Solid Power, Inc. — Q1 2022 Form 10-Q
Business context and reporting period
Quarter ended March 31, 2022. Solid Power is a development-stage company developing sulfide-based solid-electrolyte materials and all-solid-state battery cells, primarily for electric vehicles. Its intended model is to license cell designs and manufacturing know-how and sell electrolyte material. The December 2021 business combination was accounted for as a reverse recapitalization; historical results are those of Legacy Solid Power.
Financial results and liquidity
Amounts below are in millions of dollars unless otherwise noted.
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $2.196 | $0.480 |
| Direct costs | $2.030 | $0.514 |
| Operating expenses | $13.508 | $4.773 |
| Operating loss | $(11.312) | $(4.293) |
| Net loss | $(10.344) | $(7.141) |
| Operating cash used | $(14.369) | $(3.643) |
| Investing cash used | $(48.881) | $(0.097) |
- Revenue less direct costs implies a gross loss of $0.166 million in Q1 2022, compared with $0.034 million in Q1 2021. The filing does not present a separate gross-margin measure.
- At March 31, cash and cash equivalents were $450.405 million, marketable securities $102.910 million, and long-term investments $10.898 million: approximately $564.2 million in total liquidity. Current liabilities were $6.477 million.
- Debt was $0.092 million, including current and long-term portions. Lease liabilities totaled approximately $8.354 million. Warrant liabilities were $49.310 million.
- Cash and cash equivalents declined $63.042 million during the quarter. Financing provided $0.208 million; investing outflows included $10.527 million of property and equipment purchases and net investment purchases.
Material changes versus prior comparable period
- Revenue rose 358% to $2.196 million, reflecting higher government and commercial contract activity. The company had not generated material revenue from its principal planned business activities.
- Operating expenses increased 183%. Research and development expense more than doubled to $6.661 million; general and administrative expense rose to $4.022 million, in part because of public-company costs and increased headcount.
- Net loss widened to $10.344 million from $7.141 million. A $0.710 million gain from warrant-liability remeasurement and higher interest income partly offset operating losses; Q1 2021 included a $2.680 million embedded-derivative fair-value loss.
- Operating cash use increased, principally reflecting higher R&D and G&A costs. Investing cash use increased with capital expenditures and purchases of marketable securities and long-term investments.
Outlook, management commentary, risks and unusual items
- Management said available cash was expected to fund operations, R&D, working capital and capital expenditure needs for at least the next 12 months and longer, until adequate cash flows from licensing or electrolyte sales. Additional financing could be needed if plans or conditions change.
- The company expected operating and investing cash use to increase as development and facility expansion continued. It planned to complete a second cell-production line in 2022, begin internal testing of EV-scale cells in Q3 2022, and bring its second electrolyte-production facility online in the second half of 2022. Automotive qualification was expected to begin in late 2022; commercialization is targeted by 2028.
- Key risks include technology development and validation, commercialization timing, customer qualification and contract terms, competition, supply-chain disruption, EV adoption, facility-construction delays, and the need for additional capital. The company cautioned that COVID-19 effects remain uncertain.
- The company adopted lease accounting standards on January 1, 2022, recognizing operating right-of-use assets and liabilities; management reported no material effect on quarterly earnings or cash flows. A shareholder counsel fee demand related to the former business combination was settled in March 2022 for an amount materially consistent with the $0.5 million accrual.
- Management concluded disclosure controls were effective at quarter-end. A previously reported material weakness in internal control over financial reporting remained under remediation, with remediation expected by December 31, 2022.
- After quarter-end, the Compensation Committee approved executive salary adjustments, 50% target cash bonuses, and planned long-term incentive awards; expected grants were approximately $6.425 million in target value in aggregate.
Important facts for investors to verify
- Whether the EV-scale cell and electrolyte facility milestones were achieved on the stated timelines, and what progress has been made toward automotive qualification.
- How much of reported revenue reflects government or development contracts versus commercial product sales, and whether material recurring product revenue has begun.
- Actual cash burn, capital spending, investment balances and remaining liquidity as facility construction and R&D scale up.
- Whether commercialization targets and customer agreements—including licensing and supply terms—remain achievable, given the company’s development-stage status.
- Progress in remediating the material weakness in internal control over financial reporting by the expected deadline.