Solid Power, Inc 10-Q for FY2022 Q1
Solid Power, Inc. (SLDP)
About this 10-Q
Solid Power, Inc filed this 10-Q on May 11, 2022, covering the quarter ended March 31, 2022 (FY2022 Q1).
Headline figures
Quarter ended March 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.2M
- up 357.5% from $480K a year earlier
- Net loss
- $10.34M
- compared with a net loss of $7.14M a year earlier
- Diluted EPS
- -$0.06
- compared with -$0.10 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to _______
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(Exact name of registrant as specified in its charter)
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incorporation or organization) | Identification No.) | |
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | | Accelerated filer ☐ | | | Smaller reporting company | |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
SOLID POWER, INC.
FORM 10-Q
Table of Contents
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 | |
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Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) of Solid Power, Inc. (f/k/a Decarbonization Plus Acquisition Corporation III, “Solid Power,” the “Company,” “we,” “us,” or “our”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this Report, regarding our future financial performance and our strategy, expansion plans, market opportunity, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “will,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “project” or the negative of such terms or other similar expressions. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Report. We caution you that the forward-looking statements contained herein are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control.
In addition, we caution you that the forward-looking statements regarding the Company contained in this Report are subject to the following factors:
| ● | risks relating to the uncertainty of the success of our research and development efforts, including our ability to achieve the technological objectives or results that our partners require, and to commercialize our technology in advance of competing technologies; |
| ● | risks relating to the non-exclusive nature of our original equipment manufacturers and joint development agreement relationships; |
| ● | our ability to negotiate and execute supply agreements with our partners on commercially reasonable terms; |
| ● | our ability to protect our intellectual property, including in jurisdictions outside of the United States; |
| ● | broad market adoption of electric vehicles and other technologies where we are able to deploy our all-solid-state batteries, if developed successfully; |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees, including technicians and engineers, or directors; |
| ● | changes in applicable laws or regulations; |
| ● | risks related to technology systems and security breaches; |
| ● | the possibility that COVID-19 or a future pandemic may adversely affect our results of operations, financial position and cash flows; |
| ● | the possibility that we may be adversely affected by other economic, business or competitive factors, including supply chain interruptions, and may not be able to manage other risks and uncertainties; |
| ● | risks relating to our status as an early stage company with a history of financial losses, and an expectation to incur significant expenses and continuing losses for the foreseeable future; |
1
| ● | rollout of our business plan and the timing of expected business milestones; |
| ● | the termination or reduction of government clean energy and electric vehicle incentives; |
| ● | delays in the construction and operation of production facilities; |
| ● | changes in domestic and foreign business, market, financial, political and legal conditions; and |
| ● | those factors discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. |
We caution you that the foregoing list does not contain all of the risks or uncertainties that could affect the Company.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, operating results, financial condition and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Report to reflect events or circumstances after the date of this Report or to reflect new information or the occurrence of unanticipated events, except as required by law. You should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
TRADEMARKS
Our logo and trademark appearing in this Report and the documents incorporated by reference herein are our property. This document and the documents incorporated by reference herein contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Report may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of it by, any other companies.
MARKET AND INDUSTRY DATA
We obtained the industry and market data used throughout this Report or any documents incorporated herein by reference from our own internal estimates and research, as well as from independent market research, industry and general publications and surveys, governmental agencies, publicly available information and research, and surveys and studies conducted by third parties. Internal estimates are derived from publicly available information released by industry analysts and third-party sources, our internal research and our industry experience, and are based on assumptions made by us based on such data and our knowledge of our industry and market, which we believe to be reasonable. In some cases, we do not expressly refer to the sources from which this data is derived. In addition, while we believe the industry and market data included in this Report or any documents incorporated herein by reference is reliable and based on reasonable assumptions, such data involve material risks and other uncertainties and is subject to
2
change based on various factors, including those discussed in the section entitled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties or by us.
INFORMATION ABOUT SOLID POWER
We use our website (www.solidpowerbattery.com) and various social media channels as a means of disclosing information about Solid Power and our products to our customers, investors and the public (e.g., @SolidPowerInc on Twitter, Solid Power Inc. on LinkedIn, and Solid Power on YouTube). The information posted on our website and social media channels is not incorporated by reference in this Report or in any other report or document we file with the United States Securities and Exchange Commission (“SEC”). The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings, and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about Solid Power when you enroll your e-mail address by visiting the “Investor Email Alerts” section of our website at www.ir.solidpowerbattery.com.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Solid Power, Inc. Financial Statements
Condensed Consolidated Balance Sheets
(in thousands, except par value, and per share amounts)
| | March 31, 2022 | | December 31, | ||
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| (Unaudited) |
| 2021 | ||
Assets | ||||||
Current Assets |
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Cash and cash equivalents | | $ | | | $ | |
Marketable securities | | | | | | |
Contract receivables | |
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Prepaid expenses and other current assets | |
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Total current assets | |
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Property, Plant and Equipment, net | |
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Right-Of-Use Operating Lease Asset, net | | | | | | — |
Right-Of-Use Financing Lease Asset, net | | | | | | — |
Other Assets | | | | | | |
Long-term Investments | | | | | | — |
Intangible Assets , net | |
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Total assets | | $ | | | $ | |
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Liabilities and Stockholders' Equity | ||||||
Current Liabilities | |
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Accounts payable | | $ | | | $ | |
Current portion of long-term debt | |
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Deferred revenue | |
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Accrued and other current liabilities: | |
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Accrued compensation | |
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Other accrued liabilities | |
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Operating lease liabilities, short-term | | | | | | — |
Financing lease liabilities, short-term | | | | | | — |
Total current liabilities | |
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Long-term Debt | |
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Operating Lease Liabilities, Long-Term | |
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| — |
Financing Lease Liabilities, Long-Term | |
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| — |
Warrant Liabilities | | | | | | |
Other Long-term Liabilities | |
| — | |
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Deferred Taxes | |
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Total liabilities | | | | | | |
Stockholders' Equity | |
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Common stock, $ | |
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Additional paid in capital | | | | | | |
Accumulated other comprehensive loss | | | ( | | | — |
Accumulated deficit | |
| ( | |
| ( |
Total stockholders' equity | |
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Total liabilities and stockholders' equity | | $ | | | $ | |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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Solid Power, Inc. Financial Statements
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(in thousands, except par value, and per share amounts)
| | Three Months Ended March 31, | | ||||
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| 2022 |
| 2021 |
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Revenue | | $ | | | $ | | |
Operating Expenses |
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Direct costs | | | | | | | |
Research and development |
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Marketing and sales |
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General and administrative |
