Solid Power, Inc 10-Q for FY2024 Q1
Solid Power, Inc. (SLDP)
About this 10-Q
Solid Power, Inc filed this 10-Q on May 8, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).
Headline figures
Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $5.95M
- up 57.0% from $3.79M a year earlier
- Net loss
- $21.21M
- compared with a net loss of $19.16M a year earlier
- Diluted EPS
- -$0.12
- compared with -$0.11 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 _______
Commission file number:
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading symbol(s) |
| Name of each exchange on which registered |
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 | |
| | Emerging growth company |
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
| ||
5 | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 | |
21 | ||
21 | ||
| | |
| ||
21 | ||
21 | ||
22 | ||
23 | ||
| | |
| 24 | |
1
GLOSSARY OF DEFINED TERMS
Term | | Definition |
2014 Plan | | Solid Power, Inc. 2014 Equity Incentive Plan |
2021 Plan | | Solid Power, Inc. 2021 Equity Incentive Plan |
2023 Form 10-K | | Our Annual Report on Form 10-K for the year ended December 31, 2023 |
Ah | | Ampere hour |
BMW | | BMW of North America LLC |
Board | | The Board of Directors of Solid Power, Inc. |
Electrolyte Supply Agreement | | Electrolyte Supply Agreement, dated January 10, 2024, between Solid Power Operating, Inc. and SK On |
ESPP | | Solid Power, Inc. 2021 Employee Stock Purchase Plan |
EV | | Battery electric vehicle |
EV cells | | Prototype cell formats between 60 and 100 Ah |
Exchange Act | | Securities Exchange Act of 1934, as amended |
GAAP | | U.S. generally accepted accounting principles |
JDA | | Joint development agreement |
Line Installation Agreement | | Line Installation Agreement, dated January 10, 2024, among Solid Power Korea Co., Ltd., SK On, and, for the limited purposes of Section 12.16 of the Line Installation Agreement, Solid Power |
OEM | | Automotive original equipment manufacturers |
Private Placement Warrants | | Warrants sold in a private placement as part of our initial public offering or acquired through a conversion of a working capital loan |
Public Warrants | | Our publicly-traded warrants |
R&D License Agreement | | Research and Development Technology License Agreement, dated January 10, 2024, between Solid Power Operating, Inc. and SK On |
Report | | This Quarterly Report on Form 10-Q |
RSU | | Restricted stock unit |
SEC | | Securities and Exchange Commission |
SK On | | SK On Co., Ltd. |
SK On Agreements | | Electrolyte Supply Agreement, Line Installation Agreement, and R&D License Agreement, collectively |
Solid Power / the Company / we / us / our | | Solid Power, Inc., a Delaware corporation (f/k/a Decarbonization Plus Acquisition Corporation III) |
SP1 | | Our Louisville, Colorado facility, which we primarily use for cell production, research and development, and quality control |
SP2 | | Our Thornton, Colorado facility, which we primarily use for pilot production of electrolyte, research and development, quality control, and general office space |
Warrants | | Private Placement Warrants and Public Warrants |
2
Cautionary Note Regarding Forward-Looking Statements
This Report 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 or 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 our ability to commercialize our technology in advance of competing technologies; |
| ● | rollout of our business plan and the timing of expected business milestones; |
| ● | risks relating to the non-exclusive nature of our OEM and other partner relationships and our ability to manage these business relationships; |
| ● | our ability to negotiate and execute commercial agreements with our partners on commercially reasonable terms; |
| ● | our ability to protect and maintain our intellectual property, including in jurisdictions outside of the United States; |
| ● | broad market adoption of EVs and other technologies where we are able to deploy our technology, if developed successfully; |
| ● | our success attracting and retaining our executive officers, key employees, and other qualified personnel; |
| ● | changes in applicable laws or regulations; |
| ● | risks relating to our information technology infrastructure and data security breaches; |
| ● | risks relating to our status as a research and development stage company with a history of financial losses with an expectation of incurring significant expenses and continuing losses for the foreseeable future; |
| ● | our ability to secure government contracts and grants and the availability of government subsidies and economic incentives; |
| ● | delays in the construction and operation of additional facilities; |
| ● | risks relating to other economic, business, or competitive factors in the United States and other jurisdictions, including supply chain interruptions and changes in market conditions, and our ability to manage these risks and uncertainties; and |
| ● | those factors discussed in “Part I, Item 1A. Risk Factors” in our 2023 Form 10-K, as such description may be updated or amended in future filings we make with the SEC. |
3
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 2023 Form 10-K, as such description may be updated or amended in future filings we make with the SEC. 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, 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 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 (e.g., Solid Power, Inc. on LinkedIn) as a means of disclosing information about Solid Power and our products to our customers, investors, and the public. 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 SEC. Further, references to our website URLs are intended to be inactive textual references only. 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 https://ir.solidpowerbattery.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act are filed with the SEC. These reports and other information we file with the SEC are available free of charge at https://www.solidpowerbattery.com/investor-relations/financials/sec-filings when such reports are available on the SEC’s website.
