SES AI Q3 gross margin falls to 4.9% from 51.1%
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
SES AI Corporation reported third-quarter 2026 revenue of $6.6 million, down 6.7% year over year, and net loss of $13.4 million, versus $20.9 million. Gross profit fell to $0.3 million from $3.6 million, with gross margin at 4.9% versus 51.1%, primarily due to a changed mix of product and service revenue. For the first nine months, revenue rose 12.1% to $18.4 million, while gross profit declined 75.1% to $2.7 million.
At September 30, 2026, SES had $70.7 million in cash and cash equivalents and $66.6 million in short-term investments; nine-month operating cash use was $48.8 million. SES said cash and marketable securities would fund principal needs and ongoing activities for at least 12 months from the report date. September repurchases totaled 16,161,561 Class A shares for $9.2 million; its at-the-market program permits sales of up to $150.0 million, with none to date. After a July notice that its average closing price missed NYSE's $1.00 minimum over 30 consecutive trading days, SES scheduled a reverse-split vote for December 10, 2026. If approved, implementation is intended promptly afterward only if the Board determines a reduction in shares is likely to improve trading price and necessary to help maintain listing.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointNine-month revenue rose 12.1% to $18.4 million.
- Moderate pointQuarterly net loss narrowed to $13.4 million from $20.9 million.
Negative
- Major pointNYSE's $1.00 minimum average closing-price standard was unmet for 30 trading days.
- Moderate pointThird-quarter revenue fell 6.7% to $6.6 million.
- Moderate pointThird-quarter gross margin was 4.9%, versus 51.1% a year earlier.
- Moderate pointNine-month gross profit declined 75.1% to $2.7 million.
Filing Explained
The $5,875 thousand current deferred-consideration liability remained at September 30, 2026, and the 2025 payment was unpaid.
SES reports that it funded its full
SES says it controls the entity through the right to appoint a majority of its board and senior management; Hisun’s 10% interest is presented as a noncontrolling interest.
At
Key Figures
Key Terms
gross margin financial
at-the-market equity offering program financial
variable interest entity financial
Monte Carlo simulation technical
contingent liabilities financial
NDAA-compliant regulatory
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were SES (SES) third-quarter 2026 revenue and net loss?
Why did SES (SES) gross margin fall in the third quarter of 2026?
How does SES's (SES) at-the-market equity offering program work?
What is SES's (SES) reverse-split proposal and when will stockholders vote?
What drone-cell capacity does SES (SES) plan to reach?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
| |
(State or other jurisdiction of | (I.R.S. Employer |
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(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| | |
Title of Each Class | Trading symbol(s) | Name of Exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | ☐ | | | Accelerated filer | ☐ |
| | | | | |
☒ | | | Smaller reporting company | ||
| | | | | |
| | | | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 9, 2026, there were
Table of Contents
TABLE OF CONTENTS
| | |
| | |
Cautionary Note Regarding Forward-Looking Statements | | |
Part I. | Financial Information | |
Item 1. | Financial Statements | 5 |
| Condensed Consolidated Balance Sheets (Unaudited) | 5 |
| Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) | 6 |
| Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) | 7 |
| Condensed Consolidated Statements of Cash Flows (Unaudited) | 8 |
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 9 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 26 |
Item 4. | Controls and Procedures | 26 |
| | |
Part II. | Other Information | |
Item 1. | Legal Proceedings | 26 |
Item 1A. | Risk Factors | 27 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 27 |
Item 3. | Defaults Upon Senior Securities | 28 |
Item 4. | Mine Safety Disclosures | 28 |
Item 5. | Other Information | 28 |
Item 6. | Exhibits | 29 |
Signatures | 30 | |
2
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains statements that SES AI Corporation (the “Company,” “SES,” “we,” or “us”) believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements relating to expectations for future financial performance, business strategies or expectations for our business. These statements are based on the beliefs and assumptions of the management of the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, it cannot provide assurance that it will achieve or realize these plans, intentions or expectations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report, words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strive,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
You should not place undue reliance on these forward-looking statements. Should one or more of a number of known and unknown risks and uncertainties materialize, or should any of our assumptions prove incorrect, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to the risks below:
| ● | We expect to continue to incur losses for the foreseeable future. While we expect to become profitable eventually, our projections are based on internal assumptions that may prove incorrect, and we may never achieve or maintain profitability. |
| ● | We will need substantial additional capital in the future to fund our business and may be unable to meet our future capital requirements, impairing our financial position and results of operations. |
| ● | We may not be able to successfully integrate UZ Energy’s operations into our business. |
| ● | The market for drone cells may not achieve the growth potential we expect. |
| ● | We may face challenges in developing National Defense Authorization Act (“NDAA”)-compliant manufacturing capacity for drone cells, and even if we develop the manufacturing capacity, demand for NDAA-compliant drone cells may not develop. |
| ● | Changes in U.S. government priorities, federal defense spending and budget timelines and qualification requirements could affect the demand for NDAA-compliant drone cells. |
| ● | If our batteries fail to perform as expected, our ability to develop, market and sell our batteries could be harmed. |
| ● | We may not be able to establish new, or maintain existing, supply relationships for necessary raw materials, components or equipment or may be required to pay costs for raw materials, components or equipment that are more expensive than anticipated, which could delay the introduction of our product and negatively impact our business. |
| ● | Our ability to manufacture our batteries at scale depends on our ability to build, operate and staff our facilities successfully, as well as to obtain sufficient contract manufacturing capacity. |
| ● | We have pursued and may continue to pursue joint development agreements (“JDAs”), services contracts, and other strategic alliances, which could have an adverse impact on our business if they are unsuccessful or if we are unable to enter into new strategic alliances. |
| ● | The battery market continues to evolve and is highly competitive, and certain other battery manufacturers have significantly greater resources than we do. |
| ● | We may not be able to estimate accurately the future supply and demand for our batteries, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to predict accurately our manufacturing requirements, we could incur additional costs or experience delays. |
| ● | Certain components of our batteries pose safety risks that may cause accidents. We may be subject to financial and reputational risks due to product recalls and product liability claims, and we could face substantial liabilities that exceed our resources. |
| ● | We may not be able to develop and commercialize newly discovered materials. |
| ● | The use of artificial intelligence (“AI”) in our products and services may result in reputational harm and competitive harm. |
| ● | Our use of artificial intelligence and machine learning may result in legal and regulatory risks. |
| ● | The market for our AI-based services such as Molecular Universe is still emerging and our AI programs may not achieve the growth potential we expect. |
| ● | The economic benefit of our Energy Storage Systems (“ESS”) products to our customers depends on the cost of electricity available from alternative sources, including local electric utility companies, which cost structure is subject to change. |
| ● | Our ESS products performance may not meet customers’ expectations or needs. |
| ● | We depend upon component and product manufacturing and logistical services provided by third parties, many of whom are located outside of the U.S. |
3
Table of Contents
| ● | Our patent applications may not result in issued patents or our patent rights may be challenged, invalidated or limited in scope, any of which could have a material adverse effect on our ability to prevent others from competing or interfering with the commercialization of our products. |
| ● | We rely heavily on our intellectual property portfolio, including unpatented proprietary technology. If we are unable to protect our intellectual property rights from unauthorized use, our business and competitive position would be harmed. |
| ● | The international nature of our business exposes us to business, regulatory, political, operational, financial and economic risks (including ongoing geopolitical conflicts in the Middle East, including transit disruptions in the Strait of Hormuz, and countries in Asia-Pacific) associated with doing business outside of the U.S. |
| ● | The price of our Class A common stock has been and may continue to be volatile. |
| ● | Our warrants may never be in the money, and they may expire worthless. |
| ● | We are controlled or substantially influenced by Dr. Qichao Hu and certain entities affiliated with Dr. Hu, whose interests may conflict with other stockholders. The concentrated ownership of our dual class common stock could prevent stockholders from influencing significant decisions. |
| ● | Our failure to satisfy certain New York Stock Exchange (“NYSE”) listing requirements may result in our Class A common stock being delisted from the NYSE, which could eliminate or adversely affect the trading market for our Class A common stock. |
