Solid Power(SLDP) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Solid Power, Inc.'s unaudited condensed consolidated financial statements, covering balance sheets, operations, cash flows, and accounting notes Condensed Consolidated Balance Sheets Total assets decreased slightly to $597.8 million, driven by reduced cash, while liabilities decreased to $44.8 million due to lower warrant liabilities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $597,779 | $617,680 | | Cash and cash equivalents | $97,700 | $513,447 | | Marketable securities & Long-term Investments | $409,873 | $75,885 | | Property, Plant and Equipment, net | $74,381 | $22,082 | | Total Liabilities | $44,828 | $59,015 | | Warrant Liabilities | $21,837 | $50,020 | | Total Stockholders' Equity | $552,951 | $558,665 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Q3 revenue increased to $2.8 million, but operating loss widened to $15.6 million; nine-month net loss narrowed to $9.1 million due to warrant liability fair value change Statement of Operations Highlights (in thousands) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,813 | $628 | $7,591 | $1,669 | | Total operating expenses | $18,412 | $9,109 | $49,199 | $20,492 | | Operating loss | $(15,599) | $(8,481) | $(41,608) | $(18,823) | | Change in fair value of warrant liabilities | $0 | $0 | $28,183 | $0 | | Net loss | $(12,399) | $(8,450) | $(9,076) | $(24,864) | | Net loss per share | $(0.07) | $(0.08) | $(0.05) | $(0.28) | Condensed Consolidated Statements of Cash Flows Net cash used in operations increased to $30.5 million, investing activities surged to $385.8 million, leading to a significant decrease in cash to $97.7 million Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(30,486) | $(18,033) | | Net cash used in investing activities | $(385,782) | $(6,762) | | Net cash provided by financing activities | $521 | $129,093 | | Net decrease in cash | $(415,747) | $104,298 | | Cash at end of period | $97,700 | $109,272 | Notes to Condensed Consolidated Financial Statements Notes detail the company's all-solid-state battery business, reverse recapitalization, property and equipment investments, fair value measurements, and stock-based compensation - The company is developing all-solid-state battery cell technology for EVs, planning to license its technology and sell its sulfide-based solid electrolyte[30] - The December 2021 business combination with DCRC was accounted for as a reverse recapitalization, with Legacy Solid Power as the accounting acquirer[32][45] - Net property, plant, and equipment increased to $74.4 million from $22.1 million, driven by expanded electrolyte production and a second EV cell pilot line[49][50][51] - Total stock-based compensation expense for the nine months ended September 30, 2022, was $6.5 million, a significant increase from $1.0 million in the prior year[84] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's all-solid-state battery development, operational updates including cell shipments and facility expansion, and financial results highlighting revenue growth, increased expenses, and liquidity Overview Solid Power is developing all-solid-state battery cells for EVs, shipping 20 Ah cells to OEMs, expanding electrolyte production, and pursuing a 'capital light' licensing and sales model - The company began shipping 20 Ah cells to automotive OEM partners for initial testing during Q3 2022[108] - Construction is underway for a second facility in Thornton, CO, to expand sulfide-based electrolyte production, expected to begin operations in Q1 2023[108] - The business model involves licensing cell designs and selling its proprietary sulfide-based solid electrolyte, aiming for a 'capital light' strategy[110][112] Results of Operations Nine-month revenue increased by 355% to $7.6 million, but operating expenses grew 140% to $49.2 million, resulting in a $41.6 million operating loss, though net loss improved to $9.1 million due to warrant liabilities Comparison of Operating Results (in thousands) | Metric | Nine Months 2022 | Nine Months 2021 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $7,591 | $1,669 | $5,922 | 355% | | Research and development | $24,811 | $10,709 | $14,102 | 132% | | General and administrative | $13,212 | $6,200 | $7,012 | 113% | | Total operating expenses | $49,199 | $20,492 | $28,707 | 140% | | Operating Loss | $(41,608) | $(18,823) | $(22,785) | 121% | | Net loss | $(9,076) | $(24,864) | $15,778 | (63)% | - The increase in operating loss was driven by higher R&D costs from expanded development efforts and increased G&A costs related to being a public company[127] Liquidity and Capital Resources Total liquidity was $507.6 million, deemed sufficient for the next 12 months, with significant capital expenditures planned for the new electrolyte production facility Total Liquidity (in thousands) | Component | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $97,700 | $513,447 | | Marketable securities | $270,839 | $75,885 | | Long-term investments | $139,034 | $0 | | Total liquidity | $507,573 | $589,332 | - Management believes current liquidity is sufficient to meet operating and capital needs for at least the next 12 months[130] - Significant capital expenditures for the next 12 months will be for the construction of the second production facility in Thornton, Colorado[129] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk occurred during Q3 2022, consistent with prior disclosures in the Annual Report on Form 10-K - There have been no material changes to the Company's market risk during the third quarter of 2022[139] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of September 30, 2022, with no material changes to internal controls, and ongoing remediation of a prior material weakness - Management concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective[140] - The company is continuing to remediate a material weakness in internal control over financial reporting, with completion expected by the end of 2022[141] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any legal proceedings likely to have a material adverse effect on its business - The company is not currently involved in any legal proceedings expected to have a material adverse effect on the business[144] Item 1A. Risk Factors No material changes to the company's risk factors have occurred since the filing of its 2021 Annual Report on Form 10-K - There have been no material changes to the company's risk factors since its 2021 Annual Report on Form 10-K[145] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including certifications by the CEO and CFO, and XBRL data files - The report includes a list of filed exhibits, such as the Business Combination Agreement, corporate governance documents, and required certifications[147]