4
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Solid Power, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value and number of shares)
| | March 31, 2024 | | | | | |
|
| (Unaudited) |
| December 31, 2023 | | ||
Assets | | | | | | | |
Current Assets |
| |
|
| |
| |
Cash and cash equivalents | | $ | | | $ | | |
Marketable securities | | | | | | | |
Contract receivables | |
| | |
| | |
Contract receivables from related parties | | | | | | — | |
Prepaid expenses and other current assets | |
| | |
| | |
Total current assets | |
| | |
| | |
Long-Term Assets | | | | | | | |
Property, plant and equipment, net | |
| | |
| | |
Right-of-use operating lease assets, net | | | | | | | |
Right-of-use finance lease assets, net | | | | | | | |
Investments | | | | | | | |
Intangible assets, net | |
| | |
| | |
Prepaid expenses and other assets | | | | | | | |
Total long-term assets | | | | | | | |
Total assets | | $ | | | $ | | |
Liabilities and Stockholders’ Equity | |
| | |
| | |
Current Liabilities | |
| | |
| | |
Accounts payable and other accrued liabilities | | | | | | | |
Deferred revenue | |
| | |
| | |
Deferred revenue from related parties | | | — | | | | |
Accrued compensation | |
| | |
| | |
Operating lease liabilities | | | | | | | |
Finance lease liabilities | | | | | | | |
Total current liabilities | |
| | |
| | |
Long-Term Liabilities | | | | | | | |
Warrant liabilities | | | | | | | |
Operating lease liabilities | | | | | | | |
Finance lease liabilities | |
| | |
| | |
Deferred revenue | | | | | | — | |
Other liabilities | |
| | |
| | |
Total long-term liabilities | | | | | | | |
Total liabilities | | | | | | | |
Stockholders’ Equity | |
|
| |
|
| |
Common Stock, $ | |
| | |
| | |
Additional paid-in capital | |
| | | | | |
Accumulated deficit | |
| ( | |
| ( | |
Accumulated other comprehensive loss | | | ( | | | ( | |
Total stockholders’ equity | |
| | |
| | |
Total liabilities and stockholders’ equity | | $ | | | $ | | |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
5
Solid Power, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(in thousands, except number of shares and per share amounts)
| | Three Months Ended March 31, | | ||||
| | 2024 |
| 2023 | | ||
Revenue | | $ | | | $ | | |
Operating Expenses | | | | |
| | |
Direct costs | | | | | | | |
Research and development | | | | |
| | |
Selling, general and administrative | | | | |
| | |
Total operating expenses | | | | |
| | |
Operating Loss | | | ( | |
| ( | |
Nonoperating Income and Expense | | | | |
| | |
Interest income | | | | | | | |
Change in fair value of warrant liabilities | | | ( | | | ( | |
Interest expense | | | ( | |
| ( | |
Total nonoperating income and expense | | | | |
| | |
Net Loss Attributable to Common Stockholders | | $ | ( | | $ | ( | |
Other Comprehensive Income (Loss) | | | ( | | | | |
Comprehensive Loss Attributable to Common Stockholders | | $ | ( | | $ | ( | |
Basic and diluted loss per share | | $ | ( | | $ | ( | |
Weighted average shares outstanding – basic and diluted | | | | | | | |
| | | | | | | |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
6
Solid Power, Inc.
Condensed Consolidated Statement of Stockholders’ Equity (Unaudited)
(in thousands, except number of shares)
| | Common Stock | | | | | | | | | | | | |||||
| | | | | | | | Additional | | Accumulated | | Accumulated Other | | Total Stockholders’ | ||||
|
| Shares |
| Amount |
| paid-in capital |
| deficit |
| Comprehensive Loss |
| Equity | ||||||
Balance as of December 31, 2023 | | | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | |
Net loss | |
| — | |
| — | | | — | |
| ( | | | — | |
| ( |
Withholding of employee taxes related to stock-based compensation | | | — | | | — | | | ( | | | — | | | — | | | ( |
Shares of common stock issued for vested RSUs | | | | | | — | | | — | | | — | | | — | | | — |
Stock options exercised | |
| | |
| — | | | | |
| — | | | — | |
| |
Repurchase and retirement of shares of common stock | | | ( | | | — | | | ( | | | — | | | — | | | ( |
Stock-based compensation expense | |
| — | |
| — | | | | |
| — | | | — | |
| |
Unrealized loss on marketable securities | | | — | | | — | | | — | | | — | | | ( | | | ( |
Balance as of March 31, 2024 | | | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | |
| | Common Stock | | | | | | | | | | | | |||||
| | | | | | | | Additional | | Accumulated | | Accumulated Other | | Total Stockholders’ | ||||
|
| Shares |
| Amount |
| paid-in capital |
| deficit |
| Comprehensive Loss |
| Equity | ||||||
Balance as of December 31, 2022 | | | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | |
Net loss | |
| — | |
| — | | | — | |
| ( | | | — | |
| ( |
Stock options exercised | |
| | |
| — | | | | |
| — | | | — | |
| |
Stock-based compensation expense | |
| — | |
| — | | | | |
| — | | | — | |
| |
Unrealized gain on marketable securities | | | — | | | — | | | — | | | — | | | | | | |
Balance as of March 31, 2023 | | | | | $ | | | $ | | | $ | ( | | $ | ( | | $ | |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
7
Solid Power, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
| | Three Months Ended March 31, | | ||||
|
| 2024 |
| 2023 | | ||
Cash Flows from Operating Activities |
| | | | | | |
Net loss | | $ | ( | | $ | ( | |
Adjustments to reconcile net loss to net cash and cash equivalents from operating activities: | | | | |
| | |
Depreciation and amortization | | | | |
| | |
Amortization of right-of-use assets | | | | | | | |
Stock-based compensation expense | | | | |
| | |
Change in fair value of warrant liabilities | | | | | | | |
Accretion of discounts on other long-term liabilities | | | ( | | | — | |
Amortization of premiums and accretion of discounts on marketable securities | | | ( | | | ( | |
Change in operating assets and liabilities that provided (used) cash and cash equivalents: | | | | |
| | |
Contract receivables | | | ( | |
| ( | |
Contract receivables from related parties | | | ( | | | | |
Prepaid expenses and other assets | | | ( | |
| ( | |
Accounts payable and other accrued liabilities | | | | |