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Total operating expenses |
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Operating Loss |
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Non-operating Income (Expense) |
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Interest income |
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Interest expense |
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Other income |
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| | — |
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Change in fair value of warrant liabilities | | | | | | — | |
Loss from change in fair value of embedded derivative liability | | | — | | | ( | |
Total Non-operating Income (Loss) |
| | |
| | ( |
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Pretax Loss |
| | ( |
| | ( |
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Income tax benefit |
| | ( |
| | ( |
|
Net Loss | | $ | ( | | $ | ( | |
Other comprehensive loss | | | ( | | | — | |
Comprehensive loss attributable to common stockholders | | $ | ( | | $ | ( | |
Net loss per share – Basic and Diluted | | | ( | | | ( | |
Weighted average shares outstanding – Basic and Diluted | | | | | | | |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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Solid Power, Inc. Financial Statements
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
(in thousands, except par value, and per share amounts)
| | Common Stock |
| | | | | |
| Accumulated Other | | Total Stockholders' | |||||
|
| Shares |
| Amount |
| Additional Paid in Capital |
| Accumulated Deficit |
| Comprehensive Loss |
| Equity | |||||
Balance as of December 31, 2020 | | | | $ | | | $ | | | $ | ( | | $ | — | | $ | |
Net Loss | | — | |
| — | |
| — | |
| ( | | | — | |
| ( |
Beneficial conversion feature on convertible debt | | — | |
| — | |
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| — | | | — | |
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Stock options exercised | | | |
| — | |
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| — | | | — | |
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Stock-based compensation expense | | — | |
| — | |
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| — | | | — | |
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Balance as of March 31, 2021 | | | | $ | | | $ | | | $ | ( | | $ | — | | $ | |
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Balance as of December 31, 2021 | | | | $ | | | $ | | | $ | ( | | $ | — | | $ | |
Net Loss | | — | |
| — | |
| — | |
| ( | | | — | |
| ( |
Transaction fees | | | | | — | | | ( | | | | | | | | | ( |
Stock options exercised | | | |
| — | |
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| — | | | — | |
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Stock-based compensation expense | | — | | | — | | | | | | — | | | — | | | |
Unrealized loss on marketable securities | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance as of March 31, 2022 | | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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Solid Power, Inc. Financial Statements
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands, except par value, and per share amounts)
| | Three Months Ended March 31, | ||||
|
| 2022 |
| 2021 | ||
Cash Flows from Operating Activities |
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Net loss | | $ | ( | | $ | ( |
Adjustments to reconcile net loss to net cash and cash equivalents from operating activities: | |
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Depreciation and amortization | |
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Amortization of right-of-use assets | | | | | | — |
Loss on sale of property, plant and equipment | |
| — | |
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Stock compensation expense | |
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Deferred taxes | |
| ( | |
| ( |
Warrant liabilities | | | ( | | | — |
Accrued interest on convertible notes payable to be paid in kind | |
| — | |
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Loss from change in fair value of embedded derivative liability | |
| — | |
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Changes in operating assets and liabilities that provided (used) cash and cash equivalents: | |
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Contract receivables | |
| ( | |
| ( |
Prepaid expenses and Other Assets | |
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| ( |
Accounts payable | |
| ( | |
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Deferred revenue | |
| ( | |
| ( |
Accrued and other liabilities | |
| ( | |
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Operating lease liability | | | | | | ( |
Net cash and cash equivalents used in operating activities | |
| ( | |
| ( |
Cash Flows from Investing Activities | |
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Purchases of property, plant and equipment | |
| ( | |
| ( |
Purchase of marketable securities and long-term investments | | | ( | | | — |
Proceeds from sales of marketable securities | | | | | | — |
Purchases of intangible assets | |
| ( | |
| ( |
Net cash and cash equivalents used in investing activities | |
| ( | |
| ( |
| | | | | | |
Cash Flows from Financing Activities | |
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Proceeds from debt | |
| — | |
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Payments of debt | |
| ( | |
| ( |
Proceeds from issuance of convertible note payable | |
| — | |
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Proceeds from exercise of common stock options | |
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| |
Payments on finance lease liability | | | ( | | | — |
Transaction costs | | | ( | | | — |
Net cash and cash equivalents provided by financing activities | | | | | | |
| | | | | | |
Net (Decrease) Increase in Cash and Cash Equivalents | | | ( | | | |
Cash and cash equivalents at beginning of period | | | | | | |
Cash and cash equivalents at end of period | | | | | | |
| | | | | | |
Supplemental information | | | | | | |
Cash paid for interest | | $ | | | $ | |
Accrued Capital Expenditures | | $ | | | $ | |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
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Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 – Nature of Business
Solid Power, Inc. (the “Company”), headquartered in Louisville, Colorado, is developing all-solid-state battery cell technology primarily for the electric vehicle market. The Company's planned business model is to license its all-solid-state battery cell designs and manufacturing know-how to top tier battery manufacturers or automotive original equipment manufacturers and to sell its sulfide-based solid electrolyte for incorporation into all-solid-state battery cells. As of March 31, 2022, Company has not derived material revenue from its principal business activities.
On December 8, 2021 (the “Closing Date”), the Company (f/k/a Decarbonization Plus Acquisition Corporation III (“DCRC”)) consummated its previously announced business combination pursuant to the Business Combination Agreement and Plan of Reorganization, dated June 15, 2021 (as amended, the “Business Combination Agreement”), among the Company, DCRC Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of DCRC (“Merger Sub”), and Solid Power Operating, Inc., a Colorado corporation (f/k/a Solid Power, Inc., “Legacy Solid Power”). Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into Legacy Solid Power, with Legacy Solid Power surviving the merger as a wholly owned subsidiary of the Company (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”).
Pursuant to the Business Combination Agreement, the Merger was accounted for as a reverse recapitalization in accordance with GAAP (the "Reverse Recapitalization"). Under this method of accounting, DCRC was treated as the "acquired" company and Legacy Solid Power is treated as the acquirer for financial reporting purposes. See Note 3
Note 2 – Significant Accounting Policies
The significant accounting policies followed by the Company are set forth in Note 2 – Significant Accounting Policies to the Company’s financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) and are supplemented by the Notes to the condensed consolidated financial statements (Unaudited) (the “Notes”) included in this Quarterly Report on Form 10-Q for the period ended March 31, 2022 (this “Report”). The financial statements included in this Report (including the Notes) should be read in conjunction with the 2021 Form 10-K.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the basis of generally accepted accounting principles in the United States (“GAAP”). The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the unaudited condensed consolidated financial statements. Actual results could differ from those estimates. All amounts presented in the notes are in thousands, except share and per share amounts.
The accompanying unaudited condensed consolidated financial statements include accounts of the Company and its wholly owned subsidiary, Solid Power Operating, Inc. All intercompany balances and transactions have been eliminated in consolidation.
Long-Term Investments
The Company considers all investments with an original maturity of twelve months or more when purchased to be Long-term Investments.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents, marketable securities and long-term investments. As of March 31, 2022 and December 31, 2021, approximately $
8
were held in U.S. money market funds, and $
Leases
The Company accounts for its leases under ASU No. 2016-02, Leases (Topic 842). Under this guidance, the Company classifies contracts meeting the definition of a lease as operating or financing leases, and leases are recorded on the condensed consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset results in front-loaded expense over the lease term. Variable lease expenses, including common maintenance fees, insurance and property tax, are recorded when incurred.
In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components for all classes of assets. The Company excludes short-term leases having initial terms of 12 months or less as an accounting policy election, and instead recognizes rent expense on a straight-line basis over the lease term.
