Solid Power, Inc 10-K for FY2022

Solid Power, Inc. (SLDP)

10-K 2023-03-01 For: 2022-12-31

Added on April 04, 2026

About this 10-K

Solid Power, Inc filed this 10-K on March 1, 2023, covering the fiscal year ended December 31, 2022 (FY2022).

Headline figures

Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $11.79M; up 334.7% from $2.71M a year earlier
Net loss: $9.56M; compared with net income of $18.09M a year earlier
Diluted EPS: -$0.05; compared with $0.11 a year earlier

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Delaware		86-1888095
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)


486 S. Pierce Ave., Suite E
Louisville, Colorado		80027
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	SLDP	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50	SLDPW	The Nasdaq Stock Market LLC


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
			Emerging growth company ☐


PART I		7
Item 1.	Business	7
Item 1A.	Risk Factors	15
Item 1B.	Unresolved Staff Comments	42
Item 2.	Properties	42
Item 3.	Legal Proceedings	42
Item 4.	Mine Safety Disclosures	42

PART II		43
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	43
Item 6.	[Reserved]	44
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 8.	Financial Statements and Supplementary Data	53
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	84
Item 9A.	Controls and Procedures	84
Item 9B.	Other Information	85
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	85

PART III		86
Item 10.	Directors, Executive Officers and Corporate Governance	86
Item 11.	Executive Compensation	86
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	86
Item 13.	Certain Relationships and Related Transactions, and Director Independence	86
Item 14.	Principal Accounting Fees and Services	86

PART IV		87
Item 15.	Exhibits, Financial Statement Schedules	87
Item 16.	Form 10-K Summary	90

Term		Definition
Ah		Ampere hour
APQP		Advanced Product Quality Planning
BMW		BMW of North America LLC
BMW Holding		BMW Holding B.V.
BMW Nomination Agreement		Board Nomination Support Agreement, dated May 5, 2021, between Solid Power and BMW Holding
Board		The Board of Directors of Solid Power, Inc.
Business combination		The transactions contemplated by the Business Combination Agreement.
Business Combination Agreement		Business Combination Agreement and Plan of Reorganization, dated June 15, 2021 by and among the Company, Merger Sub, and Legacy Solid Power, as amended.
Bylaws		Amended and Restated Bylaws of Solid Power, Inc.
Closing Date		December 8, 2021
DCRC		Decarbonization Plus Acquisition Corporation III
DGCL		Delaware General Corporation Law
EV		Battery electric vehicle
EV cells		Prototype cell formats between 60 and 100 Ah
EV line		Our pilot cell production line that is capable of producing cells between 60 and 100 Ah.
Exchange Act		Securities Exchange Act of 1934, as amended
Ford		Ford Motor Company
GAAP		U.S. generally accepted accounting principles
Legacy Solid Power		Solid Power Operating, Inc., a Colorado corporation
Li2S		Lithium-sulfide
Merger Sub		DCRC Merger Sub, Inc., a Delaware corporation
NMC		Lithium nickel manganese cobalt oxide
OEM		Automotive original equipment manufacturers
OSHA		Occupational Safety and Health Act
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 in conjunction with the business combination.
Public Warrants		Our publicly-traded warrants
Report		This Annual Report on Form 10-K
Sarbanes-Oxley Act		The Sarbanes-Oxley Act of 2002, as amended
SEC		Securities and Exchange Commission
Second A&R Charter		Second amended and restated certificate of incorporation of Solid Power, Inc.
Series B Financing		Our $135.6 million Series B investment round, which closed in May 2021
SK On		SK On Co., Ltd.
Solid Power / the Company / we / us / our		Solid Power, Inc., a Delaware corporation (f/k/a Decarbonization Plus Acquisition Corporation III)



☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Category	Stage	Standard	Solid Power Cell Format
Pre-A sample	Proof of concept	1. Produce cells to demonstrate functionality towards basic product requirements.	0.2 Ah, 2 Ah, 20 Ah, and EV
A-sample	Cell concept validation	1. Evaluate multiple designs against customer requirements. 2. Suppliers tested and selected ahead of B-sample.	EV
B-sample	Cell design validation	1. Cell design is frozen. 2. Samples are produced on pilot equipment. 3. Ensure sample performance meets customer specifications. 4. Module and pack testing and validation begins.	EV
C-sample	Cell process validation	1. Frozen design manufactured on production equipment. 2. Ensure production samples continue to meet customer specifications. 3. Continued pack testing and prototype vehicle integration.	EV
D-sample	Cell production validation	1. Full cell production rates, quality and process certifications. 2. Vehicle level testing.	EV
Product	Sales product	1. Supply customer at requested volumes.	EV


Name	Position	Age
Joshua Buettner-Garrett	Chief Technology Officer	37
David Jansen	Interim Chief Executive Officer, President, Chairman of the Board, and Class III Director	61
Derek Johnson	Chief Operating Officer	45
James Liebscher	Chief Legal Officer and Secretary	42
Kevin Paprzycki	Chief Financial Officer and Treasurer	52


	Year Ended December 31,
(in thousands)	2022		2021		Change		%
Revenue	$	11,789	$	2,712	$	9,077	335	%
Operating Expenses
Direct costs		9,592		3,073		6,519	212	%
Research and development		38,592		17,102		21,490	126	%
Marketing and sales		3,692		3,428		264	8	%
General and administrative		19,032		5,655		13,377	237	%
Total operating expenses		70,908		29,258		41,650	142	%
Operating Loss		(59,119)		(26,546)		(32,573)	(123)	%
Nonoperating Income (Expense)
Interest income		4,692		56		4,636	NM
Change in fair value of warrant liabilities		40,903		51,233		(10,330)	(20)	%
Interest expense		(42)		(394)		352	(89)	%
Other income (expense)		3,784		(3,602)		7,386	NM
Loss from change in fair value of embedded derivative liability		—		(2,680)		2,680	(100)	%
Total nonoperating income	$	49,337	$	44,613	$	4,724	NM

Pretax Income (Loss)		(9,782)		18,067		(27,849)	(154)	%
Income tax benefit		(227)		(25)		(202)	NM
Net Income (Loss)	$	(9,555)	$	18,092	$	(27,647)	(153)	%
Premium paid on repurchase of redeemable convertible preferred stock		—		(5,436)		5,436	NM
Net Income (Loss) attributable to Common Stockholders	$	(9,555)	$	12,656	$	(22,211)	(175)	%
Other Comprehensive Loss
Unrealized loss on marketable securities		(3,159)		—		(3,159)	NM
Comprehensive loss attributable to Common Stockholders	$	(12,714)	$	12,656	$	(25,370)	NM


(in thousands)	December 31, 2022		December 31, 2021
Cash and cash equivalents	$	50,123	$	513,447
Marketable securities		272,957		75,885
Long-term investments		172,974		—
Total liquidity	$	496,054	$	589,332


Valuation of Private Placement Warrant Liability
Description	Judgments and Uncertainties	Effect if Results Differ From Assumptions

The private placement warrant liability is classified as a liability, in accordance with ASC Topic 815, as they do not satisfy the criteria to be classified as equity based on the indexation criteria. Public and private warrants are recorded at their fair value at the date of issuance, and subsequently remeasured at each reporting period end. Any change in value is recognized through the consolidated statement of operations.	Valuation of private placement warrants requires that we make significant judgments and assumptions related to the fair value based on the Black-Scholes model including term, stock price, volatility and the selection of guideline public companies, risk free rate and dividend yield.	If we were to change our judgments or estimates used in valuation of private warrants, it could cause a material increase or decrease to the gain or loss realized from the change in fair value of private placement warrants, and to the underlying warrant liability.