| | |
Deferred revenue | | | | |
| ( | |
Deferred revenue from related parties | | | ( | | | ( | |
Accrued compensation | | | ( | |
| ( | |
Operating and finance lease liabilities, short-term | | | ( | | | ( | |
Net cash and cash equivalents used in operating activities | | | ( | |
| ( | |
Cash Flows from Investing Activities | | | | |
| | |
Purchases of property, plant and equipment | | | ( | |
| ( | |
Purchases of marketable securities and investments | | | ( | |
| ( | |
Proceeds from sales of marketable securities | | | | | | | |
Purchases of intangible assets | | | ( | |
| ( | |
Net cash and cash equivalents provided by (used in) investing activities | | | | |
| ( | |
Cash Flows from Financing Activities | | | | |
| | |
Payments of debt | | | — | |
| ( | |
Proceeds from exercise of stock options | | | | |
| | |
Cash paid for withholding of employee taxes related to stock-based compensation | | | ( | | | — | |
Repurchase of shares of common stock | | | ( | | | — | |
Payments on finance lease liabilities | | | ( | | | ( | |
Net cash and cash equivalents provided by (used in) financing activities | | | ( | | | | |
| | | | | | | |
Net decrease in cash and cash equivalents | | | ( | | | ( | |
Cash and cash equivalents at beginning of period | | | | | | | |
Cash and cash equivalents at end of period | | | | | | | |
| | | | | | | |
Cash paid for interest | | $ | | | $ | | |
Accrued capital expenditures | | $ | | | $ | | |
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
8
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 – Nature of Business
Solid Power is developing solid-state battery technology for the EV and other markets. The Company’s planned business model is to sell its electrolyte and to license its cell designs and manufacturing processes.
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 2023 Form 10-K and are supplemented by the Notes to the Condensed Consolidated Financial Statements (Unaudited) (the “Notes”) included in this Report. The financial statements included in this Report (including the Notes) should be read in conjunction with the 2023 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 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 dollar amounts presented herein are in U.S. dollars and are in thousands, except par value and share and per share amounts.
The accompanying unaudited condensed consolidated financial statements include accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Additionally, certain prior period amounts have been reclassified to conform to current period presentation in the accompanying unaudited condensed consolidated financial statements.
Recent Accounting Pronouncements
Income taxes
In December 2023, the FASB issued ASU No. 2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures. ASU 2023-09 requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires companies to disclose additional information about income taxes paid. ASU 2023-09 will be effective for annual periods beginning January 1, 2025 and will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is evaluating the disclosure impact of ASU 2023-09.
Segment Reporting
In November 2023, the FASB issued ASU No. 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. Among other new disclosure requirements, ASU 2023-07 requires companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker, or CODM. ASU 2023-07 will be effective for annual periods beginning on January 1, 2024 and interim periods beginning on January 1, 2025. ASU 2023-07 must be applied retrospectively to all prior periods presented in the financial statements. The Company is evaluating the disclosure impact of ASU 2023-07.
9
Note 3 – Property, Plant and Equipment
Property, plant and equipment are summarized as follows:
|
| March 31, 2024 |
| December 31, 2023 | | ||
Commercial production equipment | | $ | | | $ | | |
Laboratory equipment | | | | | | | |
Leasehold improvements | |
| | |
| | |
Furniture and computer equipment | |
| | |
| | |
Construction in progress | |
| | |
| | |
Total cost | |
| | |
| | |
Accumulated depreciation | |
| ( | |
| ( | |
Net property and equipment | | $ | | | $ | | |
Depreciation expenses for dedicated laboratory equipment and commercial production equipment are charged to research and development. The other depreciation expenses are included in the Company’s overhead and are allocated across Operating Expenses based on Company personnel costs incurred.
Depreciation expense related to property, plant and equipment are summarized as follows:
| | Three Months Ended March 31, | | ||||
| | 2024 |
| 2023 | | ||
Depreciation expense | | $ | | | $ | | |
The Company expanded its electrolyte production to produce larger quantities of electrolyte material required to feed cell-production lines and continue research and development efforts at SP2. The Company began producing electrolyte at SP2 in 2023.
| | March 31, 2024 | | December 31, 2023 | | ||
Construction in progress | | | | | | | |
SP1 - Capital projects | | $ | | | $ | | |
SP2 - Increased scale electrolyte production | | | | | | | |
Note 4 – Intangible Assets
Intangible assets of the Company are summarized as follows:
|
| March 31, 2024 |
| December 31, 2023 | | ||||||||
| | Gross Carrying | | Accumulated | | Gross Carrying | | Accumulated | | ||||
|
| Amount |
| Amortization |
| Amount |
| Amortization | | ||||
Intangible assets: | | | | | | | | | | | | | |
Licenses | | $ | | | $ | ( | | $ | | | $ | ( | |
Patents | | | | | | ( | | | | | | ( | |
Patents pending |
| | |
| | — |
| | |
| | — | |
Trademarks | | | | | | — | | | | | | — | |
Trademarks pending |
| | |
| | — |
| | |
| | — | |
Total amortized intangible assets | | $ | | | $ | ( | | $ | | | $ | ( | |
10
Amortization expense for intangible assets is summarized as follows:
| | Three Months Ended March 31, |
| ||||
| | 2024 |
| 2023 |
| ||
Amortization expense | | $ | | | $ | | |
Useful lives of intangible assets range from to
Note 5 – Collaborative Arrangement
On January 10, 2024, the Company entered into the SK On Agreements.