Recent Accounting Pronouncements
Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), followed by other related ASUs that provided targeted improvements and additional practical expedient options. On January 1, 2022, the Company adopted the standards under Topic 842 using the modified retrospective method and elected a number of the practical expedients in its implementation of Topic 842. The key change that affected the Company relates to accounting for operating leases for which it is the lessee that were historically off-balance sheet. The impact of adopting the standards resulted in the recognition of a right-of-use asset of $
Financial Instruments
In June 2016, the FASB issued ASU 2016-13, Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. ASU 2016-13 also provides updated guidance regarding the impairment of available-for-sale debt securities and includes additional disclosure requirements. The Company adopted this guidance as of January 1, 2022.
The Company regularly reviews its available-for-sale marketable securities and evaluates the current expected credit losses by considering factors such as any changes in credit ratings, historical experience, market data, issuer-specific factors, and current economic conditions. Based on this analysis, an allowance for credit losses is recorded as a reduction to the carrying value of the asset.
The Company reviews its receivable aging on an individual customer level, considering collectability of cash flows based on the risk of past events, current conditions, and forward-looking information. The Company establishes allowances for bad debts equal to the estimable portions of accounts receivable for which failure to collect is expected to occur. Allowances for doubtful accounts are recorded as reductions to the carrying values of the related receivables.
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Income Taxes
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which aims to reduce complexity in accounting standards by improving certain areas of GAAP without compromising information provided to users of financial statements. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted this guidance beginning January 1, 2022 with no financial statement impact at adoption.
Note 3 – Business Combination
Legacy Solid Power was deemed the accounting acquirer in the Business Combination based on the analysis of the criteria outlined in FASB Topic 805, Business Combinations. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Solid Power issuing stock for the net assets of DCRC, accompanied by a recapitalization. The net assets of DCRC are stated at historical cost, with no goodwill or other intangible assets recorded.
Because Legacy Solid Power was deemed the accounting acquirer, the historical consolidated financial statements of Legacy Solid Power became the historical consolidated financial statements of the combined company. As a result, the condensed consolidated financial statements included in this Report reflect (i) the historical operating results of Legacy Solid Power prior to the Business Combination; (ii) the combined results of the Company and Legacy Solid Power following the closing of the Business Combination (“Closing”); (iii) the assets and liabilities of Legacy Solid Power at their historical cost; and (iv) the Company’s equity structure for all periods presented as discussed below.
In accordance with guidance applicable to the Business Combination, the equity structure has been restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company's common stock, $
Note 4 – Property, Plant and Equipment
Property, plant and equipment are summarized as follows:
|
| March 31, 2022 |
| December 31, 2021 | ||
Commercial production equipment | | $ | | | $ | |
Laboratory equipment | | | | | | |
Leasehold improvements | |
| | |
| |
Computer equipment | |
| | |
| |
Furniture and fixtures | |
| | |
| |
Construction in progress | |
| | |
| |
Total cost | |
| | |
| |
Accumulated depreciation | |
| ( | |
| ( |
Net property, plant and equipment | | $ | | | $ | |
Depreciation and amortization expense related to property, plant and equipment for the three months ended March 31, 2022 and 2021 was $
10
expenses on the accompanying condensed consolidated statements of operations based on Company personnel costs incurred.
The Company is expanding its cell production capabilities through the construction of a second dry room and installation of a second cell-production line, which is expected to be able to produce larger format all-solid-state battery cells as part of the automotive qualification process. The Company expects to complete this construction in 2022. Construction in progress related to these efforts was $
The Company is expanding its sulfide-based solid electrolyte production to a second location. Scaling this production will allow it to produce larger quantities of electrolyte material required to feed the cell-production lines and continue research and development efforts. The Company expects to complete construction in late 2022. Construction in progress related to these efforts was $
As of March 31, 2022 and December 31, 2021, Construction in progress also contains $
Note 5 – Intangible Assets
Intangible assets of the Company are summarized as follows:
| | March 31, 2022 | | December 31, 2021 | ||||||||
| | Gross Carrying | | Accumulated | | Gross Carrying | | Accumulated | ||||
| | Amount | | Amortization | | Amount | | Amortization | ||||
Intangible assets: |
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Licenses | | $ | | | $ | ( | | $ | | | $ | ( |
Patents pending | |
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| — | |
| | |
| — |
Trademarks | |
| | |
| — | |
| | |
| — |
Trademarks pending | | | | | | — | | | — | | | — |
Total amortized intangible assets | | $ | | | $ | ( | | $ | | | $ | ( |
Amortization expense for intangible assets totaled $
Note 6 – Long-term Debt
Long-term debt is as follows:
| | March 31, 2022 | | December 31, 2021 | ||
Various equipment notes payable to banks in monthly installments ranging from $ | | $ | | | $ | |
Total | |
| | |
| |
Less current portion | |
| | |
| |
Long‑term portion | | $ | | | $ | |
Note Payable
On December 7, 2021, prior to the Closing, the Company used available cash to pay off the outstanding balance and remaining fees of a note payable to a commercial bank. The Company was in compliance with all financial covenants through the loan payoff on December 7, 2021.
11
Interest expense on long-term debt for the three months ended March 31, 2022 was $
Note 7 – Convertible Notes Payable
2020 Convertible Promissory Notes
On December 10, 2020 and December 18, 2020, the Company issued unsecured convertible promissory notes to investors in the total principal amount of $
2020 Convertible Promissory Notes Embedded Derivative
The 2020 Notes contained the following embedded derivatives: (i) a share settled redemption upon Qualified Financing; (ii) share settled redemption upon the closing of the Business Combination; and (iii) share settled redemption at maturity.
Embedded derivatives are separated from the host contract and carried at fair value when: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (b) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. The Company has concluded that certain embedded derivatives within the 2020 Notes meet these criteria and, as such, must be valued separate and apart from the 2020 convertible promissory notes as one embedded derivative and recorded at fair value each reporting period.
See Note 8 – Fair Value Measurement for information about the assumptions that the Company used to measure the fair value of the embedded derivative.
2019 Convertible Promissory Notes
On December 4, 2019, the Company issued an unsecured convertible promissory note to an investor in the principal amount of $
See Note 8 – Fair Value Measurement for information about the assumptions that the Company used to measure the fair value of the 2019 Note. At December 31, 2020, the outstanding balance on the 2019 Note was $
For all debt instruments, including any for which the Company has elected fair value accounting, the Company classifies interest that has been accrued during each period as Interest expense on the Condensed Consolidated Statements of Operations.
12
Note 8 – Fair Value Measurements
The carrying amounts of certain financial instruments, such as cash equivalents, short-term investments, accounts receivable, accounts payable, accrued liabilities, and equipment notes payable approximate fair value due to their short maturities.
