ENERGY VAULT HOLDINGS, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The following discussion and analysis provide information which Energy Vault's
management believes is relevant to an assessment and understanding of Energy
Vault's consolidated results of operations and financial condition. The
discussion should be read together with our unaudited interim condensed
consolidated financial statements, the respective notes thereto, and other
financial information included elsewhere in this Quarterly Report. The
discussion and analysis should also be read together with the audited
consolidated financial statements for the year ended December 31, 2021, and the
related notes included in Amendment No. 1 to the Current Report on Form 8-K
filed by us with the SEC on March 31, 2022 ("Amendment No. 1"). This discussion
may contain forward-looking statements based upon Energy Vault's current
expectations that involve risks, uncertainties, and assumptions. Energy Vault's
actual results may differ materially from those anticipated in these
forward-looking statements. You should review the section titled "Cautionary
Note Regarding Forward-Looking Statements" for a discussion of forward-looking
statements and the section titled "Risk Factors," for a discussion of factors
that could cause actual results to differ materially from the results described
in or implied by the forward-looking statements contained in the following
discussion and analysis and elsewhere in this Quarterly Report. Energy Vault's
historical results are not necessarily indicative of the results that may be
expected for any period in the future. Unless the context otherwise requires,
all references in this Quarterly Report to "we," "our," "us," "the Company," or
"Energy Vault" refer to Energy Vault Holdings, Inc., a Delaware corporation, and
its subsidiaries both prior to the consummation of and following the Merger (as
defined below).

Our Business

Energy Vault develops sustainable, grid-scale energy storage solutions designed
to advance the transition to a carbon free, resilient power grid. Energy Vault's
mission is to identify, develop, and bring to market the most economical,
flexible, and sustainable energy storage solutions. To achieve this, Energy
Vault delivers turn-key energy storage solutions and energy management software
systems to utilities, independent power producers, and large energy users to
significantly reduce their levelized cost of energy while maintaining power
reliability.

Energy Vault was founded to address one of the greatest impediments to efficient
renewable energy adoption - energy storage. Renewable energy solutions struggle
to replace fossil fuel power due to intermittency of the generation source and
the lack of economic and sustainable energy storage solutions. Variable
renewable energy sources such as wind and solar only produce energy when the sun
is shining, or when the wind is blowing. Cost-effective energy storage is
required to increase the amount of electricity that can be delivered to the grid
from renewable energy sources in a balanced way that supports grid integration
resiliency during low generation and eliminates over-generation and the risk of
changes in energy delivery, or ramp rate. Ramp rate is measured as
the percentage of change in energy delivered per second. Power plants are
designed to operate within a range where the amount of energy delivered to the
grid must always equal the amount of energy that is being consumed. Blackouts
and other issues can result when the balance is disrupted, when the energy
levels fall out of the set range due to low generation periods, or high energy
demand periods. The system also may become overloaded because of abrupt changes
in renewable energy generation. Energy storage helps to maintain the balance of
energy delivery with energy consumed and to mitigate ramp rate to stay within
range and avoid blackouts or other grid resiliency problems.

Energy Vaults basic skills include:

• EVx: our proprietary gravity-based energy storage system, which is a technologically and economically viable system currently being deployed.

•Energy Vault Solutions (“EVS”): EVS develops our energy management software to maximize the applications and economic performance of various energy storage assets, including batteries and gravity-based systems.

The company’s market-ready turnkey energy storage solutions portfolio currently includes:

• Gravity Energy Storage Systems (“GESS”),

• Battery Energy Storage Systems (“BESS”), and

• Energy management software (“EMS”)

Gravity Energy Storage Systems

Energy Vault's gravity-based solutions provide long-duration energy storage of
four to twelve hours, while providing competitive economics and a lifetime
round-trip efficiency ("RTE") of over 80%. The Company's gravity-based solutions
are based on the well-understood physics and mechanical engineering fundamentals
of pumped hydroelectric energy storage, but replace water with custom-made
composite blocks, or "mobile masses", that can be made from low-cost and

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locally sourced materials, including local soil, mine tailings, coal combustion residues (coal ash) and decommissioned wind turbine blades at end of life.

Energy Vault's gravity-based solutions build upon the core, proven energy
storage technology of pumped hydroelectric energy storage and incorporates a
simplified building design that is modular, flexible, and not limited by the
same topographical/geological constraints of pumped hydroelectric energy storage
plants.

Applying the fundamental principles of gravity and potential energy, Energy
Vault's EVx solution combines advanced materials science and proprietary
machine-vision software to autonomously orchestrate the charge, storage, and
discharge of electricity in grid-scale applications. Energy Vault synthesized
technologies from four established industries: crane/elevators, shipping,
motor/generator, and materials science. Combining potential and kinetic energy
cycles, Energy Vault's systems are automated with advanced computer control and
machine vision software to create a gravity energy storage innovation designed
to meet the market demand for storage duration of four to twelve hours.

Our storage, when combined with low-cost wind and photovoltaic solar, is
designed to achieve an attractive levelized cost of energy delivered. The EVx
system can be deployed as stand-alone storage connected to the grid or alongside
any generation source, such as wind or solar farms. Energy Vault is focused on
enabling cost-effective renewable power on a global scale at a lower cost than
existing, fully-depreciated fossil fuel plants, and with high sustainability
standards. The potential energy of the system can be stored with the composite
blocks in the raised position for unlimited periods of time and with nearly zero
expected loss of the storage capacity over time. Additionally, Energy Vault is
uniquely positioned to work with traditional fossil fuel companies to help
utilities and coal plant operators make a more cost-effective transition to
green power by utilizing energy waste materials such as coal ash in the
production of the mobile masses that charge our gravity energy storage
solutions.

In July 2020, Energy Vault completed mechanical construction of a five MW
commercial demonstration unit ("CDU") located in Arbedo-Castione, Switzerland
based on the EV1 Tower design. In July 2020, the CDU was connected to the Swiss
national electricity grid. Following the successful commercial scale deployment
of the CDU, Energy Vault announced the new EVx platform in 2021 concurrent with
its announcement of an investment in Energy Vault from Saudi Aramco Energy
Ventures investment. EVx is expected to offer performance enhancements designed
to have RTE of over 80%, a 35-year life, and a flexible, modular design that is
45% lower in height than the EV1 Tower design. Round trip efficiency is the
ratio between the amount of energy that is delivered from the charged system and
the amount of energy that was used to charge the system, expressed as a
percentage. For example, a round trip efficiency of 80% means that a system is
able to deliver 80% of the energy that was used to charge the system to the end
user. It is important to note that no energy storage system is 100% efficient
and that there is always a loss of energy in the storage/delivery process.