| ● | We have had a history of material weaknesses in our internal control over financial reporting, and any identification of new material weaknesses could have an adverse impact on the value of our Class A common stock. |
| ● | The other factors disclosed in this Quarterly Report on Form 10-Q and the Company’s other filings with the Securities and Exchange Commission (the “SEC”), in particular the risks described in “Part II, Item 1A” of this Quarterly Report and “Part I, Item 1A” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 4, 2026, as amended on April 30, 2026 (the “2025 Annual Report on Form 10-K”). |
The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on information available as of the date of this Quarterly Report on Form 10-Q and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and should not be relied upon as representing the Company’s views as of any subsequent date. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
4
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SES AI Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
| | | | | | |
(in thousands, except share and per share amounts) | | September 30, 2026 | | December 31, 2025 | ||
Assets | | | |
| | |
Current Assets | | | |
| | |
Cash and cash equivalents | | $ | | | $ | |
Short-term investments | | | | | | |
Accounts receivable | | | | | | |
Inventories | | | | | | |
Prepaid expenses and other current assets | |
| | |
| |
Total current assets | |
| | |
| |
Property and equipment, net | |
| | |
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Goodwill | | | | | | |
Intangible assets, net | |
| | |
| |
Right-of-use assets, net | | | | | | |
Deferred tax assets | | | | | | |
Other assets, non-current | |
| | |
| |
Total assets | | $ | | | $ | |
Liabilities and Stockholders’ Equity | |
| | |
| |
Current Liabilities | |
| | |
| |
Accounts payable | | $ | | | $ | |
Operating lease liabilities | | | | | | |
Deferred consideration, current | | | | | | |
Accrued expenses and other current liabilities | |
| | |
| |
Total current liabilities | |
| | |
| |
Sponsor Earn-Out liabilities | | | | | | |
Operating lease liabilities, non-current | | | | | | |
Unearned government grant | | | | | | |
Deferred consideration, non-current | | | — | | | |
Other liabilities, non-current | |
| | |
| |
Total liabilities | |
| | |
| |
Commitments and contingencies (Note 10) | |
| | |
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Stockholders’ Equity | |
| | |
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Common stock: Class A shares, $ | |
| | |
| |
Additional paid-in capital | |
| | |
| |
Accumulated deficit | |
| ( | |
| ( |
Accumulated other comprehensive loss | |
| ( | |
| ( |
Total stockholders' equity attributable to SES | |
| | |
| |
Non-controlling interests | | | | | | — |
Total equity | |
| | |
| |
Total liabilities and stockholders' equity | | $ | | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Table of Contents
SES AI Corporation
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
(in thousands, except share and per share amounts) | | | 2025 | | 2026 | | 2025 | |||||
Revenue from contracts with customers: | | | | | | | | | | | | |
Revenue | | $ | | | $ | | | $ | | | $ | |
Cost of revenues | | | | |
| | | | | | | |
Gross profit | |
| | |
| | |
| | |
| |
Operating expenses: | | | |
| | | | | |
| | |
Research and development | | | | | | | | | | | | |
General and administrative | |
| | |
| | |
| | |
| |
Total operating expenses | |
| | |
| | |
| | |
| |
Loss from operations | |
| ( | |
| ( | |
| ( | |
| ( |
Other income: | |
| | |
| | |
| | |
| |
Gain (Loss) on change in fair value of Sponsor Earn-Out liabilities | | | | | | ( | | | | | | |
Interest income | | | | | | | | | | | | |
Gain on change in fair value of deferred consideration | | | | | | — | | | | | | — |
Miscellaneous expense, net | | | ( | | | ( | | | ( | | | ( |
Total other income, net | |
| | |
| ( | |
| | |
| |
Loss before income taxes | |
| ( | |
| ( | |
| ( | |
| ( |
(Provision for) Benefit from income taxes | |
| ( | |
| | |
| ( | |
| ( |
Net loss | |
| ( | |
| ( | |
| ( | |
| ( |
Less: Net income attributable to non-controlling interests | | | | | | — | | | | | | — |
Net loss attributable to SES | | | ( | | | ( | | | ( | | | ( |
Other comprehensive income (loss), net of tax: | |
| | |
| | |
| | |
| |
Foreign currency translation adjustment | |
| ( | |
| ( | |
| | |
| ( |
Unrealized gain (loss) on short-term investments | | | | | | | | | ( | | | |
Total other comprehensive (loss) income, net of tax | | | ( | | | ( | | | | | | ( |
Total comprehensive loss | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Net loss per share attributable to common stockholders: | | | | | | | | | | | | |
Basic and diluted | | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | | |
Weighted-average shares outstanding: | | | | | | | | | | | | |
Basic and diluted | |
| | |
| | |
| | |
| |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Table of Contents
SES AI Corporation
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2026 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Class A and Class B | | | | | | | | Accumulated | | Total SES | | | | | Total | ||||||
| Common Stock | | Additional | | Accumulated | | Other Comprehensive | | Stockholders’ | | Non-Controlling | | Stockholders’ | |||||||||
(in thousands, except share and per share amounts) | Shares | | Amount | | Paid-in-Capital | | Deficit | | (Loss) Income | | Equity | | Interest | | Equity | |||||||
Balance – December 31, 2025 | |
| $ | |
| $ | |
| $ | ( |
| $ | ( | | $ | | | $ | — |
| $ | |
Issuance of common stock upon exercise of stock options | | | | — | | | | | | — | | | — | | | | | | — | | | |
Restricted stock units vested | | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Retirement of common shares | ( | | | — | | | ( | | | — | | | — | | | ( | | | — | | | ( |
Stock-based compensation | — | | | — | | | | | | — | | | — | | | | | | — | | | |
Net loss | — | | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Unrealized loss on short-term investments | — | | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Foreign currency translation adjustments | — | | | — | | | — | | | — | | | | | | | | | — | | | |
Balance — March 31, 2026 | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | | | $ | — | | $ | |
Issuance of common stock upon exercise of stock options | | | | — | | | | | | — | | | — | | | | | | — | | | |
Restricted stock units vested | | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Retirement of common shares | ( | | | — | | | ( | | | — | | | — | | | ( | | | — | | | ( |
Forfeitures of Earn-Out Restricted Shares | ( | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Stock-based compensation | — | | | — | | | | | | — | | | — | | | | | | — | | | |
Net (loss) income | — | | | — | | | — | | | ( | | | — | | | ( | | | | | | ( |
Unrealized loss on short-term investments | — | | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Foreign currency translation adjustments | — | | | — | | | — | | | — | | | | | | | | | — | | | |
Balance — June 30, 2026 | |
| $ | |
| $ | |
| $ | ( |
| $ | ( | | $ | | | $ | |
| $ | |
Issuance of common stock upon exercise of stock options | | | | — | | | | | | — | | | — | | | | | | — | | | |
Restricted stock units vested | | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Forfeitures of Earn-Out restricted shares | ( | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Repurchase and retirement of Class A common stock | ( | | | ( | | | ( | | | — | | | — | | | ( | | | — | | | ( |
Stock-based compensation | — | | | — | | | | | | — | | | — | | | | | | — | | | |
Net (loss) income | — | | | — | | | — | | | ( | | | — | | | ( | | | | | | ( |
Unrealized gain on short-term investments | — | | | — | | | — | | | — | | | | | | | | | — | | | |
Foreign currency translation adjustments | — | | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Balance — September 30, 2026 | |
| $ | |
| $ | |
| $ | ( |
| $ | ( | | $ | | | $ | |
| $ | |
| | | | | | | | | | | | | | | | | | | | | | |
Nine Months Ended September 30, 2025 | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
| Class A and Class B | | | | | | | | Accumulated | | Total SES | | | | | Total | ||||||
| Common Stock | | Additional | | Accumulated | | Other Comprehensive | | Stockholders’ | | Non-Controlling | | Stockholders’ | |||||||||
(in thousands, except share and per share amounts) | Shares | | Amount | | Paid-in-Capital | | Deficit | | (Loss) Income | | Equity | | Interest | | Equity | |||||||
Balance — December 31, 2024 | |
| $ | |
| $ | |
| $ | ( |
| $ | ( | | $ | | | $ | — |
| $ | |
Issuance of common stock upon exercise of stock options | | | | — | | | | | | — | | | — | | | | | | — | | | |
Restricted stock units vested | | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Forfeitures of Earn-Out Restricted Shares | ( | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Forfeitures of Restricted Stock Awards | ( | | | — | | | ( | | | — | | | — | | | ( | | | — | | | ( |
Stock-based compensation | — | | | — | | | | | | — | | | — | | | | | | — | | | |
Net loss | — | | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Unrealized loss on short-term investments | — | | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Foreign currency translation adjustments | — | | | — | | | — | | | — | | | | | | | | | — | | | |
Balance — March 31, 2025 | |
| $ | |
| $ | |
| $ | ( |
| $ | ( | | $ | | | $ | — |
| $ | |
Issuance of common stock upon exercise of stock options | | | | | | | | | | — | | | — | | | | | | — | | | |
Restricted stock units vested | | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Forfeitures of Earn-Out Restricted Shares | ( | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Forfeitures of Restricted Stock Awards | ( | | | — | | | ( | | | — | | | — | | | ( | | | — | | | ( |
Stock issuance costs | — | | | — | | | ( | | | — | | | — | | | ( | | | — | | | ( |
Stock-based compensation | — | | | — | | | | | | — | | | — | | | | | | — | | | |
Net loss | — | | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Unrealized loss on short-term investments | — | | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Foreign currency translation adjustments | — | | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Balance — June 30, 2025 | |
