SEC Filing Document

Company: ERock, Inc.
Ticker: 
CIK: 2110029
Filing Type: DRS/A
Document Type: DRS/A
Date Filed: 2026-04-24
Accession Number: 0001193125-26-177695
Exchange: 
SIC Code: 3620
SIC Description: Electrical Industrial Apparatus
URL: https://www.sec.gov/Archives/edgar/data/2110029/000119312526177695/filename1.htm

Chunk 15 of 107
Word Count: 1465
Character Count: 10244

Document Content:

operations. Because reimbursable variable revenues and costs are recorded on a gross basis under U.S. GAAP and, by design, offset one another with no material contribution to profit, their inclusion in GAAP revenues and cost of revenues can cause reported gross margin percentages to fluctuate significantly depending on the frequency of underlying activities which can be driven by unpredictable changes in market conditions. By excluding these revenues, Adjusted Gross Margin reflects the margin we earn on the goods and services where we bear economic risk, exercise pricing judgment, and generate value for our customers. We use Adjusted Gross Profit and Adjusted Gross Margin internally to evaluate segment-level performance, assess pricing and cost trends, and benchmark our profitability against peers whose revenue recognition practices Table of Contents may differ with respect to reimbursable items. We believe this perspective enhances investors’ understanding of the operating leverage and margin trajectory of our business.

Adjusted Gross Profit and Adjusted Gross Margin have limitations as analytical tools. They are not substitutes for GAAP gross
profit or GAAP gross margin, and our calculations may not be comparable to similarly titled measures reported by other companies because other entities may not define or calculate these measures in the same manner. In addition, while reimbursable
variable costs are excluded because they have immaterial net margin impact, they do represent real cash flows and contractual obligations that affect our working capital and liquidity. Accordingly, these non-GAAP measures should be considered
alongside, and not as alternatives to, the GAAP financial measures included in our consolidated financial statements.

For the Year Ended

Total Revenues $	183,145 $	128,490

Total Cost of Revenues 145,151 111,280

Less: Depreciation and amortization expense 3,993 1,859

Total Gross Profit $	34,001 $	15,351

Less: Reimbursable variable revenue (16,336	) (13,903	)

Add: Reimbursable variable cost 16,156 14,042

Adjusted Gross Profit $	33,821 $	15,490

Gross margin 18.6	% 11.9	%

Adjusted Gross Margin 20.3	% 13.5	%

Operational Measures

Contracted Power System Sales Backlog

Contracted Power System Sales Backlog represents the actual contracted value for purchases of power systems and ESI services,
whether invoiced or not, to be invoiced and recognized as revenue as a result of performing our obligations over the term of the contract, assuming no exceptions or contingencies are exercised.

We believe contracted power system sales backlog is an important operating metric because it provides visibility into future
revenue from power system sales, reflects underlying demand for our power systems, and helps us plan production, procurement, and workforce requirements.

As of December 31,

Contracted Power System Sales Backlog $	1,183,072 $	227,656

Annualized Recurring Service Revenue

Annualized Recurring Service Revenue represents the annualized value of recurring revenue under contracted operations and
maintenance service and asset management agreements as of the measurement date, including both fixed contractual payments and variable payments based on typical utilization of such services.

Table of Contents

We believe annualized recurring service revenue is an important operating
metric because it reflects a stable base of recurring revenue which is less dependent on new power system sales and more indicative of ongoing services.

As of December 31,

(in thousands)

Annualized Recurring Service Revenue $	22,370 $	19,636

Installed Base

Installed Base represents the total installed megawatt capacity of our power systems that have been deployed and are currently
operational.

We believe installed base is an important operating metric because it reflects the scale of our equipment
footprint in the field and is broadly representative of our assets under ongoing services contracts. Most of our deployments include the comprehensive design, delivery, installation and long-term services provided by the ERock Platform.

A larger installed base expands our potential to generate ongoing service revenue through maintenance agreements, parts sales,
monitoring services, and equipment upgrades or replacements. It also provides insight into customer adoption of our products and the long-term demand for our service offerings.