Stock-Based Compensation
Description	Judgments and Uncertainties	Effect if Results Differ From Assumptions

We record stock-based compensation expense according to the provisions of ASC Topic 718 – Stock Compensation. ASC Topic 718 requires all share-based awards to employees, including grants of employee stock options, restricted stock units, and shares purchased through the Company’s ESPP Plan to be recognized in the financial statements based on their fair values. The grant date fair value of Legacy Solid Power’s common stock was historically determined by its board of directors with the assistance of management and an independent valuation. As of December 9, 2021, our common stock is publicly traded, and the fair value is based on the closing market price on the date grants are made.	Under the provisions of ASC Topic 718, we determine the appropriate fair value model to be used for valuing share-based issuances and the amortization method for recording compensation cost, which can be impacted by the following assumptions: ● expected term ● expected volatility ● expected dividend yield ● risk-free interest rate	If we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of stock-based compensation expense reported.


Collaborative Revenue
Description	Judgments and Uncertainties	Effect if Results Differ From Assumptions

We recognize revenue from our research and development collaboration agreements representing joint operating activities in accordance with ASC Topic 808, Collaborative Arrangements. The elements of the collaboration agreements in which both parties to the contract are active participants and to which both parties are exposed to significant risks and rewards that are dependent on the commercial success of the efforts under the contract are recorded as collaborative arrangements.	Our revenue recognition accounting methodology requires us to make significant estimates and assumptions, and to apply professional judgment. Collaborative revenues from cost-based contracts are recognized based on costs incurred during each period plus any earned fee. Contract costs include all direct labor, subcontract costs, costs for materials and indirect costs related to the contract performance that are allowable under the provisions of the contract. Collaborative revenues from fee-based contracts are recognized based on costs incurred to meet contractually defined milestones and deliverables along with our assessment of achievement of those measurable deliverables under the contract or based on appropriate over time methods.	If we were to change our judgments or estimates, it could cause a material increase or decrease in the amount of revenue or deferred revenue that we report in a particular period.


Leases
Description	Judgments and Uncertainties	Effect if Results Differ From Assumptions

Under ASC 842, at contract inception we determine if an arrangement meets the definition of a lease, as either operating or financing leases. At lease commencement, we record and recognize right-of-use assets for the lease liability amount and initial direct costs incurred, offset by lease incentives received. We record lease liabilities for the net present value of future lease payments over the lease term. The discount rate we use is generally our estimated incremental borrowing rate unless the lessor’s implicit rate is readily determinable. We calculate discount rates periodically to estimate the rate we would pay to borrow the funds necessary to obtain an asset of similar value, over a similar term, with a similar security.	Judgments made by management for our lease obligations include the determination of our incremental borrowing rate and the length of the lease term, which includes the determination of renewal options that are reasonably assured. We use our estimated incremental borrowing rate in determining the present value of lease payments for purposes of determining lease classification and recording lease liabilities and lease assets on our consolidated balance sheets. Our incremental borrowing rate is determined based on a synthetic credit rating, determined using a valuation model, adjusted to reflect a secured credit rating and a developed spread curve, if applicable, applied to a risk-free rate yield curve. The lease term can affect the classification of a lease as finance or operating for accounting purposes, the amount of the lease liability and corresponding right-of-use lease asset recognized, the term over which related leasehold improvements for each facility are amortized and any	These judgments may produce materially different amounts of depreciation, amortization and rent expense, right-of-use assets, and lease liabilities than would be reported if different assumed lease terms were used.


Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)	54
Consolidated Balance Sheets	57
Consolidated Statements of Operations	58
Consolidated Statements of Stockholders’ Equity	59
Consolidated Statements of Cash Flows	60
Notes to Consolidated Financial Statements	61


	December 31,
	2022		2021
Assets
Current Assets
Cash and cash equivalents	$	50,123	$	513,447
Marketable securities		272,957		75,885
Contract receivables		1,840		829
Prepaid expenses and other current assets		2,888		4,216
Total current assets		327,808		594,377
Property, Plant and Equipment, net		82,761		22,082
Right-Of-Use Operating Lease Asset, net		7,725		—
Right-Of-Use Financing Lease Asset, net		922		—
Other Assets		1,148		602
Long-term Investments		172,974		—
Intangible Assets, net		1,108		619
Total assets	$	594,446	$	617,680
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	10,070	$	4,326
Current portion of long-term debt		7		120
Deferred revenue		4,050		500
Accrued and other current liabilities:
Accrued compensation		4,528		1,151
Other accrued liabilities		1,256		2,269
Operating lease liabilities, short-term		549		—
Financing lease liability, short-term		273		—
Total current liabilities		20,733		8,366
Long-term Debt		—		10
Warrant Liabilities		9,117		50,020
Operating Lease Liabilities, Long-Term		8,622		—
Financing Lease Liabilities, Long-Term		602		—
Other Long-term Liabilities		—		393
Deferred Taxes		—		226
Total liabilities		39,074		59,015
Stockholders’ Equity
Common Stock, $0.0001 par value; 2,000,000,000 shares authorized; 176,007,184 and 167,557,988 shares issued and outstanding as of December 31, 2022 and 2021, respectively		18		17
Additional paid-in capital		577,603		568,183
Accumulated deficit		(19,090)		(9,535)
Accumulated other comprehensive loss		(3,159)		—
Total stockholders’ equity		555,372		558,665
Total liabilities and stockholders’ equity	$	594,446	$	617,680


	For the Years Ended December 31,
	2022		2021		2020
Revenue	$	11,789	$	2,712	$	2,103
Operating Expenses
Direct costs		9,592		3,073		1,670
Research and development		38,592		17,102		9,594
Marketing and sales		3,692		3,428		1,205
General and administrative		19,032		5,655		1,227
Total operating expenses		70,908		29,258		13,696
Operating Loss		(59,119)		(26,546)		(11,593)
Nonoperating Income (Expense)
Interest income		4,692		56		28
Change in fair value of warrant liabilities		40,903		51,233		—
Interest expense		(42)		(394)		(361)
Other income (expense)		3,784		(3,602)		—
Loss from change in fair value of debt		—		—		(437)
Loss from change in fair value of embedded derivative liability		—		(2,680)		(2,817)
Gain on loan extinguishment		—		—		923
Total nonoperating income (expense)		49,337		44,613		(2,664)
Pretax Income (Loss)		(9,782)		18,067		(14,257)
Income tax (benefit) expense		(227)		(25)		118
Net Income (Loss)	$	(9,555)	$	18,092	$	(14,375)
Premium paid on repurchase of redeemable convertible preferred stock		—		(5,436)		—
Net Income (Loss) Attributable to Common Stockholders	$	(9,555)	$	12,656	$	(14,375)
Other Comprehensive Loss
Unrealized loss on marketable securities		(3,159)		—		—
Comprehensive Income (Loss) Attributable to Common Stockholders	$	(12,714)	$	12,656	$	(14,375)
Basic earnings (loss) per share		(0.05)		0.13		(0.21)
Diluted earnings (loss) per share		(0.05)		0.11		(0.21)
Weighted average shares outstanding – basic		174,374,386		95,477,472		69,228,444
Weighted average shares outstanding – diluted		174,374,386		114,910,129		69,228,444