| $ | |
| $ | |
| $ | ( |
| $ | ( | | $ | | | $ | — |
| $ | |
Issuance of common stock upon exercise of stock options | | | | — | | | | | | — | | | — | | | | | | — | | | |
Restricted stock units vested | | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Forfeitures of Earn-Out Restricted Shares | ( | | | — | | | — | | | — | | | — | | | — | | | — | | | — |
Forfeitures of Restricted Stock Awards | ( | | | — | | | ( | | | — | | | — | | | ( | | | — | | | ( |
Repurchase and retirement of Class A common stock | ( | | | ( | | | ( | | | — | | | — | | | ( | | | — | | | ( |
Stock-based compensation | — | | | — | | | | | | — | | | — | | | | | | — | | | |
Net loss | — | | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Unrealized gain on short-term investments | — | | | — | | | — | | | — | | | | | | | | | — | | | |
Foreign currency translation adjustments | — | | | — | | | — | | | — | | | ( | | | ( | | | — | | | ( |
Balance — September 30, 2025 | |
| $ | |
| $ | |
| $ | ( |
| $ | ( | | $ | | | $ | — |
| $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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SES AI Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | | | |
| Nine Months Ended September 30, | ||||
(in thousands) | 2026 | | 2025 | ||
Cash Flows From Operating Activities | | |
| | |
Net loss | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: |
| | |
| |
Gain from change in fair value of Sponsor Earn-Out liabilities | | ( | | | ( |
Stock-based compensation |
| | |
| |
Depreciation and amortization |
| | |
| |
Gain from change in fair value of deferred consideration | | ( | | | — |
Loss on disposal of fixed assets | | — | | | |
Accretion income from available-for-sale short-term investments | | ( | | | ( |
Other | | | | | |
Changes in operating assets and liabilities: |
| | |
| |
Accounts receivable | | ( | | | ( |
Inventories | | ( | | | |
Prepaid expenses and other assets |
| | |
| ( |
Right-of-use assets | | | | | |
Accounts payable |
| | |
| |
Lease liabilities |
| ( | |
| ( |
Accrued expenses and other liabilities | | ( | | | |
Net cash used in operating activities |
| ( | |
| ( |
Cash Flows From Investing Activities |
| | |
| |
Purchases of property and equipment |
| ( | |
| ( |
Acquisition of business, net of cash acquired | | — | | | |
Proceeds from the sale of short-term investments | | — | | | |
Purchase of short-term investments |
| ( | |
| ( |
Proceeds from the maturities of short-term investments |
| | |
| |
Net cash provided by (used in) investing activities |
| | |
| ( |
Cash Flows From Financing Activities |
| | |
| |
Payments for taxes withheld on vesting of restricted stock | | ( | | | ( |
Payments for share repurchase | | ( | | | ( |
Proceeds from stock option exercises | | | | | |
Net cash used in financing activities |
| ( | |
| ( |
Effect of exchange rates on cash |
| ( | |
| |
Net increase (decrease) in cash, cash equivalents and restricted cash |
| | |
| ( |
Cash, cash equivalents and restricted cash at beginning of period (Note 5) |
| | |
| |
Cash, cash equivalents and restricted cash at end of period (Note 5) | $ | | | $ | |
| | | | | |
Supplemental Cash and Non-Cash Information: |
| | |
| |
Accounts payable and accrued expenses related to purchases of property and equipment | $ | | | $ | |
Deferred consideration payable for acquisition | $ | — | | $ | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
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SES AI Corporation
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(Dollars in thousands, unless otherwise stated)
Note 1. Nature of Business
Organization
SES AI Corporation and its consolidated subsidiaries (together the “Company” or “SES”), develops and manufactures high-performance Lithium-Metal (“Li-Metal”) and Lithium-ion (“Li-ion”) battery cells and systems, together with artificial intelligence (“AI”)-enhanced software, with a current focus on battery cells for drones and other unmanned systems, Energy Storage Systems (“ESS”), and Molecular Universe, its AI-enhanced material discovery platform. The Company’s mission is to accelerate the world’s energy transition through AI-enhanced material discovery and battery management. The Company’s headquarters are located in Boston, with operations in South Korea, Singapore, and China.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim financial reporting. Management believes that all adjustments necessary for the fair presentation of results, consisting of normally recurring items, have been included in the condensed consolidated financial statements for the interim periods presented. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results that may be expected for the full year or any other future interim or annual periods. All intercompany balances and transactions have been eliminated in consolidation. The Company’s fiscal year ends on
The year-end balance sheet data was derived from audited consolidated financial statements. These unaudited interim condensed consolidated financial statements do not include all of the annual disclosures required by U.S. GAAP; accordingly, they should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2025 included in the 2025 Annual Report on Form 10-K.
Use of estimates
The preparation of these condensed consolidated financial statements in conformity with U.S. GAAP requires management to make use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of commitments and contingencies, and the reported amounts of revenues, if any, and expenses. The Company bases its estimates on available historical experience and on various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from those estimates.
Significant estimates and assumptions include those related to the valuation of (i) certain equity awards including, the Sponsor Earn-Out Shares (as defined below), and performance stock units, (ii) revenue from customers, (iii) deferred tax assets and uncertain income tax positions, (iv) the measurement of operating lease liabilities, (v) the evaluation of the recoverability of long-lived assets and intangible assets, including goodwill, (vi) fair value measurement of acquired intangible assets and deferred consideration, and (vii) warranty reserve. On an ongoing basis, the Company evaluates these judgments and estimates for reasonableness.
Accounts Receivable
As of December 31, 2024, our accounts receivable was $
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Inventories
Inventory is stated at the lower of average cost or net realizable value. Inventory costs include purchase of materials, freight, storage, hauling, and certification costs. The cost-basis of the Company’s inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions. Once established, write-downs of inventory are considered permanent adjustments to the cost basis of inventory and cannot be reversed due to subsequent increases in demand forecasts. As of September 30, 2026 and December 31, 2025, the Company did
Inventories consisted of the following:
| | | | | |
(in thousands) | September 30, 2026 | | December 31, 2025 | ||
Inventories: | | | | | |
Raw materials | $ | | | $ | |
Work-in-process | | — | | | |
Finished goods | | | | | |
In-transit | | | | | |
Total inventories | $ | | | $ | |
Fair Value Measurements
Fair value is defined as an exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact, and it also considers assumptions that market participants would use when pricing the asset or liability.
The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. GAAP establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is as follows:
Level 1 Observable inputs such as quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 Inputs other than the quoted prices in active markets that are observable either directly or indirectly.
Level 3 Unobservable inputs in which there are little or no market data and which require the Company to develop its own assumptions.
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Certain of the Company’s financial instruments, including cash and cash equivalents, accounts payable, accrued expenses and other current liabilities are carried at cost, which approximates their fair value because of their short-term nature. The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:
| | | | | | | | | | | |
(in thousands) | Level 1 | | Level 2 | | Level 3 | | Total | ||||
September 30, 2026 | | | | | | | | | | | |
Current Assets | | | | | | | | | | | |
Cash equivalents in money market funds (Note 5) | $ | | | $ | — | | $ | — | | $ | |
U.S. treasury securities (Note 6) | | | | | — | | | — | | | |
Equity securities(1) (Note 6) | | | | | — | | | — | | | |
Total current assets at fair value | $ | | | $ | — | | $ | — | | $ | |
| | | | | | | | | | | |
Current Liabilities | | | | | | | | | | | |
Deferred consideration, current(2) | | — | | | — | | | | | | |
Total current liabilities at fair value | $ | — | | $ | — | | $ | | | $ | |
| | | | | | | | | | | |
Long-term Liabilities | | | | | | | | | | | |
Sponsor Earn-Out liabilities (Note 9) | | — | | $ | — | | | | | | |
Total long-term liabilities at fair value | $ | — | | $ | — | | $ | | | $ | |
| | | | | | | | | | | |
December 31, 2025 | | | | | | | | | | | |
Current Assets | | | | | | | | | | | |
Cash equivalents in money market funds (Note 5) | $ | | | $ | — | | $ | — | | $ | |
U.S. treasury securities (Note 6) | | | | | — | | | — | | | |
Equity securities(1) (Note 6) | | | | | — | | | — | | | |
Total current assets at fair value | $ | | | $ | — | | $ | — | | $ | |
| | | | | | | | | | | |
Current Liabilities | | | | | | | | | | | |
Deferred consideration, current(2) | | — | | | — | | | | | | |
Total current liabilities at fair value | $ | — | | $ | — | | $ | | | $ | |
| | | | | | | | | | | |
Long-term Liabilities | | | | | | | | | | | |
Sponsor Earn-Out liabilities (Note 9) | | — | | | — | | | | | | |
Deferred consideration, non-current(2) | | — | | | — | | | | | | |
Total long-term liabilities at fair value | $ | — | | $ | — | | $ | | | $ | |
(1) Fair value was determined using publicly quoted market prices obtained from third-party sources in their respective markets.
(2) Fair value was determined using the Black Scholes option pricing formula capped call and capped put methodology using risk adjusted discount rate for the revenue and adjusted revenue forecasts.