The fair value of debt instruments for which the Company has not elected fair value accounting is based on the present value of expected future cash flows and assumptions about the then-current market interest rates as of the reporting period and the creditworthiness of the Company. The book values of the Company’s long-term debt approximate fair value because interest rates charged are similar to other financial instruments with similar terms and maturities and the rates vary in accordance with a market index. Most of the Company's debt is carried on the condensed consolidated balance sheets on a historical cost basis net of unamortized discounts and premiums because the Company has not elected the fair value option of accounting. Changes to the inputs used in these valuation models can have a significant impact on the estimated fair value of the Convertible Promissory Notes and the Company's embedded derivatives.
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
As discussed in Note 7, all Convertible Promissory Notes were converted to Legacy Solid Power Series B Preferred Stock in May 2021. As of March 31, 2022 and December 31, 2021 the Company’s financial liabilities measured and recorded at fair value on a recurring basis were classified within the fair value hierarchy as follows:
| | | | | | | | | | | | |
| | March 31, 2022 | ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Assets |
| | | | | | | | | | | |
Commercial Paper | | $ | | | $ | — | | $ | — | | $ | |
Corporate Bonds | | $ | | | $ | — | | $ | — | | $ | |
Government Bonds | | $ | | | $ | — | | $ | — | | $ | |
U.S Treasuries | | $ | | | $ | — | | $ | — | | $ | |
| | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | |
Public Warrants | | $ | | | $ | — | | $ | — | | $ | |
Private Warrants | | $ | — | | $ | | | $ | — | | $ | |
| | December 31, 2021 | ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Assets | | | | | | | | | | | | |
Commercial Paper | | $ | | | $ | — | | $ | — | | $ | |
Corporate Bonds | | $ | | | $ | — | | $ | — | | $ | |
Government Bonds | | $ | | | $ | — | | $ | — | | $ | |
| | | | | | | | | | | | |
Liabilities | |
|
| |
|
| |
|
| |
|
|
Public Warrants | | $ | | | $ | — | | $ | — | | $ | |
Private Warrants | | $ | — | | $ | | | $ | — | | $ | |
The change in fair value of the Company’s marketable securities is included in Other Comprehensive loss. There were
Fair Value of Stock Warrants
The fair value of the Private Placement Warrants (defined below) have been estimated using a Black-Scholes model as of March 31, 2022 and December 31, 2021. The fair value of the Public Warrants (defined below) has been measured based on the quoted price of such warrants on the Nasdaq Stock Market, a level 1 input. The estimated fair
13
value of the Private Placement Warrants is determined using Level 2 inputs. Inherent in a Black-Scholes model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. Material increases (or decreases) in any of those inputs may result in a significantly higher (or lower) fair value measurement. The Company estimates the volatility of its Private Placement Warrants based on implied volatility from the Company’s Public Warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend yield is based on the historical rate, which the Company anticipates remaining at zero. Refer to Note 9 for additional details on the Company’s warrant liabilities.
The following table provides quantitative information regarding Level 2 inputs used in the recurring valuation of the Private Placement Warrants as of their measurement dates:
|
| | |
| | |
|
| | March 31, 2022 | | December 31, 2021 |
| ||
Exercise Price | | $ | | | $ | | |
Stock Price | | $ | | | $ | | |
Volatility | |
| | % |
| | % |
Term | |
| | |
| | |
Risk-free rate | |
| | % |
| | % |
The following table provides a reconciliation of the Private Placement Warrants measured at fair value using Level 2 directly or indirectly observable inputs:
Date |
| Fair Value | |
December 31, 2021 | | $ | |
Change in fair value | | $ | ( |
March 31, 2022 | | $ | |
Note 9 – Common Stock Warrant Liabilities
As of March 31, 2022 and December 31, 2021, there were
Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $
The Company may redeem all of the outstanding Public Warrants:
| ● | in whole and not in part; |
| ● | upon at least |
| ● | at a price of $ |
| ● | if the last sale price of the Company’s Common Stock equals or exceeds $ |
Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $
The Company may redeem all of the outstanding Public Warrants:
14
| ● | in whole and not in part; |
| ● | upon at least |
| ● | at a price of $ |
| ● | if the last sale price of the Company’s Common Stock equals or exceeds $ |
The “fair market value” of the Company’s Common Stock means the average reported last sale price of the Company’s Common Stock for the trading days immediately following the date on which the notice of redemption is sent to the holders of Warrants. The Company classifies the outstanding Warrants as Warrant Liabilities on the condensed consolidated balance sheets in accordance with the guidance contained in ASC 815.
None of the Private Placement Warrants are redeemable by the Company so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees.
The warrant liabilities were initially measured at fair value upon Closing of the Business Combination and subsequently re-measured at each reporting period. The Public Warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value. The Company recognized a gain in connection with changes in the fair value of warrant liabilities of $
Note 10 – Mezzanine Equity
In accordance with ASC 480, Legacy Solid Power's Series A-1 Preferred Stock and Series B Preferred Stock (collectively, "Preferred Stock") prior to the Business Combination were classified as mezzanine equity. Immediately prior to the Closing Legacy Solid Power had
Prior to the Business Combination, the Preferred Stock had a redemption feature, at the option of the holders of a majority of the outstanding Preferred Stock, any time after April 30, 2031. The Preferred Stock was redeemable for the greater of its original issue price, plus all declared but unpaid dividends thereon, or fair value. Since the Preferred Stock had redemption provisions that were not solely within control of Legacy Solid Power, the Preferred Stock was classified prior to the Business Combination as mezzanine equity on Legacy Solid Power’s balance sheets.
As a result of the Business Combination with DCRC on December 8, 2021 the Solid Power Series A-1 and Series B Preferred Stock converted to common stock. The
Note 11 – Stockholders’ Equity
Common Stock
For the three months ended March 31, 2022 and 2021, stock options were exercised for
15
Legacy Solid Power Warrants
During 2015, Legacy Solid Power issued warrants to a third party to purchase
In May 2021, Legacy Solid Power issued warrants to purchase
Note 12 – Stock Based Compensation
The fair value of stock options and other equity-based compensation issued to employees and other service providers is recognized as compensation expense over the period of service that generally coincides with the vesting period of the award. The Company recognized compensation costs totaling $
At March 31, 2022, the Company had
On December 8, 2021 and in connection with the Closing, the Company adopted the Solid Power, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan originated with
As of March 31, 2022, the 2021 Plan permitted the Company to grant up to
The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of comparable companies. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.
16
When calculating the amount of annual compensation expense, the Company has elected not to estimate forfeitures and instead accounts for forfeitures as they occur.
