ESS Tech, Inc.GWH

ESS Tech, Inc. Fair Value Disclosure

10-KFiled Mar 31, 20252 min read
FAIR VALUE MEASUREMENTS
The following tables present the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis (in thousands):
December 31, 2024
Cash Equivalents and Restricted CashShort-Term InvestmentsTotal Assets at Fair Value
Level 1:
Money market funds$7,232 $— $7,232 
U.S. Treasury securities— 7,142 7,142 
Total Level 17,232 7,142 14,374 
Level 2:
Certificate of deposit80 — 80 
Commercial paper4,811 7,825 12,636 
Corporate debt securities— 3,296 3,296 
Total Level 24,891 11,121 16,012 
Total assets measured at fair value$12,123 $18,263 $30,386 
December 31, 2023
Cash Equivalents and Restricted CashShort-Term InvestmentsTotal Assets at Fair Value
Level 1:
Money market funds$10,126 $— $10,126 
U.S. Treasury securities— 54,681 54,681 
Total Level 110,126 54,681 64,807 
Level 2:
Certificate of deposit77 — 77 
U.S. agency securities— 12,447 12,447 
Commercial paper9,353 20,771 30,124 
Total Level 29,430 33,218 42,648 
Total assets measured at fair value$19,556 $87,899 $107,455 
The following tables present the Company’s fair value hierarchy for its financial liabilities measured at fair value on a recurring basis (in thousands):
December 31, 2024
Level 1Level 2Level 3Total
Liabilities:
Public common stock warrants802 — — 802 
Total liabilities measured at fair value$802 $— $— $802 
December 31, 2023
Level 1Level 2Level 3Total
Liabilities:
Public common stock warrants917 — — 917 
Total liabilities measured at fair value$917 $— $— $917 
There were no transfers among Level 1, Level 2, or Level 3 categories during the periods presented. The carrying amounts of the Company’s accounts payable approximate their fair values due to their short maturities.
Level 1 Assets: The Company invests in money market funds and U.S. Treasury securities. These assets are valued using observable inputs that reflect quoted prices for securities with identical characteristics.
Level 2 Assets: The Company invests in a certificate of deposit, U.S. agency securities, commercial paper, and corporate debt securities. These assets are valued using observable inputs that reflect quoted prices for securities with similar characteristics and other observable inputs (such as interest rates that are observable at commonly quoted intervals).
Level 1 Liabilities: The Company values its public common stock warrants based on the market price of the warrants.
For trading securities held at the reporting date, net losses recorded during the year ended December 31, 2024 and 2023 were immaterial.
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About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

Income TaxesRevenueEarnings Per SharePP&EGoodwill & IntangiblesLeasesSegmentsCommitmentsStock CompensationNew Standards