($16.6 million), contract assets ($7.4 million), vendor deposits ($5.9 million), and accounts receivable ($6.9 million combined), partially offset by increases in accounts payable ($12.5 million) and accrued expenses ($7.5 million).

Net cash used in investing activities for the six months ended June 30, 2026 increased to $70.6 million from $12.0 million in the prior year, primarily to support the growth of manufacturing facilities at the Warrendale location.

Net cash provided by financing activities for the six months ended June 30, 2026 decreased to $1.8 million from $186.8 million in the prior year. The current period was primarily due to proceeds from the exercise of warrants ($3.3 million), partially offset by debt issuance costs ($0.6 million) and share repurchases for tax withholding ($0.8 million). The prior year included significant proceeds from a public offering ($81.1 million), issuance of the May 2025 Convertible Notes ($240.0 million), and the Credit and Securities Purchase Transaction ($38.5 million), partially offset by the payoff of the 2021 Convertible Notes and prepayment of the DDTL ($180.9 million).

Total future debt payments increased to $1,189.9 million as of June 30, 2026 from $809.6 million as of June 30, 2025. The current period includes the November 2025 Convertible Notes ($657.8 million) and excludes the AFG Convertible Notes ($32.5 million) and equipment financing facility ($1.1 million). The DOE Loan Facility increased to $120.3 million from $91.5 million. The May 2025 Convertible Notes decreased to $63.5 million from $336.1 million.

The company removed the going concern disclosure that was present in the prior year. The prior year disclosure stated that management evaluated negative financial conditions and concluded that uncertainties raised substantial doubt about the company's ability to continue as a going concern. The removal of this disclosure indicates improved financial condition and liquidity, supported by the company's increased cash position ($305.5 million unrestricted cash as of June 30, 2026 vs. $120.2 million as of June 30, 2025) and working capital ($356.1 million vs. $128.0 million).

The company has made a minority investment in Frontier Power USA, a new entity that will develop and operate energy storage projects. This represents a business-model expansion beyond manufacturing into project ownership and operations, exposing the company to development, financing, permitting, construction, and electricity-market risks outside its historical expertise. Because the investment is non-controlling, the company has limited ability to influence strategic or operational decisions.

Frontier Power USA is expected to become a customer of the company, creating a potential customer-concentration risk. Future revenues and backlog may depend on Frontier Power USA's ability to execute its project-development business plan. If Frontier Power USA encounters financial or operational challenges or reduces purchases, the company's revenue, backlog, and growth prospects could be adversely affected.

Frontier Power USA will be controlled and managed by a related party, creating potential conflicts of interest. The company's interests may not always align with those of Frontier Power USA or its other owners regarding commercial arrangements, governance, or financing decisions, and the company's ability to influence these matters may be limited.

The company currently does not consolidate Frontier Power USA in its financial statements, but this accounting treatment involves judgment and will be reassessed each reporting period. Changes in Frontier Power USA's ownership structure, governance, or financing could require consolidation in the future, which could materially affect the company's reported financial statements, operating results, and financial condition.

The minority investment in Frontier Power USA may be illiquid and difficult to exit or monetize. The investment could result in losses or impairment charges if it underperforms. Additionally, equity financings, warrants, or exchange rights related to the investment may dilute existing stockholders, and if the investment fails to produce anticipated strategic or financial benefits, the company's business, financial condition, and stockholder value could be materially adversely affected.