The Company determined the R&D License Agreement, Electrolyte Supply Agreement, and the Line Installation Agreement should be combined and evaluated as a single contract, the SK On Agreements. The SK On Agreements were determined to be a collaborative arrangement in accordance with ASC Topic 808, Collaborative Arrangements, and revenue recognition is recorded by analogy to ASC Topic 606, Revenue from Contracts with Customers. The Company determined the SK On Agreements represent a single, combined performance obligation. Collaborative revenue will be recognized over time using the input measurement method utilizing incurred labor hours in relation to total labor hours anticipated to satisfy the combined performance obligation. The Company will expense contract fulfillment costs as incurred.
Note 6 – Fair Value Measurements
The Company considers all highly liquid instruments with original maturities of less than 90 days to be cash equivalents. The carrying amounts of certain financial instruments, such as cash equivalents, short-term investments, accounts receivable, accounts payable, and accrued liabilities, approximate fair value due to their relatively short maturities.
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis
As of March 31, 2024 and December 31, 2023, the Company’s financial assets and liabilities measured and recorded at fair value on a recurring basis were classified within the fair value hierarchy as follows:
| | March 31, 2024 | ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Assets | | | | | | | | | | | | |
Commercial Paper | | $ | | | $ | — | | $ | — | | $ | |
Corporate Bonds | | $ | | | $ | — | | $ | — | | $ | |
Government Bonds | | $ | | | $ | — | | $ | — | | $ | |
| | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | |
Public Warrants | | $ | | | $ | — | | $ | — | | $ | |
Private Placement Warrants | | $ | — | | $ | | | $ | — | | $ | |
| | December 31, 2023 | ||||||||||
|
| Level 1 |
| Level 2 |
| Level 3 |
| Total | ||||
Assets | | | | | | | | | | | | |
Commercial Paper | | $ | | | $ | — | | $ | — | | $ | |
Corporate Bonds | | $ | | | $ | — | | $ | — | | $ | |
Government Bonds | | $ | | | $ | — | | $ | — | | $ | |
| | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | |
Public Warrants | | $ | | | $ | — | | $ | — | | $ | |
Private Placement Warrants | | $ | — | | $ | | | $ | — | | $ | |
The change in fair value of the Company’s marketable securities and long-term investments are included in other comprehensive income (loss). There were
11
31, 2024 or year ended December 31, 2023. During the three months ended March 31, 2024 and 2023, the Company purchased $
Fair Value of Warrants
The fair value of the Private Placement Warrants have been estimated using a Black-Scholes model as of March 31, 2024 and December 31, 2023 Consolidated Balance Sheet dates. The estimated fair value of the Private Placement Warrants is determined using Level 2 directly or indirectly observable 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 companies’ common stock. 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 dividend yield is based on the historical rate, which the Company anticipates remaining at zero. The fair value of the Public Warrants has been measured based on the quoted price of such warrants on the Nasdaq Stock Market, a Level 1 input.
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, 2024 |
| December 31, 2023 |
| ||
Exercise price | | $ | | | $ | | |
Stock price | | $ | | | $ | | |
Volatility | |
| | % |
| | % |
Term (in years) | |
| | |
| | |
Risk-free rate | |
| | % |
| | % |
The following table provides a rollforward of the Public Warrants measured at fair value per Public Warrant using Level 1 inputs and Private Placement Warrants measured at fair value per Private Placement Warrant using Level 2 inputs:
| | Public Warrants | | Private Placement Warrants | ||
|
| Level 1 Fair Value |
| Level 2 Fair Value | ||
December 31, 2023 | | $ | | | $ | |
Change in fair value | | $ | | | $ | |
March 31, 2024 | | $ | | | $ | |
The following tables provides a reconciliation of the change in fair value for the Public Warrants and Private Placement Warrants at March 31.
| | | | | | | | Three Months Change in | | | |||
Warrant Class |
| Level |
| Warrants |
| December 31, 2023 |
| Fair Value |
| March 31, 2024 | |||
Public Warrants |
| 1 |
| | | $ | | | $ | | | $ | |
Private Placement Warrants |
| 2 |
| | | $ | | | $ | | | $ | |
Total |
|
|
| | | $ | | | $ | | | $ | |
Note 7 – Warrant Liabilities
The table below provides a summary of the outstanding Public and Private Placement Warrants at:
|
| March 31, 2024 |
| December 31, 2023 |
Public Warrants | | | | |
Private Placement Warrants | | | | |
Each whole Warrant entitles the holder thereof to purchase
12
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 table below provides the fair value of warrant liabilities at:
|
| | March 31, 2024 |
| | December 31, 2023 |
Fair value of warrant liabilities | | $ | | | $ | |
The table below provides the Company’s loss recognized in connection with changes in fair value of warrant liabilities:
| | | Three Months Ended March 31, | ||||
|
| | 2024 |
| 2023 | ||
Loss recognized associated with warrant liabilities | | $ | ( | | $ | ( | |
There have been no changes to our Public or Private Placement Warrants, including redemption terms disclosed in our 2023 Form 10-K.