As of December 31,

Installed Base in megawatts 1,020 931

Table of Contents

RISK FACTORS

Investing in our Class A common stock involves risks. The risks described below are not the only ones that we face.
Additional risks not presently known to us or that we currently deem immaterial individually or in the aggregate may also impair our business operations. We urge you to carefully consider the information in this prospectus, including the matters
addressed under “Cautionary Statement Regarding Forward-Looking Statements” and the following risks before making an investment decision. If any of these risks were to materialize, our business, financial condition, results of operations
and future prospects could be materially adversely affected. The trading price of our Class A common stock could consequently decline due to any of these risks, and you may lose all or part of your investment. For a summary of these risks, see
“Prospectus Summary—Summary of Our Risk Factors.”

Risks Related to Our Business, Industry and Sales

Our business depends on demand for distributed energy generation in the United States, which is an emerging and rapidly evolving market.
The development of this market, and demand for our power system solutions from data center, utility, C&I, healthcare and retail end markets, is uncertain and may not proceed as we expect. If distributed energy generation or our power system
solutions do not achieve widespread acceptance or demand is lower than anticipated, our business, prospects, financial condition and results of operations could be materially and adversely affected.

Distributed energy generation is still an emerging market, and it is uncertain whether potential customers will embrace
distributed generation in general or our power systems in particular. Enterprises may be unwilling to adopt our power systems over traditional or competing power sources such as distributed solar or grid-supplied electricity due to perceptions that
our company is unproven, lack of confidence in our business model, limited awareness of our power system solutions or concerns regarding regulatory or political challenges associated with technologies that use natural gas fuel or produce carbon
emissions.

Our business depends on demand for distributed power system solutions from data center, utility, C&I,
healthcare and retail end markets in the United States, and demand in these end markets depends on demand for electricity generated by distributed power systems and on the level of customer capital spending to design, construct and operate those
systems. Such demand and associated capital spend has primarily been driven by increases in demand for reliable power that has outpaced grid-sourced power supply, including due to the transition towards the electrification of transportation and
buildings, reshoring of manufacturing and the rapid adoption of artificial intelligence technologies and data center growth. However, customer investment decisions and the overall viability and demand for our power system solutions may be impacted
by many factors outside of our control, including changes in actual or projected power demand; changes in electricity price expectations; technological or operational shifts in energy usage, including artificial intelligence-driven load growth that
may not materialize as expected; changes in consumer consumption behaviors; changes in data-center siting trends, energy-efficiency measures and decarbonization initiatives; interconnection constraints, permitting timelines or the availability of
utility-scale or grid-connected alternatives, including as a result of accelerated grid interconnection, transmission expansion or other grid infrastructure upgrades, that increase grid-sourced power availability that may reduce the relative
attractiveness of distributed power systems and lead customers to redirect or defer capital spending; overall market acceptance of our power system solutions (including anti-natural-gas sentiment or misalignment with renewable and zero-carbon
procurement goals); the cost competitiveness, reliability and performance of our power systems relative to traditional or competing power sources; the availability and amount of government subsidies and incentives; the emergence, continuance or
success of, or increased government support for, other alternative energy or hydrogen-based technologies; prices and availability of traditional or competing power solutions; changes in laws, regulations or policies (including tariffs, taxes or
reshoring incentives); changes in internal budget priorities; geopolitical and macroeconomic instability, including wars, terrorism, political unrest, public health emergencies, inflation, recessionary conditions, boycotts, trade restrictions and
other business disruptions; and availability and cost of capital,

Table of Contents

including increases in interest rates or tightening in global capital markets (such as reduced tax-equity availability). Any of these factors may adversely impact demand for our power systems and
services or cause customers to reduce, delay or cancel planned projects requiring our power systems or alter or terminate our services. In addition, actual or anticipated reductions in demand in our core markets for reliable power, or increases in
grid-sourced power supply, could adversely impact demand for distributed power solutions and therefore demand for our power systems and services, which could result in lower capital expenditures, project modifications, delays or cancellations,
general business disruptions, and delays in payment of, or nonpayment of, amounts that are owed to us. Any such reductions in demand or effects could have a material adverse effect on our business, prospects, financial condition and results of
operations.