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What changed in Solid Power, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Solid Power, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+436 added−543 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-01)

Top changes in Solid Power, Inc.'s 2023 10-K

436 paragraphs added · 543 removed · 319 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

53 edited+37 added−41 removed20 unchanged
Biggest changeSince we anticipate our need for Li2S to significantly increase upon commercialization of sulfide-based cells, we are taking a two-pronged approach to secure the necessary supply of Li2S: sourcing from multiple global entities and working to develop processes to produce material in-house using novel production methods. Our cell design is a multi-layered stacked pouch cell, which we manufacture ourselves.
Biggest changeOur electrolyte is made from abundant materials produced at industrial scale in multiple geographical locations, except for the Li2S precursor material. Since we anticipate our Li2S need to significantly increase upon commercialization, we are taking a two-pronged approach to secure supply: sourcing from multiple global entities as well as working to develop in-house processes to produce material.
We offer competitive salaries and benefits, as well as a robust equity compensation plan, all with the intention of attracting and retaining team members capable of making our company a world leader in electrolyte production and solid-state battery development. Our compensation decisions are driven by individual contributions, the overall market, and how critical the role is to our success.
We offer competitive salaries and benefits, as well as a robust equity compensation plan, all with the intention of attracting and retaining team members capable of making our company a world leader in solid-state electrolyte production and battery development. Our compensation decisions are driven by individual contributions, the overall market, and how critical the role is to our success.
The JDA also contemplates that Solid Power and SK On will, upon the fulfillment of certain milestones under the JDA, negotiate a commercial agreement, which agreement is expected to cover terms and conditions for the sale of our electrolyte materials and licensing terms for our cell designs, manufacturing techniques, and production practices.
The JDA also contemplates that Solid Power and SK On will, upon the fulfillment of certain milestones, negotiate a commercial agreement, which is expected to cover terms and conditions for the sale of our electrolyte materials and licensing terms for our cell designs, manufacturing techniques, and production practices.
We are committed to increasing diversity in the workforce and we believe building and maintaining an inclusive and positive culture is important for our success. We are committed to compensating our employees in a competitive manner. We have taken steps to comply with Colorado’s Equal Pay for Equal Work Act.
We are committed to increasing diversity in the workforce and we believe building and maintaining an inclusive and equitable culture is important for our success. We are committed to compensating our employees in a competitive manner. We have taken steps to comply with Colorado’s Equal Pay for Equal Work Act.
Information about our Executive Officers Set forth below, in alphabetical order, is a list of our executive officers as of February 28, 2023, including each executive officer’s principal occupation and employment during the past five years and reflecting recent organizational changes.
Information about our Executive Officers Set forth below, in alphabetical order, is a list of our executive officers as of February 28, 2024, including each executive officer’s principal occupation and employment during the past five years and reflecting recent organizational changes.
Intellectual Property Our proprietary battery material and cell technology is protected through a combination of patents, patent applications, and trade secrets. Our patent portfolio includes technologies invented by us, in addition to exclusive licenses obtained from the University of Colorado Boulder and Oak Ridge National Laboratory.
Intellectual Property Our proprietary battery material and cell technology is protected through a combination of patents, patent applications, and trade secrets. Our patent portfolio includes technologies we invented, in addition to exclusive licenses obtained from the University of Colorado Boulder and Oak Ridge National Laboratory.
The following table highlights the stages and standards we believe will need to be met for our technology to be integrated into EVs: Category Stage Standard Solid Power Cell Format Pre-A sample ​ Proof of concept ​ 1.
The following table highlights the general high-level stages and standards we believe will need to be met for our technology to be integrated into EVs: Category Stage Standard Solid Power Cell Format Pre-A sample ​ Proof of concept ​ 1.
After we enter A-sample, we intend to work with each of our partners to determine the preferred approach for B-sample production.
We intend to work with each of our partners to determine the preferred approach for B-sample production.
Also, BMW Holding has the right to designate an individual to attend meetings of our Board and its committees in a non-voting, observer capacity. Ford Motor Company We started our relationship with Ford in 2018, when it participated in our Series A-1 equity financing by providing both business plan validation and capital.
Also, BMW Holding has the right to designate an individual to attend meetings of our Board and its committees in a non-voting, observer capacity. Ford Motor Company We started our relationship with Ford in 2018, when it participated in our Series A-1 equity financing.
Human Capital As of February 1, 2023, we employed 236 full-time employees, based out of our facilities in Louisville, Colorado and Thornton, Colorado. This represents a growth of over 100 employees in the past year. Many of our employees have a technical background or hold advanced engineering and scientific degrees.
Human Capital As of February 1, 2024, we employed over 270 full-time employees, primarily based out of our facilities in Louisville, Colorado and Thornton, Colorado. This represents growth of 40 employees in the past year. Many of our employees have a technical background or hold advanced engineering and scientific degrees.
The JDA contemplates that SK On and Solid Power will collaborate to validate that Solid Power’s cell designs and production processes are scalable and compatible with existing lithium-ion production technology to enable us to deliver pre-commercial cells to our OEM customers as part of the APQP process.
The JDA contemplates that SK On and Solid Power will collaborate to validate Solid Power’s cell designs and production processes are scalable and compatible with existing lithium-ion production technology, enabling us to deliver pre-commercial cells to our OEM customers.
For more information, see “Risk Factors — Risks Related to Development and Commercialization.” Business Model Our business model currently has two strategic elements: ● Selling our electrolyte material. ● Licensing our cell designs and manufacturing processes. We believe this business model distinguishes us from many of our competitors that seek to become commercial battery manufacturers.
For more information, see “Risk Factors—Risks Related to Development and Commercialization.” Business Model Our business model has two strategic elements: ● Selling our electrolyte material. ● Licensing our cell designs and manufacturing processes. We believe this business model distinguishes us from competitors who are becoming commercial battery manufacturers.
Johnson holds a B.S. in Environmental Engineering from the University of Florida, an M.S. in Chemical Engineering from Colorado State University, and a Ph.D. in Chemical and Biochemical Engineering from Colorado State University. Dr. Johnson has published 16 peer reviewed publications and holds 38 patents. James Liebscher serves as our Chief Legal Officer and Secretary.
Johnson holds a B.S. in Environmental Engineering from the University of Florida, an M.S. in Chemical Engineering from Colorado State University, and a Ph.D. in Chemical and Biochemical Engineering from Colorado State University. Dr. Johnson has published 16 peer reviewed publications and holds 38 patents.
Solid Power, Inc. | 2022 Form 10-K | 13 Table of Contents To date, we have not experienced any work stoppages and we consider our relationship with our employees to be good. None of our employees are either represented by a labor union or subject to a collective bargaining agreement.
To date, we have not experienced any work stoppages and we consider our relationship with our employees to be good. None of our employees are either represented by a labor union or subject to a collective bargaining agreement.
However, due to the pace of development by both parties and delayed planned market adoption of Solid Power, Inc. | 2022 Form 10-K | 11 Table of Contents solid-state batteries in general, we do not currently expect to meet those target dates. We are working collectively with SK On in connection with a revised development roadmap and associated expected timing.
However, due to the pace of development by both parties and delayed planned market adoption of solid-state batteries in general, we will not meet those target dates. We are working collectively with SK On in connection with a revised development roadmap and associated expected timing.
Due to the requirement that C-sample and D-sample cells are produced on production equipment rather than pilot equipment, we intend to partner with OEMs and/or top tier cell manufacturers for this stage of development rather than produce C-sample or D-sample cells at our facilities.
Solid Power, Inc. | 2023 Form 10-K | 9 Table of Contents Due to the requirement that C-sample and D-sample cells are produced on production equipment rather than pilot equipment, we intend to partner with OEMs or top tier cell manufacturers for this stage of development rather than produce C-sample or D-sample cells ourselves.
We further protect our intellectual property with non-disclosure agreements for all employees and consultants and material transfer agreements and non-disclosure agreements with third parties. Competition Performance improvements in next-generation battery and EV technologies will contribute to global adoption of EVs.
We further protect our intellectual property with non-disclosure agreements for all employees, consultants, and other third parties, material transfer agreements, and license agreements. Competition Performance improvements in next-generation battery and EV technology will contribute to global adoption of EVs. This trend has heightened competition and brought new entrants into the industry.
Solid electrolyte materials and methods of production make up the largest portion of our patent application filings. Additional subjects include electrode and cell designs, cell processing methods, and electrolyte precursor methods, among others. We accelerated our patent application filings in 2022 and are continuing that acceleration in 2023. We regularly file new applications in areas that are enforceable and/or reverse-engineerable.
Solid electrolyte materials and methods of production make up the largest portion of our patent application filings. Additional subjects include electrode and cell designs, cell processing methods, and electrolyte precursor methods, among others. We accelerated our patent application filings in recent years and are continuing that acceleration in 2024.
The license allows, among other things, for BMW to install a solid-state prototype cell manufacturing line based upon our proprietary information. In consideration of the license and additional development activities under the JDA, BMW agreed to pay us $20 million between December 2022 and June 2024, subject to our achieving certain milestones.
The license allows for BMW to install a solid-state prototype cell manufacturing line based upon our proprietary information and BMW agreed to pay us $20 million between December 2022 and June 2024, subject to our achieving certain milestones. During 2023, we engaged with BMW in joint development and manufacturing activities at our facilities.
Partnerships Since we do not contemplate becoming a mass commercial cell producer, one of our key goals is to establish and expand partnerships with OEMs and cell manufacturers. Our joint development agreements with BMW, Ford, and SK On are non-exclusive. This allows us the ability to pursue additional relationships with other OEMs or cell manufacturers.
Partnerships Since we do not contemplate becoming a commercial cell manufacturer, one of our key goals is to establish and expand partnerships with OEMs and cell producers. Our JDAs with BMW, Ford, and SK On are non-exclusive allowing us to pursue additional OEM or cell manufacturer relationships.
Jansen has a B.S. in Electrical Engineering from the University of Arizona. Derek Johnson serves as our Chief Operating Officer. He served as Legacy Solid Power’s Chief Operating Officer since January 2020.
Mr. Garrett holds a B.S. in Mechanical Engineering from Arizona State University and a M.S. in Mechanical Engineering from Colorado State University. Derek Johnson serves as our Chief Operating Officer. He served as Legacy Solid Power’s Chief Operating Officer since January 2020.
Under the amended JDA, and prior to the installation of BMW’s anticipated prototype cell manufacturing line, we expect to engage with BMW in joint development and manufacturing activities at our facilities. Under the terms of the amended JDA, any intellectual property developed jointly by BMW and Solid Power at our facilities will be solely owned by us.
Under the terms of the amended JDA, any intellectual property developed jointly by BMW and Solid Power at our facilities will be solely owned by us. We expect to negotiate a non-exclusive electrolyte supply agreement to supply BMW with our electrolyte material following commissioning of BMW’s prototype cell manufacturing line.
However, the key commercial terms of such additional arrangements have not yet been determined. SK On In October 2021, we entered into a non-exclusive JDA with SK On for joint production of our EV cells and, contemporaneously, and in connection with the closing of the business combination, SK On invested $30 million in our company.
SK On In October 2021, we entered into a non-exclusive JDA with battery manufacturer SK On for joint production of our EV cells. In connection with the closing of the business combination, SK On invested $30 million into our company.
We are also subject to the strict requirements of the Resource Conservation and Recovery Act and comparable state statutes for the generation or disposal of solid waste, which may include hazardous waste. OSHA and comparable laws in other jurisdictions regulate the protection of the health and safety of workers.
We are also subject to the strict requirements of the Resource Conservation and Recovery Act and comparable state statutes for the generation or disposal of solid waste, which may include hazardous waste. We believe that we are in material compliance with applicable environmental laws and regulations.