Note 8 – Stockholders’ Equity
Common Stock
Stock options exercised for common stock, shares of common stock repurchased under the stock repurchase program, and shares of common stock issued upon vesting of RSUs for the three months ended March 31, 2024 and 2023 are summarized in the table below:
| | Three Months Ended March 31, | | ||
| | 2024 |
| 2023 | |
Stock options exercised | | | | | |
Shares of common stock repurchased | | ( | | — | |
Shares of common stock issued for vested RSUs | | | | — | |
The table below presents the cash received or paid associated with common stock related activities for the three months ended March 31, 2024 and 2023:
| | | Three Months Ended March 31, | |||
|
| | 2024 |
| | 2023 |
Cash received from stock options exercised | | $ | | | $ | |
Cash paid for shares of common stock repurchased | | | ( | | | — |
Stock Repurchase Program
On January 23, 2024, the Company announced that its Board approved a stock repurchase program authorizing the Company to purchase up to $
The table below presents the number of shares repurchased and retired, the aggregate cost, and the average purchase price per share for the three months ended March 31, 2024:
|
| | Shares | | | Aggregate cost |
| | Avg. Price Paid Per Share |
Repurchased and retired shares of common stock | | | | | $ | | | $ | |
In April 2024, the Company purchased
13
Note 9 – Stock-Based Compensation
There have been no changes to our equity incentive plans, the ESPP, or our accounting methodology for stock-based compensation, as disclosed in our 2023 Form 10-K.
The fair value of stock options and RSUs issued to employees and directors is recognized as compensation expense over the period of service that generally coincides with the vesting period of the award. The Company allocated compensation ratably across Operating Expenses based on Company personnel costs incurred. When calculating the amount of annual compensation expense, the Company has elected not to estimate forfeitures and instead accounts for forfeitures as they occur.
For the three months ended March 31, 2024 and 2023, the Company recognized compensation costs totaling:
| | Three Months Ended March 31, | ||||
| | 2024 |
| 2023 | ||
Equity-based compensation costs related to RSUs | | $ | | | $ | |
Equity-based compensation costs related to stock options | |
| | |
| |
Equity-based compensation costs related to ESPP | | | | | | — |
Total equity-based compensation costs | | $ | | | $ | |
Unrecognized future compensation cost as of: | | | | | | |
The following table summarizes our award activity for RSUs and stock options for the three months ended March 31, 2024:
| | |
| | |
| | RSUs | | Stock Options | |
Balance at December 31, 2023 | | |
| | |
Granted | | | | | |
Vested or Exercised | | ( | | | ( |
Forfeited | | ( | | | ( |
Balance at March 31, 2024 | | | | | |
Stock Options
The fair value of each stock option grant during the three months ended March 31, 2024 and 2023 was estimated on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions used:
|
| Three Months Ended March 31, |
| | ||||
|
| 2024 |
| 2023 |
| | ||
Approximate risk‑free rate |
| | | % | | % | | |
Volatility |
| | | % | | % | | |
Average expected life (in years) |
| | | | | | ||
Dividend yield |
| | — | % | | — | % | |
Weighted‑average grant date fair value | | $ | | | $ | | | |
Estimated fair value of total stock options granted | | $ | | | $ | | | |
Note 10 – Basic and Diluted Loss Per Share
Basic loss per share represents net loss attributable to common stock divided by the basic weighted average number of shares of common stock outstanding during the period.
Diluted loss per share also includes the dilutive effect of additional potential shares of common stock issuable from stock-based awards determined using the treasury stock method. Diluted loss per share represents net earnings divided by diluted weighted average number of shares of common stock, which includes the average dilutive effect of all potentially dilutive securities that are outstanding during the period.
14
The table below sets forth the basic and diluted loss per share calculation for the three months ended March 31, 2024 and 2023.
| | Three Months Ended March 31, | | ||||
| | 2024 | | 2023 | | ||
Net loss attributable to common stockholders | | $ | ( | | $ | ( | |
Weighted average shares outstanding – basic and diluted | | | | | | | |
Basic and diluted loss per share | | $ | ( | | $ | ( | |
Due to the net loss for the three months ended March 31, 2024 and 2023 presented above, diluted loss per share was computed without consideration to potentially dilutive instruments as their inclusion would have been anti-dilutive. The table below sets forth (in shares) potentially dilutive securities excluded from the diluted loss per share calculation for the three months ended March 31, 2024 and 2023.
| | Three Months Ended March 31, | | ||
| | 2024 |
| 2023 | |
Warrants | | |
| | |
2014 Plan & 2021 Plan - Stock Options | | |
| | |
2021 Plan - RSUs | | |
| | |
ESPP - Common Stock | | | | | |
Contingently Issued Shares of Common Stock | | — | | | |
Total potentially dilutive securities | | | | | |
Note 11 – Leases
The Company leases its facilities and certain equipment. Fixed rent 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 facility in Louisville, Colorado, is under a noncancelable operating lease with a maturity date in September 2029. In 2022, the Company amended this operating lease to incorporate a prior subleased space into the base lease and extend the term of the lease. The Company has the right to renew this operating lease for an additional
On September 1, 2021, the Company entered into an industrial operating lease agreement for its facility in Thornton, Colorado, with the initial term through March 31, 2029. Under this operating lease, the Company has one option to renew for
The Company has certain equipment leases classified as finance leases as of March 31, 2024.
The Company’s leases do not have any contingent rent payments and do not contain residual value guarantees.
