COMMON STOCK WARRANTS

12 Months Ended

Dec. 31, 2023

Common stock warrant balances consist of the following:


	December 31, 2023	December 31, 2022
Public Warrants outstanding	11,461,227	7,377,893
Private Warrants outstanding:
Other Private Warrants outstanding	—	3,500,000
Earnout Warrants outstanding	—	583,334
SMUD Warrant outstanding	12,500	12,500
Honeywell Warrants outstanding:
Investment Warrant outstanding	10,631,633	—
IP Warrant outstanding	6,269,955	—
Performance Warrants outstanding	775,760	—
Total common stock warrants	29,151,075	11,473,727

As part of STWO’s initial public offering, 8,333,287 warrants to purchase common stock (the “Public Warrants”) were sold. The Public Warrants are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “GWH.W.” The Public Warrants entitle the holder thereof to purchase one share of common stock at a price of $11.50 per share, subject to adjustments. The Public Warrants may be exercised only for a whole number of shares of common stock. No fractional shares will be issued upon exercise of the warrants. The Public Warrants expire on October 8, 2026, five years after completion of the Business Combination, or earlier upon redemption or liquidation.

The Company may call the Public Warrants for redemption starting any time, in whole and not in part, at a price of $0.01 per warrant, so long as the Company provides no less than 30 days prior written notice of redemption to each warrant holder, and if, and only if, the reported last sale price of common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders provided there is an effective registration statement covering the shares of common stock issuable upon exercise of the warrants.

The Company may call the Public Warrants for redemption starting any time, in whole and not in part, at a price of $0.10 per warrant, so long as the Company provides no less than 30 days prior written notice of redemption to each warrant holder; provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive a number of shares determined based on the redemption date fair market value of the shares, and if, and only if, the reported last sale price of common stock equals or exceeds $10.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders provided there is an effective registration statement covering the shares of common stock issuable upon exercise of the warrants.

Simultaneously with STWO’s initial public offering, STWO issued in a private placement 4,666,667 warrants to purchase common stock (the “Private Warrants”) to STWO’s sponsor. In connection with the Business Combination, STWO’s sponsor agreed to forfeit 583,333 Private Warrants. Of the remaining 4,083,334 Private Warrants, 3,500,000 were immediately vested and 583,334 warrants (the “Earnout Warrants”) were vested upon meeting certain earnout milestone events on November 9, 2021. The Private Warrants, including the Earnout Warrants, automatically converted on a 1:1 basis into Public Warrants upon the transfer of such warrants by the initial holder to a third party during the fourth quarter of 2023.

The table below shows the common stock warrant activities during the year ended December 31, 2023:


	December 31, 2022	Issued	Exercised	Converted(1)	December 31, 2023
Earnout Warrants	583,334	—	—	(583,334)	—
Private Warrants (excluding Earnout Warrants)	3,500,000	—	—	(3,500,000)	—
Public Warrants	7,377,893	—	—	4,083,334	11,461,227
SMUD Warrant	12,500	—	—	—	12,500
Investment Warrant	—	10,631,633	—	—	10,631,633
IP Warrant	—	6,269,955	—	—	6,269,955
Performance Warrants	—	775,760	—	—	775,760
Total common stock warrants	11,473,727	17,677,348	—	—	29,151,075

(1) In accordance with the terms of the Warrant Agreement, dated September 16, 2020, by and between STWO and Continental Stock Transfer & Trust Company (“Continental”), as amended by the Assignment, Assumption and Agreement, dated October 8, 2021, by and among the Company, STWO, Continental and Computershare Trust Company, N.A. (as amended, the “Warrant Agreement”), the Private Warrants, including the Earnout Warrants, automatically converted on a 1:1 basis into Public Warrants upon the transfer of such warrants by the initial holder to a third party during the fourth quarter of 2023.

The table below shows the common stock warrant activities during the year ended December 31, 2022:


	December 31, 2021	Issued	Exercised	December 31, 2022
Earnout Warrants	583,334	—	—	583,334
Private Warrants (excluding Earnout Warrants)	3,500,000	—	—	3,500,000
Public Warrants	7,377,913	—	20	7,377,893
SMUD Warrant	—	12,500	—	12,500
Total common stock warrants	11,461,247	12,500	20	11,473,727

The Company’s common stock warrants were initially recorded at fair value upon completion of the Business Combination and are adjusted to fair value at each reporting date based on the market price of the Public Warrants, with the change in fair value recorded as a component of other income (expense), net in the consolidated statements of operations and comprehensive loss. For the year ended December 31, 2023, the Company recorded a net decrease to the liabilities for Public Warrants of $2.3 million. For the year ended December 31, 2022, the Company recorded a net decrease to the liabilities for Earnout Warrants, Public Warrants and Private Warrants (Excluding Earnout Warrants) of $25.8 million.

SMUD Warrant

On September 16, 2022, the Company entered into a warrant agreement with SMUD, whereby the Company agreed to issue a warrant for up to 500,000 shares of the Company’s common stock at an exercise price of $4.296 per share. The vesting of the shares underlying the warrant will be subject to the achievement of certain commercial milestones through December 31, 2030 pursuant to a related commercial agreement. As of December 31, 2023 and 2022, 12,500 shares underlying the warrant were vested.

Honeywell Warrants

On September 21, 2023, the Company entered into the Purchase Agreement with Honeywell Ventures, an affiliate of Honeywell, a related party. Pursuant to the Purchase Agreement, Honeywell invested $27.5 million in the Company and the Company issued 16,491,754 shares of common stock and a warrant to issue up to 10,631,633 shares of common stock to Honeywell Ventures. Pursuant to the Purchase Agreement and also as further consideration for the licensing by UOP, an affiliate of Honeywell, of certain intellectual property to the Company, the Company issued a warrant to issue up to 6,269,955 shares of common stock to UOP. The Investment Warrant has an exercise price of $1.89, and the IP Warrant has an exercise price of $2.90. Each warrant will expire on September 21, 2028.

On September 21, 2023, the Company and UOP also entered into the Supply Agreement, pursuant to which UOP may purchase equipment supplied by the Company. Pursuant to the Supply Agreement, the Company agreed to issue additional warrants to purchase common stock to UOP, consisting of (i) an initial performance warrant to issue up to 775,760 shares of common stock, issued on September 21, 2023 in exchange for a prepayment of equipment by UOP in the amount of $15 million, and (ii) additional performance warrants (not to exceed an aggregate value of $15 million based on target purchase amounts of up to $300 million by 2030) to be issued on an annual basis for the five-year period beginning in 2026, based on UOP’s purchase of additional equipment after execution of the Supply Agreement. The initial Performance Warrant has an exercise price of $1.45 and the additional Performance Warrants will have an exercise price equal to the volume-weighted average price of the Company’s common stock for the last fifteen (15) trading days of the relevant calendar year for which such Performance Warrant is being issued. The initial Performance Warrant expires on September 21, 2028 and each additional Performance Warrant will have a five-year term from its respective date of issuance.