Battery energy storage systems

Energy Vault's BESSs have expected lives that range from 10 to 20 years and
provide short-duration energy storage of one to four hours. Our BESSs utilize a
purpose-built AC block system leveraging an innovative architecture to lower
cost, improve performance, and ensure the highest level of project safety. The
Company's BESS integrates hardware components from a diverse network of battery
and power electronics manufacturers, and incorporates modular inverters to
improve uptime and insulate against the potential consolidated damages of lost
capacity. Our battery systems utilize flexible system architecture for long-term
asset resiliency as grid conditions and market parameters change, as well as
improved augmentation by avoiding reliance on a single manufacturer.

Energy management software

The Company launched EVS to provide customers with (i) a technology neutral
platform for the integration and delivery of multiple energy storage
technologies and (ii) an advanced software energy management system, using
artificial intelligence, predictive analytics and software optimization
algorithms, to orchestrate the ideal economic dispatching of energy generation
and storage assets. EVS is expected to offer EMS as a software as a service,
bundled with the sale of energy storage assets, or an energy storage technology
license.

Recent Developments

In February 2022, Energy Vault announced a License and Royalty agreement for
renewable energy storage with Atlas Renewable LLC ("Atlas") and its majority
investor China Tianying Inc., an international environmental management and
waste remediation corporation engaged in smart urban environmental services,
resource recycling and recovery, and zero-carbon clean energy technologies. The
agreement supports the deployment of Energy Vault's proprietary gravity energy
storage technology and energy management software platform within mainland China
and the Special Administrative Regions ("SAR") of Hong Kong and Macau. Atlas
agreed to pay $50.0 million in IP licensing fees, for use and deployment of
Energy Vault's gravity energy storage technology. The Company has collected
$45.0 million of the $50.0 million of cash and expects to collect the remaining
$5.0 million of cash before the end of 2022. The Company recognized revenue

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related to this agreement $0.5 million and $44.4 million in the three and nine months ended September 30, 2022respectively.

In connection with the Company's licensing agreement with Atlas, the Company
agreed to make a refundable contribution to Atlas in the amount up to
$25.0 million during the period in which Atlas constructs its first gravity
energy storage system ("GESS"). As of September 30, 2022, the Company has
contributed $22.5 million of the $25.0 million. The refundable contribution will
be returned to the Company upon Atlas' first GESS reaching substantial
completion and meeting certain performance metrics.

In April 2022, the Company purchased a $2.0 million convertible promissory note
from DG Fuels, LLC ("DG Fuels"). The maturity date of the note is the earlier of
(i) 30 days after a demand for payment is made by the Company at any time after
the two year anniversary of the date of issuance of the note; (ii) the four year
anniversary of the date of issuance of the note; (iii) five days following a
Financial Close ("Financial Close" means a project finance style closing by DG
Fuels or its subsidiary of debt and equity capital to finance the construction
of that certain biofuel facility currently under development by DG Fuels), or
(iv) upon an event of default determined at the discretion of the Company. The
note has an annual interest rate of 10.0%. The Company intends to hold and
convert the DG Fuels Note into the equity securities issued by DG Fuels in their
next equity financing round that is greater than $20.0 million at a 20% discount
to the issuance price. The principal balance and unpaid accrued interest on the
DG Fuels Note will, at the option of the Company, convert into equity securities
upon the closing of such next equity financing round.

On July 1, 2022, Energy Vault delivered a notice of redemption for all of its
outstanding public warrants to purchase shares of Energy Vault common stock.
After delivering the notice of redemption, 2.2 million shares of common stock
were issued upon the cashless exercise of 8.7 million public warrants.
0.2 million in unexercised and outstanding Public Warrants as of August 1, 2022
were redeemed at a price of $0.10 per warrant. No Public Warrants remain
outstanding as of September 30, 2022.

In August 2022, the Company entered into two contracts with Jupiter Power
("Jupiter"), a leading battery energy storage developer and owner/operator of
utility-scale battery energy storage projects in the United States, whereby
Energy Vault will supply equipment, engineering, procurement, construction,
balance of plant services, and the energy management software for two of
Jupiter's battery energy storage projects. The projects include a 100 MW (200
MWh) battery energy storage system near Fort Stockton, Texas, which will provide
energy and ancillary services to ERCOT, and a 10 MW (20 MWh) system in
Carpinteria, California, to provide grid services through participation in the
CAISO Resource Adequacy program as well as energy resiliency in southern
California. The projects will provide critically needed dispatchable capacity to
these electricity markets and are expected to be completed in 2023.

In September 2022, the Company entered into a contract with Wellhead Electric
Company, Inc. ("Wellhead") and W Power, LLC, ("W Power"), a woman-owned business
enterprise that has developed and owned power generation facilities in
California, whereby Energy Vault will construct a 275.2 MWh battery storage
project at W Power's Energy Reliability Center in Stanton, California. The
project is on an accelerated timeline to meet critical power needs for southern
California and is expected to be completed by mid-2023.

Business combinations and public company costs

On February 11, 2022, Energy Vault, Inc. ("Legacy Energy Vault") completed the
merger with NCCII Merger Corp., with Legacy Energy Vault surviving as a
wholly-owned subsidiary of Novus Capital Corporation II ("Novus") (the
"Merger"). Immediately following the completion of the Merger, Novus changed its
name to Energy Vault Holdings, Inc. On February 14, 2022, Energy Vault's common
stock and warrants began trading on the New York Stock Exchange under the
symbols "NRGV" and "NRGV WS," respectively.

The Merger was accounted for as a reverse recapitalization in accordance with
United States Generally Accepted Accounting Principles ("GAAP"). Under this
method of accounting, Novus was treated as the "acquired" company for financial
reporting purposes. Accordingly, for accounting purposes, the financial
statements of the combined entity upon consumption of the Merger represented a
continuation of the financial statements of Legacy Energy Vault with the Merger
being treated as the equivalent of Legacy Energy Vault issuing stock for the net
assets of Novus, accompanied by a recapitalization. The net assets of Novus are
stated at historical cost, with no goodwill or other intangible assets recorded.
Operations prior to the Merger are presented as those of Legacy Energy Vault in
future reports of the combined entity. All periods prior to the Merger have been
retroactively adjusted using the exchange ratio of 6.7735 (the "Exchange Ratio")
for the equivalent number of shares outstanding immediately after the Merger to
effect the reverse recapitalization.