The components of lease expense are as follows:
|
| Three Months Ended | | |
|
| March 31, 2024 | | |
Finance lease costs: |
| | | |
Amortization of right-of-use assets | | $ | | |
Interest on lease liabilities | |
| | |
Operating lease costs | |
| | |
Total lease expense | | $ | | |
15
The components of cash flow information related to leases are as follows:
|
| Three Months Ended | | |
|
| March 31, 2024 | | |
Operating outgoing cash flows – finance leases | | $ | | |
Financing outgoing cash flows – finance leases | |
| | |
Operating outgoing cash flows – operating leases | |
| | |
Right-of-use assets obtained in exchange for new finance lease liabilities: | | | — | |
Right-of-use assets obtained in exchange for new operating lease liabilities: | | | — | |
|
| March 31, 2024 |
|
Finance lease |
|
| |
Weighted-average remaining lease term – finance leases (in years) |
| | |
Weighted-average discount rate – finance leases |
| | % |
Operating lease |
| | |
Weighted-average remaining lease term – operating leases (in years) |
| | |
Weighted-average discount rate – operating leases |
| | % |
As of March 31, 2024, future minimum payments during the next five years and thereafter are as follows:
Fiscal year |
| Finance Lease |
| Operating Lease | ||
2024 (remaining nine months) | | $ | | | $ | |
2025 | | | | | | |
2026 | | | | | | |
2027 | | | | | | |
2028 | | | | | | |
2029 | | | — | | | |
Thereafter | | | — | | | |
Total | | | | | | |
Less present value discount | | | ( | | | ( |
Total lease liabilities | | $ | | | $ | |
Note 12 – Related Party Transactions
During the three months ended March 31, 2024, the Company recognized $
Note 13 – Income Taxes
The Company’s effective tax rate was
Note 14 – 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.
16
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 2023 Form 10-K, as such descriptions may be updated or amended in future filings we make with the SEC. Unless indicated otherwise, the following discussion and analysis of results of operations and financial condition and liquidity relates to our current continuing operations and should be read in conjunction with the consolidated financial statements and notes thereto of this Report and our 2023 Form 10-K. 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 solid-state battery technology for EV and additional markets served by battery manufacturers.
Our core technology is our proprietary solid electrolyte material, which replaces the liquid or gel electrolyte used in traditional lithium-ion batteries. We believe that our electrolyte material can improve driving range, battery life, safety performance, and battery costs.
We are also developing solid-state cells with our electrolyte, with the aim of commercializing our technology by selling our electrolyte material and licensing our cell designs. This approach is capital light, unlike other battery manufacturers who require significant production facilities and equipment. This strategy allows us to focus on our core strengths of electrolyte production and solid-state technology development.
We currently produce our electrolyte on a pilot manufacturing line, which is used in our cell development and for customer sampling. We currently develop our cells on our two pilot lines, producing multiple cell sizes to both support our partners and refine cell designs. Longer-term, we expect our pilot lines to focus on research and development.
We have partnered with industry leaders BMW, Ford Motor Company, and SK On and will continue to work closely with our partners to improve cell designs, produce electrolyte material, and commercialize our technology. Our products are currently in the development stage and require further research and improvement before we can commercialize our technology.
Recent Business Highlights
| ● | Entered into the SK On Agreements with strong early execution on technology transfer and line installation. |
| ● | Expanded electrolyte sampling with shipments to multiple potential customers. |
| ● | A-2 Sample cells remain on track with end-of-year delivery target. |
Key Factors Affecting Operating Results
We are a research and development-stage company and have not generated significant revenue through the sale of our electrolyte or licensing of our cell designs. Our ability to commercialize our products depends on several factors that present significant opportunities for us but also pose material risks and challenges, including those discussed in the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” sections of this Report, which are incorporated by reference.
Prior to reaching commercialization, we must improve our products to ensure they meet the performance and safety requirements of our customers. We also will have to continue to negotiate licensing and supply contracts with our customers on terms and conditions that are mutually acceptable. We will need to scale production of our electrolyte material to satisfy anticipated demand.
17
All of these factors will take time and affect our operating results. Since many factors are difficult to quantify, our actual operating results may be different than we currently anticipate.
Our revenue generated to date has primarily come from performance on research and development licensing activities and government contracts. We continue to deploy substantial capital to expand our production capabilities and engage in research and development programs. We also expect to continue to incur significant administrative expenses as a publicly traded company.
In addition to meeting our development goals, commercialization and future growth and demand for our products are highly dependent upon consumers adopting EVs. The market for new energy vehicles is still rapidly evolving due to emerging technologies, competitive pricing, government regulation and industry standards, and changing consumer demands and behaviors.
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.
Results of Operations
Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023
During the three months ended March 31, 2024, we continued to expand and accelerate our development efforts through increased capital and operational investments. We continued to invest in talent while expanding our facilities, production equipment, and capabilities. We expect to continue to increase our spending in all operational areas through the remainder of 2024 in order to execute our development strategy.