Solid Power, Inc. | 2022 Form 10-K | 12 Table of Contents We believe our ability to compete successfully with traditional lithium-ion battery cell technology and with other companies seeking to develop solid-state battery cells will depend on several factors, including electrolyte performance and cost, safety, energy density, and battery life, and on non-technical factors such as brand, established customer relationships and financial and manufacturing resources.
We believe our ability to compete successfully with both traditional lithium-ion and new battery technology will depend on several factors, including electrolyte performance and cost, safety, energy density, and battery life, and on non-technical factors such as brand, established customer and partner relationships, and financial and manufacturing resources.
However, the key commercial terms of such additional arrangements have not yet been determined. During 2022, we amended our JDA with BMW to provide BMW with a research and development-only license to certain of our intellectual property relating to cell manufacturing.
During 2022, we amended our JDA to provide BMW with a research and development-only license to certain of our intellectual property relating to cell manufacturing.
We believe our close working relationships with Ford, BMW, and SK On can expedite our research and development process relative to our competitors by creating a constant feedback loop allowing for more rapid and intelligent iterations. Government Regulation and Compliance Government regulations frequently control how battery cells and their components are stored, transported, used and disposed of.
We believe our close working relationships with BMW, Ford, and SK On can expedite our research and development process relative to our competitors by creating a constant feedback loop allowing for rapid and intelligent iterations.
Our relationship initially focused on cell research and development, and in 2017, we announced a partnership to jointly develop solid-state battery cell technology. In 2021, BMW and Solid Power expanded the partnership with BMW Holding’s participation in the Series B Financing and with the execution of a JDA for EV cells for testing and vehicle integration with BMW.
In 2021, BMW and Solid Power expanded the partnership with BMW Holding’s participation in the Series B Financing and with the execution of a JDA for EV cells for testing and vehicle integration with BMW. The JDA with BMW sets out the collaborative framework for research and development and vehicle integration of solid-state battery cells.
Though our anticipated timing for achievement of the various milestones and development targets continues to evolve under the JDA, we are currently targeting delivery of EV cells to Ford in 2023. Additionally, the terms of the JDA permit Ford to share in the intellectual property developed through the research and development efforts required under the JDA.
The JDA requires us to continue our research and development efforts towards deployment in Ford’s EVs. Though our anticipated timing for achievement of the various milestones and development targets continues to evolve under the JDA, we are currently targeting delivery of EV cells to Ford in 2024.
Prior to joining Legacy Solid Power, Mr. Paprzycki served as Chief Financial Officer, Treasurer and Solid Power, Inc. | 2022 Form 10-K | 14 Table of Contents Corporate Secretary (Principal Financial Officer and Chief Accounting Officer) of Scott’s Liquid Gold-Inc.
Kevin Paprzycki serves as our Chief Financial Officer and Treasurer. He served as Legacy Solid Power’s Chief Financial Officer since October 2021. Prior to joining Legacy Solid Power, Mr. Paprzycki served as Chief Financial Officer, Treasurer and Corporate Secretary (Principal Financial Officer and Chief Accounting Officer) of Scott’s Liquid Gold-Inc.
We also manufacture our cathode and anode using materials sourced from external suppliers. We source other input materials from both industry leading and emerging suppliers. Our two pilot production lines have successfully produced prototype cells in 0.2 Ah, 2 Ah, 20 Ah, and EV cell form factors.
We currently manufacture all of our cell designs ourselves, including our cathodes and anodes, using materials sourced from external suppliers. We source other input materials from both industry leading and emerging suppliers. Our two pilot production lines have successfully produced prototype cells in various sizes.
In particular, an export license may be required to export or re-export our products and technology to certain countries or end-users or for certain end-uses or may be prohibited. Obtaining the necessary export license for a particular sale or offering may not be possible or may be time-consuming and may result in the delay or loss of sales opportunities.
In particular, an export license may be required to export or re-export our products and technology to certain countries or end-users or for certain end-uses or such export, re-export, or end uses may be prohibited.
We anticipate that we will need to produce multiple A-sample variations before finalizing the design and progressing to B-sample. One or more of our partners may elect to produce their own B-sample cells to customize the cells for their specific needs or to have more supply chain control.
We now expect to work closely with our partners to incrementally improve our cell performance to meet requirements. We anticipate that we will need to produce and test multiple A-sample variations before finalizing the design and progressing to B-sample. One or more of our partners may decide to produce their own B-sample cells.
For more information, see “Risk Factors — Risks Related to Development and Commercialization.” The following sets forth the material terms of our JDAs with each of BMW, Ford, and SK On. BMW Group We have a long-standing relationship with BMW, which began in 2016.
The following sets forth the material terms of our JDAs with each of BMW, Ford, and SK On. BMW Group We have a long-standing relationship with BMW, which began in 2016. Our relationship initially focused on cell research and development, and in 2017, we announced a partnership to jointly develop solid-state battery cell technology.
In addition, our business may be subject to the Foreign Corrupt Practices Act and other anti-corruption, anti-bribery, and anti-money laundering laws and regulations in the jurisdictions in which we have offices or do business, both domestic and abroad.
Solid Power, Inc. | 2023 Form 10-K | 12 Table of Contents In addition, we are subject to the FCPA and other anti-corruption, anti-bribery, and anti-money laundering laws and regulations in the jurisdictions in which we have offices or do business, both domestic and abroad.
These laws regulate the generation, storage, treatment, transportation, and disposal of solid and hazardous waste and may impose strict, joint and several liability for the investigation and remediation of areas where hazardous substances may have been released or disposed.
Government regulations frequently control how battery cells and their components are stored, transported, used and disposed of through environmental laws and regulations regarding hazardous substances and solid waste. These laws may impose strict, joint, and several liability for the investigation and remediation of areas where hazardous substances may have been released or disposed.
Though our anticipated timing for achievement of the various milestones and development targets continues to evolve under the JDA, we are currently targeting delivery of EV cells to BMW in 2023. Additionally, the terms of the JDA permit BMW to share in certain intellectual property developed through the research and development efforts required under the JDA.
The JDA requires us to continue our research and development efforts towards deployment in BMW’s EVs. Though our anticipated timing of milestones and development targets continues to evolve under the JDA, we are currently targeting delivery of A2 EV cells to BMW in 2024.
Item 1. Business Overview Solid Power is developing solid state battery technologies to enable the next generation of rechargeable batteries for the fast-growing EV and other markets. Our core technology is our proprietary sulfide-based solid electrolyte material, which replaces the liquid or gel electrolyte used in conventional lithium-ion batteries.
Item 1. Business 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.
Liebscher holds an LL.M. in Securities and Financial Regulation from Georgetown University Law Center, a J.D. from the University of Notre Dame Law School, and a B.S. in Business Administration from Bellevue University. Kevin Paprzycki serves as our Chief Financial Officer and Treasurer. He served as Legacy Solid Power’s Chief Financial Officer since October 2021.
Prior to his legal career, he served for nine years in the United States Air Force as an airborne cryptologic linguist. Mr. Liebscher holds an LL.M. in Securities and Financial Regulation from Georgetown University Law Center, a J.D. from the University of Notre Dame Law School, and a B.S. in Business Administration from Bellevue University.
He previously was in private practice as a securities and corporate attorney at Polsinelli PC from August 2016 until February 2020 and Dufford & Brown, P.C. from October 2014 until August 2016. Prior to his legal career, he served for nine years in the United States Air Force as an airborne cryptologic linguist. Mr.
Liebscher was a senior attorney at Aspect Holdings, LLC, an international energy company, from February 2020 until June 2021. He previously was in private practice as a securities and corporate attorney at Polsinelli PC from August 2016 until February 2020 and Dufford & Brown, P.C. from October 2014 until August 2016.
Some of these companies have established relationships with OEMs and are in varying stages of development.
A number of mature and development-stage companies are seeking to improve conventional lithium-ion battery cells or to develop new technologies for battery cells. Some of these companies have established relationships with OEMs and are in varying stages of development.
We intend to negotiate the commercialization agreement simultaneously with fulfilling our obligations under the JDA for cell production. Manufacturing and Supply We have designed our manufacturing processes to use much of the same equipment currently used in production of conventional lithium-ion battery cells. Since inception, manufacturability has been fundamental to our strategy.
Manufacturing and Supply We have designed our manufacturing processes to use much of the same equipment currently used in conventional lithium-ion battery cell production. We believe using industry standard production processes and equipment reduces commercialization risk and allows for a more rapid and broad deployment of our technology.
Each executive officer’s age is set forth in the table next to his name. ​ ​ 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 ​ Joshua Buettner-Garrett serves as our Chief Technology Officer.
Name Position Age Joshua Buettner-Garrett ​ Chief Technology Officer ​ 38 Derek Johnson ​ Chief Operating Officer ​ 46 James Liebscher ​ Chief Legal Officer and Secretary ​ 43 Kevin Paprzycki ​ Chief Financial Officer and Treasurer ​ 53 John Van Scoter ​ President, Chief Executive Officer, and Director ​ 62 ​ Joshua Buettner-Garrett serves as our Chief Technology Officer.
Solid Power’s ability to share developments gained through the course of performance of the JDA with its other partners is limited in certain circumstances. The JDA also contemplates that we will enter into additional agreements with BMW for purchase and pricing of electrolyte materials for integration into cell designs, as well as licensing our cell technology to cell producers.
The JDA also contemplates entering additional agreements with BMW for purchase and pricing of electrolyte materials, integration into cell designs, as well as licensing our cell technology to cell producers. The key commercial terms of such additional arrangements have not yet been determined.
We are working closely with each of these partners to refine and validate our cell designs and electrolyte material with the ultimate goal to commercialize our technologies. The products we currently make are in the development stage and require continued development and validation before we can commercialize either our electrolyte or cell technology.
We have partnered with industry leaders BMW, Ford, 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.
Processes for manufacturing sulfide-based solid electrolyte materials and solid-state cells make up the majority of our trade secrets. As of February 1, 2023, we owned or exclusively licensed 13 issued United States patents and 38 pending United States patent applications, 48 non-United States and PCT patents and applications, and two registered United States trademarks.
As of February 1, 2024, we owned or exclusively licensed 14 issued United States patents, 64 pending United States patent applications, 85 non-United States and PCT patents and applications, 2 registered United States trademarks, 2 pending United States trademarks, and 8 registered or pending non-United States trademarks.
Solid Power’s ability to share developments gained through the course of performance of the JDA with its other partners is limited in certain circumstances. The JDA also contemplates that we will enter into additional agreements with Ford for purchase and pricing of electrolyte materials for integration into cell designs, as well as licensing our cell technology to cell producers.
Additionally, the terms of the JDA permit Ford to share in certain intellectual property developed through these research and development efforts. Solid Power’s ability to share developments gained through the course of performance of the JDA with its other partners is limited in certain circumstances.
Cell Development As we continue to develop our cell technology, we are focused on the following: Drive cell performance improvements to meet OEM specifications . We have worked closely with each of our partners to develop a roadmap to meet their ultimate commercial performance targets.
We have worked closely with each of our partners to develop a cell roadmap to meet their ultimate commercial performance targets. To hit those targets we need to continue to make improvements in cell performance. In 2023, we delivered our first A1 cells and made improvements in energy density, pressure, cycle life, low temperature performance, and other metrics.
Full cell production rates, quality and process certifications. 2. Vehicle level testing. ​ EV Product ​ Sales product ​ 1. Supply customer at requested volumes. ​ EV ​ We are currently producing Pre-A sample 20 Ah and EV cells. We are focused on demonstrating that our Pre-A sample cells will meet our partner’s basic requirements for vehicle integration.
Full cell production rates, quality and process certifications. 2. Vehicle level testing. ​ EV Product ​ Sales product ​ 1. Supply customer at requested volumes. ​ EV ​ During 2023 we reached a major goal of delivering A1 EV cells to BMW, marking the formal entry into automotive qualification.