There were
Recently Adopted Accounting Pronouncements
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows for a practical expedient election to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset in the development of a reasonable and supportable forecast as part of estimating expected credit losses. The new standard is effective for annual periods beginning after December 15, 2025, with
Recently Issued Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses, which requires more detailed information about the types of expenses included in certain expense captions presented on the consolidated statements of operations. Additionally, this amendment requires the disclosure of a qualitative description of the amounts remaining in relevant expense captions that
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are not separately disaggregated quantitatively and the disclosure of the total amount of selling expenses. The new standard is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. We are currently
In September 2025, the FASB issued ASU No. 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, which removes references to project stages and clarifies the timing of capitalizing costs based on certain thresholds. Additionally, this amendment requires certain disclosures in the notes to the financial statements regardless of financial statement presentation of software costs. The new standard is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods with early adoption permitted. We are currently
In December 2025, the FASB issued ASU No. 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. The new standard is effective for annual periods beginning after December 15, 2028, and interim periods within those annual reporting periods with early adoption permitted. We are currently evaluating the impact of adoption on our consolidated financial statements.
The Company has reviewed all accounting pronouncements issued during the three months ended September 30, 2026 and concluded that they were either not applicable or not expected to have a material impact on the Company’s condensed consolidated financial statements.
Note 3. Acquisitions
Acquisition of Shenzhen UZ Energy Co. Ltd.
On
The aggregate consideration for the acquisition of UZ Energy was approximately RMB
The purchase price was allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill. Goodwill is primarily attributed to the expected synergies from future expected economic benefits, including enhanced revenue growth from expanded products and capabilities related to ESS, as well as substantial cost savings from duplicative overheads, streamlined operations and enhanced efficiency. Goodwill is
Cash and cash equivalents | $ | ||
Accounts receivable | |||
Inventories | |||
Prepaid expenses and other current assets | |||
Property, plant and equipment | |||
Intangible assets | |||
Goodwill | | | |
Other assets | | ||
Accounts payable | ( | | |
Accrued expenses and other current liabilities | | ( | |
Deferred revenue | | ( | |
Operating lease liability | | ( | |
Note payable, current | | ( | |
Total | $ |
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The above fair values of assets acquired and liabilities assumed are final. The fair values include Level 3 unobservable inputs and were determined using generally accepted valuation techniques.
The following table presents a reconciliation of the deferred consideration liability:
| | | |
| | (in thousands) | |
Balance as of December 31, 2025 | | $ | |
Additions during the period | | | — |
Payments during the period | | | — |
Change in fair value | |
| ( |
Foreign exchange impact | | | |
Balance as of September 30, 2026 | | $ | |
The deferred consideration liability is contingent on UZ Energy meeting specified thresholds relating to revenue and cash balances for fiscal years 2025 and 2026. It was measured at fair value using a Black-Scholes option-pricing model at Closing and subsequently at each reporting period. The fair value analysis considered, among other items, contractual terms of the Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue and cash balance thresholds required for payment of the deferred consideration will be achieved. As of September 30, 2026, the possible outcomes for the range of deferred cash payments, on an undiscounted basis, are from $
The following table sets forth the components of the identifiable intangible assets acquired and their estimated fair values and useful lives as of the date of the acquisition:
| | | | | |
| | | | ||
(in thousands) | Fair Value | | Weighted Average Useful Lives | ||
Patents | $ | | | | |
Trademarks |
| | |
| |
Total acquired intangible assets | $ | | | | |
The amount of revenue and pre-tax loss the Company recognized from the acquired company during the nine month period ended September 30, 2026, which is included in the consolidated statements of operations and comprehensive loss, was approximately $
The Company has not included pro-forma financial information for the acquisition of UZ Energy in these condensed consolidated financial statements. It was determined that the preparation of such information is impracticable as UZ Energy was a foreign, privately held entity that did not historically maintain financial statements in accordance with the U.S. GAAP. The Company has, however, included the results of UZ Energy's operations in its condensed consolidated financial statements from the Closing date forward.
Note 4. Revenue
We disaggregate our revenue from customers by the type of arrangement, primarily from the sale of battery products and energy storage system products as well as from providing research and development services, as this depicts how the nature, amount, timing, and cash flows are affected by economic factors. The following table summarizes the Company’s disaggregated revenue:
| | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenue from customers: | | | | | | | | | | | |
Product revenue | $ | | | $ | | | $ | | | $ | |
Service revenue | | — | | | | | | | | | |
Total | $ | | | $ | | | $ | | | $ | |
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Contract Assets
Contract assets primarily relate to service revenue for which the revenue has been earned, but the billing has not yet occurred due to certain performance or acceptance conditions. Contract assets are included in prepaid and other current assets in the Company's condensed consolidated balance sheets. As of September 30, 2026 and December 31, 2025, the Company had contract assets balances of
Contract Liabilities
Contract liabilities primarily relate to the advance consideration received from customers. Contract liabilities are included in accrued expenses and other current liabilities in the Company’s condensed consolidated balance sheets. The following table reflects the change in contract liabilities for the three and nine months ending September 30, 2026 and 2025, respectively:
| | | | | |
(in thousands) | 2026 | | 2025 | ||
Balance at December 31, | $ | | | $ | — |
Additions | | | | | — |
Revenue recognized | | ( | | | — |
Foreign exchange adjustments | | | | | — |
Balance at March 31, | $ | | | $ | — |
Additions | | | | | — |
Revenue recognized | | ( | | | — |
Foreign exchange adjustments | | ( | | | — |
Balance at June 30, | $ | | | $ | — |
Additions | | | | | — |
Revenue recognized | | ( | | | — |
Balance at September 30, | $ | | | $ | — |
Warranty Liability
Warranty expense is recorded in cost of revenues and the related liabilities are recorded in accrued expenses and other current liabilities and other liabilities based on expected warranty term. The following table reflects the change in warranty liability for the three and nine months ending September 30, 2026:
| | | | | |
(in thousands) | 2026 | | 2025 | ||
Balance at December 31, | $ | | | $ | — |
Additions | | | | | — |
Warranty claims | | ( | | | — |
Foreign exchange adjustments | | | | | — |
Balance at March 31, | $ | | | $ | — |
Additions | | | | | — |
Warranty claims | | ( | | | — |
Foreign exchange adjustments | | | | | — |
Balance at June 30, | $ | | | $ | — |
Additions | | | | | — |
Warranty claims | | ( | | | — |
Foreign exchange adjustments | | | | | — |
Balance at September 30, | $ | | | $ | — |
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Note 5. Cash and Cash Equivalents
Cash, cash equivalents, and restricted cash consisted of the following:
| | | | | |
| | | | ||
(in thousands) | September 30, 2026 | | December 31, 2025 | ||
Cash | $ | | | $ | |
Money market funds |
| | |
| |
Total cash and cash equivalents | | | | | |
Restricted cash included in other assets |
| | |
| |
Total shown in the condensed consolidated statements of cash flows | $ | | | $ | |
Restricted cash includes cash held in checking and money market funds as collateral to secure certain insurance policies and a letter of credit for corporate lease activity.
Note 6. Short-Term Investments
The following table provides amortized costs, gross unrealized gains and losses, and fair values for the Company’s investments in available-for-sale U.S. treasury securities as of September 30, 2026 and December 31, 2025, which have maturity dates that range from
| | | | | | | | | | | |
September 30, 2026 | | | | Gross | | Gross | | | | ||
(in thousands) | Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | ||||
Short-term U.S. treasury securities | $ | | | $ | — | | $ | ( | | $ | |
Total | $ | | | $ | — | | $ | ( | | $ | |
| | | | | | | | | | | |
December 31, 2025 | | | | Gross | | Gross | | | | ||
(in thousands) | Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | ||||
Short-term U.S. treasury securities | $ | | | $ | | | $ | — | | $ | |
Total | $ | | | $ | | | $ | — | | $ | |
The Company has an equity security investment with an initial cost of $
Note 7. Accrued Expenses and Other Current Liabilities
The components of accrued expenses and other current liabilities consisted of the following:
| | | | | |
| | | | ||
(in thousands) | September 30, 2026 | | December 31, 2025 | ||
Employee compensation and related costs | $ | | | $ | |
Vendor project charges | | | | | |
Contract liabilities | | | | | |
Professional and consulting services | | | | | |
Short-term notes payables | | — | | | |
Income taxes payable | | | | | |
Software services | | — | | | |
Other |
| | |
| |
Total | $ | | | $ | |
Note 8. Government Grant
In December 2022, the Company was awarded a grant (the “Grant”) from certain Korean government agencies. The incentives received under the Grant, which is in the form of cash, can be used for facilities related expenses and the purchase of property and equipment. The
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Company is required to adhere to the following conditions attached to the incentives, which include purchase of a government grant guarantee insurance policy, required minimum investments into specified spending categories and the creation of a minimum amount of permanent full-time jobs in a certain geographical location over the next
As of September 30, 2026 and December 31, 2025, the Company has received, but not yet earned, cash grants of
Note 9. Sponsor Earn-Out Liabilities
The Sponsor Earn-Out shares in Tranche 2 through Tranche 5 have been measured at their estimated fair value using a Monte Carlo simulation valuation model. Inherent in the valuation model are assumptions related to expected stock price volatility, risk-free interest rate, expected term, and dividend yield. The key inputs used in the Monte Carlo simulation model at their respective measurement dates were as follows:
| | | | | |
| | September 30, 2026 | | | December 31, 2025 |
Expected term (in years) | | | | ||
Risk free rate | | | | ||
Expected volatility | | | | ||
Expected dividends | | | | ||
Stock price | $ | | $ |
The stock price is based on the closing price of the Company’s Class A common stock as of the valuation date and simulated through the end of the earn-out period following Geometric Brownian Motion. The Company estimates the volatility of its common stock by using a weighted average of historical volatilities of SES’s shares and warrants and select peer companies’ common stock that matches the expected term of the awards (range of the weighted average of volatility was
The following table provides a reconciliation of the beginning and ending balances for the Sponsor Earn-Out liabilities:
| | |
(in thousands) | | |
Balance at December 31, 2025 | $ | |
Change in fair value | | ( |
Balance at September 30, 2026 | $ | |
| | |
Balance at December 31, 2024 | $ | |
Change in fair value | | ( |
Balance at September 30, 2025 | $ | |
| | |
Note 10. Commitments and Contingencies
Commitments
In December 2021, the Company amended the lease agreement for an office space in Woburn, Massachusetts. The amendment includes an obligation for the Company to pay monthly relinquishment charges (equal to the total rental obligation for the duration of the lease term) only if the new tenant does not pay the monthly rental amount and the lessor has provided a notice to collect the relinquishment charges from the Company. As of September 30, 2026, the Company assessed the probability of any liability to be incurred for relinquishment charges as remote.