Energy Vault raised gross proceeds of $235.8 million, including the contribution
of $40.8 million of cash, net of redemptions, held in Novus' trust account from
its initial public offering and an aggregate purchase price of $195.0 million
from the sale and issuance of shares of common stock in a private placement
("Private Investment in Public Equity" or

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"PIPE") at $10.00 per share. Energy Vault and Novus paid $44.8 million in
transaction costs, resulting in total net cash proceeds to Energy Vault from the
Merger and PIPE of $191.0 million. See Note 1 and Note 3, in Part I, Item 1.
"Financial Statements" for additional information about the Merger.

As a result of the Merger, Energy Vault has become the successor to a publicly
reporting company, which has required the hiring of additional personnel and the
implementation of procedures and processes to comply with public company
regulatory requirements, including the Exchange Act, and customary practices. We
have begun to incur and expect to continue to incur additional annual expenses
as a public company for, among other things, directors' and officers' liability
insurance, director fees, and additional internal and external accounting,
legal, and administrative resources, including increased audit and legal fees.

Main factors and trends affecting our business

We believe that our performance and future success depends on several factors that present significant opportunities for us, but also pose risks and challenges, including those discussed below and in Part II, Item 1A. “Risk factors.”

Product development and deployment plan

energy vault intends to leverage its technology, competitive strengths, and remediation opportunities to make its EVx system a viable solution for short-, medium-, and long-term renewable energy storage.

Our cost projections are heavily dependent upon raw materials (such as steel),
equipment (such as motors, inverters, and power electronic devices) and
technical and construction service providers (such as engineering, procurement,
construction firms). The global supply chain, on which Energy Vault relies, has
been significantly impacted by (i) the COVID-19 pandemic, (ii) economic
uncertainties, including the war in Ukraine, and (iii) high inflation pressure
on project budgeting resulting in potential significant delays and cost
fluctuations, particularly with respect to microchips and many other raw
materials that are within the motor and power electronic supply chains. These
future timing and financial developments may impact Energy Vault's performance
from both a deployment and cost perspective.

To date, the only operating energy storage system that utilized Energy Vault's
technologies was the CDU. Energy Vault used the CDU for testing and software
improvement until it was dismantled in September 2022. Building on its
experience with the CDU, Energy Vault designed its EVx system. The EVx platform
is designed to be a scalable, modular product line starting from 40 MWh to
multi-GWh to address grid resiliency needs in shorter durations while supporting
longer duration and power needs in the event of power outages or powering
industrial processes over long periods. There are no commercial installations of
Energy Vault's EVx system at this time.

Energy storage industry

Our future revenue growth will be directly tied to the continued adoption of
renewable energy storage systems. As the sector is relatively nascent, we expect
the markets for renewable energy storage to increase. Furthermore, our systems
rely on an alternative technology to the dominant and accepted storage
technologies such as lithium-ion, flow batteries, and thermal storage. Our
business depends on the acceptance of our products, including the EVx systems,
in the marketplace. Even if renewable energy and energy storage become more
widely adopted than they have been to date, potential customers may choose
energy storage products from our competitors that are based on technologies
other than our gravity-based energy storage technology.

COVID-19[feminine]

The spread of the COVID-19 has caused an economic downturn on a global scale, as
well as significant volatility in the financial markets. Government reactions to
the public health crisis with mitigation measures have created significant
uncertainties in the U.S. and global economies. The extent to which the COVID-19
pandemic impacts Energy Vault's business, operations and financial results will
depend on numerous evolving factors that management may not be able to
accurately predict. The ultimate outcome of these matters is uncertain and,
accordingly, the impact on our financial condition or results of operations is
also uncertain.

Components of operating results

Revenue

Prior to January 1, 2022, Energy Vault had not recognized any revenue. During
the three and nine months ended September 30, 2022, Energy Vault recognized
revenue of $1.7 million and $45.6 million, respectively, from the building of
energy storage systems and from the licensing of the Company's intellectual
property.

We plan to generate revenue from the sale of energy storage solutions, through four complementary sales programs based on customer preferences.

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Under the first program, Storage Asset Owners, the customer owns both the energy
storage system and the service, that the system provides (i.e., the energy
storage and dispatch of electricity). Energy Vault anticipates that this program
will constitute the substantial majority of future sales and that utility
companies, independent power producers, and industrial customers that consume
large amounts of power or are making a transition to 24/7 renewable power may be
interested in being Storage Asset Owners. The Company recognized revenue of $1.2
million during both the three and nine months ended September 30, 2022 related
to this sales program.

Under the second program, Storage Service Customers, customers such as community
choice aggregators, independent power producers, and utility companies would
sign long-term power purchase agreements and/or tolling agreements to purchase
power on a fixed dollar per kilowatt on a monthly or hourly basis, while Energy
Vault and potentially other equity co-investors would retain an ownership
interest in the system. An investment tax credit of up to 30% could be applied
against the costs incurred by the Company for U.S. based project installations
if Energy Vault decides to combine other renewable energy components into a
combined storage project. See the section titled "Risks Related to Government
Regulations" in Item 1A. Risk Factors for further details. The Company has not
yet recognized any revenue from this sales program.

Under the third program, the customer would enter into a Software as a Service
("SaaS") agreement with Energy Vault, and would be granted access to Energy
Vault's Energy Management System that helps the economic dispatching of its
energy storage and generation assets. The Company has not yet recognized any
revenue from this sales program.

Under the fourth program, the Company would enter into intellectual property
license and royalty agreements associated with our energy storage technology.
The Company recognized revenue of zero and $42.9 million during the three and
nine months ended September 30, 2022 related to this sales program.

Operating Expenses

Revenue cost

Revenue cost primarily includes the costs of subcontractors, direct labor and consulting fees associated with constructing energy storage systems and providing construction support services to Atlas.

Sales and marketing expenses

Sales and marketing expenses consist primarily of expenses relating to
professional service costs, trade shows, marketing and sales related promotional
materials, public relations expenses, website operating and maintenance costs,
and stock-based compensation expenses for marketing, sales personnel, and
related support teams. We expect that our sales and marketing expenses will
increase over time as we continue to hire additional personnel to support the
overall growth in our business.

Research and development costs

Research and development expenses consist primarily of internal and external
expenses incurred in connection with our research activities and development
programs that include materials costs directly related to the product
development, testing and evaluation costs, construction costs including labor
and transportation of material, overhead related costs and other direct expenses
consisting of stock-based compensation and consulting expenses relating to study
of product safety, reliability and development. We expect our research and
development costs to increase for the foreseeable future as we continue to
invest in these activities to achieve our product design, engineering, and
development roadmap.