As we get closer to start-of-production for the next generation of EVs, new and emerging battery technologies could create impediments to our commercial success. Nonetheless, we believe we are well-positioned across the battery cell technology value chain, including material and cell development, production techniques, and our business model.
We compete directly with both established and emerging EV battery cell producers and materials suppliers. We believe we are well-positioned across the battery cell technology value chain, including material and cell development, production techniques, and our business model. Our prospective competitors include major OEMs and top tier battery producers currently providing and developing batteries for EVs.
He served as Lead Corporate Attorney of Legacy Solid Power from June 2021 through the closing of the business combination. Mr. Liebscher was a senior attorney at Aspect Holdings, LLC, an international energy company, from February 2020 until June 2021.
Solid Power, Inc. | 2023 Form 10-K | 13 Table of Contents James Liebscher serves as our Chief Legal Officer and Secretary. He served as Lead Corporate Attorney of Legacy Solid Power from June 2021 through the closing of the business combination. Mr.
Generally, the JDA with Ford sets out the framework for the collaboration on the research and development of our cells. The JDA requires us to continue our research and development efforts such that our products are capable of being deployed in Ford’s EVs.
In 2023, we amended our JDA with Ford to extend the expiration date to December 31, 2024 and to revise our cell and electrolyte delivery obligations. The JDA with Ford sets out the framework for the collaboration on the research and development of our cells.
While we believe our goals are achievable, and our roadmap to hitting those goals is reasonable, as with any company that is developing novel technology, our strategy, forecasts, and timetables are subject to change.
While we believe we have reasonable goals and a reasonable roadmap to hit those goals, our strategy, forecasts, and timetables are subject to change similar to any technology developer. Our research and development activities are currently focused on the following initiatives: Electrolyte Our electrolyte is a sulfide-based material comprised of lithium sulfide and other proprietary inputs.
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We believe that our electrolyte material can enable extended driving range, longer battery life, improved safety, and lower costs compared to conventional lithium-ion. We also are designing and developing solid state cells that utilize our electrolyte in the cathode, anode, and separator layers. Our most mature cell design uses a silicon anode, NMC cathode, and solid separator.
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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.
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We are in earlier research development on additional cell designs, including lithium-metal, an anode-less design and a cell that replaces the nickel and cobalt in the cathode with earth abundant materials. We currently produce 0.2 Ah, 2 Ah, 20 Ah, and EV cells on two pilot lines using established manufacturing processes.
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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.
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To support testing requirements of our partners and further refinement of our cell design, we will continue to produce 2 Ah, 20 Ah and EV cells during 2023. Longer-term, we expect to use our pilot lines to further our research and development activities. We have partnered with industry leaders, including Ford, BMW, and SK On.
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Our goal is to become a leading provider of solid electrolyte material for EVs and other markets. We intend to sell our electrolyte to customers that license our cell technology and those which have their own cell designs.
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Ultimately, we endeavor to be a leading producer and distributor of sulfide-based solid electrolyte material for powering both EVs and other applications. Since we do not intend to commercially produce battery cells, we expect to invest significantly less than other development-stage battery companies that plan to commercially manufacture their own cell designs and construct their own battery production facilities.
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Since we do not plan to produce battery cells long term or build gigafactories, we expect to invest significantly less than other battery developers.
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Benefits of Our Technologies Driving Range We have designed our cells with the expectation they will have higher energy compared to traditional lithium-ion battery cells. We expect higher energy cells to provide OEMs with the flexibility to balance cost and driving range when designing their EVs.
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Benefits of Our Technology We have designed our electrolyte and cells targeting the following potential benefits over traditional lithium-ion batteries: ‌ ● Driving Range – Higher energy capabilities to increase driving ranges. ● Battery Life – Improvement in high temperature stability to provide longer battery lives. ● Safety – Improved safety performance as our battery cells use zero liquids or gels, which can be highly flammable and volatile, and the fact that our proprietary electrolyte has higher ignition points. ● Cost – Our manufacturing processes reduce the time, cost, and space required and may allow OEMs to reduce costly pack materials and cooling systems. ​ Solid Power, Inc. | 2023 Form 10-K | 7 Table of Contents Our Growth and Research & Development Strategy Our research and development focuses on improving our electrolyte and cell technology to commercialize products that will outperform conventional lithium-ion.
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Battery Life We expect our electrolyte will improve high temperature stability of our cells compared to conventional lithium-ion technology. This could allow for the removal or reduction of battery pack cooling systems. A potential additional benefit could be a longer life of the cell and less permanent degradation in battery capacity at higher temperatures.
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We believe most OEMs and battery manufacturers have a future technology roadmap which includes sulfide-based, solid-state cell products which can utilize our electrolyte. Our growth and development for electrolyte is focused on: Expanding electrolyte production. In 2023, we commissioned an electrolyte production facility with an annual capacity of 30 metric tons.
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Solid Power, Inc. | 2022 Form 10-K | 7 Table of Contents Safety We believe solid electrolytes can improve the safety of battery cells because conventional lithium-ion batteries use a liquid or gel electrolyte that is highly flammable and volatile under certain circumstances.
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We can further scale electrolyte capacity based on partner needs and market reception. Customer sampling. We are providing electrolyte samples to potential OEMs and battery manufacturer customers to develop commercial markets for our electrolyte. We are receiving feedback and tailoring our electrolyte to meet their needs. Samples provided from larger scale production batches are preferable to potential customers.
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Our solid electrolyte has a much higher ignition point than traditional liquid or gel electrolytes, which means it has the potential to be safer than conventional lithium-ion. Cost We anticipate cell designs incorporating our electrolyte will cost less to produce than conventional lithium-ion.
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Continued development of electrolyte materials . Our first generation of electrolyte is primarily used in cells we manufacture. We are constructing a new electrolyte research and development lab and are producing limited volumes of our second-generation electrolyte to improve performance, manufacturability, and cost. Supply chain improvements. We currently source Li2S from leading lithium and chemical companies globally.
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This is enabled in part because our cell designs can be manufactured with existing industry-standard manufacturing processes and equipment. The processes we have adopted have the potential to reduce the time, cost and space needed to manufacture cells.
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However, we are also developing our own production abilities to address potential supply risks and potentially lower costs. Cells Our first generation EV cells are multi-layered stacked pouch designs made with a nickel, magnesium, and cobalt (NMC) cathode, a silicon-based anode, and our electrolyte as a separator.
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Additionally, we are in the early stages of developing a cell that replaces the nickel and cobalt in the cathode with earth abundant materials.
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We believe the cell advances we are making in solid-state electrolyte technology will improve EV manufacturability and performance. As we continue to develop our cell technology, our focus is on the following: Driving incremental performance improvement to meet OEM specifications.
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If we are able to successfully develop this technology, it could cut cathode costs by up to 90%. 2022 Highlights Fiscal year 2022 was an important and successful year for Solid Power during which we installed critical infrastructure, enhanced our electrolyte and cell development capabilities, expanded our relationship with BMW, and added critical team members.
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As we have scaled our cells up to the EV cell size, our safety performance has been varied, with a small number of cells going into thermal runaway in a controlled environment. A key objective for 2024 is to further improve cell performance across the board to meet the more demanding targets in the A2 and A3 cells.
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Our key 2022 highlights are below and discussed elsewhere in this Business section: Electrolyte facility . We began construction of a pilot electrolyte production line. We expect this facility to come online in the first quarter of 2023.
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We have shifted our primary focus to our A2 cells, which incorporate planned designs and material modifications that we expect will improve overall cell performance, including safety. Continue to invest in next-gen battery cell innovations. Our research and development teams are working on second generation lithium metal and anode free cells.
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We anticipate this facility will be capable of producing up to 30 metric tons of electrolyte per year, which we expect to be sufficient to support demand until commercialization. Installation of the EV line . We successfully installed the EV line and began producing our first EV cells.
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Our focus on development of a third generation nickel- and cobalt-free battery cell could remove these costly and difficult to obtain materials from batteries.
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We expect to utilize the EV line for the automotive qualification process and for vehicle demonstration purposes. The EV line is designed to ultimately produce up to 300 EV cells a week. Delivery of 20 Ah cells to our partners .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn certain circumstances, our partners may be able to exploit certain of the intellectual property developed under their respective JDAs in ways that are detrimental to us. ● If we are unable to attract and retain key employees and qualified personnel, our ability to compete could be harmed. ● If solid-state battery cell technology does not become widely accepted, we may not be successful in generating revenues from the manufacture and sale of our electrolyte. ● The battery cell market continues to evolve and is highly competitive, and we may not be successful in competing in this market or establishing and maintaining confidence in our long-term business prospects among current and future partners and customers. ● We may not succeed in attracting customers during the development stage or for high volume commercial production, and our future growth and success depend on our ability to attract customers. ● We may not be able to accurately estimate the future supply and demand for our cells and/or our electrolyte, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue.
Biggest changeIn certain circumstances, our ability to share developments gained through the course of performance of a particular agreement with our other partners may be limited, and our partners may be able to exploit certain of the intellectual property developed under their respective agreements in ways that are detrimental to us. ● If we are unable to attract and retain key employees and qualified personnel, our ability to compete could be harmed. ● The battery cell market continues to evolve and is highly competitive, and we may not be successful in competing in this market or establishing and maintaining confidence in our long-term prospects among current and future partners and customers. ● We may not be able to accurately estimate future demand for our technology, which could result in a variety of inefficiencies in our business, hinder our ability to generate revenue, and cause us to incur additional costs or experience delays. ● We rely heavily on owned and exclusively-licensed intellectual property, including patent rights, trade secrets, copyrights, trademarks, and know-how, and we may be unable to protect and maintain access to these intellectual property rights. ● We have not performed exhaustive searches or analyses of the intellectual property landscape of the battery industry and cannot guarantee that our technology, or its ultimate integration into EVs, does not infringe intellectual property rights of third parties.
Item 1A. Risk Factors Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. If any such risks and uncertainties materialize, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks described below are not the only risks that we face.
Item 1A. Risk Factors Our business is subject to numerous risks and uncertainties that you should be aware of in evaluating our business. If any such risks and uncertainties materialize, our business, prospects, results of operations, and financial condition could be materially and adversely affected. The risks described below are not the only risks that we face.
As with any large-scale capital project, any modification or construction of this nature could be subject to delays, cost overruns or other complications. Any failure to commence commercial production on schedule likely would lead to additional costs and could delay our ability to generate meaningful revenues.
As with any large-scale capital project, any modification or construction of this nature could be subject to delays, cost overruns, or other complications. Any failure to commence commercial production on schedule would likely lead to additional costs and could delay our ability to generate meaningful revenues.
These competitors also may have greater access to customers and may be able to establish cooperative or strategic relationships amongst themselves or with third parties that may further enhance their resources and competitive positioning.
These competitors may also have greater access to customers and may be able to establish cooperative or strategic relationships amongst themselves or with third parties that may further enhance their resources and competitive positioning.
As new companies and larger, existing vehicle and battery cell manufacturers enter the solid-state battery cell space, we may lose any perceived or actual technological advantage we may have in the marketplace and suffer a decline in our position in the market.
As new companies and larger, existing vehicle and battery manufacturers enter the solid-state battery cell space, we may lose any perceived or actual technological advantage we may have in the marketplace and suffer a decline in our market position.
Accordingly, in order to build and maintain our business, we must instill and maintain confidence among current and future partners, customers, suppliers, analysts, ratings agencies and other parties in our long-term financial viability and business prospects.
Accordingly, in order to build and maintain our business, we must instill and maintain confidence among current and future partners, customers, suppliers, analysts, ratings agencies, and other parties in our long-term financial viability and prospects.
Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of Solid Power, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, stockholder, officer or other employee of Solid Power to us or our stockholders, (iii) any action arising pursuant to any provision of the DGCL, our Second A&R Charter or our Bylaws (as either may be amended from time to time) or (iv) any action asserting a claim governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.
Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court in Delaware or the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of Solid Power, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, stockholder, officer or other employee of Solid Power to us or our stockholders, (iii) any action arising pursuant to any provision of the DGCL or our Second A&R Charter or Bylaws (as either may be amended from time to time), or (iv) any action asserting a claim governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.
We may amend the terms of the warrants in a manner that may be adverse to holders of Public Warrants with the approval of the holders of at least 50% of the then-outstanding Public Warrants (or, if applicable, 65% of the then-outstanding Public Warrants and 65% of the then-outstanding Private Placement Warrants, voting as separate classes).
We may amend the terms of the Warrants in a manner that may be adverse to holders with the approval of the holders of at least 50% of the then-outstanding Public Warrants (or, if applicable, 65% of the then-outstanding Public Warrants and 65% of the then-outstanding Private Placement Warrants, voting as separate classes).
Accordingly, we may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding Public Warrants (or, if applicable, 65% of the then-outstanding Public Warrants and 65% of the then-outstanding Private Placement Warrants, voting as separate classes) approve of such amendment.
Accordingly, we may amend the terms of the Warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding Public Warrants (or, if applicable, 65% of the then-outstanding Public Warrants and 65% of the then-outstanding Private Placement Warrants, voting as separate classes) approve of such amendment.
In connection with constructing these facilities, we will need to identify and acquire the land or obtain leases for suitable locations appropriately zoned for activities involving hazardous materials, which will limit where we are able to locate our facilities and may require us to pay a premium for any such real estate.
In connection with constructing these facilities, we will need to identify and acquire the land or obtain leases for suitable locations that are appropriately zoned for activities involving hazardous materials, which will limit where we are able to locate our facilities and may require us to pay a premium for any such real estate.
While we believe our development of a manufacturing process compatible with existing lithium-ion battery cell manufacturing lines provides significant competitive advantages, modifying or constructing these lines for production of our products could be more complicated or present significant challenges to our manufacturing partners that we do not currently anticipate.
While we believe our development of a manufacturing process compatible with existing lithium-ion cell manufacturing lines provides significant competitive advantages, modifying or constructing these lines for production of our products could be more complicated or present significant challenges to our manufacturing partners that we do not currently anticipate.
Our business plan contemplates top tier battery cell suppliers and OEMs will manufacture our cell designs pursuant to licensing agreements with us. A component of our plan is to develop our products in such a way as to enable our manufacturing partners to utilize existing lithium-ion battery cell manufacturing processes and equipment.
Our business plan contemplates that top tier battery cell suppliers and OEMs will manufacture our cell designs pursuant to licensing agreements with us. A component of our plan is to develop our products in such a way as to enable our manufacturing partners to utilize existing lithium-ion cell manufacturing processes and equipment.
We expect to need several additional years of research and development and automotive qualification efforts before our cells will be advanced enough for us to realize material revenue from licensing agreements for our battery cell technology or reach commercial levels of sales of our electrolyte materials.
We expect to need several additional years of research and development and automotive qualification efforts before our cells will be advanced enough for us to realize material revenue from licensing agreements for our cell technology or reach commercial levels of sales of our electrolyte materials.
Despite our efforts to protect our proprietary rights, third parties, including our vendors, customers, partners, and consultants, have and may in the future attempt to copy or otherwise obtain and use our intellectual property without our consent or may decline to license or defend necessary intellectual property rights to us on terms favorable to our business.
Despite our efforts to protect our intellectual property rights, third parties, including our vendors, partners, customers, and consultants, have and may in the future attempt to copy or otherwise obtain and use our intellectual property without our consent or may decline to license or defend necessary intellectual property rights to us on terms favorable to our business.
Collaboration with third parties to manufacture our cell designs reduces our level of control over the process. We could experience delays if our partners do not meet agreed upon timelines or experience capacity constraints.
Collaboration with third parties to manufacture our cell designs reduces our level of control over the manufacturing process. We could experience delays if our partners do not meet agreed upon timelines or experience capacity constraints.
However, lithium-ion battery cell technology has been widely adopted and our current competitors have, and future competitors may have, greater resources than we do and may also be able to devote greater resources to the development of their current and future technologies.
However, lithium-ion battery cell technology has been widely adopted, and our current competitors have, and future competitors may have, greater resources than we do and may be able to devote greater resources to the development of their current and future technologies.
Similarly, suppliers and other third parties will be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will succeed in the long term.
Similarly, suppliers and other third parties may be less likely to invest time and resources in developing business relationships with us if they are not convinced that our business will succeed in the long term.
If we are unable to attract and retain key employees and qualified personnel, our ability to compete could be harmed. Our success depends on our ability to attract and retain our executive officers, key employees and other qualified personnel, and our operations may be severely disrupted if we lost their services.
If we are unable to attract and retain key employees and qualified personnel, our ability to compete could be harmed. Our success depends on our ability to attract and retain our executive officers, key employees, and other qualified personnel, and our operations could be severely disrupted if we lost their services.
The rate at which we will incur losses may be significantly higher in future periods as we, among other things, continue to incur significant expenses in connection with the design, development and manufacturing of our materials and cells; expand our research and development activities; invest in additional research and development and manufacturing facilities and capabilities; build up inventories of raw materials and other components; commence sales and marketing activities; develop our distribution infrastructure; and increase our general and administrative functions to support our growing operations.
The rate at which we will incur losses may be significantly higher in future periods as we, among other things, continue to incur significant expenses in connection with the design, development, and manufacturing of our technology; expand our research and development activities; invest in additional research and development and manufacturing facilities and capabilities; build up inventories of raw materials and other components; commence sales and marketing activities; develop our distribution infrastructure; and increase our general and administrative functions to support our growing operations.
Our cells will require additional and extensive safety testing prior to being installed in EVs. ● We are seeking additional partners with which to collaborate in the development of our cell technology.
Our cells will require additional and extensive safety testing prior to being installed in EVs. ● We are seeking additional partners with which to collaborate in the development of our technology.
In addition, we seek to protect our intellectual property rights through nondisclosure and invention assignment agreements with our employees and consultants, and through non-disclosure agreements with business partners and other third parties.
In addition, we seek to protect our intellectual property rights through non-disclosure and invention assignment agreements with our employees and consultants and through non-disclosure agreements with business partners and other third parties.
If we fail to effectively manage our future growth, we may not be able to market and license the technology and know-how to manufacture our cells or sell our electrolyte successfully.
If we fail to effectively manage our future growth, we may not be able to market and license the technology and know-how to manufacture our cells or sell our electrolyte.
We intend to use our cash on hand to expand our operations significantly, with a view toward accelerating our research and development activities and positioning our company for potential commercialization of our technologies. In connection with these efforts, we anticipate hiring, retaining and training personnel, establishing manufacturing plants and other facilities, and implementing administrative infrastructure, systems and processes.
We intend to use our cash on hand to expand our operations significantly, with a view toward accelerating our research and development activities and positioning our company for potential commercialization of our technology. In connection with these efforts, we anticipate hiring, retaining, and training personnel; establishing manufacturing plants and other facilities; and implementing administrative infrastructure, systems, and processes.
The U.S. government has made and continues to make significant changes in U.S. trade policy and has taken certain actions that could negatively impact U.S. trade, including imposing tariffs on certain goods imported into the United States, increasing scrutiny on foreign direct investment, and modifying export control laws applicable to certain technologies.
The U.S. government has made and continues to make significant changes in U.S. trade policy and has taken certain actions that could adversely impact U.S. trade, including imposing tariffs on certain goods imported into the United States, increasing scrutiny on foreign direct investment, and modifying export control laws applicable to certain technologies.
These factors may make the timing, amount, terms or conditions of additional financings unattractive to us. If we raise additional funds by issuing equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our currently issued and outstanding equity or debt, and our existing stockholders may experience dilution.
These factors may make the timing, amount, terms, or conditions of additional financings unattractive to us. If we raise additional funds by issuing equity, equity-linked, or debt securities, those securities may have rights, preferences, or privileges senior to the rights of our then-issued and -outstanding equity or debt, and our existing stockholders may experience dilution.
In addition, any such delay could diminish any “first mover” advantage we aim to attain, prevent us from gaining the confidence of OEMs and open the door to increased competition. All of the foregoing could hinder our ability to successfully launch and grow our business and achieve a competitive position in the market.
In addition, any such delay could diminish any “first mover” advantage we aim to attain, prevent us from gaining the confidence of OEMs, and open the door to increased competition. Any of the foregoing could hinder our ability to successfully grow our business and achieve a competitive position in the market.
Accordingly, our expectations regarding our capital needs are dynamic and changing, and are subject to various risks and uncertainties, including those described herein.
Our expectations regarding our capital needs are dynamic, changing, and subject to various risks and uncertainties, including those described herein.
Solid Power, Inc. | 2022 Form 10-K | 40 Table of Contents In addition, our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of our securities, including, without limitation and for the avoidance of doubt, any auditor, underwriter, expert, control person, or other defendant.
Solid Power, Inc. | 2023 Form 10-K | 34 Table of Contents In addition, our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against any person in connection with any offering of our securities, including, without limitation and for the avoidance of doubt, any auditor, underwriter, expert, control person, or other defendant.
Some of the development hurdles that we need to overcome before licensing or selling our solid-state battery cell technology to customers include: ● increasing the volume, yield, reliability and uniformity of our cells and cell components; ● increasing the size and number of layers of our cells; ● developing manufacturing techniques to produce the volume of cells needed for customer applications; ● understanding optimization requirements for high volume manufacturing equipment; ● designing and engineering packaging to ensure adequate cycle life (i.e., the number of charge and discharge cycle that a battery cell can sustain until its capacity falls below 80% of the original capacity); ● reducing cost of production; and ● meeting the rigorous and challenging specifications required by our customers, and ultimately OEMs and cell manufacturers, including but not limited to, battery life, energy density, abuse and safety testing, charge rate, cycle life, stack pressure, and operating temperature.
Some of the development hurdles that we need to overcome before licensing or selling our solid-state battery cell technology to customers include: ● meeting the rigorous and challenging specifications required by our customers and ultimately OEMs and battery manufacturers, such as battery life, energy density, abuse and safety testing, charge rate, cycle life, stack pressure, and operating temperature; ● increasing the volume, yield, reliability, and uniformity of our cells and cell components; ● increasing the size and number of layers of our cells; ● developing manufacturing techniques to produce the volume of cells needed for customer applications; ● understanding optimization requirements for high volume manufacturing equipment; ● designing and engineering packaging to ensure adequate cycle life (i.e., the number of charge and discharge cycle that a battery cell can sustain until its capacity falls below 80% of the original capacity); and ● reducing cost of production.
Developing the technology and know-how to produce solid-state battery cells at scale and cost, and which meet the performance requirements for wide adoption by OEMs, is extremely challenging. We must overcome significant hurdles to complete development, validation and automotive qualification of our battery cells prior to being able to license or sell our technology to any customers.
Developing the technology and know-how to produce cells at scale and cost, and which meet the performance requirements for wide adoption by OEMs, is extremely challenging. We must overcome significant hurdles to complete development, validation, and automotive qualification of our cells prior to being able to license or sell our technology to any customers.
In addition, because this equipment has historically not been used to build solid-state battery cells or sulfide-based electrolyte, the operational performance and costs associated with this equipment is difficult to predict and may be influenced by factors outside of our control, such as, but not limited to, failures by suppliers to deliver necessary components of our products in a timely manner and at prices and volumes acceptable to us, environmental hazards and associated costs of remediation, difficulty or delays in obtaining governmental permits, damages or defects in systems, industrial accidents, fires, seismic activity and other natural disasters.