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Deferred Consideration
Under the terms of the acquisition agreement for UZ Energy, the Company recognized contingent liabilities related to purchase consideration payments to UZ Energy shareholders. The fair value analysis considered, among other items, contractual terms of the Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue and cash balance thresholds required for payment of the deferred consideration will be achieved. These payments are contingent on meeting specified thresholds relating to revenue and cash balances for fiscal years 2025 and 2026, which were deemed to be met in full for 2025 and are still being evaluated for 2026 based on revenue and cash projections. The payment for 2025 deferred consideration has still not been made as of September 30, 2026.
Legal Contingencies
From time-to-time, the Company may be subject to claims arising in the ordinary course of business or become involved in litigation or other legal proceedings.
Securities Class Action Litigation
On
Shareholder Derivative Litigation
Two shareholder derivative suits were filed on
Indemnifications
The Company enters into indemnification provisions under agreements with other companies in the ordinary course of business, including, but not limited to, partnerships, landlords, vendors, and contractors. Pursuant to these arrangements, the Company agrees to indemnify, defend, and hold harmless the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification provisions. In addition, the Company indemnifies its officers, directors, and certain key employees against claims made with respect to matters that arise while they are serving in their respective capacities as such, subject to certain limitations set forth under applicable law, and applicable indemnification agreements. The Company maintains insurance, including commercial general liability insurance, product liability insurance, and directors and officers insurance to offset certain potential liabilities under these indemnification provisions. To date, there have been no claims under these indemnification provisions.
Note 11. Income Taxes
The Company’s effective tax rate for the three and nine months ended September 30, 2026 was (
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Note 12. Net Loss Per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing net loss, as adjusted for changes in fair value recognized in earnings from equity contracts classified as liabilities, by the weighted average number of common shares outstanding and, when dilutive, common share equivalents from outstanding stock options and restricted stock units (using the treasury-stock method). The weighted-average number of common shares used in the computation of basic and diluted net loss per share were as follows:
| | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
(in thousands, except share and per share amounts) | 2026 | | 2025 | | 2026 | | 2025 | ||||
Numerator: | | | | | | | | | | | |
Net loss attributable to common stockholders - basic | $ | ( | | $ | ( | | $ | ( | | $ | ( |
| | | | | | | | | | | |
Denominator: | | | | | | | | | | | |
Weighted average shares of common stock outstanding - basic and diluted | | | |
| | |
| | |
| |
| | | | | | | | | | | |
Net loss per share attributable to common stockholders - basic and diluted | $ | ( | | $ | ( | | $ | ( | | $ | ( |
The number of common stock equivalents excluded from the computation of diluted net loss per share because either the effect would have been anti-dilutive, or the performance criteria related to such shares and awards had not been met, were as follows:
| | | | | | | | | | | | |
| | | | | | | | As of September 30, | ||||
| | | | | | | | 2026 | | 2025 | ||
Escrowed earn-out shares | | | | | | | | | | | | |
Options to purchase common stock | | | | | | | | | | | | |
Warrants issued in public offerings | | | | | | | | | | | | |
Sponsor Earn-Out Shares | | | | | | | | | | | | |
Warrants issued in private offerings | | | | | | | | | | | | |
Unvested RSUs | | | | | | | | | | | | |
Unvested PSUs | | | | | | | | | | | | |
Earn-out Restricted Shares | | | | | | | | | | | | |
Unvested RSAs | | | | | | | | — | | | | |
Total | | | | | | | | | | | | |
Note 13. Segment and Geographic Information
Operating Segments
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in
Significant Expenses
The Company concluded it operates as
| | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||||
(in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Compensation and benefits | | $ | | | $ | | | $ | | | $ | |
Stock compensation | | | | | | | | | | | | |
Lab and equipment | | | | | | | | | | | | |
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General and administrative | | | | | | | | | | | | |
Professional services | | | | | | | | | | | | |
Facility | | | | | | | | | | | | |
Marketing and sales | | | | | | | | | | | | |
Total | | $ | | | $ | | | $ | | | $ | |
Geographic & Concentration Information
For the three and nine months ended September 30, 2026, revenue outside of the United States, based on customer billing address, was
For the three months ended September 30, 2026, there was one customer that accounted for
As of September 30, 2026, there was one customer that accounted for
Note 14. Variable Interest Entities
A variable interest entity ("VIE") is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additional subordinated financial support or (ii) has equity investors who lack the characteristics of owning a controlling financial interest. When SES determines that it has a variable interest in a VIE, a qualitative evaluation is performed to assess which interest holders have the power to direct the activities that most significantly impact the economic performance of the entity and have the obligation to absorb losses or receive benefits that could be significant to the entity. The evaluation considers the purpose and design of the business, the risks that the business was designed to create and pass along to other entities, the activities of the business that can be directed and which party can direct them, and the expected relative impact of those activities on the economic performance of the business through its life. SES has the power to direct the activities of an entity when it has the ability to make key operating and financing decisions, including, but not limited to, capital investment and the issuance of debt. Based on the evaluation of these criteria, SES has determined it is the primary beneficiary of certain entities and as such is required to account for the VIEs on a consolidated basis.
Hisun VIE
On
Total initial equity capitalization is expected to be $
MUMPL is a variable interest entity because its equity investment at risk is not sufficient to permit it to finance its activities without additional subordinated financial support, as SES is contractually obligated to fund all working capital reasonably required for its operations. SES concluded it is the primary beneficiary because it has the contractual right to appoint a majority of MUMPL's board of directors and its senior management and therefore directs the activities that most significantly impact the MUMPL's economic performance. Hisun's board and consent rights are protective and are not substantive participating rights. Accordingly, SES consolidates MUMPL from the date of formation, and Hisun's
SES holds a unilateral option, exercisable beginning on the third anniversary of the Agreement, to purchase Hisun's shares at fair market value. The option is not accounted for as a derivative because the underlying shares are not readily convertible to cash.
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As of September 30, 2026, MUMPL's assets consisted of $
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements as of and for the three and nine months ended September 30, 2026 and the related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements as of and for the year ended December 31, 2025 and the related notes contained in the 2025 Annual Report on Form 10-K. This Quarterly Report on Form 10-Q includes forward-looking statements. These forward-looking statements within the meaning of the federal securities law are based on our current expectations and beliefs concerning future developments and their potential effects on us. These forward-looking statements are not statements of historical fact and may include statements regarding possible or assumed future results of operations. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Factors that might cause or contribute to such forward-looking statements include, but are not limited to, those set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Item 1A. Risk Factors in the 2025 Annual Report on 10-K. References in this section to our future plans that indicate the timing of when we expect such plans to be completed by a certain year mean at any point during that year.
Overview
We develop and manufacture high-performance Lithium-Metal (“Li-Metal”) and Lithium-ion (“Li-ion”) battery cells and systems. Our current focus is on three areas: battery cells for drones and other unmanned systems, which we manufacture at our NDAA-compliant facility in Chungju, South Korea; Energy Storage Systems (“ESS”), sold primarily through our subsidiary, UZ Energy, and differentiated by our battery management and battery health software; and Molecular Universe, our AI-enhanced materials discovery platform, which supports the development of our own products and is offered to battery manufacturers. The Company’s mission is to accelerate the world’s energy transition through AI-enhanced material discovery and battery management.