			Common Stock
	Mezzanine						Additional		Accumulated		Accumulated		Total Stockholders’
	Equity		Shares		Amount		paid-in capital		deficit		OCI		Equity
Balance - December 31, 2019	$	29,096		7,213,730		1	$	—	$	(16,197)	$	—	$	(16,196)
Retroactive application of recapitalization		(29,096)		61,573,943		6		26,145		2,945		—	$	29,096
Adjusted Balance Beginning of Period	$	—		68,787,673	$	7	$	26,145	$	(13,252)	$	—	$	12,900
Net loss		—		—		—		—		(14,375)		—		(14,375)
Bank warrant issuance		—		—		—		16		—		—		16
Beneficial Conversion feature on convertible debt		—		—		—		5,125		—		—		5,125
Stock options exercised		—		1,097,370		—		24		—		—		24
Stock-based compensation expense		—		—		—		182		—		—		182
Balance - December 31, 2020	$	—		69,885,043	$	7	$	31,492	$	(27,627)	$	—	$	3,872
Net income		—		—		—		—		18,092		—		18,092
Business Combination, net of redemptions and transaction costs of $47,888		—		63,039,829		6		394,587		—		—		394,593
Beneficial Conversion feature on convertible debt		—		—		—		4,875		—		—		4,875
Redemption of Series A-1 redeemable preferred stock*		—		(1,065,432)		—		(6,041)		—		—		(6,041)
Issuance of Series B redeemable preferred stock net of issuance costs of $4,511 and settlement of associated convertible preferred stock liability*		—		27,930,997		3		140,436		—		—		140,439
Warrants exercised		—		6,606,621		1		14		—		—		15
Stock options exercised		—		1,160,930		—		106		—		—		106
Stock-based compensation expense		—		—		—		2,714		—		—		2,714
Balance - December 31, 2021	$	—		167,557,988	$	17	$	568,183	$	(9,535)	$	—	$	558,665
Net loss		—		—		—		—		(9,555)		—		(9,555)
Withholding of Employee taxes related to stock-based compensation		—		—		—		(58)		—		—		(58)
Shares issued for the vesting of restricted stock units		—		20,672		—		—		—		—
Stock options exercised		—		8,428,524		1		818		—		—		819
Transaction costs		—		—		—		(12)		—		—		(12)
Unrealized loss on marketable securities		—		—		—		—		—		(3,159)		(3,159)
Stock-based compensation expense		—		—		—		8,672		—		—		8,672
Balance - December 31, 2022	$	—		176,007,184	$	18	$	577,603	$	(19,090)	$	(3,159)	$	555,372


	December 31, 2022		December 31, 2021
Contract receivables not billed	$	1,083	$	310


		Depreciable Life - Years
Commercial production equipment		5 years
Laboratory equipment		5 years
Furniture and Computer Equipment		3-7 years
Leasehold improvements		Lesser of asset life or lease term


	Recapitalization
Cash – DCRC trust and cash, net of redemptions	$	347,914
Cash – PIPE Financing		195,000
Cash – Sponsor Funds		264
Non-cash net assets acquired from DCRC		(100,697)
Less: transaction costs and advisory fees for Legacy Solid Power allocated to equity		(5,991)
Less: transaction costs and advisory fees for DCRC		(41,897)
Net Business Combination	$	394,593
Add: non-cash net assets acquired from DCRC		100,697
Add: accrued transaction costs and advisory fees		80
Net cash contributions from Business Combination	$	495,370


		Number of Shares
DCRC Class A common stock outstanding prior to Business Combination		43,710,000
DCRC Class B common stock outstanding prior to Business Combination		40,000
Less: redemption of DCRC Class A common stock		(210,171)
Shares of Common Stock issued in PIPE Financing		19,500,000
Shares of Common Stock issued to Legacy Solid Power stockholders		104,518,159
Total shares of Common Stock outstanding immediately after Business Combination		167,557,988


	December 31, 2022		December 31, 2021
Construction in progress
Louisville, Colorado – 2^nd cell pilot line	$	2,010	$	6,875
Louisville, Colorado – Other capital projects		2,206		—
Thornton, Colorado – Increased scale electrolyte production		35,820		943


	2022				2021
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Intangible assets:
Licenses	$	149	$	(51)	$	149	$	(42)
Patents pending		984		—		503		—
Trademarks and trademarks pending		26		—		9		—
Total amortized intangible assets	$	1,159	$	(51)	$	661	$	(42)


	2022		2021
Various equipment notes payable to banks in monthly installments ranging from $1 to $2, including interest at 6.255 percent to 12.18 percent maturing from April 2022 through April 2023. The notes are collateralized by the financed equipment.	$	7	$	130
Total		7		130
Less current portion		7		120
Long-term portion	$	—	$	10