In addition, because this equipment has not historically been used to build solid-state battery cells or produce sulfide-based solid electrolytes, the operational performance and costs associated with this equipment is difficult to predict and may be influenced by factors outside of our control, such as failures by suppliers to deliver necessary components of our products in a timely manner and at prices and volumes acceptable to us; environmental hazards and associated costs of remediation; difficulty or delays in obtaining governmental permits; damages or defects in systems; industrial accidents; and fires, seismic activity, and other natural disasters.
We will continue to encounter risks and difficulties frequently experienced by early commercial stage companies, including scaling up our infrastructure and headcount, and may encounter unforeseen expenses, difficulties or delays in connection with our growth.
We will continue to encounter challenges frequently experienced by early commercial stage companies, including scaling up our infrastructure and headcount, and may encounter unforeseen expenses, difficulties, or delays in connection with our growth.
Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.
Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the price of our common stock and Warrants.
Our business plan contemplates that we will develop the necessary production capabilities to manufacture our electrolyte for sale to top tier battery suppliers and OEMs that have determined to manufacture solid-state battery cells.
Our business plan contemplates that we will develop the necessary production capabilities to manufacture our electrolyte for sale to top tier battery manufacturers and OEMs that have determined to manufacture solid-state battery cells.
Certain of our JDAs provide that, among other things, (i) any intellectual property jointly developed will be owned by both parties, with each party having the right to license that intellectual property to third parties in connection with the development of such party’s products, (ii) each party retains sole ownership of previously or independently developed intellectual property, and (iii) the partner receives a license to our solely developed intellectual property under the JDA for use in the partner’s products.
Certain of our agreements provide that, among other things, (i) any intellectual property jointly developed will be owned by both parties, with each party having the right to license that intellectual property to third parties in connection with the development of such party’s products, (ii) each party retains sole ownership of previously or independently developed intellectual property, and (iii) the partner receives a license to our solely developed intellectual property under the agreement for use in the partner’s products.
We rely on complex equipment for our operations, and production involves a significant degree of risk and uncertainty in terms of operational performance and costs. We rely heavily on complex equipment for our operations and the production of our battery cells and electrolyte.
We rely heavily on complex equipment for our operations, and the production of our technology involves a significant degree of risk and uncertainty in terms of operational performance and costs. We rely heavily on complex equipment for our operations and the production of our cells and electrolyte.
Such machinery may unexpectedly malfunction and require repairs and spare parts to resume operations, which may not be available when needed. We do not expect to maintain any redundancies in our research and development facilities, so unexpected malfunctions of our production equipment may significantly affect our operational efficiency.
Such machinery may unexpectedly malfunction and require repairs and spare parts to resume operations, which may not be available when needed. Because we do not maintain any redundancies in our research and development facilities, unexpected malfunctions of our production equipment may significantly affect our operational efficiency.
We rely on a combination of the intellectual property protections afforded by patent, copyright, trademark and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain and enforce rights and competitive advantage in our proprietary technologies.
We rely on a combination of the intellectual property protections afforded by patent, copyright, trademark, and trade secret laws in the United States and other jurisdictions, as well as license agreements and other contractual protections, to establish, maintain, and enforce rights and competitive advantage in our technology.
To that end, our partners have invested, and are likely to continue to invest in the future, in their own development efforts and, in certain cases, in JDAs with our current and future competitors.
To that end, our partners have invested, and are likely to continue to invest in the future, in their own development efforts and, in certain cases, in agreements with our current and future competitors.
In certain of our JDAs to date, we have agreed that our partners would receive certain rights to our intellectual property in certain circumstances, including if we were to fail to perform under commercial agreements that we may enter into in the future or otherwise abandon our business following the execution of such commercial agreements.
Further, in certain of our agreements, we have agreed that our partners would receive certain rights to our intellectual property in certain circumstances, including if we were to fail to perform under commercial agreements that we may enter into in the future or otherwise abandon our business following the execution of such commercial agreements.
Our status as a Delaware corporation and the anti-takeover provisions of the DGCL may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, even if a change of control would be beneficial to our existing stockholders.
We are a Delaware corporation, and the anti-takeover provisions of the DGCL may discourage, delay, or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, even if a change of control would be beneficial to our existing stockholders.
Similarly, if we fail to accurately predict and ensure that our solid-state battery cell technology can address customers’ changing needs or emerging technological trends, or if our customers fail to achieve the benefits expected from our battery cells, our business will be harmed.
Similarly, if we fail to accurately predict and ensure that our solid-state battery cell technology addresses customers’ changing needs or emerging technological trends, or if our customers fail to achieve the benefits expected from our cells, our business will be harmed.
Our JDAs provide a framework for our cooperation, and certain of the JDAs contemplate that we will enter into additional arrangements with our partners for the purchase and pricing of electrolyte materials for integration into our cell design, as well as licensing our cell technology to cell producers.
Our agreements provide a framework for our cooperation with our partners, and certain of these agreements contemplate that we will enter into additional arrangements with our partners for the purchase and pricing of electrolyte materials for integration into our cell design, as well as licensing our cell technology to cell producers.
As a result, we may be required to pay higher outside legal, accounting or consulting costs than our competitors, and our management team members may have to devote a higher proportion of their time to issues relating to compliance with the laws applicable to public companies, both of which might put us at a disadvantage relative to competitors.
As a result, we may be required to pay higher outside legal, accounting, or consulting costs than our competitors, and our management team members may have to devote a higher proportion of their time to issues relating to compliance with the laws applicable to public companies, either of which could put us at a disadvantage relative to our competitors.
If those provisions are triggered, certain of our partners may receive perpetual, irrevocable, royalty-free licenses to portions of our intellectual property, which may limit the profitability and competitive advantage offered by our intellectual property and adversely affect our revenue. We are subject to risks relating to production scale manufacturing of our cells through partners in the longer term.
If those provisions are triggered, certain of our partners may receive perpetual, irrevocable, royalty-free licenses to portions of our intellectual property, which may limit the profitability and competitive advantage offered by our intellectual property and adversely impact our revenue. We are subject to risks relating to production scale manufacturing of our cells through partners in the long term.
Further, certain components, including Li2S, are not currently produced at a scale we believe necessary to support our proposed commercial operations.
Further, certain materials and components, including Li2S, are not currently produced at a scale we believe necessary to support our proposed commercial operations.
Maintaining such confidence may be particularly complicated by certain factors including those that are largely outside of our control, such as: ● our limited operating history; ● market unfamiliarity with our products; ● delays in or impediments to completing or achieving our research and development goals; ● unexpected costs that OEM and top tier cell partners may be required to incur to scale manufacturing, delivery and service operations to meet demand for EVs containing our technologies or products; ● competition and uncertainty regarding the future of EVs; ● the development and adoption of competing technologies that are less expensive and/or more effective than our products; and ● our eventual production and sales performance compared with market expectations.
Maintaining such confidence may be complicated by certain factors, including those that are largely outside of our control, such as: ● our limited operating history; ● market unfamiliarity with our products; ● delays in or impediments to completing or achieving our research and development goals; ● unexpected costs that OEM and other potential partners may be required to incur to scale manufacturing, delivery, and service operations to meet demand for EVs containing our technology or products; ● competition and uncertainty regarding the future of EVs; ● the development and adoption of competing technologies that are less expensive and/or more effective than our products; and ● our eventual production and sales performance compared with market expectations.
If we fail to do so, or otherwise encounter delays or lose necessary consents, permits, licenses, or commercial agreements, we could face delays or terminations of construction or development activities. If our planned facilities do not become operable on schedule, or at all, or become inoperable, production of our battery cells and our business will be harmed.
If we fail to do so, or otherwise encounter delays or lose necessary licenses, approvals, permits, consents, or commercial agreements, we could face delays or terminations of construction or development activities. If our planned facilities do not become operable on schedule, or at all, or become inoperable, production of our electrolyte and our business will be harmed.
Our Bylaws designate state courts within the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Our Bylaws designate the Court of Chancery of the State of Delaware as the exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees, or agents.
For example, our budgets assume, among other things, that our development timeline progresses as planned and our corresponding expenditures are consistent with current expectations, both of which have been derived based on discussions with our key partners only and do not factor in the possibility of additional partnerships.
For example, our budgets assume, among other things, that our development timeline progresses as planned and our corresponding expenditures are consistent with current expectations, but our timeline and expectations been derived based on discussions with our key partners only and do not factor in the possibility of additional partnerships.
We rely on third-party suppliers for components and equipment necessary to develop our battery cells and produce our electrolyte, including key supplies, such as Li2S, NMC, silicon, lithium metal foil and manufacturing tools.
We rely on third-party suppliers for materials, components, and equipment necessary to develop cells and produce electrolyte, including key supplies, such as Li2S, NMC, silicon, lithium metal foil, and manufacturing tools.
As a result, we cannot be certain that the patent applications that we file will result in patents being issued, or that our patents and any patents that may be issued to us will afford protection against competitors with similar technology.
As a result, we cannot be certain that our patent applications will result in patents being issued or that our patents, and any patents that may be issued to us, will afford us adequate protection against competitors with similar technology.
To date, we have focused our efforts on our sulfide-based solid-state battery cell technology, a promising alternative to conventional lithium-ion battery cell technology.
To date, we have focused our efforts on our solid-state battery cell technology, a promising alternative to conventional lithium-ion battery cell technology.
We face risks relating to the availability of these materials and components, including that we will be subject to demand shortages and supply chain challenges and generally may not have sufficient purchasing power to eliminate the risk of price increases for the raw materials and tools we need.
We face risks relating to the timely availability, adequate quality, and consistency of these materials and components, including that we will be subject to demand shortages and supply chain challenges and generally may not have sufficient purchasing power to eliminate the risk of price increases for the raw materials and tools we need.
We have not secured a location or obtained the necessary licenses or permits for commercial-level electrolyte manufacturing facilities.
We have not secured a location or obtained the necessary licenses, approvals, permits, or consents for commercial-level electrolyte manufacturing facilities.
Additionally, we cannot predict market reaction or the impact on the market price of our common stock as we make announcements regarding our achievement or failure to achieve our objectives and/or milestones we have publicly disclosed. Any negative market reactions as we make such announcements could result in the volatility of the price of our common stock.
Additionally, we cannot predict market reaction or the impact on the price of our common stock and Warrants as we make announcements regarding our achievement, or failure to achieve, our objectives and publicly-disclosed milestones. Negative market reactions could result in volatility in the of the price of our common stock and Warrants.
The trading market for our common stock and warrants will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors.
The trading market for our common stock and Warrants is influenced by the research and reports that industry or securities analysts may publish about us, our business, our market, or our competitors.
In addition, our technology and intellectual property may be subject to theft or compromise via more indirect routes. For example, our products or components thereof may be reverse engineered by partners, customers or other third parties, which could result in our patents being infringed or our know-how or trade secrets stolen.
In addition, our technology and intellectual property may be subject to theft or compromise via more indirect routes. For example, our products or components thereof may be reverse engineered by partners, customers, or other third parties, which could result in infringement of our patents or theft of our know-how or trade secrets.
Furthermore, to the extent a development we make jointly with one of our partners involves such partner’s previously developed intellectual property, we may not be able to use any information gleaned in the course of performance under the JDA with such partner in performance of our other partners’ JDAs, which could prevent us from scaling the development or deploying it in work with all of our partners.
To the extent that a development we make jointly with one of our partners involves such partner’s previously developed intellectual property, we may not be able to use any information gleaned in the course of performance under the agreement with such partner in performance of our other partners’ agreements, which could prevent us from scaling the development or deploying it in work with all of our partners.
Solid Power, Inc. | 2022 Form 10-K | 20 Table of Contents We are subject to risks relating to the construction and development of facilities for our short-term research and development and long-term production requirements. Our business model contemplates that we will construct additional facilities for research and development and eventually commercial electrolyte manufacturing.
