Filing summary
Important scope note: This is Decarbonization Plus Acquisition Corporation III’s (DCRC) Form 10-Q for the quarter ended June 30, 2021, not an operating-company 10-Q filed by Solid Power. DCRC was a blank-check company that signed a proposed business combination agreement with Solid Power on June 15, 2021.
Business context and reporting period
DCRC was formed to pursue a business combination, with a stated focus on businesses supporting decarbonization. It had not begun operating activities or generating operating revenue by June 30, 2021. The financial statements cover the three months ended June 30, 2021 and, for certain statements, the period from inception on January 29, 2021 through June 30, 2021.
Under the proposed transaction, DCRC’s wholly owned merger subsidiary would merge into Solid Power, with Solid Power surviving as a DCRC subsidiary. The transaction remained subject to closing conditions; the filing does not report that it had closed.
Financial metrics
| Metric | Reported amount |
|---|---|
| Operating revenue | None; DCRC expected no operating revenue before a business combination. |
| Net loss, three months ended June 30, 2021 | $23.2 million, including $21.3 million of non-cash warrant fair-value expense. |
| Net loss, inception through June 30, 2021 | $24.2 million. |
| General and administrative expense, three months | $1.8 million. |
| Cash from operating activities, inception through June 30 | $(2.35) million. |
| Cash from investing activities, inception through June 30 | $(350.0) million, primarily funding the Trust Account. |
| Cash from financing activities, inception through June 30 | $352.35 million. |
| Cash and Trust Account at June 30 | $0 cash outside the Trust Account; $350.0 million in the Trust Account, reported at $350.005 million including earnings. |
| Liabilities at June 30 | $61.1 million, including $48.2 million of warrant liabilities and $12.25 million of deferred underwriting fees. |
| Redeemable Class A shares | 28.5 million shares classified as temporary equity at $284.9 million. |
| Stockholders’ equity | $5.0 million. |
Profit margins are not meaningful because DCRC had no operating revenue. No conventional funded debt was reported, and there were no working-capital loan borrowings outstanding at quarter-end. The filing reports no cash outside the Trust Account and describes access to potential sponsor working-capital loans, which were not committed.
Material changes and unusual items
- DCRC classified its public and private warrants as liabilities following SEC staff guidance, rather than as equity. The resulting fair-value remeasurement produced a $21.3 million expense for the quarter and accounted for most of the reported net loss; it was non-cash.
- The filing says DCRC had previously accounted for the warrants as equity and revised its March 31, 2021 financial statements. The filing also identifies a material weakness in internal control over financial reporting related to warrant classification and other accounting matters.
- DCRC reported that its disclosure controls and procedures were not effective as of June 30, 2021. Remediation steps were underway but the material weakness had not been fully remediated.
- DCRC raised $165 million through a proposed PIPE subscription for the business combination, contingent on the transaction closing. It is not included as completed funding in the June 30 balance sheet.
Outlook, risks and contingencies
- The proposed Solid Power transaction and PIPE were subject to closing conditions. Public shareholders could redeem shares in connection with a business combination, potentially affecting available funds.
- If DCRC did not complete a business combination within 24 months of its March 26, 2021 IPO closing, it would be required to wind up and redeem public shares, subject to the charter and applicable law.
- Warrant liabilities are remeasured each reporting period, so changes in warrant fair value may cause material, non-cash earnings volatility.
- DCRC stated that COVID-19 could adversely affect its financial position, results, or search for a target, but the specific impact was not determinable.
- The filing reports no legal proceedings and no off-balance-sheet arrangements as of the report date.
Important facts for investors to verify
- Confirm the status and final terms of the DCRC–Solid Power business combination, including all required approvals and closing conditions.
- Verify whether the $165 million PIPE was funded at closing and how shareholder redemptions affected transaction proceeds and the combined company’s liquidity.
- Review Solid Power’s separate operating-company filings for its revenue, cash burn, liquidity, debt, and business risks; DCRC’s figures do not represent Solid Power’s standalone financial results.
- Monitor remediation of DCRC’s material weakness and any subsequent changes to warrant accounting, fair values, or reported earnings.