General and administrative expenses

General and administrative expenses consist of information technology expenses,
legal and professional fees, travel cost, personnel-related expenses for our
corporate, executive, finance, and other administrative functions including
expenses for professional and contract services. Personnel related expenses
consist of salaries, benefits, and stock-based compensation expense. To a lesser
extent, general and administrative expense includes depreciation, investor
relations costs, insurance costs, rent, office expenses, and maintenance costs.
We expect our general and administrative expenses to increase in the foreseeable
future as we hire personnel to meet the growth of our business, and as a result
of operating as a public company, including compliance with the rules and
regulations of the SEC, legal, audit, additional insurance requirements,
investor relations fees, SOX 404 implementation fees, and other administrative
and professional services.

Asset impairment

Energy Vault began building a prototype of the EV1 in March 2020, resulting in
the CDU, an EV1 Tower, which was connected to the Swiss national grid in July
2020. Thereafter, through design improvements and refinements of its technology,
Energy Vault announced the new EVx platform in 2021 and the Company completed
the dismantling of the

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CDU by September 2022. The Company has recognized various impairments related to
the CDU and production equipment for the EV1 Tower when components have been
damaged or become obsolete.

Other income (expense)

Interest expense

Interest expense primarily includes interest related to finance leases.

Change in fair value of warrant liability

The Company's warrants are subject to fair value remeasurement at each balance
sheet date. The Company expects to incur incremental income (expense) in the
condensed consolidated statements of operations for the fair value change for
the outstanding warrant liabilities at the end of each reporting period or
through the exercise of such warrants. With the completion of the redemption of
Energy Vault's public warrants on August 1, 2022, Energy Vault currently expects
to incur incremental income (expense) in its consolidated statements of
operations for the fair value change for outstanding warrant liabilities at the
end of each reporting period in respect of outstanding private warrants.

Transaction costs

Transaction costs include legal, accounting, banking and other costs directly related to the completion of the Merger and the PIPE.

Other income (expenses), net

Other income (expenses), net, mainly includes interest income related to our investments in money market funds as well as gains and losses related to foreign exchange transactions.

Main operating parameters

Reservations

Reservations represent the total number of MWh to be delivered per signed customer contract, or the total dollar value of signed customer contracts entered into during the specified periods. The following table presents the reservations for the periods indicated (amounts in thousands, excluding amounts in MWh):

                                    Three months ended September 30,                               Nine Months Ended September 30,
                               2022                  2021             $ Change               2022                  2021             $ Change
Bookings [MWh]                      495                  -                495                     495                  -                495
Bookings [$]            $       206,794          $       -          $ 206,794          $      256,794          $       -          $ 256,794


Backlog

Backlog represents the amount of revenue we expect to realize in the future on
uncompleted construction contracts, including new contracts under which work has
not yet begun, as well as the remaining revenue to be recognized under the
Company's intellectual property licensing agreement with Atlas. As of
September 30, 2022, backlog totaled $211.5 million.

The Company expects to realize the majority of the backlog as of September 30,
2022 over the next twelve months. Timing of revenue for construction and
installation projects included in our backlog can be subject to change as a
result of customer, regulatory, or other delays or cancellations including from
economic or other conditions caused by supply chain disruptions, inflation,
COVID-19, weather, and/or other project-related factors. These effects, among
others, could cause estimated revenue to be realized in periods later than
originally expected, or not at all. Customers may postpone or cancel
construction projects due to changes in our customer's spending plans, market
volatility, changes in government permitting, regulatory delays, and/or other
factors. There can be no assurance as to our customer's requirements or if
actual results will be consistent with our estimates. As a result, our backlog
as of any particular date is an uncertain indicator of future revenue and
earnings.

Backlog is a commonly used metric in our industry. Our methodology for determining the backlog, however, may not be comparable to methodologies used by others. The Company’s backlog is the amount of our remaining performance obligations, which are described in Note 4 – Revenue recognition.

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Operating results

Consolidated comparison of the three and nine month periods ended September 30, 2022 at
September 30, 2021

The following table presents our results of operations for the periods indicated (amounts in thousands):

                                                   Three months ended September 30,                     Nine Months Ended September 30,
                                               2022                  2021             $ Change                   2022               2021             $ Change
Revenue                                $      1,694               $      -          $   1,694                $  45,555          $       -          $  45,555
Operating Expenses:
Cost of revenue                               1,623                      -              1,623                    2,194                  -              2,194
Sales and marketing                           3,758                    169              3,589                    8,287                443              7,844
Research and development                     16,731                  1,697             15,034                   36,155              4,920             31,235
General and administrative                   12,960                  3,759              9,201                   33,434              8,620             24,814
Asset impairment                              2,828                    (11)             2,839                    2,828              2,733                 95
Loss from operations                        (36,206)                (5,614)           (30,592)                 (37,343)           (16,716)           (20,627)
Other Income (Expense):

Interest expense                                  -                      -                  -                       (1)                (7)                 6
Change in fair value of warrant
liability                                     6,706                      -              6,706                    2,061                  -              2,061
Transaction costs                                 -                      -                  -                  (20,586)                 -            (20,586)
Other income (expenses), net                    920                   (549)             1,469                    1,205             (1,866)             3,071
Loss before income taxes               $    (28,580)              $ (6,163)         $ (22,417)               $ (54,664)         $ (18,589)         $ (36,075)


Revenue

The Company recognized revenue for the categories of products and services as follows for the three months ended September 30, 2022 and 2021.

                                                                   Three 

Months ended September 30,

                                                                       2022                  2021
Licensing of intellectual property                               $           -          $         -
Build and transfer energy storage products                               1,153                    -
Other                                                                      541                    -
Total revenue                                                    $       1,694          $         -


Revenue for the three months ended September 30, 2022 was $1.7 million compared
to no revenue for the three months ended September 30, 2021. Revenue for the
three months ended September 30, 2022 primarily consisted of $1.2 million
related to the building and transferring of energy storage products. This $1.2
million in revenue was earned from Jupiter as the Company began construction on
their battery energy storage systems during the three months ended September 30,
2022. Revenue from Jupiter represents 68% of the Company's total revenue for the
three months ended September 30, 2022. Additionally, the Company earned other
revenue of $0.5 million from Atlas related to providing construction support
services during the three months ended September 30, 2022. Revenue from Atlas
represents 32% of the Company's total revenue for the three months ended
September 30, 2022.

The Company recognized revenue for the categories of products and services as follows for the nine months ended September 30, 2022 and 2021.