Solid Power, Inc. | 2023 Form 10-K | 20 Table of Contents We are subject to risks relating to the construction and development of facilities for our short-term research and development and long-term production requirements. Our business plan contemplates that we will construct additional facilities for research and development and commercial electrolyte manufacturing.
Furthermore, patent applications filed in foreign countries may be subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications related to issued U.S. patents will be issued.
Patent applications filed in foreign countries may be subject to laws, rules, and procedures that differ from those of the United States, and we cannot guarantee that foreign patent applications related to issued U.S. patents will be issued.
Although our ability to amend the terms of the Public Warrants with the consent of at least 50% of the then-outstanding Public Warrants (or, if applicable, 65% of the then-outstanding Public Warrants and 65% of the then-outstanding Private Placement Warrants, voting as separate classes) is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant. ​ Solid Power, Inc. | 2022 Form 10-K | 41 Table of Contents Item 1B.
Although our ability to amend the terms of the Warrants with approval of the holders of at least 50% of the then-outstanding Public Warrants (or, if applicable, 65% of the then-outstanding Public Warrants and 65% of the then-outstanding Private Placement Warrants, voting as separate classes) is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, convert the Warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period, or decrease the number of shares of our common stock purchasable upon exercise of a Warrant ​ ​ ​ Solid Power, Inc. | 2023 Form 10-K | 35 Table of Contents
Solid Power, Inc. | 2022 Form 10-K | 39 Table of Contents Delaware law and provisions in our Second A&R Charter and Bylaws might delay, discourage or prevent a change in control of the Company or changes in our management, thereby depressing the market price of our common stock and warrants.
Solid Power, Inc. | 2023 Form 10-K | 33 Table of Contents Delaware law and provisions in our Second A&R Charter and Bylaws might delay, discourage, or prevent a change in control of the Company or changes in our management, thereby depressing the price of our common stock and Warrants.
In addition, if we are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following: · cease selling, leasing, incorporating or using products that incorporate the challenged intellectual property; · pay substantial damages; · materially alter our research and development activities and proposed production processes; · obtain a license from the holder of the infringed intellectual property right, which may not be available on reasonable terms or at all; or · redesign our battery cells at significant expense.
If we are determined to have infringed upon a third party’s intellectual property rights, we may be required to: · cease selling, leasing, incorporating, or using products that incorporate the challenged intellectual property; · pay substantial damages; · materially alter our research and development activities and proposed production processes; · obtain a license from the holder of the intellectual property right, which may not be available on commercially reasonable terms or at all; or · redesign our cells at significant expense.
We must continue to commit significant resources to develop our cell technology in order to establish a competitive position, and these commitments must be made without knowing whether our investments will result in products potential customers will accept.
We must continue to commit significant resources to developing our technology in order to establish a competitive position, and these commitments must be made without knowing whether our investments will result in products customers will accept.
Our ability to share developments gained through the course of performance of a particular JDA with our other partners may be limited in certain circumstances. In certain circumstances, our partners may be able to exploit certain of the intellectual property developed under their respective JDAs in ways that are detrimental to us.
In certain circumstances, our ability to share developments gained through the course of performance of a particular agreement with our other partners may be limited, and our partners may be able to exploit certain of the intellectual property developed under their respective agreements in ways that are detrimental to us.
There is risk of potential disputes with partners, which could stop or slow battery cell production, and we could be affected by adverse publicity related to our partners, whether or not such publicity is related to such third parties’ collaboration with us. In addition, we cannot guarantee that our suppliers will not deviate from agreed-upon quality standards.
There is risk of potential disputes with partners, which could stop or slow cell production, and we could be impacted by adverse publicity related to our partners, whether or not such publicity is related to such partner’s collaboration with us. In addition, we cannot guarantee that our suppliers will not deviate from agreed-upon quality standards.
The battery cell market continues to evolve and is highly competitive, and we may not be successful in competing in this market or establishing and maintaining confidence in our long-term business prospects among current and future partners and customers. The battery cell market in which we compete continues to evolve and is highly competitive.
Risks Related to Industry and Market Trends The battery cell market continues to evolve and is highly competitive, and we may not be successful in competing in this market or establishing and maintaining confidence in our long-term prospects among current and future partners and customers. The battery cell market in which we compete continues to evolve and is highly competitive.
Furthermore, the battery cell industry also competes with other emerging or evolving technologies, such as natural gas, advanced diesel and hydrogen-based fuel cell powered vehicles. Developments in alternative technologies or improvements in batteries technology made by competitors may materially adversely affect the sales, pricing and gross margins of our products.
The battery industry also competes with other emerging or evolving technologies, such as natural gas, advanced diesel, and hydrogen-based fuel cell powered vehicles. Developments in alternative technologies or improvements in battery technologies made by competitors may adversely impact the sales, pricing, and gross margins of our products.
The work required to integrate this equipment into the production of our cells and electrolyte manufacturing is time intensive and requires us to work closely with the equipment providers to ensure that it works properly with our technology.
Integrating this equipment into the production of our cells and electrolyte is time intensive and requires us to work closely with the equipment providers to ensure that it works properly with our technology.
As disclosed above, development in materials sciences is not linear and the pace of our efforts will depend in significant part on the level of engagement and extent of resources devoted to these efforts by our development partners, making it difficult to predict when we will begin to recognize material revenues from our cell technology or electrolyte.
Development in materials sciences is not linear, and the pace of our efforts will depend in significant part on the level of engagement and extent of resources devoted to these efforts by our partners, making it difficult to predict when we will begin to recognize material revenues from our technology.
The issuance of additional shares of common stock or of preferred stock: ● may significantly dilute the equity interests of our investors; ● may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; ● could cause a change in control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and ● may adversely affect prevailing market prices for our common stock and/or warrants.
The issuance of additional shares of common stock or shares of preferred stock: ● may significantly dilute the equity interests of our existing stockholders; ● would subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; ● could cause a change in control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and ● may adversely impact the price of our common stock and Warrants.
For instance, we may learn from these validation efforts that our cells contain defects or errors that cause the cells not to perform as expected or our electrolyte contains impurities or otherwise does not meet the quality or performance requirements of our customers.
For example, we have learned, and may continue to learn, from these validation efforts that our cells contain defects or errors that cause the cells not to perform as expected or our electrolyte contains impurities or otherwise does not meet the quality or performance requirements of our customers.
We require significant capital to develop our solid-state battery cell technologies and expect to incur significant expenses, including those relating to research and development, raw material procurement, leases, sales and distribution as we build our brand and market our technologies, and general and administrative costs as we scale our operations.
We require significant capital to develop our technology and expect to incur significant expenses, including those relating to research and development, raw material procurement, leases, sales, and distribution as we build our brand and market our technology and general and administrative costs as we scale our operations.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our common stock adversely, the price and trading volume of our common stock could decline.
If securities or industry analysts do not publish, or publish inaccurate or unfavorable, research about us, our business, or our market, or if they adversely change their recommendations regarding our common stock, the price and trading volume of our common stock and Warrants could decline.
Among other things, these provisions: ● provide advance notice procedures with regard to stockholder nominations of candidates for election as directors or other stockholder proposals to be brought before meetings of our stockholders, which may preclude our stockholders from bringing certain matters before meetings of our stockholders; ● provide the Board the ability to authorize issuance of preferred stock in one or more series, which makes it possible for the Board to issue, without our stockholder’s approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of Solid Power and which may have the effect of deterring hostile takeovers or delaying changes in control or management of Solid Power; ● provide that the Board be divided into three classes of directors, with each class as nearly equal in number as possible, serving staggered three-year terms; ● a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; ● provide that certain provisions of our Second A&R Charter can only be amended or repealed by the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares of our common stock entitled to vote thereon, voting together as a single class; ● provide that certain provisions of our Bylaws can be altered or repealed by (i) the Board or (ii) our stockholders upon the affirmative vote of 66 2/3% of the voting power of our common stock outstanding and entitled to vote thereon, voting together as a single class; ● only the Board (pursuant to a majority vote) or the Chairperson of the Board may call a special meeting; and ● the designation of Delaware and federal courts as the exclusive forum for certain disputes.
Among other things, these provisions: ● provide advance notice procedures with regard to stockholder nominations of candidates for election as directors or other stockholder proposals to be brought before meetings of our stockholders, which may discourage our stockholders from bringing certain matters before meetings of our stockholders; ● provide the Board the ability to authorize issuance of preferred stock, which makes it possible for the Board to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of Solid Power; ● provide for a classified Board with staggered three-year terms, with each class as nearly equal in number as possible; ● prohibit stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of stockholders; ● provide that certain provisions of our Second A&R Charter can only be amended or repealed by the affirmative vote of the holders of at least 66 2/3% in voting power of the outstanding shares of our common stock entitled to vote thereon, voting together as a single class; ● provide that certain provisions of our Bylaws can be altered or repealed by (i) the Board or (ii) our stockholders upon the affirmative vote of 66 2/3% of the voting power of our common stock outstanding and entitled to vote thereon, voting together as a single class; ● provide that only the Board (pursuant to a majority vote) or the Chairperson of the Board may call a special meeting of stockholders; and ● designate Delaware and federal courts as the exclusive forum for certain disputes.
We may not be able to engage other third parties or establish or expand our own production capacity to meet our needs on acceptable terms, or at all. The expense and time required to adequately complete any transition may be greater than anticipated. Any of the foregoing could adversely affect our business, results of operations, financial condition and prospects.
We may not be able to engage other third parties or establish or expand our own production capacity to meet our needs on acceptable terms or at all, and the expense and time required to adequately complete any transition or expansion may be greater than anticipated, which could have a material adverse effect on our business, prospects, results of operations, and financial condition.
It is difficult to predict our future revenues and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business. In the event that actual results differ from our estimates or we adjust our estimates in future periods, our operating results, prospects and financial position could be materially affected.
It is difficult to predict our future revenues and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business. If actual results differ from our estimates or we adjust our estimates in future periods, our business, prospects, results of operations, and financial condition could be materially and adversely affected.
As a result, our projections of revenue and other financial results are uncertain. ● The terms of certain JDAs permit our partners to share in the intellectual property developed through the research and development efforts required under our particular agreements with them.
As a result, our projections of revenue and other financial results are uncertain. ● The terms of certain agreements permit our partners to share in the intellectual property developed through the research and development efforts under their respective agreements.
We have not reached agreement on key commercial terms with any of these partners Solid Power, Inc. | 2022 Form 10-K | 19 Table of Contents and the structure for realizing the monetary value of our products is unknown.
We have not reached agreement on key commercial terms Solid Power, Inc. | 2023 Form 10-K | 19 Table of Contents for the licensing of our cell technology or sale of our electrolyte with any of these partners, and the structure for realizing the monetary value of our products is unknown.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease approximately 75,000 square feet in Thornton, Colorado under a lease that expires in March 2029. This facility is designed to support pilot production of electrolyte, research and development, and general office space. ​
Biggest changeWe lease approximately 75,000 square feet in Thornton, Colorado under a lease that expires in March 2029.
Item 2. Properties We currently operate out of two facilities in Colorado. We lease approximately 29,000 square feet in Louisville, Colorado under a lease that expires in September 2029. Most of this facility is used for cell production, research and development, small-scale electrolyte manufacturing and quality control.
Item 2. Properties We currently operate out of two facilities in Colorado. We lease approximately 29,000 square feet in Louisville, Colorado under a lease that expires in September 2029. Most of this facility, which we refer to as SP1, is used for cell production, research and development, quality control, and general office space.
Added
Most of this facility, which we refer to as SP2, is used for pilot production of electrolyte, research and development, quality control, and general office space. ​ In addition, we lease general office space in the Republic of Korea that is immaterial to our financial statements. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. ​ Item 4. Mine Safety Disclosures Not applicable. ​ Solid Power, Inc. | 2022 Form 10-K | 42 Table of Contents PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. ​ Item 4. Mine Safety Disclosures Not applicable. ​ Solid Power, Inc. | 2023 Form 10-K | 36 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe actual number of stockholders and warrantholders, respectively, is greater than this number of record holders and includes investors who are beneficial owners but whose shares or warrants are held in street name by brokers and other nominees. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None.
