Solid Power, Inc. — 2021 Form 10-K
Business context and reporting period. Fiscal year ended December 31, 2021; this is an annual report, not a standalone fourth-quarter report. Solid Power is a development-stage company building sulfide-based all-solid-state battery cells and electrolyte, primarily for electric vehicles. Its intended model is to license cell designs and manufacturing know-how and sell electrolyte. The business combination closed December 8, 2021; the filing accounts for it as a reverse recapitalization, with Legacy Solid Power as the accounting acquirer.
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $2.712 million | $2.103 million |
| Operating expenses | $29.258 million | $13.696 million |
| Operating loss | $26.546 million | $11.593 million |
| Net income (loss) | $18.092 million | $(14.375) million |
| Operating cash flow | $(25.440) million | $(9.995) million |
| Investing cash flow | $(88.883) million | $(1.060) million |
| Financing cash flow | $622.796 million | $5.395 million |
- Revenue rose 29%, while operating expenses more than doubled. Direct costs of $3.073 million exceeded revenue, implying a negative contribution of $0.361 million before other operating expenses.
- Reported net income was not evidence of operating profitability: it included a $51.233 million gain from revaluing warrant liabilities, partly offset by $3.602 million of other expense and a $2.680 million loss on an embedded derivative. The warrant gain was noncash.
- At year-end, cash and cash equivalents were $513.447 million and marketable securities were $75.885 million. Current liabilities were $8.366 million; total liabilities were $59.015 million, including $50.020 million of warrant liabilities. Debt was $0.130 million, after repayment of the bank term loan in December.
- Net cash from financing included $495.370 million from the business combination and $135.579 million from the Series B financing. Cash used in investing included $12.617 million of property and equipment purchases and $75.885 million invested in marketable securities.
- Stockholders’ equity was $558.665 million; accumulated deficit was $9.535 million. The company reported 167.558 million shares outstanding at year-end.
Material changes versus 2020
- Research and development expense increased 78% to $17.102 million, reflecting higher labor and material costs. General and administrative expense increased to $5.655 million, primarily from professional services and public-company costs.
- Operating cash use increased by $15.445 million, and capital investment expanded as the company prepared new cell and electrolyte production facilities.
- Revenue remained small and was primarily from government research contracts; management attributed year-to-year changes in government versus commercial revenue to program timing.
- The company became publicly listed following the December business combination and received substantial financing, materially increasing cash and equity.
Outlook, risks, and unusual items
- Management estimated 2022 combined capital and operating expenditures of $150 million to $170 million. It expected the EV-scale cell line to be operational in the third quarter of 2022 and electrolyte production at the Thornton facility to begin in the second half of 2022.
- Production targets included roughly 300 cells per week on the EV Line by late 2022 and electrolyte capacity of approximately 30 metric tons per year in 2022. These are forward-looking targets, not achieved results.
- The company expected continuing losses and cash outflows; it stated material revenue from commercialization was not expected before at least 2026, with its broader commercialization goal extending to 2028. Management believed year-end cash was sufficient for at least 12 months and longer, subject to plans and conditions.
- Ford, BMW, and SK Innovation development agreements are non-exclusive. Commercial licensing and electrolyte supply terms had not been agreed, milestones may change, and partners may terminate agreements or pursue competing technologies. The agreements also provide for some partner rights in jointly developed intellectual property.
- Key execution and business risks include cell performance, safety qualification, manufacturing scale, yield and cost; supply constraints, particularly lithium sulfide; facility construction and permitting; competition; and adoption of EVs and solid-state batteries. Sulfide materials can generate toxic hydrogen sulfide gas if exposed to moisture.
- A material weakness in internal control over financial reporting remained unremediated at year-end, related to review of complex transactions. Management targeted remediation by December 31, 2022, but gave no assurance it would meet that timing. The auditor issued an unqualified opinion on the financial statements.
- A $0.5 million liability was accrued for a shareholder counsel fee demand related to the business-combination vote; the company settled the demand in March 2022 for an amount materially consistent with the accrual. The filing reported no litigation then expected to have a material adverse effect.
Important facts for investors to verify
- Whether the EV Line and Thornton facility met the stated 2022 schedules, capacity targets, and qualification milestones.
- Subsequent operating cash burn, capital spending, and cash, cash-equivalent, and marketable-security balances relative to the company’s funding runway.
- Whether Solid Power secured commercial agreements with partners, including pricing, licensing economics, volume commitments, and intellectual-property provisions.
- Progress in cell testing and automotive qualification, including cycle life, safety, manufacturing yields, and cost at larger formats.
- Remediation of the financial-reporting material weakness and any resulting changes to controls or reported results.
- Potential dilution from outstanding options and warrants, and the impact of warrant-liability remeasurement on reported earnings.