Solid Power, Inc. — Form 10-Q summary
Reporting period: Quarter and six months ended June 30, 2022; filed August 10, 2022. Solid Power is developing all-solid-state battery cells and sulfide-based electrolyte, with a planned model of licensing cell designs and selling electrolyte. It reported no material revenue from its principal business activities.
Financial performance and liquidity
Amounts below are in millions of dollars unless otherwise noted.
| Metric | Q2 2022 | Six months 2022 | Comparable 2021 period |
|---|---|---|---|
| Revenue | $2.58 | $4.78 | $0.56 Q2; $1.04 six months |
| Operating expenses | $17.28 | $30.79 | $6.61 Q2; $11.38 six months |
| Operating loss | $(14.70) | $(26.01) | $(6.05) Q2; $(10.34) six months |
| Net income (loss) | $13.67 | $3.32 | $(9.27) Q2; $(16.41) six months |
| Operating cash used | — | $(22.96) | — Q2; $(10.16) six months |
- Revenue increased 360% in Q2 and 359% for the first six months, principally from government contracts and collaborative arrangements. Direct costs exceeded revenue by $0.41 million in Q2 and $0.24 million for the six-month period; the filing does not present a separate gross-margin measure.
- Net income was driven by a noncash $27.47 million Q2 gain from revaluing warrant liabilities ($28.18 million for six months). Excluding this gain, operating results remained loss-making; the reported net income should not be read as evidence of profitable operations.
- Cash and cash equivalents were $301.60 million at June 30, versus $513.45 million at year-end 2021. Marketable securities were $182.69 million and long-term investments $49.87 million, bringing reported total liquidity to $534.17 million, down from $589.33 million.
- Six-month investing cash outflow was $189.16 million, including $30.96 million of property and equipment purchases and net purchases of securities and investments. Financing activities provided $0.27 million; there was no fundraising in the period.
- Total assets were $608.08 million; total liabilities were $43.11 million. Long-term debt was zero, with $0.06 million current equipment debt. Lease liabilities totaled approximately $7.99 million operating and $0.20 million financing. Current assets of $489.19 million substantially exceeded current liabilities of $13.57 million.
Changes, outlook, and risks
- Operating expenses rose 161% in Q2 and 170% for the six months, reflecting higher R&D spending, staffing, facility expansion, and public-company costs. R&D increased 164% in Q2 and 139% for the six months.
- Management said cash on hand should fund operations and capital needs for at least 12 months. It expects spending to continue increasing, with significant near-term capital expenditures for the Thornton, Colorado electrolyte facility.
- The second EV cell pilot line is designed for 60–100 Ah cells. Management expected internal testing to begin in Q3 2022 and delivery of EV-scale cells to automotive partners by year-end 2022 for qualification. Commercialization is targeted by 2028.
- Supply-chain and permitting delays shifted expected electrolyte production at Thornton to Q1 2023; management said it did not expect the delay to materially affect the development timeline. Construction in progress for the facility was $33.82 million at quarter-end.
- Key risks include technical development and customer qualification, commercialization and scale-up, non-exclusive partner relationships and future contract terms, EV adoption, competition, supply-chain interruptions, construction delays, and potential need for additional financing if assumptions or plans change.
- The company reported effective disclosure controls, but continued remediation of a previously identified material weakness in internal control over financial reporting; management expected remediation by December 31, 2022. No material change to reported risk factors was identified. A previously accrued shareholder-counsel fee demand was settled in March 2022 for an amount materially consistent with the $0.50 million accrual.
Important facts for investors to verify
- Whether EV-scale cell testing, partner deliveries, and automotive qualification proceeded on the stated timelines.
- Whether the Thornton facility began electrolyte production in Q1 2023 and whether further delays or cost increases occurred.
- Actual cash burn and capital spending relative to management’s liquidity estimate and stated development plans.
- Revenue quality and growth: the filing says revenue to date was primarily from government-contract and collaborative R&D work, not material commercial sales.
- Potential dilution: 19.3 million public and private warrants were outstanding, exercisable at $11.50 per share, alongside equity awards; common shares outstanding were 174.45 million at June 30, 2022.
- Progress in remediating the internal-control material weakness and any subsequent disclosure about control effectiveness.