Recent Developments
Reverse Stock Split Proposal. In July 2026, we received notice from the NYSE that we did not satisfy its continued listing standard requiring a minimum average closing price of $1.00 per share over a consecutive 30 trading-day period. In October 2026, we filed a definitive proxy statement for our 2026 annual meeting of stockholders, scheduled for December 10, 2026, which includes a proposal to approve a reverse stock split of our Class A common stock at a ratio within the range set forth in the proxy statement, with the final ratio to be determined by our Board of Directors. If the proposal is approved, we intend to implement the reverse stock split promptly following the annual meeting if our Board of Directors determines that a decrease in the number of shares of Class A Common Stock outstanding is likely to improve the trading price of our Class A Common Stock and is necessary to help maintain our listing on the NYSE.
Share Repurchases. In September 2026, we repurchased 16,161,561 shares of our Class A common stock for $9.2 million under our previously announced share repurchase program
Key Trends, Opportunities and Uncertainties
Historical Performance
We are an early-stage growth company. We incurred net losses of $13.4 million and $20.9 million for the three months ended September 30, 2026 and 2025, respectively, and $43.4 million and $56.0 million for the nine months ended September 30, 2026 and 2025, respectively, and had an accumulated deficit of $415.3 million and $354.9 million from our inception through September 30, 2026 and 2025, respectively. We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for several years. Our historical results may not be indicative of our future results for reasons that may be difficult to anticipate and our ability to generate revenue in the future that is sufficient to achieve profitability will depend largely on the successful development of our products and services. Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical results of operations
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We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose significant risks and challenges, including those discussed below and in “Part I, Item 1A. Risk Factors.”
NDAA-Compliant Drone Cell Manufacturing
Our development of NDAA-compliant manufacturing capacity for drone cells is intended to position us to capture new business from the U.S. government and defense-related customers, which we believe could be a driver of future revenue growth. We recently completed the ramp up of the manufacturing capacity of our Chungju, South Korea drone cell line to an installed capacity of one million NDAA-compliant cells per year and announced plans to further expand the line to an installed capacity of three million NDAA-compliant cells per year by the end of the second quarter of 2027. NDAA compliance may also enhance our competitive positioning and open additional market opportunities. However, this initiative will require substantial capital investment and ongoing compliance costs, and there is uncertainty regarding the timing and magnitude of customer demand. If we are unable to achieve commercial-scale production or if demand for NDAA-compliant drone cells does not materialize as expected, we could experience underutilization of assets and negative impacts on cash flows.
Commercialization of Molecular Universe
We believe that the commercialization of the Molecular Universe platform represents a significant opportunity to drive future revenue growth and margin expansion, as it should enable us to offer differentiated AI-driven solutions to customers. We expect that successful adoption of Molecular Universe, both as a software product and as an integrated component of our hardware and software offerings, could increase revenues and improve gross margins over time. However, we also recognize that the market for AI-based scientific discovery tools is nascent and rapidly evolving, and that the pace of adoption and competitive dynamics are uncertain. If adoption is slower than anticipated or if competing platforms gain traction, our ability to achieve revenue growth and profitability could be adversely affected.
Shift to Manufacturing with Hisun
Our strategic shift away from in-house manufacturing of certain battery materials, and the announcement of a fully consolidated variable interest entity with Hisun to produce novel materials at commercial scale, is expected to reduce capital intensity and accelerate time-to-market for new products. We anticipate that this approach will allow us to scale more efficiently and address a broader customer base, which could positively impact future revenues. However, the transition introduces new uncertainties, including the risk of production delays, quality control challenges, and dependence on third-party manufacturing partners. These factors could result in variability in cost of goods sold, potential supply chain disruptions, and fluctuations in cash flows. See “Note 14 – Variable Interest Entities” of our accompanying consolidated financial statements for further discussion.
Results of Operations
The following table sets forth our historical operating results for the periods indicated:
| | | | | | | | | | | |
| Three Months Ended September 30, | | $ | | % | ||||||
(in thousands) | 2026 | | 2025 | | Change | | Change | ||||
Revenue from customers | $ | 6,640 | | $ | 7,118 | | $ | (478) | | (6.7) | % |
Cost of revenue | | 6,313 | | | 3,482 | | | 2,831 | | 81.3 | % |
Gross profit | | 327 | | | 3,636 | | | (3,309) | | (91.0) | % |
Operating Expenses | | | | | | | | | | | |
Research and development | | 9,595 | | | 15,625 | | | (6,030) | | (38.6) | % |
General and administrative | | 9,150 | | | 6,660 | | | 2,490 | | 37.4 | % |
Total operating expenses | | 18,745 | | | 22,285 | | | (3,540) | | (15.9) | % |
Loss from operations | $ | (18,418) | | $ | (18,649) | | $ | 231 | | (1.2) | % |
| | | | | | | | | | | |
| Nine Months Ended September 30, | | $ | | % | ||||||
(in thousands) | 2026 | | 2025 | | Change | | Change | ||||
Revenue from customers | $ | 18,423 | | $ | 16,438 | | $ | 1,985 | | 12.1 | % |
Cost of revenue | | 15,734 | | | 5,645 | | | 10,089 | | 178.7 | % |
Gross profit | | 2,689 | | | 10,793 | | | (8,104) | | (75.1) | % |
Operating Expenses | | | | | | | | | | | |
Research and development | | 31,988 | | | 55,222 | | | (23,234) | | (42.1) | % |
General and administrative | | 26,184 | | | 20,500 | | | 5,684 | | 27.7 | % |
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Total operating expenses | | 58,172 | | | 75,722 | | | (17,550) | | (23.2) | % |
Loss from operations | $ | (55,483) | | $ | (64,929) | | $ | 9,446 | | (14.5) | % |
Factors Affecting Operating Results
Revenue from Customers
For the three and nine months ended September 30, 2026 and 2025, we generate revenue from two primary sources:
| ● | Product revenue generally consists of sales of residential and commercial ESS products, Li-ion and Li-metal based battery cells for drones, and battery materials such as electrolytes sold to automotive OEMs and other manufacturers. |
| ● | Service revenue generally consists of services for the discovery, design and development of Li-ion and Li-Metal battery materials in accordance with the customer’s specifications. |
Revenue from customers for the three and nine months ended September 30, 2026 was $6.6 million and $18.4 million, respectively. Revenue decreased by $0.5 million, or 6.7%, and increased by $2.0 million, or 12.1%, respectively, compared to the three and nine months ended September 30, 2025, which had revenue of $7.1 million and $16.4 million, respectively. The decrease in revenue for the three months ended September 30, 2026 was primarily driven by a decrease in service revenue from OEMs after completion of the contract service periods in the fourth quarter of 2025, partially offset by increased product revenue for ESS product sales from UZ Energy, which was acquired in third quarter of 2025. The increase in revenue for the nine months ended September 30, 2026 was primarily driven by increased product revenue for ESS product sales from UZ Energy, partially offset by the decrease in service revenue.
Services revenue decreased $3.9 million and $12.9 million for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025. Product revenue increased $3.4 million and $14.9 million for the three and nine months ended September 30, 2026 compared to the three and nine months ended September 30, 2025. Refer to “Note 4 – Revenue” to the condensed consolidated financial statements for additional information.
Cost of Revenue
Cost of revenue includes materials, labor, depreciation and amortization expense, inventory, freight costs, warranty, and other direct costs related to manufacturing our products and service contracts. Labor consists of personnel-related expenses such as salaries, benefits, and stock-based compensation.
Costs of revenue for the three and nine months ended September 30, 2026 were $6.3 million and $15.7 million, respectively. Cost of revenue increased by $2.8 million and $10.1 million, or 81.3% and 178.7%, respectively, compared to the three and nine months ended September 30, 2025, which had costs of revenue of $3.5 million and $5.6 million, respectively. The increased costs of revenue was primarily driven by increased product revenue for ESS product sales from UZ Energy, which was acquired in the third quarter of 2025, while service revenue from OEMs decreased due to the service period ending in the fourth quarter of 2025.
Gross Profit Margin
Gross profit margin has been and will continue to fluctuate over time affected by a variety of factors, including the average sales price of our product and service offerings and changes in our mix of revenue between ESS products, drone batteries, battery materials and service offerings to automotive OEMs and other manufacturers.
Gross margin for the three and nine months ended September 30, 2026 was 4.9% and 14.6%, respectively, compared to 51.1% and 65.7%, for the three and nine months ended September 30, 2025, respectively. The decrease was primarily due to the effect of changing revenue mix between product and service offerings.
Research and Development
Research and development expenses include personnel-related expenses, such as salaries, benefits, and stock-based compensation, for scientists, experienced engineers and technicians. These expenses also cover materials and supplies used in product research and development, process engineering efforts and testing, payments made to consultants, and patent related legal costs. Furthermore, they encompass depreciation, allocated facilities expenses, and information technology costs, including costs incurred for renting graphic processing units (“GPUs”) to train AI models.