Biggest changeThe actual number of stockholders and Warrant holders, respectively, is greater than this number of record holders and includes investors who are beneficial owners but whose shares or Warrants are held in street name by brokers and other nominees. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities None. Item 6. [Reserved] ​
Holders of Common Stock and Warrants As of February 27, 2023, there were 34 holders of our common stock and four holders of our warrants.
Holders of Common Stock and Warrants As of February 26, 2024, there were 26 record holders of our common stock and four record holders of our Warrants.
Removed
Stock Performance Graph The following graph shows the total stockholder return of an investment of $100 on December 9, 2021 (the date our common stock began trading on Nasdaq following the business combination) through December 31, 2022 for (1) our common stock, (2) the Russell 2000 Index, and (3) a peer group index we selected.
Removed
Our peer group consists of Blink Charging Co., Canoo Inc., ChargePoint Holdings, Inc., Enovix Corp., ESS Tech, Inc., EVgo Inc., Fisker Inc., FREYR Battery, Hyliion Holdings Corp., Lightning eMotors, Inc., Lordstown Motors Corp., Microvast Holdings, Inc., Mullen Automotive Inc., Nikola Corporation, Proterra Inc., QuantumScape Corporation, SES AI Corp., and Stem, Inc. All values assume reinvestment of all dividends.
Removed
The comparisons in the graph are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common stock.
Removed
This graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Removed
Solid Power, Inc. | 2022 Form 10-K | 43 Table of Contents Item 6. [Reserved] ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSolid Power, Inc. | 2022 Form 10-K | 45 Table of Contents Results of Operations The following table is a consolidated summary of our operating results for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ NM = Not meaningful The key factors driving our 2022 increase in operating loss were as follows: ● Revenue and direct costs – our overall revenue and related direct costs increased as a result of additional performance under our JDAs and government contracts, as well as additional product sales. ● Research and development – our research and development costs increased primarily as a result of increased labor costs and material consumption as we expanded the development efforts of our battery cells and electrolyte material.
Biggest changeResults of Operations The following table is a consolidated summary of our operating results for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ (in thousands) ​ 2023 2022 Change % Revenue ​ $ 17,410 ​ $ 11,789 ​ $ 5,621 ​ 48 % Operating Expenses ​ ​ ​ ​ ​ Direct costs ​ 27,731 ​ 9,592 ​ 18,139 189 % Research and development ​ 54,749 ​ 38,592 ​ 16,157 42 % Selling, general and administrative ​ 25,550 ​ 22,724 ​ 2,826 12 % Total operating expenses ​ 108,030 ​ 70,908 ​ 37,122 52 % Operating Loss ​ (90,620) ​ (59,119) ​ (31,501) 53 % Nonoperating Income and Expense ​ ​ ​ ​ ​ Interest income ​ 20,265 ​ 8,476 ​ 11,789 139 % Change in fair value of warrant liabilities ​ ​ 4,890 ​ ​ 40,903 ​ ​ (36,013) ​ (88) % Interest expense ​ (84) ​ (42) ​ (42) 100 % Total nonoperating income and expense ​ $ 25,071 ​ $ 49,337 ​ $ (24,266) (49) % Pretax Loss ​ ​ (65,549) ​ ​ (9,782) ​ ​ (55,767) ​ 570 % Income tax benefit ​ — ​ (227) ​ 227 NM ​ Net Loss Attributable to Common Stockholders ​ $ (65,549) ​ $ (9,555) ​ $ (55,994) 586 % Other Comprehensive Income (Loss) ​ 2,600 ​ (3,159) ​ 5,759 NM ​ Comprehensive Loss Attributable to Common Stockholders ​ $ (62,949) ​ $ (12,714) ​ $ (50,235) 395 % ​ NM = Not meaningful Solid Power, Inc. | 2023 Form 10-K | 38 Table of Contents The key factors driving our 2023 increase in operating loss were as follows: ● Revenue and direct costs – our overall revenue and related direct costs increased for the period as a result of additional performance under our JDAs and government contracts. ● Research and development – our research and development costs increased for the period primarily as a result of increased labor costs and material consumption as we expanded the development efforts of our battery cells and electrolyte material.
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 research and development performance on government contracts and research and development licensing activities.
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.
For additional discussion, see “Special 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.
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.
As of December 31, 2022, the criteria for commercialization have not yet been met. Research and development costs require us to make judgments regarding our progress toward commercialization. We routinely assess this progress to prepare for the change in cost treatment.
As of December 31, 2023, the criteria for commercialization have not yet been met. Research and development costs require us to make judgments regarding our progress toward commercialization. We routinely assess this progress to prepare for the change in cost treatment.
We may, however, need additional cash if there are material changes to our business conditions or other developments, including changes to our operating plan, development progress, delays in negotiations with OEMs, cell manufacturers or other suppliers, market adoption of EVs, supply chain challenges, competitive pressures, inflation, and regulatory developments.
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 of EVs, supply chain challenges, competitive pressures, inflation, and regulatory developments.
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 “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” appearing in this Report, which are incorporated by reference.
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 test and validate our products to ensure they meet the performance and safety requirements of our customers. We also will have to negotiate licensing and supply contracts with our customers on terms and conditions that are mutually acceptable. We will need to scale production of our electrolyte material to satisfy anticipated demand.
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.
If the financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to take actions to reduce our capital or operating expenditures, which may adversely affect our development, business, operating results, financial condition and prospects. Our cash investment policy is designed to provide flexibility in investment options.
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.
Solid Power, Inc. | 2022 Form 10-K | 49 Table of Contents 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.
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.
We have and are deploying substantial capital to expand our production capabilities and engage in research and development programs. We also expect to incur significantly more administrative expenses as a publicly traded company than we did previously. In addition to meeting our development goals, commercialization, and future growth and demand for our products is highly dependent upon consumers adopting EVs.
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.
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.
For more information, see “Risk Factors – Risks Related to Development and Commercialization.” 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.
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 calculate discount rates periodically to estimate the rate we would pay to borrow the funds necessary 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.
Long-Term Liquidity Requirements We believe that our cash on hand is sufficient to meet our operating cash needs (including expenditures for the increased pace and scope of development as well as increased public company costs), working capital and capital expenditure requirements for a period of at least the next 12 months and longer term until we generate adequate cash flows from licensing activities and/or electrolyte sales.
Solid Power, Inc. | 2023 Form 10-K | 39 Table of Contents 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 anticipate our total combined capital and operational expenditures for 2023 will be between $50 million and $60 million, which includes approximately $1.45 million for the payment of contractual cash obligations as of December 31, 2022, primarily related to payments for operating leases.
We anticipate our total combined capital and operational expenditures for 2024 will be between $100 million and $120 million, which includes approximately $1.60 million for the payment of contractual cash obligations as of December 31, 2023, primarily related to payments for operating leases. We expect to fund our short-term liquidity requirements through our cash on hand and other liquid assets.
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. ​ Solid Power, Inc. | 2022 Form 10-K | 50 Table of Contents 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.
ASC Topic 718 requires all share-based awards to employees, including grants of employee stock options, restricted stock units, and shares purchased through the 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.
We continue to expect cash flows used in operating activities to increase as we accelerate both the pace and scope of our development efforts, and work to achieve commercialization of our products. We continue to anticipate increased expenditures for general and administrative functions in connection with our status as a public company and to support growth of our development efforts.
We expect cash flows used in operating activities to remain at these increased levels as we continue the pace and scope of our development efforts and work to achieve commercialization of our products.
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, particularly in “Risk Factors.” 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.
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.
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.
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 rent holidays and/or changes in rental amounts for recognizing rent expense over the term of the lease. ​ Research and Development Description Judgments and Uncertainties Effect if Results Differ From Assumptions ​ ​ ​ Our Company is in the research and development phase.
As our production processes are scaled in the future, especially with respect to our electrolyte material, we expect capital expenditures to increase. Cash used in investing activities increased from 2020 to 2021 due to increases in capital expenditures and purchases of marketable securities in 2021.
Capital expenditures were primarily for custom manufacturing equipment in connection with our expansion of electrolyte production capabilities. As our production processes are scaled in the future for commercialization, especially with respect to our electrolyte material, we expect capital expenditures to increase.
Net cash provided by financing activities for the year ended December 31, 2020 were primarily from the sale of convertible notes and proceeds from a bank term loan, which was retired in December of 2021. Off-Balance Sheet Arrangements We are not a party to any off-balance sheet arrangements, as defined under SEC rules.
Cash provided by financing activities: Cash provided by financing activities for 2022 and 2023 were primarily related to the exercise of stock options and the sale of shares of common stock under the ESPP, partially offset by leased equipment payments. Off-Balance Sheet Arrangements We are not a party to any off-balance sheet arrangements, as defined under SEC rules.
Cash Flows The following tables summarize our cash flows from operating, investing, and financing activities for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) 2022 2021 2020 Net cash used in operating activities ​ $ (33,824) ​ $ (25,440) ​ $ (9,995) Investing activities ​ ​ ​ ​ ​ ​ ​ ​ ​ Net purchases and proceeds of marketable securities and long-term investments ​ $ (371,191) ​ $ (75,885) ​ $ — Purchases of property, plant and equipment ​ ​ (58,296) ​ ​ (12,617) ​ ​ (1,020) Purchases of intangible assets ​ ​ (498) ​ ​ (381) ​ ​ (40) Net cash used in investing activities ​ $ (429,985) ​ $ (88,883) ​ $ (1,060) Net cash provided by financing activities ​ $ 485 ​ $ 622,796 ​ $ 5,395 ​ Solid Power, Inc. | 2022 Form 10-K | 48 Table of Contents Cash flows used in operating activities: Cash used in operating activities increased from 2021 to 2022 primarily attributable to our operating loss, which was driven by continued increase in research and development costs and general and administrative expenses.
Cash Flows The following table summarizes our cash flows from operating, investing, and financing activities for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2023 2022 Net cash and cash equivalents used in operating activities ​ $ (58,261) ​ $ (33,824) Net cash and cash equivalents provided by (used in) investing activities ​ ​ 42,502 ​ (429,985) Net cash and cash equivalents provided by financing activities ​ $ 173 ​ $ 485 ​ Cash used in operating activities: Cash used in operating activities increased from 2022 to 2023 primarily attributable to our operating loss, which was driven by continued increase in direct, research and development, and selling, general, and administrative expenses.
Solid Power, Inc. | 2022 Form 10-K | 47 Table of Contents As of December 31, 2022 and 2021, we had $496.1, and $589.3 million of total liquidity, respectively, as set forth below: ​ ​ ​ ​ ​ ​ ​ (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 ​ Short-Term Liquidity Requirements We anticipate that our most significant capital expenditures in 2023 will relate to finishing construction of our electrolyte facility, and enhancing production capabilities at this facility and our cell manufacturing lines.
As of December 31, 2023 and 2022, we had $415.6, and $496.1 million of total liquidity, respectively, as set forth below: ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ December 31, 2023 December 31, 2022 Cash and cash equivalents ​ $ 34,537 ​ $ 50,123 Marketable securities ​ 141,505 ​ 272,957 Long-term investments ​ 239,566 ​ 172,974 Total liquidity ​ $ 415,608 ​ $ 496,054 ​ ​ ​ ​ ​ ​ ​ Total current liabilities ​ $ 15,879 ​ $ 20,733 ​ ​ ​ ​ ​ ​ ​ ​ 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.
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.
The discount rate we use is generally our estimated incremental borrowing rate unless the lessor’s implicit rate is readily determinable.