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets
Commercial Paper	$	165,179	$	—	$	—	$	165,179
Corporate Bonds	$	227,957	$	—	$	—	$	227,957
Government Bonds	$	42,865	$	—	$	—	$	42,865
U.S. Treasuries		9,930		—		—		9,930

Liabilities
Public Warrants	$	4,900	$	—	$	—	$	4,900
Private Warrants	$	—	$	4,217	$	—	$	4,217


	December 31, 2022			December 31, 2021
Exercise Price	$	11.50		$	11.50
Stock Price	$	2.54		$	8.74
Volatility		71.3	%		48.9	%
Term		3.94			4.94
Risk-free rate		4.03	%		1.24	%


	Public Warrants		Private Warrants
	Level 1 Fair Value		Level 2 Fair Value
December 31, 2021	$	2.27	$	3.07
Change in fair value	$	(1.85)	$	(2.52)
December 31, 2022	$	0.42	$	0.55


			December 31,		Change in Fair		December 31,
Warrant Class	Level	Shares	2021		Value		2022
Public Warrants	1	11,666,636	$	26,483	$	(21,583)	$	4,900
Private Warrants	2	7,666,667	$	23,537	$	(19,320)	$	4,217
Total		19,333,303	$	50,020	$	(40,903)	$	9,117


	December 31, 2022	December 31, 2021
Option awards granted under 2021 Plan	1,730,564	—
RSU awards granted under 2021 Plan	1,292,429	—


				Weighted-average
				Remaining
	Number of	Weighted-average		Contractual Term
Options	Shares	Exercise Price		(in years)
Outstanding at January 1, 2020	23,020,981	$	0.06	7.06
Granted	1,719,754	$	0.16
Exercised	(1,097,370)	$	0.02
Forfeited or expired	(167,381)	$	0.15
Outstanding at December 31, 2020	23,475,984	$	0.06	6.53

Outstanding at January 1, 2021	23,475,984	$	0.06	6.53
Granted	12,285,359	$	5.10
Exercised	(1,160,930)	$	0.09
Forfeited or expired	(192,464)	$	0.84
Outstanding at December 31, 2021	34,407,949	$	1.86	6.98

Outstanding at January 1, 2022	34,407,949	$	1.86	6.98
Granted	1,730,564	$	7.19
Exercised	(8,428,524)	$	0.10
Forfeited or expired	(1,711,817)	$	4.64
Outstanding at December 31, 2022	25,998,172	$	2.60	6.31

Exercisable at December 31, 2020	18,023,695	$	0.04	5.96
Exercisable at December 31, 2021	19,603,474	$	0.05	5.21
Exercisable at December 31, 2022	18,202,064	$	1.19	5.14


	Years Ended December 31,
	2022		2021		2020
Net income (loss) attributable to common stockholders	$	(9,555)	$	12,656	$	(14,375)
Weighted average shares outstanding – basic		174,374,386		95,477,472		69,228,444
Weighted average shares outstanding – diluted		174,374,386		114,910,129		69,228,444

Basic earnings (loss) per share	$	(0.05)	$	0.13	$	(0.21)
Diluted earnings (loss) per share	$	(0.05)	$	0.11	$	(0.21)


	December 31, 2022		December 31, 2021
Finance lease costs:
Amortization of right-of-use assets	$	92	$	—
Interest on lease liabilities		28		—
Operating lease costs		850		—
Total lease expense	$	970	$	—


	December 31, 2022		December 31, 2021
Operating outgoing cash flows – finance lease	$	24	$	—
Financing outgoing cash flows – finance lease		142		—
Operating outgoing cash flows – operating lease		568		—
Right-of-use assets obtained in exchange for new finance lease liabilities		1,014		—
Right-of-use assets obtained in exchange for new operating lease liabilities		8,947		—