There were
|
| 2021 |
| |
Approximate risk‑free rate |
| | | % |
Volatility |
| | | % |
Average expected life |
| | | |
Dividend yield |
| | | % |
Weighted‑average grant date fair value | | $ | | |
Estimated fair value of total options granted | | $ | | |
Future compensation costs related to the unvested portion of stock options at March 31, 2022 and 2021 was $
2021 Employee Stock Purchase Plan
The 2021 Employee Stock Purchase Plan (“2021 ESPP”) originated with
The 2021 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. Substantially all employees are eligible to participate and, through payroll deductions, can purchase shares on dates determined by the administrator. However, with respect to the Section 423 Component, an employee may not be granted rights to purchase stock under the ESPP if the employee, immediately after the grant, would own (directly or through attribution) stock possessing
17
Note 13 – Earnings Per Share
The table below reconciles basic weighted average common shares outstanding to diluted weighted average shares outstanding for March 31, 2022 and 2021. Basic earnings per share is based on the weighted average number of common shares outstanding for the period. Diluted earnings per share also includes the dilutive effect of additional potential common shares issuable from stock-based awards and are determined using the treasury stock method. Basic earnings per share represents net earnings or loss attributable to Common Stock divided by the basic weighted average number of common shares outstanding during the period. Diluted earnings per share represents net earnings divided by diluted weighted average number of common shares, which includes the average dilutive effect of all potentially dilutive securities that are outstanding during the period. The unvested stock awards, warrants, and options are included in the number of shares outstanding for diluted earnings per share calculations, unless a net loss is reported, in which situation unvested stock awards, warrants, and options are excluded from the number of shares outstanding for diluted earnings per share calculations.
| | Three Months Ended March 31, | | ||||
|
| 2022 |
| 2021 |
| ||
Net loss | | $ | ( | | $ | ( | |
Weighted average shares outstanding – Basic and Diluted | | | | | | | |
Net loss per share – Basic and Diluted | | ( | | ( | | ||
Due to the net loss to common stockholders for the three months ended March 31, 2022 and 2021, diluted loss per share was computed with consideration to potentially dilutive instruments as their inclusion would have been anti-dilutive. As of March 31, 2022 and 2021, potentially dilutive securities excluded from the diluted loss per share calculation are as follows:
| | 2022 | | 2021 |
Warrant Common Stock |
| |
| |
2014 Equity Incentive Plan |
| |
| |
Total potentially dilutive securities |
| |
| |
Note 14 – Leases
The Company leases its headquarters, other warehouse space and certain equipment. Fixed rent generally escalates each year, and the Company is responsible for a portion of the landlords’ operating expenses such as property tax, insurance and common area maintenance.
The Company’s headquarters are under a noncancelable operating lease with a maturity date in September 2024. In 2019, the Company amended the lease, agreeing to sublease additional space in the building, which sublease expires in December 2024.
On September 1, 2021, the Company entered into an Industrial Lease Agreement with the initial term through March 31, 2029. Under this lease, the Company has one option to renew for five years, which has been included in the calculation of lease liabilities and right-of-use assets at the adoption date of the lease accounting standard on January 1, 2022, as the exercise of the option was reasonably certain. As the renewal rent has not been negotiated, the Company used an estimated rent rate which approximated the fair market rent at adoption of ASC 842 on January 1, 2022 for the extension period. The Company is responsible for its proportionate share of common area maintenance, taxes, and insurance.
The Company has certain equipment leases classified as financing leases as of March 31, 2022.
The Company’s leases do not have any contingent rent payments and do not contain residual value guarantees.
18
The components of lease related expense are as follows:
| | Three months ended | |
| | March 31, 2022 | |
Lease costs | | | |
Finance lease costs: |
| |
|
Amortization of right-of-use assets | | $ | |
Interest on lease liabilities | |
| |
Operating lease costs | |
| |
Variable lease costs | |
| — |
Total lease expense | | $ | |
The components of supplemental cash flow information related to leases are as follows:
| | Three months ended | |
| | March 31, 2022 | |
Operating outgoing cash flows – finance lease | | $ | |
Financing outgoing cash flows – finance lease | |
| |
Operating outgoing cash flows – operating lease | |
| |
Right-of-use assets obtained in exchange for new finance lease liabilities | |
| |
Right-of-use assets obtained in exchange for new operating lease liabilities | |
| |
| | Three months ended | |
| | March 31, 2022 |
|
Finance lease | |
|
|
Weighted-average remaining lease term - finance lease (in years) |
| | |
Weighted-average discount rate - finance lease |
| | % |
Operating lease |
| | |
Weighted-average remaining lease term - operating lease (in years) |
| | |
Weighted-average discount rate - operating lease |
| | % |
As of March 31, 2022, future minimum payments during the next five years and thereafter are as follows (amounts in thousands):
Fiscal year |
| Finance lease |
| Operating lease | ||
2022 (remaining nine months) | | $ | | | $ | |
2023 | |
| | |
| |
2024 | |
| | |
| |
2025 | |
| | |
| |
2026 | |
| | |
| |
Thereafter | |
| | |
| |
Total | |
| | |
| |
Less present value discount | |
| | |
| |
Lease liabilities | | $ | | | $ | |
Note 15 – Retirement Plans
The Company sponsors a 401(k) plan for all eligible employees. The plan provides for the Company to make a discretionary matching contribution. Contributions to the plan totaled $
19
Note 16 – Income Taxes
The Company’s effective tax rate was
Note 17 – Contingencies
In the normal course of business, the Company may be party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that resolution of such litigation will not have a material adverse effect on the Company. DCRC, the predecessor to the Company, received a demand letter dated August 31, 2021 from counsel purporting to represent a shareholder of DCRC alleging that the proposed vote on the Authorized Share Charter Proposal (“Proposal”) for the proposed business combination with Legacy Solid Power violated Section 242(b)(2) of the Delaware General Corporation law and demanded that DCRC provide DCRC’s Class A stockholders with a separate class vote on the Proposal. DCRC subsequently provided for the Class A stockholders to have a separate class vote on the Proposal share increase. The Proposal was approved and the Business Combination closed. The counsel who issued this demand letter made a fee demand (the “Fee Demand”) for prompting the change in the Proposal. The Company accrued a liability of $
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Report. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs, and expected performance. For additional discussion, see “Cautionary Note Regarding Forward-Looking Statements” above. The forward-looking statements are dependent upon events, risks, and uncertainties that may be outside of our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed elsewhere in this Report and under Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021. We do not undertake, and expressly disclaim, any obligation to publicly update any forward-looking statements, whether as a result of new information, new developments or otherwise, except to the extent that such disclosure is required by applicable law.
Overview
Solid Power is developing all-solid-state battery cell technology that replaces the liquid or gel polymer electrolyte used in conventional lithium-ion battery cells with a sulfide-based solid electrolyte. Our sole focus is on the development and commercialization of all-solid-state battery cells and solid electrolyte materials, which we are currently developing for the fast-growing battery-powered electric vehicle market.
We are currently producing 0.2, 2, and 20 ampere-hour (“Ah”) high-content silicon all-solid-state battery cells using established manufacturing processes on our initial pilot production line. We are currently constructing a second pilot production line, which we refer to as the EV cell pilot line, at our headquarters in Louisville, Colorado. The EV cell pilot line has been designed to produce 60 to 100 Ah all-solid-state battery cells, which we refer to as EV-scale. Once the EV cell pilot line is fully operational, we expect to begin producing EV-scale cells for internal testing during the third quarter of 2022. In addition, we are constructing a second facility in Thornton, Colorado primarily to expand our sulfide-based electrolyte production capability. We expect this facility to be brought on-line in the second half of 2022.