Cash flows used in investing activities: Cash used in investing activities increased from 2021 to 2022 primarily due to capital expenditures, investments in patents, and the net effect of the purchase and sales of marketable securities. Capital expenditures were primarily for custom manufacturing equipment in connection with our expansion of electrolyte production capabilities and installation of our EV line.
Solid Power, Inc. | 2023 Form 10-K | 40 Table of Contents Cash provided by (used in) investing activities: Cash provided by investing activities increased from 2022 to 2023 primarily due to the net effect of increased purchase and sales of marketable securities, in addition to decreased capital expenditures for property, plant and equipment.
Overview We are developing solid state battery technologies to enable the next generation of rechargeable batteries for the fast-growing EV and other markets. Our core technology is our proprietary sulfide-based solid electrolyte material, which replaces the liquid or gel electrolyte used in conventional lithium-ion batteries.
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.
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.
Our incremental borrowing rate is determined based on a synthetic credit rating, determined using a valuation model, adjusted to reflect a secured 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.
We continue to expect our general and administrative costs to increase as a result of additional planned hiring and increased public company compliance costs. ● Non-cash stock compensation costs increased across Direct costs, Research and development, and General and administrative expenses related to increased labor costs. ● Nonoperating income – our nonoperating income increased primarily due to increased interest income following strategic cash investments, and the absence of other expense related to the buyout and termination of a manufacturing rights agreement, offset by a decrease in the gain on fair value adjustment of warrant liabilities.
We expect our development costs to continue to increase as we continue to accelerate both 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, additional planned hiring and workforce development associated with increasing our headcount to over 270 people, and enterprise resource planning system costs and implementation efforts . ● Operating expenses – non-cash stock-based compensation costs increased for the period across direct costs, research and development costs, and selling, general and administrative expenses related to our increased headcount. ● Nonoperating income – our nonoperating income decreased for the period primarily due to a lesser gain on fair value adjustment of warrant liabilities, partially offset by increased interest income related to strategic cash investment yields. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liquidity and Capital Resources Sources of Liquidity Our primary sources of cash have historically derived from the sale of equity, with a small portion coming from performance on commercial revenues and government contracts.
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.
Solid Power, Inc. | 2023 Form 10-K | 41 Table of Contents ESPP 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. ​ ​ 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.
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We believe that our electrolyte material can enable extended driving range, longer battery life, improved safety, and lower costs compared to conventional lithium-ion. We also are designing and developing solid state cells that utilize our electrolyte in the cathode, anode, and separator layers.
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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 under “Part I, Item 1A. Risk Factors,” as such descriptions may be updated or amended in future filings we make with the SEC.
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We currently produce 0.2 Ah, 2 Ah, 20 Ah, and EV cells on two pilot lines using established manufacturing processes. In 2022, we installed our EV line, which allows us to produce EV cells between 60 Ah and 100 Ah.
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Unless indicated otherwise, the following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated statements and notes thereto in this Report.
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The EV line is designed to produce cells as part of the automotive qualification process and for vehicle integration demonstration purposes. We have partnered with industry leaders, including Ford, BMW, and SK On. We are working closely with each of these partners to refine and validate our cell designs and electrolyte material with the ultimate goal to commercialize our technologies.
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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.
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Our business model – selling our electrolyte to cell manufacturers and licensing our cell designs and manufacturing processes – distinguishes us from many of our competitors who plan to be commercial battery manufacturers. Ultimately, we endeavor to be a leading producer and distributor of sulfide-based solid electrolyte material for powering both EVs and other applications.
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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.
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Since we do not intend to commercially produce battery cells, we expect to invest less than other development-stage battery companies that plan to commercially manufacture their own cell designs and construct battery production facilities. The products we currently make are in the development stage and require continued development and validation before we can commercialize either our electrolyte or cell technology.
Added
Solid Power, Inc. | 2023 Form 10-K | 37 Table of Contents We have partnered with industry leaders BMW, Ford, and SK On and will continue to work closely with our partners to improve cell designs, produce electrolyte material, and commercialize our technology.
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The Business Combination The business combination was accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, DCRC was treated as the “acquired” company for financial reporting purposes.
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Our products are currently in the development stage and require further research and improvement before we can commercialize our technology.
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Accordingly, the business combination was treated as the equivalent of Legacy Solid Power issuing stock for the net assets of DCRC, accompanied by a recapitalization, whereby no goodwill or other intangible assets was recorded. Operations prior to the business combination are those of Legacy Solid Power.
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We anticipate that our most significant capital expenditures in 2024 will relate to finishing construction of our advanced electrolyte research facility and enhancing the capabilities of our electrolyte production facility.
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While DCRC was the legal acquirer, because Legacy Solid Power was deemed the accounting acquirer, the historical financial statements of Legacy Solid Power became the historical financial statements of the combined company upon the consummation of the business combination.
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We also believe that we have adequate cash on hand for our $50 million stock repurchase program, which our Board approved in light of our strong cash position.
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As a result of the business combination, we became a Nasdaq-listed company, which will require that we continue to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.
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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.
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We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, additional internal and external accounting, legal, administrative resources, and increased audit, compliance, and legal fees.
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The shares of common stock may be purchased at management’s discretion 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.
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Solid Power, Inc. | 2022 Form 10-K | 44 Table of Contents Our results of operations and statements of assets and liabilities may not be comparable between periods as a result of the business combination.
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Management’s decision to repurchase shares will depend on a number of factors, such as the price of our common stock, economic and market conditions, and corporate and regulatory requirements.
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We expect our development costs to continue to increase as we continue to accelerate both the pace and scope of our development efforts. ● General and administrative – our general and administrative costs increased primarily as a result of increased headcount to support our operational and organizational capabilities, professional service fees, insurance costs, and labor resources as a result of our public company status and to support our growth.
Added
Solid Power, Inc. | 2023 Form 10-K | 42 Table of Contents Leases ​ ​ Description Judgments and Uncertainties Effect if Results Differ From Assumptions to obtain an asset of similar value, over a similar term, with a similar security. credit rating and a developed spread curve, if applicable, applied to a risk-free rate yield curve.
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Solid Power, Inc. | 2022 Form 10-K | 46 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ (in thousands) 2021 2020 Change % ​ Revenue ​ $ 2,712 ​ $ 2,103 ​ $ 609 29 % Operating Expenses ​ ​ ​ ​ ​ ​ ​ ​ Direct costs ​ 3,073 ​ 1,670 ​ 1,403 84 % Research and development ​ 17,102 ​ 9,594 ​ 7,508 78 % Marketing and sales ​ 3,428 ​ 1,205 ​ 2,223 184 % General and administrative ​ 5,655 ​ 1,227 ​ 4,428 361 % Total operating expenses ​ 29,258 ​ 13,696 ​ 15,562 114 % Operating Loss ​ (26,546) ​ (11,593) ​ (14,953) (129) % Nonoperating Income (Expense) ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ 56 ​ 28 ​ 28 NM ​ Change in fair value of warrant liabilities ​ 51,233 ​ — ​ 51,233 — ​ Interest expense ​ (394) ​ (361) ​ (33) NM ​ Other expense ​ (3,602) ​ — ​ (3,602) — ​ Loss from change in fair value of debt ​ — ​ (437) ​ 437 NM ​ Loss from change in fair value of embedded derivative liability ​ (2,680) ​ (2,817) ​ 137 NM ​ Gain on loan extinguishment ​ — ​ 923 ​ (923) NM ​ Total nonoperating income (expense) ​ $ 44,613 ​ $ (2,664) ​ $ 47,277 1775 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pretax Income (Loss) ​ 18,067 ​ (14,257) ​ 32,324 227 % Income tax (benefit) expense ​ (25) ​ 118 ​ (143) NM ​ Net Income (Loss) ​ $ 18,092 ​ $ (14,375) ​ $ 32,467 226 % Premium paid on repurchase of redeemable convertible preferred stock ​ (5,436) ​ — ​ (5,436) — ​ Net Income (Loss) attributable to Common Stockholders ​ $ 12,656 ​ $ (14,375) ​ $ 27,031 188 % ​ NM = Not meaningful The key factors driving our 2021 increase in operating loss were as follows: ● Revenue and direct costs – our overall revenue and related direct costs increased, however we saw an increase in revenue from governmental contracts and corresponding decrease to commercial revenues driven by the timing of program execution. ● Research and development – our research and development costs increased primarily as a result of increased labor costs and material consumption as we expanded the development efforts of our solid-state battery cells and electrolyte material. ● Marketing and sales – our marketing and sales costs increased as a result of increased labor costs and an expansion of our sales and marketing efforts. ● General and administrative – our general and administrative costs increased primarily as a result of professional service fees and labor costs as a result of our public company status.
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We expect our general and administrative costs to increase as a result of increased public company costs and requirements. ● Nonoperating income – our nonoperating income increased as a result of the gain on fair value adjustment of warrant liabilities, loss from change in fair value of embedded derivative liability, and other expense related to the buyout and termination of a manufacturing rights agreement.
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Liquidity and Capital Resources Sources of Liquidity Our sources of cash have historically been primarily derived from the sale of equity and the business combination, with a small portion coming from performance on government contracts and commercial revenues.
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In addition, our short-term liquidity requirements include operating and capital expenses needed to further our development programs and to optimize our pilot production lines and electrolyte manufacturing capabilities. We expect to fund our short-term liquidity requirements through our cash on hand and other liquid assets.
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Our investment policy is designed primarily to maintain adequate liquidity to fund future operations, research and development, and anticipated capital expenditures, with a secondary goal to maximize yield on cash not required to be liquid for near term operations.
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Cash used in operating activities increased from 2020 to 2021. This increase in cash use was primarily attributable to our operating loss related to similar increases in research and development costs and general and administrative expenses.
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We continue to expect cash used in investing activities to increase as we finalize the build out of our electrolyte production facility and increase its production capabilities, and as we increase our electrolyte production scale. Each of our locations will continue to require investment in specialized equipment to facilitate the manufacturing process of our electrolyte material and battery cells.
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Capital expenditures were primarily for custom manufacturing equipment in connection with our expansion of electrolyte production. Cash flows provided by financing activities: Net cash provided by financing activities for the year ended December 31, 2022 was primarily from the cash exercise of stock options.
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Net cash provided by financing activities for the year ended December 31, 2021 were primarily the proceeds from the business combination and the Series B Financing.
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Solid Power, Inc. | 2022 Form 10-K | 51 Table of Contents Leases ​ ​ Description Judgments and Uncertainties Effect if Results Differ From Assumptions rent holidays and/or changes in rental amounts for recognizing rent expense over the term of the lease. ​ Research and Development Description Judgments and Uncertainties Effect if Results Differ From Assumptions ​ ​ ​ Our Company is in the research and development phase.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed, or anticipate in the future to be exposed, to a variety of market and other risks including credit risks, and foreign currency translation and transaction risks as well as risks relating to the availability of funding sources, hazard events and specific asset risks.
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Item 7A. 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. ​ Solid Power, Inc. | 2023 Form 10-K | 43 Table of Contents
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Credit Risk Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash, accounts receivable, and marketable securities. Domestic cash deposits exceeded the Federal Deposit Insurance Corporation insurable limit at December 31, 2022 and December 31, 2021. We have not experienced any losses on our cash deposits to date.
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Furthermore, for the year ended December 31, 2022, 82% of our revenues came from contracts with four customers, and for the year ended December 31, 2021, 87% of our revenues came from contracts with four customers. We are subject to non-payment or non-performance of these counterparties, and we generally do not require collateral from our customers.
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We evaluate the collectability of our accounts receivable and provide an allowance for potential credit losses as necessary. To date, we have not experienced any customer credit losses. ​ Solid Power, Inc. | 2022 Form 10-K | 52 Table of Contents

Other SLDP 10-K year-over-year comparisons