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Research and development expenses for the three months ended September 30, 2026 decreased $6.0 million, or 38.6%, to $9.6 million, compared with $15.6 million for the three months ended September 30, 2025. This decrease was primarily driven by a $3.6 million decrease in lab related expenses related to automotive OEM JDAs, a $1.9 million decrease in AI infrastructure costs incurred from renting GPU computing resources, and a $0.5 million decrease in personnel related costs, including stock-based compensation, primarily from headcount reductions.
Research and development expenses for the nine months ended September 30, 2026 decreased $23.2 million, or 42.1%, to $32.0 million compared with $55.2 million for the nine months ended September 30, 2025. This decrease was primarily driven by a $12.1 million decrease in lab related expenses related to automotive OEM JDAs, a $9.4 million decrease in AI infrastructure costs incurred from renting GPU computing resources, and a $1.7 million decrease in personnel related costs, including stock compensation, primarily from headcount reductions.
General and Administrative
General and administrative expenses include personnel-related expenses, such as salaries, benefits, and stock-based compensation for our finance, legal and human resource functions. These expenses also cover director and officer insurance, outside contractor fees, and professional services, including audit, compliance, legal, accounting, investor relations, and other advisory services. Additionally, the expenses encompass allocated facilities and information technology costs, such as depreciation and amortization.
General and administrative expenses for the three months ended September 30, 2026 increased $2.5 million, or 37.4%, to $9.2 million, compared with $6.7 million for the three months ended September 30, 2025. This increase was primarily driven by a $1.1 million increase in professional services including marketing and public relations, a $1.0 million increase for personnel costs and stock-based compensation due to increased headcount, and a $0.6 million increase in legal expenses. These increases were partially offset by a $0.2 million decrease in other expenses.
General and administrative expenses for the nine months ended September 30, 2026 increased $5.7 million, or 27.7%, to $26.2 million, compared with $20.5 million for the nine months ended September 30, 2025. This increase was primarily driven by a $2.8 million increase in professional services including recruiting, marketing, and business development, a $1.3 million increase in personnel costs and stock-based compensation due to headcount increases, a $1.0 million increase in bad debt expense, and a $0.6 million increase in legal expenses.
Non-Operating Items
Interest Income
Interest income primarily consists of interest earned on our cash and cash equivalents and marketable debt securities, which are primarily invested in money market funds and U.S. treasury securities, and accretion income from the U.S. treasury securities.
During the three and nine months ended September 30, 2026, we had interest income of $1.3 million and $4.5 million, respectively, compared with $2.3 million and $7.3 million for the three and nine months ended September 30, 2025, respectively. The $1.0 million decrease from the three months ended September 30, 2025 to the three months ended September 30, 2026 was due to lower average cash and investment balances in the periods. The $2.8 million decrease from the nine months ended September 30, 2025 to the nine months ended September 30, 2026 was due to lower investment balances primarily arising from cash used in operations.
Change in Fair Value of Earn-Out Liabilities
During the three and nine months ended September 30, 2026, we incurred a gain of $1.8 million and $6.0 million, respectively, associated with the change in fair value of the Sponsor Earn-Out liabilities compared with a loss of $3.9 million and a gain of $2.5 million, respectively, for the three and nine months ended September 30, 2025. With the fair value of the Sponsor Earn-Out liabilities tied to the Company’s stock price, continued volatility in the stock price or changes in the expected term could result in further gains or losses resulting from the change in fair value. Refer to “Note 9 – Sponsor Earn-Out Liabilities” to the condensed consolidated financial statements for additional information.
Miscellaneous Income (Expense), Net
During the three months ended September 30, 2026, we had miscellaneous expense of $0.2 million, compared with miscellaneous expense of $0.7 million for the three months ended September 30, 2025. This $0.5 million decrease in miscellaneous expense was primarily due to a one-time loss on sale of fixed assets for the three months ended September 30, 2025.
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During the nine months ended September 30, 2026, we had miscellaneous expense of $1.1 million, compared with miscellaneous expense of $0.3 million for the nine months ended September 30, 2025. This $0.7 million increase in miscellaneous expense was the result of an increase in the loss on foreign currency translations, an increase in loss on fair value of equity investments, and an increase in other expenses.
Change in Fair Value of Deferred Consideration
During the three and nine months ended September 30, 2026, we recognized a gain of $2.2 million and $3.2 million associated with the change in fair value of the deferred consideration related to the acquisition of UZ Energy, reflecting updated expectations regarding UZ Energy’s achievement of the 2026 revenue and cash balance thresholds. Refer to “Note 3 – Acquisitions” to the condensed consolidated financial statements for additional information.
Provision for Income Taxes
During the three months ended September 30, 2026, we had a provision for income taxes of less than $0.1 million, compared to a benefit from income taxes of $0.1 million for the three months ended September 30, 2025.
During the nine months ended September 30, 2026, we had a provision for income taxes of $0.6 million compared to a $0.6 million provision for income taxes for the nine months ended September 30, 2025. The provision in both periods was primarily due to local taxes in the foreign jurisdictions in which the Company operates.
Liquidity and Capital Resources
As of September 30, 2026, we had total cash and cash equivalents of $70.7 million and investments in marketable debt and equity securities of $66.6 million. As an early-stage growth company, the net operating losses we have incurred since inception are consistent with our strategy and budget.
We expect to sustain substantial operating expenses, without generating sufficient revenues to cover expenditures, for several years. Our ability to successfully develop our products and services, scale up our commercial operations and expand our business will depend on many factors, including our working capital needs, the availability of equity and/or debt financing and, over time, our ability to generate positive cash flows from operations. We believe that our cash-on-hand and marketable debt and equity securities will be sufficient to meet our principal working capital and capital expenditure requirements and fund our ongoing research and development, operational and commercial activities, for at least 12 months from the date of this Quarterly Report. These requirements and activities include activities related to the ESS business, planned NDAA-compliant manufacturing capacity for drone cell development, working capital requirements for MUMPL, and commercialization of Molecular Universe material discoveries. However, additional funding may be required during or after this period to finance certain needs beyond our principal working capital and capital expenditure requirements and ongoing costs, including additional opportunities to purchase data and equipment, develop and train our AI models, and/or develop commercial operations in the United States and abroad, acquisitions or other strategic transactions, and unexpected delays in the development of our battery cells.
If we need additional funding beyond these existing short- to medium-term sources of liquidity, or if we are not able to fund our operations from cash flows generated from anticipated product sales and service offerings, we expect that we will need to raise additional funds. This may be through a variety of possible methods, including, but not limited to, entry into joint ventures or other strategic arrangements, issuance of equity, equity-related or debt securities, and obtaining credit from financial institutions. We currently maintain an at-the-market equity offering program with certain investment banks (the “Agents”), pursuant to which we may offer and sell into the open market from time to time, at our option, shares of our Class A common stock with an aggregate offering price of up to $150.0 million. Subject to the terms and conditions of our agreement with them, the Agents will use their commercially reasonable efforts to sell shares of our Class A common stock from time to time, based on instructions from us (including any price, time or size limits or other parameters or conditions we may impose), in exchange for a commission of up to 3.0% of the aggregate gross sale proceeds. We have also provided the banks with customary indemnification and contribution rights. We are not obligated to sell any Class A common stock and may at any time suspend solicitation and offers thereunder. We sold no shares under the at-the-market equity offering program during the three months ended September 30, 2026, and to date have sold no shares under the program.
Summary of Cash Flows
The following table provides a summary of our cash flow data for the periods indicated:
| | | | | |
| Nine Months Ended September 30, | ||||
(in thousands) | 2026 | | 2025 | ||
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Cash (used in) provided by: | | | | | |
Operating activities | $ | (48,829) | | $ | (47,955) |
Investing activities | | 101,607 | | | (43,704) |
Financing activities | | (11,408) | | | (2,010) |
Effect of exchange rate changes on cash | | (169) | | | 177 |
Net increase (decrease) in cash, cash equivalents and restricted cash | $ | 41,201 | | $ | (93,492) |
Operating Activities
Our cash flows used in operating activities to date have primarily comprised research and development and general and administrative activities as discussed above.
Net cash used in operating activities of $48.8 million for the nine months ended September 30, 2026 was primarily attributable to net loss of $43.4 million, as adjusted for stock-based compensation expense of $6.2 million, a gain on change in fair value of Sponsor Earn-Out liabilities of $6.0 million, depreciation and amortization of $7.7 million, a gain on change in fair value of deferred consideration of $3.2 million, accretion income from marketable securities of $1.1 million, and $0.6 million of other items. These non-cash operating items were combined with a $9.6 million working capital outflow. The working capital outflow was primarily driven by a $5.2 million increase in receivables from customers, a $3.6 million decrease in accrued expenses and other current liabilities, and a $3.0 million increase in inventories, partially offset by a $1.2 million decrease in prepaid assets and a $1.1 million increase in accounts payable. The increase in inventories was primarily due to purchases for ESS commercial operations. The decrease in accrued expenses and other liabilities was primarily due to decreases in accruals for compensation and contract liabilities. The changes in account receivables were driven by timing of receipts.