                                                                   Nine 

Months ended September 30,

                                                                      2022                  2021
Licensing of intellectual property                               $     42,884          $         -
Build and transfer energy storage products                              1,153                    -
Other                                                                   1,518                    -
Total revenue                                                    $     45,555          $         -


Revenue for the nine months ended September 30, 2022 was $45.6 million compared
to no revenue for the nine months ended September 30, 2021. Revenue for the nine
months ended September 30, 2022 primarily consisted of $42.9 million related to
the transfer of intellectual property to Atlas. Additionally, the Company
recognized revenue of $1.2 million

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related to the building and transferring energy storage products to Jupiter and
$1.5 million in other revenue related the Company providing construction support
services to Atlas during the nine months ended September 30, 2022. Revenue from
Atlas represents 97% of the Company's total revenue for the nine months ended
September 30, 2022.

Right now, energy vault does not expect to enter into many other intellectual property license agreements.

Operating Expenses

Revenue cost

Cost of revenue was $1.6 million for the three months ended September 30, 2022
compared to no cost of revenue for the three months ended September 30, 2021.
Cost of revenue for the three months ended September 30, 2022 consisted of
subcontractor and direct labor costs on the battery storage projects with
Jupiter, and direct labor and consulting expenses related to providing
construction support services to Atlas.

Cost of revenue was $2.2 million for the nine months ended September 30, 2022
compared to no cost of revenue for the nine months ended September 30, 2021.
Cost of revenue for the nine months ended September 30, 2022 consisted of
subcontractor and direct labor costs on the battery storage projects with
Jupiter, and direct labor and consulting expenses related to providing
construction support services to Atlas.

Sales and Marketing

Sales and marketing expenses increased by $3.6 million to $3.8 million for the
three months ended September 30, 2022, compared to $0.2 million for the three
months ended September 30, 2021. The increase resulted primarily from an
increase in personnel-related expenses of $2.9 million and an increase in
marketing and public relation costs of $0.3 million. The increase in personnel
costs was due to expanded headcount, particularly at the senior levels, and
increased stock-based compensation expense. Stock-based compensation expense was
$2.1 million for the three months ended September 30, 2022, compared to $9
thousand for the three months ended September 30, 2021.

Sales and marketing expenses increased by $7.9 million to $8.3 million for the
nine months ended September 30, 2022, compared to $0.4 million for the nine
months ended September 30, 2021. The increase resulted primarily from an
increase in personnel-related expenses of $4.8 million, an increase in marketing
and public relations costs of $2.0 million, and an increase in travel related
expenses of $0.4 million. The increase in personnel costs was due to expanded
headcount, particularly at the senior levels, and increased stock-based
compensation expense. Stock-based compensation expense was $3.0 million for the
nine months ended September 30, 2022, compared to $0.1 million for the nine
months ended September 30, 2021.

Research and development

Research and development expenses increased by $15.0 million to $16.7 million
for the three months ended September 30, 2022, compared to $1.7 million for the
three months ended September 30, 2021. The increase resulted primarily from a
$6.0 million increase in personnel-related expenses, a $5.1 million increase in
depreciation expense, a $2.3 million increase in engineering and development
costs, a $0.8 million increase in consultant expenses, and a $0.8 million
increase in software costs. The increase in personnel costs was due to expanded
headcount, particularly at the senior levels, and increased stock-based
compensation expense. Stock-based compensation expense was $4.2 million for the
three months ended September 30, 2022, compared to $0.2 million for the three
months ended September 30, 2021. The increase in depreciation expense primarily
relates to depreciation on the CDU and related components.

Research and development expenses increased by $31.3 million to $36.2 million
for the nine months ended September 30, 2022, compared to $4.9 million for the
nine months ended September 30, 2021. The increase resulted primarily from a
$14.9 million increase in personnel-related expenses, a $7.4 million increase in
depreciation expense, a $4.6 million increase in engineering and development
costs, a $2.3 million increase in software expenses, a $1.0 million increase in
consultant expenses, and a $0.7 million increase in travel related expenses. The
increase in personnel costs was due to expanded headcount, particularly at the
senior levels, and increased stock-based compensation expense. Stock-based
compensation expense was $11.0 million for the nine months ended September 30,
2022, compared to $0.3 million for the nine months ended September 30, 2021. The
increase in depreciation expense primarily relates to depreciation on the CDU
and related components.

General and Administrative

General and administrative expenses increased by $9.2 million to $13.0 million
for the three months ended September 30, 2022 compared to $3.8 million for the
three months ended September 30, 2021. The increase resulted primarily from a
$5.7 million increase in personnel-related expenses, a $1.7 million increase in
legal and professional fees, a $0.7 million increase in consultant expenses, a
$0.4 million increase in insurance costs, and a $0.3 million increase in travel
expenses. The increase in personnel costs was due to expanded headcount and an
increase in stock-based compensation expense.

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Stock-based compensation expense was $4.5 million for the three months ended
September 30, 2022, compared to $9 thousand for the three months ended
September 30, 2021. The increase in legal and professional fees was attributable
to external costs such as accounting, finance, tax, compliance, auditing, legal,
and other professional fees associated with becoming a public company.

General and administrative expenses increased by $24.8 million to $33.4 million
for the nine months ended September 30, 2022, compared to $8.6 million for the
nine months ended September 30, 2021. The increase resulted primarily from a
$15.4 million increase in personnel-related expenses, a $4.0 million increase in
legal and professional fees, a $1.6 million increase in consultant expenses, a
$1.2 million increase in insurance costs, a $1.1 million in travel related
expenses, a $0.7 million increase in software expenses, and a $0.5 million
increase in employee recruiting costs. The increase in personnel costs was due
to expanded headcount and an increase in stock-based compensation expense.
Stock-based compensation expense was $12.7 million for the nine months ended
September 30, 2022, compared to $54 thousand for the nine months ended
September 30, 2021. The increase in legal and professional fees was attributable
to external costs such as accounting, finance, tax, compliance, auditing, legal,
and other professional fees associated with becoming a public company.

Asset impairment

Asset impairment was $2.8 million for both the three and nine months ended
September 30, 2022, compared to a credit to asset impairment of $11 thousand for
the three months ended September 30, 2021 and asset impairment of $2.7 million
for the nine months ended September 30, 2021. Asset impairment for the three and
nine months ended September 30, 2022 related to the CDU and the brick machines
used to manufacture bricks for the EV1 tower design. The Company completed the
dismantling of the CDU by September 2022 and is no longer being used as a
demonstration unit.

Asset impairment of $2.7 million for the nine months ended September 30, 2021
related to components of the CDU that were damaged. This impairment and other
related costs were partially offset by an insurance claim received by the
Company. Additionally, other components, which were not previously installed,
were reclassified into prepaid expenses and other current asset at their
estimated net realizable value during 2021.