The following table is a consolidated summary of our operating results for the periods indicated:
| | Three Months Ended March 31, | | | | | |
| | ||||
(in thousands) |
| 2024 |
| 2023 |
| Change |
| % |
| | |||
Revenue | | $ | 5,953 | | $ | 3,792 | | $ | 2,161 | | 57 | % | |
Operating Expenses | |
| | | | | |
|
|
|
| | |
Direct costs | |
| 4,290 | | | 6,274 | |
| (1,984) |
| (32) | % | |
Research and development | |
| 18,873 | | | 11,648 | |
| 7,225 |
| 62 | % | |
Selling, general and administrative | |
| 8,571 | | | 7,188 | |
| 1,383 |
| 19 | % | |
Total operating expenses | |
| 31,734 | | | 25,110 | |
| 6,624 |
| 26 | % | |
Operating Loss | |
| (25,781) | | | (21,318) | |
| (4,463) |
| (21) | % | |
Nonoperating Income and Expense | |
| | | | | |
|
|
|
| | |
Interest income | |
| 5,117 | | | 4,835 | |
| 282 |
| 6 | % | |
Change in fair value of warrant liabilities | | | (501) | | | (2,662) | | | 2,161 | | NM | | |
Interest expense | |
| (42) | | | (13) | |
| (29) |
| (223) | % | |
Total nonoperating income and expense | | $ | 4,574 | | | 2,160 | | $ | 2,414 |
| 112 | % | |
Net Loss Attributable to Common Stockholders | | $ | (21,207) | | $ | (19,158) | | $ | (2,049) |
| (11) | % | |
Other Comprehensive Income (Loss) | |
| (579) | | | 885 | | | (1,464) |
| NM | | |
Comprehensive Loss Attributable to Common Stockholders | | $ | (21,786) | | $ | (18,273) | | $ | (3,513) |
| (19) | % | |
NM = Not meaningful
The key factors driving our results of operations for the three months ended March 31, 2024, including our increased operating loss as compared to the corresponding period in 2023, were as follows:
| ● | Revenue – revenue from the execution of our JDAs and collaborative arrangement deliverables drove the overall increase for the period, while revenue from performance on government contracts decreased slightly. We expect revenue to increase in the remainder of 2024 as we execute on our deliverables under our JDAs and other collaborative arrangements. |
18
| ● | Direct costs – our direct costs decreased for the period primarily as a result of accelerated completion of JDA milestones. We expect direct costs to increase in the remainder of 2024 as we execute on our deliverables under our JDAs and other collaborative arrangements. |
| ● | Research and development – our research and development costs increased for the period primarily as a result of increased labor and material costs as we expanded the development efforts of our battery cells and electrolyte material. We expect our research and development costs to remain at increased levels as we continue increasing the pace and scope of our development efforts. |
| ● | Selling, general and administrative – our selling, general and administrative expenses increased for the period primarily due to additional use of outside professional services and additional planned hiring and workforce development associated with increasing our headcount. We expect our selling, general and administrative expenses to increase as a result of additional planned hiring and workforce development to, among other things, support our Korean operations. |
| ● | Operating expenses – non-cash stock-based compensation costs increased for the period across research and development costs and selling, general and administrative expenses related to our increased headcount. |
| ● | Nonoperating income – our nonoperating income increased for the period due to a decreased loss on fair value adjustment of warrant liabilities and an increase in interest income. |
Liquidity and Capital Resources
Sources of Liquidity
Our primary sources of cash have historically been derived from the sale of equity, with a small portion coming from performance on our JDAs, government contracts, and other collaborative arrangements.
As of March 31, 2024 and December 31, 2023, we had total liquidity, as set forth below:
(in thousands) |
| March 31, 2024 | | December 31, 2023 | | ||
Cash and cash equivalents | | $ | 14,019 | | $ | 34,537 | |
Marketable securities | |
| 132,619 | |
| 141,505 | |
Long-term investments | |
| 232,307 | |
| 239,566 | |
Total liquidity | | $ | 378,945 | | $ | 415,608 | |
| | | | | | | |
Total current liabilities | | $ | 18,232 | | $ | 15,879 | |
Short-Term Liquidity Requirements
Our short-term liquidity requirements include operating and capital expenses needed to further our research and development programs and to further optimize our pilot production lines and electrolyte manufacturing capabilities. We anticipate that our most significant capital expenditures for the remainder of 2024 will relate to finishing construction of our electrolyte research facility and enhancing the capabilities of our electrolyte production facility. We expect to fund our short-term liquidity requirements through our cash on hand and other liquid assets.
Long-Term Liquidity Requirements
We believe that our cash on hand is sufficient to meet our operating cash needs and 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 also believe that we have adequate cash on hand for our stock repurchase program should we choose to execute additional share repurchases.
We may need additional cash if there are material changes to our business conditions or other developments, including changes to our operating plan, development progress, negotiations with OEMs, cell manufacturers, or other suppliers, market adoption
19
of EVs, supply chain challenges, competitive pressures, inflation, 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. We also may opportunistically seek to enhance our liquidity through equity or debt financing, if such financing becomes available to us on terms that we consider favorable. If 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, which may adversely affect our development, business, operating results, financial condition and prospects.
Stock Repurchase Program
On January 23, 2024, we announced that our Board approved a stock repurchase program authorizing us to purchase up to $50 million of our outstanding common stock. Under the stock repurchase program, we may purchase shares of our common stock from time to time until the repurchase program expires on December 31, 2025. The shares of common stock may be purchased on the open market, in unsolicited negotiated transactions, or in any manner that complies with the provisions of Rule 10b-18 of the Exchange Act. Management’s decision to repurchase shares of common stock will depend on a number of factors, such as the price of our common stock, economic and market conditions, and corporate and regulatory requirements. During the three months ended March 31, 2024, the Company repurchased 3,186,638 shares of common stock at an average price of $1.52 per share for an aggregate cost of approximately $4.96 million.