Net cash used in operating activities of $48.0 million for the nine months ended September 30, 2025 was primarily attributable to net loss of $56.0 million, as adjusted for stock-based compensation expense of $8.9 million, a gain on change in fair value of Sponsor Earn-Out liabilities of $2.5 million, depreciation and amortization of $7.7 million, a loss on disposal of fixed assets of $0.6 million, accretion income from marketable securities of $2.4 million, and a $4.6 million working capital outflow. The working capital outflow was primarily driven by a $5.4 million increase in prepaids and other assets primarily due to advance payments made for software related service costs due to AI infrastructure spend, a $2.0 million increase in accrued expenses and other current liabilities due to accruals for deferred consideration in connection with the acquisition, changes in deferred revenue balances, accrued income taxes payable, and payroll related accruals and a $1.3 million increase in receivables from customers.
Investing Activities
Net cash provided by investing activities was $101.6 million for the nine months ended September 30, 2026, compared to net cash used in investing activities of $43.7 million for the nine months ended September 30, 2025. This increase in cash provided was primarily attributable to a $146.4 million decrease in purchases of short-term investments, net of purchases and sales in the current year period compared to the prior year period, partially offset by $0.8 million from acquisition of a business, net of cash and $0.3 million higher capital expenditures.
Financing Activities
Net cash used in financing activities was $11.4 million for the nine months ended September 30, 2026 compared to net cash used in financing activities of $2.0 million for the nine months ended September 30, 2025. This increase was due to a $7.6 million increase in payments for share repurchases, and a $2.0 million increase in payments for taxes withheld to cover vested restricted stock, partially offset by a $0.2 million increase in proceeds from options.
Recent Accounting Pronouncements
See “Note 2 – Basis of Presentation” of our accompanying condensed consolidated financial statements for the three and nine months ended September 30, 2026 included in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and their potential impact on our financial condition, results of operations and cash flows.
Critical Accounting Estimates and Judgments
Our financial statements have been prepared in accordance with U.S. GAAP. In the preparation of these condensed consolidated financial statements, we are required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities
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and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods.
There have been no significant changes to our critical accounting policies or in the underlying accounting assumptions and estimates used in such policies from those disclosed in our annual consolidated financial statements and accompanying notes included in our 2025 Annual Report on Form 10-K.
Other Information
The Company’s website is www.ses.ai. Information contained on the Company’s website is not part of this report. Information that we furnish to or file with the SEC, including the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to, or exhibits included in, these reports are made available for download, free of charge, through the Company’s website as soon as reasonably practicable. The Company’s SEC filings, including exhibits filed therewith, are also available directly on the SEC’s website at www.sec.gov.
The Company may use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website at www.ses.ai. Accordingly, investors should monitor this channel, in addition to following the Company’s press releases, SEC filings and public conference calls and webcasts. The contents of our website are not, however, a part of this report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no significant changes to the Company’s market risk during the three months ended September 30, 2026. Refer to “Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of the Company’s exposure to market risk.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our chief executive officer (“CEO”) and chief financial officer (“CFO”), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2026, as such term is defined in Rules 13a-15(e) and 15d-15(e) under Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and principal financial officer have concluded that as of September 30, 2026, our disclosure controls and procedures were effective. We completed the acquisition of UZ Energy on September 15, 2025, and we are currently integrating UZ Energy into our internal control system.
Management, with the participation of the principal executive officer and principal financial officer, believes the unaudited interim condensed consolidated financial information included in this Quarterly Report on Form 10-Q fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the most recent fiscal quarter that materially affected, or which are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Information regarding legal proceedings is available in Note 10 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
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Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors disclosed in “Part I, Item 1A” of our 2025 Annual Report on Form 10-K, and the other reports that we have filed with the SEC. Any of the risks discussed in such reports, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our results of operations, financial condition or prospects. During the period covered by this Quarterly Report on Form 10-Q, there have been no material changes in our risk factors as previously disclosed, except for the following:
Risks Relating to Our Common Stock and Warrants
Our failure to satisfy certain NYSE listing requirements may result in our Class A common stock being delisted from the NYSE, which could eliminate or adversely affect the trading market for our Class A common stock.
In July 2026, we received notice from the NYSE indicating that we did not satisfy the continued listing standard relating to the trading price of our common stock (the “Minimum Share Price Requirement”), as the average closing price of our common stock was less than $1.00 per share over a consecutive 30 trading-day period. Pursuant to the Minimum Share Price Requirement, we have a period of six months following receipt of the notice to regain compliance with the requirement, with the possibility of an extension at the discretion of the NYSE. We can regain compliance with the requirement at any time during the six-month cure period if, on the last trading day of any calendar month during the cure period we have a closing share price of at least $1.00, and an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of that month or the last trading day of the cure period. The notice is a notice of deficiency, not delisting, and does not currently affect the listing or trading of our Class A common stock on the NYSE, which continues to trade under the symbol “SES.” However, as of the date of this Quarterly Report, we have not regained compliance with the Minimum Share Price Requirement, and we may not regain it before the end of the cure period. In October 2026, we filed a definitive proxy statement seeking stockholder approval of a reverse stock split of our Class A common stock, in part to regain compliance with the Minimum Share Price Requirement. There can be no assurance that our stockholders will approve the reverse stock split, that we will implement it, that the per-share price of our Class A common stock after the reverse stock split will increase in proportion to the reduction in the number of shares outstanding or remain above $1.00, or that the reverse stock split will improve liquidity or broaden institutional ownership. In addition, under current NYSE rules, a company that again falls below the Minimum Share Price Requirement within a specified period after effecting a reverse stock split may not be eligible for a cure period.
We continue to actively monitor the trading prices of our Class A common stock, and assess available options to regain compliance with Minimum Share Price Requirement. The perception among investors that we are at heightened risk of delisting could negatively affect the market price and trading volume of our Class A common stock. Additionally, if the NYSE ultimately delists any of our securities from trading on its exchange for failure to meet the listing standards and we are not able to list such securities on another national securities exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we and our stockholders could face significant material adverse consequences, which could severely diminish or eliminate the value of an investment in our Class A common stock, including:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | a limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) None.
(b) Not applicable.
(c) The following table summarizes our common stock repurchase program activity for the three months ended September 30, 2026:
| | | | | | | |
| Share Repurchase Activities | ||||||
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Period | Total Number of Shares Purchased | | Average Price Paid Per Share(2) | | Total Number of Shares Purchased as Part of Publicly Announced Program(1) | | Approximate Dollar Value of Shares that May Yet Be Purchased under the Program(1) |
July 1 - July 31, 2026 | — | | — | | — | | 28,394,719 |
August 1 - August 31, 2026 | — | | — | | — | | 28,394,719 |
September 1 - September 30, 2026 | 16,161,561 | | 0.57 | | 16,161,561 | | 19,069,009 |
Total | 16,161,561 | $ | 0.57 | | 16,161,561 | | |
(1)On April 24, 2025, we announced that our Board approved a stock repurchase program authorizing us to purchase up to $30 million of our outstanding common stock. Under the authorization, the Company may repurchase shares from time to time at management’s discretion, through a variety of methods, including open market purchases in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), privately negotiated transactions or otherwise, in compliance with applicable federal securities laws and other applicable laws and regulations. The Company may also, from time to time, enter into plans that are compliant with Rule 10b5-1 of the Exchange Act to facilitate repurchases of its shares under this authorization. The timing and number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, alternative investment opportunities, and funding considerations. The share repurchase authorization does not obligate the Company to repurchase any specific number of shares, and it may be suspended or discontinued at any time and does not have an expiration date.
(2)Average price paid per share includes any broker commissions but excludes any liability under the 1% excise tax on the net amount of our share repurchases required by the Inflation Reduction Act of 2022.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
| (a) | Not applicable |
| (b) | Not applicable. |
| (c) | During the fiscal quarter ended September 30, 2026, none of our directors or Section 16 officers |
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Item 6. Exhibits
Exhibit No. | | Description |
|---|---|---|
3.1 | | Certificate of Incorporation of SES AI Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-39845), filed with the Securities and Exchange Commission on February 8, 2022). |
| | |
3.2 | | Bylaws of SES AI Corporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-39845), filed with the Securities and Exchange Commission on February 8, 2022). |
| | |
10.1† | | English Translation of Amendment to Shanghai Lease Agreement, dated as of August 5, 2026. |
| | |
31.1† | | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
31.2† | | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
32.1* | | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
32.2* | | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
101.INS† | | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| | |
101.SCH† | | Inline XBRL Taxonomy Extension Schema Document. |
| | |
101.CAL† | | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| | |
101.DEF† | | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| | |
101.LAB† | | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| | |
101.PRE† | | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| | |
104† | | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
† Filed herewith.
* Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized.
Date: November 12, 2026
| | |
| | |
| SES AI CORPORATION | |
| | |
| By: | /s/ Qichao Hu |
| Name: | Qichao Hu |
| Title: | Chief Executive Officer |
| | (Principal Executive Officer) |
| | |
| By: | /s/ Ray Liu |
| Name: | Ray Liu |
| Title: | Chief Financial Officer |
| | (Principal Financial Officer) |
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