Solid Power(SLDP) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Solid Power reported increased revenue but a wider operating loss in Q1 2022, maintaining strong liquidity with $450.4 million cash Condensed Consolidated Balance Sheets Total assets slightly decreased to $613.5 million as of March 31, 2022, while total liabilities increased to $63.6 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $450,405 | $513,447 | | Marketable securities | $102,910 | $75,885 | | Total current assets | $557,873 | $594,377 | | Property, Plant and Equipment, net | $34,978 | $22,082 | | Total assets | $613,491 | $617,680 | | Liabilities & Equity | | | | Total current liabilities | $6,477 | $8,366 | | Warrant Liabilities | $49,310 | $50,020 | | Total liabilities | $63,646 | $59,015 | | Total stockholders' equity | $549,845 | $558,665 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2022 revenue increased to $2.2 million, but operating expenses rose to $13.5 million, resulting in an $11.3 million operating loss Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenue | $2,196 | $480 | | Total operating expenses | $13,508 | $4,773 | | Operating Loss | $(11,312) | $(4,293) | | Net Loss | $(10,344) | $(7,141) | | Net loss per share – Basic and Diluted | $(0.06) | $(0.10) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities increased to $14.4 million in Q1 2022, with $48.9 million used in investing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,369) | $(3,643) | | Net cash used in investing activities | $(48,881) | $(97) | | Net cash provided by financing activities | $208 | $5,546 | | Net (Decrease) Increase in Cash | $(63,042) | $1,806 | | Cash at end of period | $450,405 | $6,780 | Notes to Condensed Consolidated Financial Statements Notes detail the company's all-solid-state battery technology, production expansion, new lease accounting, and increased stock-based compensation - The company is developing all-solid-state battery cell technology for the EV market, with a business model focused on licensing designs and selling its sulfide-based solid electrolyte. As of March 31, 2022, it has not derived material revenue from these principal activities[32] - The company is expanding its production capabilities with two major projects: a second cell-production line to produce larger EV-scale cells and a second facility to scale up sulfide-based solid electrolyte production. Both are expected to be completed in 2022[54][55] - On January 1, 2022, the company adopted the new lease accounting standard (Topic 842), resulting in the recognition of a right-of-use asset of $7.9 million and a lease liability of $8.2 million on the balance sheet[43] - Stock-based compensation expense increased to $1.6 million for Q1 2022, compared to just $70,000 in Q1 2021[89] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's development-stage all-solid-state battery technology, increased operating expenses, and strong liquidity position of $564 million - The company is developing its All-Solid-State Platform with the goal of outperforming traditional lithium-ion batteries in driving range, battery life, safety, and cost[112][114] - The business model involves licensing all-solid-state battery cell designs and selling proprietary sulfide-based solid electrolyte material, which the company believes is a 'capital light' approach compared to in-house battery production[113][117] - The company is constructing an EV cell pilot line to produce 60 to 100 Ah cells, with production for internal testing expected to begin in Q3 2022. A second facility for expanded electrolyte production is expected to come online in the second half of 2022[111] - As of March 31, 2022, the company had total liquidity of $564 million, comprising cash, cash equivalents, marketable securities, and long-term investments. Management believes this is sufficient to fund operations and capital needs for at least the next 12 months[137][140] Results of Operations Q1 2022 revenue increased by 358% to $2.2 million, while total operating expenses rose 183% to $13.5 million, widening the operating loss Comparison of Operating Results (in thousands) | ($ in thousands) | 2022 | 2021 | Change | % | | :--- | :--- | :--- | :--- | :--- | | Revenue | $ 2,196 | $ 480 | $ 1,716 | 358 % | | Research and development | 6,661 | 3,106 | 3,555 | 114 % | | General and administrative | 4,022 | 597 | 3,425 | 574 % | | Total operating expenses | 13,508 | 4,773 | 8,735 | 183 % | | Operating Loss | (11,312) | (4,293) | (7,019) | (163)% | Liquidity and Capital Resources The company maintains strong liquidity of $564 million as of March 31, 2022, sufficient to fund operations and planned capital expenditures for at least 12 months - Cash used in operating activities increased to $14.4 million in Q1 2022 from $3.6 million in Q1 2021, primarily due to higher R&D and G&A expenses[143][144] - Cash used in investing activities increased to $48.9 million in Q1 2022 from $0.1 million in Q1 2021, driven by capital expenditures for manufacturing equipment and purchases of marketable securities[143][145] - The most significant anticipated capital expenditures for 2022 relate to the construction of a second production facility in Thornton, CO, and the installation of the EV cell pilot line[138][139] Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk have occurred during the first quarter of 2022 - There have been no material changes to the Company's market risk during the first quarter of 2022[150] Controls and Procedures Disclosure controls were effective as of March 31, 2022, while remediation of a material weakness in internal control is ongoing, expected by year-end 2022 - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2022[151] - The company continues to work on remediating the material weakness in internal control over financial reporting identified in its 2021 Form 10-K, with an expected completion by the end of 2022[152] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business - The company is not currently involved in any legal proceedings that are likely to have a material adverse effect on the business[155] 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 - No material changes have occurred to the company's risk factors since the Annual Report on Form 10-K for the year ended December 31, 2021[156] Other Information The Compensation Committee approved executive base salary increases, a 50% annual cash bonus target, and new long-term incentive awards of RSUs and stock options 2022 Executive Base Salary Adjustments | Executive | Base Salary | | :--- | :--- | | Douglas Campbell (CEO) | $340,000 | | David B. Jansen (President) | $335,000 | | Kevin Paprzycki (CFO) | $335,000 | | Jon Jacobs (CMO) | $305,000 | - An annual cash bonus target was established at 50% of the base salary for the covered executives for the 2022 performance period[159] Long Term Incentive Compensation Awards (Target Dollar Values) | Executive | Total Value | RSUs | Options | | :--- | :--- | :--- | :--- | | Douglas Campbell | $3,000,000 | $1,500,000 | $1,500,000 | | David B. Jansen | $1,500,000 | $750,000 | $750,000 | | Kevin Paprzycki | $1,200,000 | $600,000 | $600,000 | | Jon Jacobs | $725,000 | $362,500 | $362,500 | - The new RSU and Option grants will vest in four equal annual installments, beginning on the first anniversary of the grant date[161] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - A list of exhibits filed with the report is provided, including certifications by the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2) and corporate governance documents[165]