We are developing our All-Solid-State Platform to meet the performance and cost demands from both consumers and automotive original equipment manufacturers (“OEMs”), with the goal of outperforming the best performing liquid or gel electrolyte-based lithium-ion technologies in driving range, battery life, safety, and cost. We have partnered with industry leaders, such as Ford Motor Company, BMW of North America LLC, and SK On Co., Ltd., to refine and validate our all-solid-state cell designs and the sulfide-based solid electrolyte we manufacture at our headquarters in Louisville, Colorado. Specifically, we are developing our all-solid-state battery cell technology with the goal to improve, among other things:
| ● | Driving range through increased energy by enabling higher capacity anodes and cathodes that are otherwise not considered viable in a traditional lithium-ion battery cell. |
| ● | Battery life through higher temperature stability compared to traditional lithium-ion and hybrid battery cells. |
| ● | Safety of electric vehicle batteries through the removal of flammable and volatile liquids and gels from the battery cells. |
| ● | Cost through simplifying the manufacturing process and removal or reduction of battery pack cooling systems and pack-level safety features typically seen in traditional lithium-ion battery packs. |
Our business model comprises two strategic elements:
| ● | Licensing our all-solid-state battery cell designs and manufacturing know-how to our commercialization partners. |
21
| ● | Selling our proprietary sulfide-based solid electrolyte material. |
Our business model allows for multiple revenue streams and distinguishes us from our competition. Longer-term, we endeavor to be a leading producer and distributor of sulfide-based solid electrolyte material, which may be employed both in powering all-solid-state battery cells in electric vehicles and in other commercial applications. By not needing to construct capital intensive battery manufacturing facilities, which are commonly referred to as gigafactories, we believe we can be “capital light” compared to other development-stage battery companies that plan to produce their battery designs in-house.
The Business Combination
On December 8, 2021 (the “Closing Date”), Solid Power consummated its previously announced business combination pursuant to that certain Business Combination Agreement and Plan of Reorganization, dated June 15, 2021 (as amended, the “Business Combination Agreement”), by and among the Company, DCRC Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), and Solid Power Operating, Inc., a Colorado corporation (f/k/a Solid Power, Inc., “Legacy Solid Power”), following the approval at a special meeting of the stockholders of the Company held on December 7, 2021. Decarbonization Plus Acquisition Corporation III prior to the business combination is referred to herein as “DCRC.”
Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into Legacy Solid Power, with Legacy Solid Power surviving the merger as a wholly owned subsidiary of the Company (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “business combination”). On the Closing Date, the Company changed its name from “Decarbonization Plus Acquisition Corporation III” to “Solid Power, Inc.” and on December 9, 2021, the Company’s common stock and warrants began trading on the Nasdaq Global Select Market under the trading symbols “SLDP” and “SLDPW,” respectively.
The business combination was accounted for as a reverse recapitalization, in accordance with generally accepted accounting principles in the United States (“GAAP”). Under this method of accounting, DCRC was treated as the “acquired” company for financial reporting purposes. Accordingly, the business combination was treated as the equivalent of Legacy Solid Power issuing stock for the net assets of DCRC, accompanied by a recapitalization, whereby no goodwill or other intangible assets was recorded. Operations prior to the business combination are those of Legacy Solid Power. While DCRC was the legal acquirer, because Legacy Solid Power was deemed the accounting acquirer, the historical financial statements of Legacy Solid Power became the historical financial statements of the combined company upon the consummation of the business combination.
As a result of the business combination, we became a Nasdaq-listed company, which will require that we continue to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We expect 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, compliance, and legal fees.
Our results of operations and statements of assets and liabilities may not be comparable between periods as a result of the business combination.
Key Factors Affecting Operating Results
We are a research and development-stage company, with the goal to reach commercialization of our all-solid-state battery cells and sulfide-based electrolyte by 2028. We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose significant risks and challenges, including those discussed in “Cautionary Note Regarding Forward-Looking Statements” appearing in this Report, which are incorporated by reference.
Specifically, the success of our business is dependent upon our ability to successfully develop and commercialize our products, which will require significant capital and subject us to regulatory oversight. Prior to reaching commercialization, we must test and validate our products to ensure they meet the performance and safety requirements of our customers. We also will have to negotiate licensing and supply contracts with our customers on
22
terms and conditions that are mutually acceptable. We also will need to scale production of our sulfide-based solid electrolyte material to satisfy anticipated demand. All of these factors will take time and affect our operating results, and, since many are difficult to quantify, our actual operating results may be different than we currently anticipate.
In addition to meeting our development goals on the expected timeline, future growth and demand for our products is highly dependent upon consumers adopting electric vehicles. The market for electric vehicles is still rapidly evolving, characterized by rapidly changing technologies, competitive pricing and factors, evolving government regulation and industry standards, and changing consumer demands and behaviors.
As a development-stage company, we have not yet generated material revenues through production of our electrolyte material or all-solid-state battery cell designs. Our revenue generated to date has primarily come from research and development performance on government contracts. We are and anticipate in the future deploying substantial capital to expand our sulfide-based electrolyte production, to install our EV cell pilot line, and in connection with research and development programs. These expenditures are needed to further development of our products and overall business. We also expect to incur significantly more administrative expenses as a publicly traded company than we did previously. For additional information, see “Results of Operations,” and “Liquidity and Capital Resources.”
COVID-19
The COVID-19 pandemic has disrupted supply chains and affected production and sales across a range of industries. The long-term extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the virus, mutations in the virus, vaccine distribution and uptake and the impact on our customers, employees, and vendors. The ultimate outcome of these matters is uncertain and, accordingly, the impact on our financial condition or results of operations is also uncertain. While the COVID-19 pandemic has presented challenges to our business, including having to devote additional time to managing our supply chain, having personnel out sick, implementing social distancing measures, and requiring certain employees to work from home in order to reduce office density, to date, we have not materially altered any terms with our contractors, suppliers, customers, other business partners or financing sources as a result of the COVID-19 pandemic.
Basis of Presentation
We currently conduct our business through one operating segment. As a research and development company with no commercial operations, our activities to date have been limited and were conducted primarily in the United States. Our historical results are reported under GAAP and in U.S. dollars.
23
Results of Operations
Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021
Following the successful completion of the business combination in December 2021, we have expanded our development efforts through increased capital and operational expenditures. We have invested in our talent, continued to expand our facilities and capabilities, and incurred additional costs through our accelerated development timeline. We expect to continue to increase our spending in all operational areas through the remainder of 2022 in order to execute our development strategy.