Cash Flows
The following table summarizes our cash flows from operating, investing, and financing activities for the periods presented:
| | Three Months Ended March 31, | | ||||
(in thousands) |
| 2024 |
| 2023 | | ||
Net cash and cash equivalents used in operating activities | | $ | (29,065) | | $ | (19,631) | |
Net cash and cash equivalents provided by (used in) investing activities | | $ | 13,639 | | $ | (20,677) | |
Net cash and cash equivalents provided by (used in) financing activities | | $ | (5,092) | | $ | 73 | |
Cash used in operating activities:
Cash used in operating activities increased from March 31, 2023 to 2024. The increase was primarily attributable to our operating loss, which was driven by a continued increase in direct and research and development costs. We expect cash used in operating activities to increase as we accelerate the pace and scope of our development efforts and work to achieve commercialization of our products.
Cash provided by (used in) investing activities:
Cash provided by (used in) in investing activities increased from March 31, 2023 to 2024 primarily due to net effect of proceeds from the sales of marketable securities and decreased capital expenditures for property, plant and equipment. As our production processes are scaled for commercialization, especially with respect to our electrolyte material, we expect capital expenditures to increase.
Cash provided by (used in) financing activities:
Cash used in financing activities for the three months ended March 31, 2024 was primarily related to the net effect of cash utilized for the stock repurchase program, partially offset by cash received from the exercise of stock options. Cash provided by financing activities for the three months ended March 31, 2023 was primarily from the exercise of stock options. We expect our cash used in financing activities to increase as we execute share repurchases through the remainder of 2024.
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements, as defined under SEC rules.
20
Critical Accounting Estimates
There were no significant and material changes in our critical accounting policies and use of estimates during the three months ended March 31, 2024 as compared to those disclosed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our 2023 Form 10-K.
Recent Accounting Pronouncements
See Note 2 of our unaudited financial statements included in this Report as well as Note 2 of our audited financial statements included in our 2023 Form 10-K for more information.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined in Rule 12b-2 under the Exchange Act. As a result, pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information required by this Item.
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, 2024.
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, 2024 covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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 2023 Form 10-K. 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 our 2023 Form 10-K.
21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Share Repurchases
The following table summarizes our common stock repurchase program activity for the three months ended March 31, 2024:
Period | | Total Number of Shares Purchased | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Program(1) | | Approximate Dollar Value of Shares that May Yet Be Purchased under the Program(1) | |||||||||
January 1 - January 31, 2024 | | — | | $ | — | | — | | $ | 50,000,000 | |||||||
February 1 - February 29, 2024 | | — | | $ | — | | — | | $ | 50,000,000 | |||||||
March 1 - March 31, 2024 | | 3,183,638 | | $ | 1.52 | | 3,183,638 | | $ | 45,085,686 | |||||||
Total | | 3,183,638 | | $ | 4,914,314 | | 3,183,638 | | | | |||||||
(1)On January 23, 2024, we announced that our Board approved a stock repurchase program authorizing us to purchase up to $50 million of our outstanding common stock. Under the repurchase program, we may purchase shares of our common stock from time to time until the repurchase program expires on December 31, 2025. The shares of common stock may be purchased on the open market, in unsolicited negotiated transactions, or in any manner that complies with the provisions of Rule 10b-18 of the Exchange Act. Management’s decision to repurchase shares of common stock will depend on a number of factors, such as the price of our common stock, economic and market conditions, and corporate and regulatory requirements.
22
Item 6. Exhibits
| | | | Incorporated by Reference | ||||||
Exhibit Number |
| Description | | Schedule Form | | File Number | | Exhibit/Annex | | Filing Date |
3.1 | | | 8-K | | 001-40284 | | 3.1 | | December 13, 2021 | |
3.2 | | | 8-K | | 001-40284 | | 3.1 | | November 21, 2022 | |
10.1± | | | 8-K | | 001-40284 | | 10.1 | | January 16, 2024 | |
10.2± | | | 8-K | | 001-40284 | | 10.2 | | January 16, 2024 | |
10.3± | | | 8-K | | 001-40284 | | 10.3 | | January 16, 2024 | |
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.
± Certain portions of this exhibit have been omitted in accordance with Regulation S-K Item 601. The Company agrees to furnish an unredacted copy of the exhibit to the SEC upon request.
23
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 8, 2024 | Solid Power, Inc. |
| By: | /s/ John Van Scoter |
| Name: | John Van Scoter |
| Title: | President, Chief Executive Officer, and Director |
| (Principal Executive Officer) | |
| By: | /s/ Kevin Paprzycki |
| Name: | Kevin Paprzycki |
| Title: | Chief Financial Officer and Treasurer |
| (Principal Financial and Accounting Officer) | |
24
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, John Van Scoter, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Solid Power, Inc. for the quarterly period ended March 31, 2024;
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 8, 2024 | ||
| | |
| By: | /s/ John Van Scoter |
| John Van Scoter | |
| President and 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, 2024;
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 8, 2024 | ||
| | |
| 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. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Solid Power, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, to the best of my knowledge, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 8, 2024 | ||
| | |
| By: | /s/ John Van Scoter |
| John Van Scoter | |
| President and Chief Executive Officer | |
| (Principal Executive Officer) | |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Solid Power, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, to the best of my knowledge, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 8, 2024 | ||
| | |
| By: | /s/ Kevin Paprzycki |
| Kevin Paprzycki | |
| Chief Financial Officer and Treasurer | |
| (Principal Financial and Accounting Officer) | |