Other income (expenses)

Change in fair value of warrant liability

The Company recognized a gain of $6.7 million related to the change in the fair
value of the Company's warrant liability for the three months ended
September 30, 2022 due to a decrease in the fair value of our outstanding
warrants as of September 30, 2022 compared to the fair value as of June 30, 2022
or as of the date the warrants were exercised. The Company recognized a gain of
$2.1 million related to the change in the fair value of the Company's warrant
liability for the nine months ended September 30, 2022 due to a decrease in the
fair value of our outstanding warrants since the Closing of the Merger. The
Company did not have any outstanding warrants during the three month and nine
month periods ending September 30, 2021.

Transaction costs

The Company did not recognize any transaction costs during the three months
ended September 30, 2022. The Company recognized transaction costs of $20.6
million related to the consummation of the Merger during the nine months ended
September 30, 2022. The Company did not recognize any transaction costs during
2021.

Other income (expense), net

Other income (expense), net improved by $1.4 million to other income, net of
$0.9 million for the three months ended September 30, 2022 compared to other
expense, net of $0.5 million for the three months ended September 30, 2021. The
improvement resulted primarily from an increase in interest income and positive
fluctuations in foreign currency transaction gain and losses.

Other income (expense), net improved by $3.1 million to other income, net of
$1.2 million for the nine months ended September 30, 2022 compared to other
expense, net of $1.9 million for the nine months ended September 30, 2021. The
improvement resulted primarily from an increase in interest income and positive
fluctuations in foreign currency transaction gain and losses.

Cash and capital resources

Since our inception, we have financed our operations primarily through the issuance and sale of shares and the proceeds of the merger and the PIPE.

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Fusion and PIPE

energy vault finalized the Merger and the PIPE on February 11, 2022pursuant to which we received the net proceeds of $191.0 million.

Short term liquidity

As of September 30, 2022, we had $274.7 million of cash, cash equivalents, and
restricted cash, representing an increase of $169.6 million from cash, cash
equivalents, and restricted cash of $105.1 million at December 31, 2021. As of
September 30, 2022, the Company had $25.1 million in restricted cash.
Substantially all of the restricted cash balance was held by banks as collateral
for the Company's letters of credit. The Company did not have any restricted
cash of December 31, 2021.

Management believes that its cash, cash equivalents, and restricted cash on hand
as of September 30, 2022 will be sufficient to fund our operating activities for
at least the next twelve months without regard to any cash proceeds we received
or may in the future receive upon the exercise for cash of our warrants. The
exercise price for any of our private warrants is $11.50 per warrant, subject to
certain specified adjustments. To the extent that the price of our common stock
exceeds $11.50 per share, it is more likely that our private warrant holders
will exercise their warrants. To the extent that the price of our common stock
declines, including a decline below $11.50 per share, it is less likely that our
private warrant holders will exercise their warrants.

Moreover, should energy vault enter into definitive collaboration and/or joint venture agreements or engage in business combinations in the future, we may need to seek additional financing.

Energy Vault has incurred negative operating cash flows and operating losses in
the past. We may continue to incur operating losses for the next several years
due to its on-going research and development activities. The Company may seek
additional capital through equity and/or debt financings depending on market
conditions. If we are required to raise additional funds by issuing equity
securities, dilution to stockholders would result. Any equity securities issued
may also provide for rights, preferences or privileges senior to those of
holders of our common stock. If we raise funds by issuing debt securities, these
debt securities would have rights, preferences and privileges senior to those of
holders of common stock. The terms of debt securities or borrowings could impose
significant restrictions on our operations. The credit market and financial
services industry have in the past, and may in the future, experience periods of
uncertainty that could impact the availability and cost of equity and debt
financing.

Contractual obligations

Our main commitments to September 30, 2022 consisted primarily of obligations under operating leases, finance leases, deferred pensions, a repayable contribution to Atlas and purchase orders issued.

The Company committed to make a $25.0 million refundable contribution to Atlas
during the period in which it constructs its first GESS, and will be refunded to
the Company upon Atlas' first GESS reaching substantial completion and meeting
certain performance metrics. As of September 30, 2022, the Company has remitted
to Atlas $22.5 million of the $25.0 million. Our non-cancellable purchase
obligations as of September 30, 2022 totaled approximately $23.9 million.

Cash flow

The following table summarizes cash flows from operating, investing and financing activities for the periods indicated (amounts in thousands):

                                                   Nine Months Ended 

September 30,

                                                         2022               

2021

Net cash used in operating activities       $        (47,795)                  $ (14,075)
Net cash used in investing activities                 (2,679)               

(76)

Net cash provided by financing activities            220,207                

119,668

Effects of exchange rate changes on cash                (123)                        723
Net increase in cash                        $        169,610                   $ 106,240


Operating Activities

During the nine months ended September 30, 2022 and 2021, cash used in operating
activities totaled $47.8 million and $14.1 million, respectively. During the
nine months ended September 30, 2022, cash used in operating activities was
negatively impacted by a net loss of $55.0 million and an increase in operating
assets of $55.2 million. The change in operating assets was primarily due to a
$24.7 million increase in contract assets, a $22.8 million increase in accounts
receivable, and a $7.7 million increase in prepaid expenses and other current
assets. Operating cash flows were positively

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impacted by non-cash charges of $35.5 million and a $27.0 million increase in
operating liabilities. The non-cash charges primarily consisted of $26.8 million
in stock-based compensation expense, $7.6 million in depreciation and
amortization expense, and $2.8 million in asset impairments. The increase in
operating liabilities primarily consisted of a $27.5 million increase in
contract liabilities.

During the nine months ended September 30, 2021, cash used in operating
activities of $14.1 million was negatively impacted by a net loss of $18.6
million and a $1.3 million decrease in operating liabilities. The decrease in
operating liabilities resulted from a decrease in accounts payable and accrued
expenses. Operating cash flows were positively impacted by non-cash charges of
$5.1 million and a $0.7 million increase in operating assets. Non-cash charges
primarily consisted of $3.2 million related to the write-down of inventory, $1.0
million in depreciation and amortization expense, $0.3 million in non-cash lease
expenses, and $0.5 million in stock-based compensation expense.

Investing activities

During the nine months ended September 30, 2022 and 2021, cash used in investing
activities totaled $2.7 million and $76 thousand, respectively. Cash used in
investing activities for the nine months ended September 30, 2022 consisted of
$2.0 million for the purchase of a convertible note and $0.7 million for the
purchase of property and equipment.

Cash flows used in investing activities for the nine months ended September 30, 2021
consisted of purchases of property, plant and equipment.