The following table sets forth our historical operating results for the periods indicated:
|
| Three Months Ended March 31, |
| |||||||||
| | (Unaudited) | | |||||||||
($ in thousands) | | 2022 | | 2021 | | | Change | | % |
| ||
Revenue | | $ | 2,196 | | $ | 480 | $ | 1,716 | | 358 | % | |
Operating Expenses |
| |
|
| |
| |
|
|
|
| |
Direct costs |
| | 2,030 |
| | 514 | |
| 1,516 |
| 295 | % |
Research and development |
| | 6,661 |
| | 3,106 | |
| 3,555 |
| 114 | % |
Marketing and sales |
| | 795 |
| | 556 | |
| 239 |
| NM | |
General and administrative |
| | 4,022 |
| | 597 | |
| 3,425 |
| 574 | % |
Total operating expenses |
| | 13,508 |
| | 4,773 | |
| 8,735 |
| 183 | % |
Operating Loss |
| | (11,312) |
| | (4,293) | |
| (7,019) |
| (163) | % |
Nonoperating Income (Expense) |
| |
|
| |
| |
|
|
|
| |
Interest income |
| | 201 |
| | 1 | |
| 200 |
| NM | |
Interest expense |
| | (5) |
| | (222) | |
| 217 |
| NM | |
Other income |
| | 39 |
| | — | |
| 39 |
| NM | |
Change in fair value of warrant liabilities |
| | 710 |
| | — | |
| 710 |
| NM | |
Loss from change in fair value of embedded derivative liability |
| | — |
| | (2,680) | |
| 2,680 |
| NM | |
Total nonoperating income (loss) |
| | 945 |
| | (2,901) | |
| 3,846 |
| 133 | % |
| | | | | | | | | | | | |
Pretax Loss |
| | (10,367) |
| | (7,194) | |
| (3,173) |
| (44) | % |
Income tax benefit |
| | (23) |
| | (53) | |
| 30 |
| NM | |
Net Loss | | $ | (10,344) | | $ | (7,141) | |
| (3,203) |
| (45) | % |
Other comprehensive loss | |
| (330) | |
| — | |
| (330) |
| NM | |
Comprehensive loss attributable to Common Stockholders | | $ | (10,674) | | $ | (7,141) | |
| (3,533) |
| (49) | % |
NM = Not meaningful
The key factors driving our first quarter 2022 results of operations, including our increased operating loss as compared to the corresponding period in 2021, were as follows:
| ● | Revenue and Direct costs – our overall revenue and direct costs increased, driven by higher levels of government and commercial contracts and activity. |
| ● | Research and development – our research and development costs increased as we expanded the development efforts of our all-solid-state battery cells and electrolyte material, spending more on both materials and labor. |
| ● | Marketing and sales – our marketing and sales costs increased as a result of an expansion of our sales and marketing team’s efforts to secure future new business and partners. |
| ● | General and administrative – our general and administrative costs increased as a result of our public company status with increased professional service fees and labor costs associated with an increased |
24
| headcount. |
| ● | Nonoperating income – our nonoperating income increased as a result of a gain on the fair value adjustment of our warrant liabilities and an increase in interest income. |
Liquidity and Capital Resources
Sources of Liquidity
Our sources of cash historically have been primarily derived from the sale of equity and, the business combination, with a small portion coming from performance on government contracts and commercial revenues. As discussed further below, we expect our sources of liquidity and cash flows will be sufficient to fund ongoing operations, research and development efforts, and to meet our anticipated capital expenditure needs.
As of March 31, 2022, we had $564 million of total liquidity (in the form of $450 million of cash and cash equivalents, $103 million of marketable securities, and $11 million of long-term investments). Our current liabilities were $6.5 million, primarily comprised of accounts payable, accrued compensation, and other accrued liabilities.
Short-Term Liquidity Requirements
We anticipate that our most significant capital expenditures in 2022 will relate to construction of our second production facility in Thornton, Colorado. The purpose of this facility is to scale production of our sulfide-based solid electrolyte to feed our EV cell pilot line. We expect to begin producing our sulfide-based solid electrolyte from this facility in the second half of 2022.
We are also investing significant capital in 2022 in connection with the installation of our EV cell pilot line at our Louisville, Colorado headquarters. The EV cell pilot line is designed to produce EV-scale all-solid-state battery cells as part of the automotive qualification process, which we expect to enter in late 2022. Once the EV cell pilot line is fully operational, we expect to begin producing EV-scale cells for internal testing during the third quarter of 2022.
Long-Term Liquidity Requirements
We believe that our cash on hand is sufficient to meet our operating cash needs (including expenditures for the increased pace and scope of development as well as increased public company costs), working capital and capital expenditure requirements for a period of at least the next 12 months and longer term until we generate adequate cash flows from licensing activities and/or electrolyte sales.
We may, however, need additional cash if there are material changes to our business conditions or other developments, including changes to our operating plan, unanticipated delays in negotiations with OEMs and tier-one automotive suppliers or other suppliers, supply chain challenges, disruptions due to the COVID-19 pandemic, competitive pressures, and regulatory developments. To the extent that our resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If the financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to take actions to reduce our capital or operating expenditures, including by not seeking potential acquisition opportunities, or reducing or delaying our production facility expansions, which may adversely affect our business, operating results, financial condition, and prospects. For more information about risks related to our business, please see “Risk Factors.”
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Cash Flows
The following tables summarize our cash flows from operating, investing, and financing activities for the periods presented.
|
| Three Months Ended March 31, | ||
| (Unaudited) | |||
($in thousands) | | 2022 | | 2021 |
Net cash (used in) operating activities |
| (14,369) |
| (3,643) |
Net cash (used in) investing activities |
| (48,881) |
| (97) |
Net cash provided by financing activities |
| 208 |
| 5,546 |
Cash flows used in operating activities:
The increase in cash used in operating activities from March 31, 2021 to March 31, 2022 was primarily attributable to an increase in research and development costs as well as increased general and administrative expense due to increased headcount. We expect cash flows used in operating activities to continue to increase as we accelerate both the pace and scope of our development efforts and work to achieve commercialization of our products. We also anticipate increased expenditures for general and administrative functions in connection with our status as a public company.
Cash flows used in investing activities:
The increase in cash used in investing activities from March 31, 2021 to March 31, 2022 is due to capital expenditures and purchase of marketable securities. Our capital expenditures were primarily custom manufacturing equipment we acquired in connection with our ongoing expansion of electrolyte production capabilities. We invested in marketable securities in an effort to achieve higher returns on our cash balance. We expect elevated cash use in investing activities as we build out our second production facility and install our EV cell pilot line. Each location requires investment in specialized equipment to facilitate the manufacturing process of sulfide-based solid electrolyte and our all-solid-state battery cells, respectively.
Cash flows provided by financing activities:
During the quarter ended March 31, 2021 we financed our operations through proceeds from a bank term loan, and the sales of convertible notes and redeemable convertible preferred stock. We retired the bank term loan and completed the business combination in December 2021. During the quarter ended March 31, 2022, we did not participate in any fundraising activities.
Critical Accounting Estimates
Except as discussed in Note 2 of our unaudited financial statements included in this Report, there were no significant and material changes in our critical accounting policies and use of estimates during the three months ended March 31, 2022, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our 2021 Annual Report on Form 10-K, filed with the SEC on March 23, 2022.
Emerging Growth Company Status
We are an emerging growth company as defined in Section 2(a) of the Securities Act and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. We expect to remain an emerging growth company at least through the end of the 2022 fiscal year and expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. 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 because of the potential differences in accounting standards used.
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Recent Accounting Pronouncements
See Note 2 to our audited financial statements, which are incorporated by reference, for more information.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to the Company’s market risk during the three months ended March 31, 2022. For a discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2021.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In designing and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired controls. As required by Rule 13a-15(b) under the Exchange Act, our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2022. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this Report, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the three months ended March 31, 2022 covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We continue to remediate the material weakness in our internal control over financial reporting as discussed in Part II, Item 9A., “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2021. Management expects to remediate the material weakness in our internal control over financial reporting by December 31, 2022. See the section titled “Risk Factors—Risks Related to Finance and Accounting—Our auditors identified a material weakness in our internal control over financial reporting as of December 31, 2021. If we are unable to develop and maintain an effective system of internal controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our stock price, business and operating results” in Part I, Item 1A., “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors
Our business, prospects, reputation, results of operations and financial condition, as well as the price of our common stock and warrants, can be affected by a number of factors, whether currently known or unknown, including those described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021. When any one or more of these risks materialize from time to time, our business, reputation, results of operations and financial condition, as well as the price of our common stock and warrants, can be materially and adversely affected. There have been no material changes to our risk factors since the Annual Report on Form 10-K for the year ended December 31, 2021.
Item 5. Other Information
On May 5, 2022, the Compensation Committee (the “Committee”) of the Board of Directors of the Company approved adjustments to certain elements of the compensation of the Company’s executive officers, including Douglas Campbell, Chief Executive Officer; David B. Jansen, President and Chair of the Board of Directors; Kevin Paprzycki, Chief Financial Officer and Treasurer; and Jon Jacobs, Chief Marketing Officer (the “Covered Executives”).
Base Salary Adjustments and Target Bonus Amounts
As set forth in the table below, the Committee adjusted the base salary for each of the Covered Executives for 2022. The annual salary adjustment was retroactive to February 1, 2022.
Executive |
| Base Salary | |
Douglas Campbell | | $ | 340,000 |
David B. Jansen | | $ | 335,000 |
Kevin Paprzycki | | $ | 335,000 |
Jon Jacobs | | $ | 305,000 |
In addition, the Committee established an annual cash bonus target of 50% of the base salary that is actually paid to each of the Covered Executives. The target bonuses for the Covered Executives relate to the performance period from January 1, 2022 through December 31, 2022 pursuant to the Company’s Executive Incentive Compensation Plan. For each Covered Executive, the amount of the actual cash incentive bonus paid will be determined at the discretion of the Committee and based in part on the Committee’s assessment of the performance of the Company and applicable Covered Executive against certain objectives and goals established by the Committee. The objectives and goals are designed to align the incentives of the Company’s employees and management with the interests of the Company’s stockholders. Any bonus payments under the 2022 plan are expected to be made in the first quarter of 2023, subject to the Covered Executive’s continued employment with the Company on the payment date.
Long Term Incentive Compensation
On May 5, 2022, the Committee approved awards of time-vesting restricted stock units (“RSUs”) and stock options (“Options”) to the Covered Executives pursuant to the Company’s 2021 Equity Incentive Plan (the “Equity Plan”). The table below sets forth the target dollar values of the RSUs and Options grants:
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Executive |
| Total Value |
| RSUs |
| Options | |||
Douglas Campbell | | $ | 3,000,000 | | $ | 1,500,000 | | $ | 1,500,000 |
David B. Jansen | | $ | 1,500,000 | | $ | 750,000 | | $ | 750,000 |
Kevin Paprzycki | | $ | 1,200,000 | | $ | 600,000 | | $ | 600,000 |
Jon Jacobs | | $ | 725,000 | | $ | 362,500 | | $ | 362,500 |
The Company expects to make the foregoing RSUs and Options grants on or about May 12, 2022. The RSUs and the Options will each vest in four equal annual installments, with the initial vesting scheduled to occur on the first anniversary of the grant date, subject to the Covered Executive’s continued employment with the Company through each vesting date and subject to accelerated vesting upon the occurrence of certain specified events. The number of shares underlying the RSUs will be determined on the grant date under applicable accounting rules and by using a 30-day trailing average of the Company’s stock price. The number of shares underlying the Options will be determined using the Black-Scholes formula for fair value as of the grant date and a ten-year life.
Except as set forth above, there have been no other changes to any compensation arrangements with any Covered Executive.
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Item 6. Exhibits
| | | | Incorporated by Reference | ||||||
Exhibit Number |
| Description |
| Schedule Form |
| File Number |
| Exhibit/Annex |
| Filing Date |
2.1 | | | 424B3 | | 333-258681 | | Annex A | | November 10, 2021 | |
2.2 | | | 424B3 | | 333-258681 | | Annex A-1 | | November 10, 2021 | |
3.1 | | | 8-K | | 001-40284 | | 3.1 | | December 13, 2021 | |
3.2 | | | 8-K | | 001-40284 | | 3.2 | | December 13, 2021 | |
31.1* | | Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 | | | | | | | | |
31.2* | | Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 | | | | | | | | |
32.1** | | | | | | | | | | |
32.2** | | | | | | | | | | |
101.INS* | | XBRL Instance Document – the instance document does not appear in the Interactive Data file because its Inline XBRL tags are embedded within the Inline XBRL document. | | | | | | | | |
101.SCH* | | Inline XBRL Taxonomy Extension Schema Document | | | | | | | | |
101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase | | | | | | | | |
101.DEF* | | Inline XBRL Taxonomy Extension Definition Document | | | | | | | | |
101.LAB* | | Inline XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | |
101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase | | | | | | | | |
104* | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | | | | | | | | |
* Filed herewith.
** Furnished herewith.
30
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 11, 2022 | Solid Power, Inc. |
| By: | /s/ Douglas Campbell | |
| Name: | Douglas Campbell | |
| Title: Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| By: | /s/ Kevin Paprzycki | |
| Name: | Kevin Paprzycki | |
| Title: Chief Financial Officer and Treasurer | ||
| (Principal Financial and Accounting Officer) | ||
31
Exhibit 31.1
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002
I, Douglas Campbell, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Solid Power, Inc. for the quarterly period ended March 31, 2022;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 11, 2022 | | |
| By: | /s/ Douglas Campbell |
| | Douglas Campbell |
| | Chief Executive Officer |
| | (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002
I, Kevin Paprzycki, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Solid Power, Inc. for the quarterly period ended March 31, 2022;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 11, 2022 | | |
| By: | /s/ Kevin Paprzycki |
| | Kevin Paprzycki |
| | Chief Financial Officer and Treasurer |
| | (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
I, Douglas Campbell, Chief Executive Officer of Solid Power, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:
(1) | the Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
This certificate is being furnished solely for the purposes of 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Date: May 11, 2022 | | |
| By: | /s/ Douglas Campbell |
| | Douglas Campbell |
| | Chief Executive Officer |
| | (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. 1350
(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
I, Kevin Paprzycki, Chief Financial Officer of Solid Power, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:
(1) | the Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
This certificate is being furnished solely for the purposes of 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
Date: May 11, 2022 | | |
| By: | /s/ Kevin Paprzycki |
| | Kevin Paprzycki |
| | Chief Financial Officer and Treasurer |
| | (Principal Financial and Accounting Officer) |