Fundraising activities

During the nine months ended September 30, 2022 and 2021, cash provided by
financing activities totaled $220.2 million and $119.7 million, respectively.
For the nine months ended September 30, 2022, cash provided by financing
activities was primarily attributable to $235.9 million in proceeds from the
reverse recapitalization and PIPE financing, net, and $7.9 million in proceeds
from the exercise of warrants. Partially offsetting these cash inflows was $20.7
million in transaction cost payments related to the reverse recapitalization and
$3.0 million in tax payments related to the net settlement of equity awards.

During the nine months ended September 30, 2021, cash provided by financing
activities was primarily attributable to $105.5 million in net proceeds from the
issuance of Series C preferred stock and $15.3 million in net proceeds from the
issuance of Series B-1 preferred stock. Partially offsetting these cash inflows
was $0.8 million in debt repayments and $0.5 million in payments related to
Merger transaction costs.

Non-GAAP Financial Measure

We use adjusted EBITDA to complement our condensed consolidated statements of
operations. Management believes that this non-GAAP financial measure complements
our GAAP net loss and such measure is useful to investors. The presentation of
this non-GAAP measure is not meant to be considered in isolation or as an
alternative to net loss as an indicator of our performance.

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The following table provides a reconciliation of non-GAAP adjusted EBITDA to GAAP net loss, the most directly comparable GAAP measure (amounts in thousands):

                                          Three Months Ended September 30,  

Nine month period ended September 30,

                                              2022                2021               2022                2021
Net loss (GAAP)                           $  (28,765)         $  (6,163)         $  (55,022)         $ (18,589)
Non-GAAP Adjustments:
Interest income, net                          (1,024)               (21)             (1,355)               (36)
Income tax expense                               185                  -                 358                  -
Depreciation and amortization                  5,158                529               7,562                976
Stock-based compensation expense              10,894                202              26,757                452
Change in fair value of warrant liability     (6,706)                 -              (2,061)                 -
Transaction costs                                  -                  -              20,586                  -
Asset impairment                               2,828                (11)              2,828              2,733
Foreign exchange (gains) and losses              219                550                 163              1,889
Adjusted EBITDA (non-GAAP)                $  (17,211)         $  (4,914)    

($184) ($12,575)


We present adjusted EBITDA, which is net loss excluding adjustments that are
outlined in the quantitative reconciliation provided above, as a supplemental
measure of our performance and because we believe this measure is frequently
used by securities analysts, investors, and other interested parties in the
evaluation of companies in our industry. The items excluded from adjusted EBITDA
are excluded in order to better reflect our continuing operations.

In evaluating adjusted EBITDA, one should be aware that in the future we may
incur expenses similar to the adjustments noted above. Our presentation of
adjusted EBITDA should not be construed as an inference that our future results
will be unaffected by these types of adjustments. Adjusted EBITDA is not a
measurement of our financial performance under GAAP and should not be considered
as an alternative to net loss, operating loss, or any other performance measures
derived in accordance with GAAP or as an alternative to cash flow from operating
activities as a measure of our liquidity.

Our adjusted EBITDA measure has limitations as an analytical tool, and should
not be considered in isolation or as a substitute for analysis of our results as
reported under GAAP. Some of these limitations are:

•it does not reflect our cash expenditures, our future capital expenditure needs or our contractual commitments;

•it does not reflect changes or cash requirements for our working capital requirements;

•it does not take stock-based compensation into account, which is a permanent expense;

•although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future, and our
adjusted EBITDA measure does not reflect any cash requirements for such
replacements;

•it is not adjusted for all non-cash income or expense items that are reflected in our condensed consolidated statements of cash flows;

•it does not reflect the impact of income or expense resulting from matters that we believe are not indicative of our ongoing operations;

•it does not reflect the limitations or costs associated with the transfer of profits from our subsidiaries to us; and

•Other companies in our industry may calculate this measure differently from us, which limits its usefulness as a comparative measure.

Because of these limitations, adjusted EBITDA should not be considered as a
measure of discretionary cash available to us to invest in the growth of our
business or as a measure of cash that will be available to use to meet our
obligations. You should compensate for these limitations by relying primarily on
our GAAP results and using adjusted EBITDA only supplementally.

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Off-balance sheet commitments and arrangements

The Company has not entered into any off-balance sheet arrangements, as defined in the rules and regulations of the SECOND of the September 30, 2022.

Significant Accounting Policies and Use of Estimates

Our consolidated financial statements are prepared in conformity with Generally
Accepted Accounting Principles in the United States ("GAAP"). In preparing our
financial statements, we make assumptions, judgments, and estimates based on
historical experience and various other factors that we believe to be reasonable
under the circumstances. Actual results could differ materially from these
estimates under different assumptions and conditions.

We believe that the following accounting policies involve a high degree of
judgment and complexity. Accordingly, these are the policies we believe are the
most critical to aid in fully understanding and evaluating our consolidated
financial condition and results of operations. Other than the policies described
in Note 2 - Summary of Significant Accounting Policies in the Company's
unaudited interim condensed consolidated financial statements included elsewhere
in this Quarterly Report, there have been no material changes to our critical
accounting policies and estimates as compared to those disclosed in the notes to
our audited consolidated financial statements as of and for the years ended
December 31, 2021 and 2020 included in Amendment No. 1.

Revenue

Effective January 1, 2022, Energy Vault's revenue recognition policy is a
critical policy due to the adoption of the guidance from ASC 606, Revenue from
Contracts with Customers. We determine the amount of revenue to be recognized
through the application of the following steps:

(1) Identification of the contract(s) with a customer.

(2) Identification of performance obligations in the contract.

(3)Determination of the transaction price.

(4) Allocation of the transaction price to the performance obligations of the contract.

(5) Recognition of revenue when a performance obligation is satisfied.

The Company identifies performance obligations in our contracts with customers.
The transaction price is determined based on the amount which the Company
expects to be entitled to in exchange for providing the promised goods and
services to the customer. The transaction price in the contract is allocated to
each distinct performance obligation on a relative standalone selling price
basis. Revenue is recognized when performance obligations are satisfied. When a
part or all of a transaction price is considered to be variable, an estimate of
the constrained transaction price is recognized. Changes in variable
consideration may result in an increase or a decrease to revenue.

Building Energy Storage Projects: The Company enters into contracts with utility
companies and independent power producers to build energy storage projects. The
Company has entered into battery-based energy storage projects and intends to
enter into gravity-based energy storage projects in the future. Each storage
project is customized depending on the customer's energy needs. Customer
payments are due upon meeting certain milestones that are consistent with
contract-specific phases of a project. The Company determines the transaction
price based on the consideration expected to be received, which includes
estimates of liquidated damages or other variable consideration. Generally, each
contract to design and construct an energy storage project contains one
performance obligation. Multiple contracts entered into with the same customer
and near the same time to construct energy storage projects are combined in
accordance with ASC 606. In these situations, the contract prices are aggregated
and then allocated to each energy storage project based upon their relative
stand-alone selling price.

The Company recognizes revenue over time as a result of the continuous transfer
of control of its products to the customer. The continuous transfer of control
to the customer is supported by clauses in the contracts that provide
enforceable rights to payment of the transaction price associated with work
performed to date for products that do not have an alternative use to the
Company and/or the project is built on the customer's land that is under the
customer's control.

Revenue for these performance obligations is recognized using the percentage of
completion method based on cost incurred as a percentage of total estimated
contract costs. Contract costs include all direct materials and labor costs
related to contract performance. Pre-contract costs with no future benefit are
expensed in the period in which they are incurred. Since the revenue recognition
of these contracts depends on estimates, which are assessed continually during
the term of the contract, recognized revenues and profit are subject to
revisions as the contract progresses to completion. The cumulative effects of
revisions of estimated total contract costs and revenues, together with any
contract reserves which may be

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deemed appropriate, are recorded in the period in which the facts and changes in
circumstances become known. Due to uncertainties inherent in the estimation
process, it is reasonably possible that these estimates will be revised in a
different period. When a loss is forecasted for a contract, the full amount of
the anticipated loss is recognized in the period in which it is determined that
a loss will incur.

The Company's contracts generally provide customers the right to liquidated
damages ("LDs") against Energy Vault in the event specified milestones are not
met on time, or certain performance metrics are not met upon or after the
substantial completion date. LDs are accounted for as variable consideration,
and the contract price is reduced by the expected penalty or LD amount when
recognizing revenue. Variable consideration is included in the transaction price
only to the extent that it is improbable that a significant reversal in the
amount of cumulative revenue recognized will occur when the uncertainty is
resolved. Estimating variable consideration requires certain estimates and
assumptions, including whether and by how much a project will be delayed. The
existence and measurement of liquidated damages may also be impacted by the
Company's judgment about the probability of favorable outcomes of customer
disputes involving whether certain events qualify as force majeure or the reason
for the events that caused project delays. Variable consideration for LDs is
estimated using the expected value of the consideration to be received. If
Energy Vault has a claim against the customer for an amount not specified in the
contract, such claim is recognized as an increase to the contract price when it
is legally enforceable, which is usually upon signing a respective change order
or equivalent document confirming the claim acceptance by the customer.

Intellectual Property Licensing: The Company enters into licensing agreements of
its intellectual property that are within the scope of ASC 606. The terms of
such licensing agreements include the license of functional intellectual
property, given the functionality of the intellectual property is not expected
to change substantially as a result of the licensor's ongoing activities. The
transaction price allocated to the licensing of intellectual property is
recognized as revenue at a point in time when the licensed intellectual property
is made available for the customer's use and benefit.

Stock-based compensation

Accounting for stock-based compensation requires us to make a number of judgments, estimates and assumptions. If any of the estimates turn out to be inaccurate, Energy Vaults net loss and results of operations could be adversely affected.

The Company's stock-based compensation arrangements are accounted for in
accordance with ASC Topic 718, "Share Based Payments." Compensation expense is
recognized over the requisite service period (usually the vesting period) on a
straight-line basis and adjusted for actual forfeitures of unvested awards as
they occur.

Equity awards that vest solely based on a service condition are valued based on the estimated fair value of the awards at the grant date using the Black-Scholes option pricing model, which has been influenced by the following assumptions:

•Expected Term - The expected term represents the period that Energy Vault's
awards granted are expected to be outstanding and is determined based upon the
simplified method, as we do not have sufficient historical information to
develop reasonable expectations about future exercise patterns and post-vesting
employment termination behavior.

•Expected Volatility - Since we were privately held and did not have any trading
history for our common stock prior to the Merger, the expected volatility was
estimated based on the average volatility for comparable publicly traded
companies over a period equal to the expected term of the stock award grants.

• Risk-free interest rate – We use the WE Treasury return for our risk-free interest rate which corresponds to the expected duration.

• Expected dividend – energy vault has never paid dividends on its common stock and does not plan to do so in the foreseeable future. Therefore, an expected dividend yield of zero was used.

The grant date fair value of our common stock is determined using valuation
methodologies which utilize certain assumptions, including probability weighting
of events, volatility, time to liquidation, a risk-free interest rate, and an
assumption for a discount for lack of marketability (Level 3 inputs). The fair
value of the Company's common stock was estimated because the common stock of
Legacy Energy Vault had not yet been publicly traded prior to the Merger.

Defined benefit pension obligation

Energy Vault's wholly owned subsidiary in Switzerland has a defined benefit
pension obligation covering retirement and other long-term benefits for the
local employees. The plan is a statutory requirement in accordance with local
regulations which is accounted for and disclosed in accordance with the
provisions of GAAP relating to the accounting for pension plans. These GAAP
provisions require the use of assumptions, such as the discount rate for
liabilities and long-term rate of return on assets, in determining the projected
benefit obligation, fair value of plan assets and an underfunded net benefit
obligation.

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Mandate Liability

Energy Vault's financial statements reflect the impact of the publicly-traded
warrants ("Public Warrants") and private warrants ("Private Warrants") that were
assumed upon the closing of the Merger. The Company accounts for warrants for
shares of the Company's common stock that are not indexed to its own stock as
liabilities at fair value on the balance sheet. The warrants are subject to
remeasurement at each balance sheet date and any change in fair value is
recognized in the Company's statement of operations. With the completion of the
redemption of Energy Vault's public warrants on August 1, 2022, Energy Vault
currently expects to incur incremental income (expense) in its condensed
consolidated statements of operations for the fair value change for outstanding
warrant liabilities at the end of each reporting period only in respect of its
private warrants.

Accounting Election for Emerging Growth Companies

We are an "emerging growth company" as defined in Section 2(a) of the Securities
Act of 1933, as amended, and have irrevocably elected to take advantage of the
benefits of this extended transition period for new or revised standard. We are
expected to remain an emerging growth company through the end of 2022 and expect
to continue to take advantage of the benefits of the extended transition period.
This may make it difficult or impossible to compare our financial results with
the financial results of another public company that is either not an emerging
growth company or is an emerging growth company that has chosen not to take
advantage of the extended transition period exemptions for emerging growth
companies because of the potential differences in accounting standards used.

Recently Adopted and Issued Accounting Pronouncements

Recently issued and adopted/unadopted accounting pronouncements are described in
Note 2 of the unaudited condensed consolidated financial statements included
elsewhere in this Quarterly Report.

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