Amprius Technologies, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Page Number Report of Independent Registered Public Accounting Firm (BDO USA, P.C., Houston, TX) (PCAOB ID: 243 ) 59 Consolidated Balance Sheets 60 Consolidated Statements of Operations 61 Consolidated Statements of Stockholders’ Equity 62 Consolidated Statements of Cash Flows 63 Notes to Consolidated Financial Statements 64 Note 1. Nature of Operations and Organization 64 Note 2. Summary of Significant Accounting Policies 65 Note 3. Business Combination 74 Note 4. Revenue 74 Note 5. Inventories 76 Note 6. Property, Plant and Equipment, Net 76 Note 7. Accrued and Other Current Liabilities 76 Note 8. Stockholders’ Equity 76 Note 9. Income Taxes 80 Note 10. Leases 82 Note 11. Commitments and Contingencies 83 Note 12. Related Party Transactions 83 Note 13. Net Loss Per Share 83 58 Table of Contents Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Amprius Technologies, Inc. Fremont, California Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Amprius Technologies, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO USA, P.C. We have served as the Company’s auditor since 2022. Houston, Texas March 28, 2024 59 Table of Contents Index to Consolidated Financial Statements A MPRIUS T ECHNOLOGIES, I NC. C ONSOLIDATED B ALANCE S HEETS December 31, (In thousands, except share and par value data) 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 45,761 $ 69,696 Accounts receivable 1,265 686 Inventories 730 500 Deferred costs 779 1,897 Prepaid expenses and other current assets 1,987 2,394 Total current assets 50,522 75,173 Non-current assets: Property, plant and equipment, net 21,760 4,236 Operating lease right-of-use assets, net 35,149 2,751 Deferred costs — 367 Other assets 305 644 Total assets $ 107,736 $ 83,171 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 3,341 $ 1,028 Accrued and other current liabilities 5,594 2,708 Deferred revenue 3,434 2,660 Operating lease liabilities 1,088 521 Total current liabilities 13,457 6,917 Non-current liabilities: Deferred revenue — 720 Operating lease liabilities 34,479 2,501 Total liabilities 47,936 10,138 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock; $ 0.0001 par value; 50,000,000 shares authorized; no shares issued and outstanding — — Common stock; $ 0.0001 par value; 950,000,000 shares authorized; 88,869,463 and 84,610,114 shares issued and outstanding at December 31, 2023 and 2022, respectively 9 8 Additional paid-in capital 189,454 165,912 Accumulated deficit ( 129,663 ) ( 92,887 ) Total stockholders’ equity 59,800 73,033 Total liabilities and stockholders’ equity $ 107,736 $ 83,171 The accompanying notes are an integral part of these consolidated financial statements. 60 Table of Contents Index to Consolidated Financial Statements A MPRIUS T ECHNOLOGIES, I NC. C ONSOLIDATED S TATEMENTS OF O PERATIONS Year ended December 31, (In thousands, except share and per share data) 2023 2022 Revenue $ 9,053 $ 4,409 Cost of revenue 23,729 10,063 Gross loss ( 14,676 ) ( 5,654 ) Operating expenses: Research and development 3,677 2,027 Selling, general and administrative 20,356 10,360 Total operating expenses 24,033 12,387 Loss from operations ( 38,709 ) ( 18,041 ) Other income (expense): Interest and other income 2,514 709 Loss on write-off of deferred stock issuance costs ( 581 ) — Total other income, net 1,933 709 Net loss $ ( 36,776 ) $ ( 17,332 ) Weighted-average common shares outstanding: Basic and diluted 86,196,391 71,342,720 Net loss per share of common stock: Basic and diluted $ ( 0.43 ) $ ( 0.24 ) The accompanying notes are an integral part of these consolidated financial statements. 61 Table of Contents Index to Consolidated Financial Statements A MPRIUS T ECHNOLOGIES, I NC. C ONSOLIDATED S TATEMENTS OF S TOCKHOLDERS’ E QUITY F OR T HE Y EARS E NDED D ECEMBER 31, 2023 AND 2022 Common Stock Additional Paid-in Capital Accumulated Deficit Total Stockholders’ Equity (In thousands, except share data) Shares Amount Balance as of January 1, 2022 65,772,001 $ 7 $ 89,252 $ ( 75,401 ) $ 13,858 Cumulative effect adjustment from the adoption of ASC 842 — — — ( 154 ) ( 154 ) Issuance of common stock in connection with business combination and PIPE investment, net of issuance costs 18,392,366 1 70,937 — 70,938 Issuance of common stock in connection with a stock purchase agreement 84,793 — — — — Capital contributions from Amprius Holdings — — 505 — 505 Exercise of stock options 146,566 — 44 — 44 Exercise of stock warrants 214,388 — 2,465 — 2,465 Stock-based compensation — — 2,709 — 2,709 Net loss — — — ( 17,332 ) ( 17,332 ) Balance as of December 31, 2022 84,610,114 8 165,912 ( 92,887 ) 73,033 Issuance of common stock in connection with the Stock Purchase Agreement, net of issuance cost 2,952,763 1 18,981 — 18,982 Issuance of common stock in connection with the At Market Issuance Sales Agreement, net of issuance cost 89,383 — 370 — 370 Issuance of common stock upon exercise of stock options and vesting of restricted stock units 1,217,103 — 310 — 310 Exercise of stock warrants 100 — 1 — 1 Stock-based compensation — — 3,880 — 3,880 Net loss — — — ( 36,776 ) ( 36,776 ) Balance as of December 31, 2023 88,869,463 $ 9 $ 189,454 $ ( 129,663 ) $ 59,800 The accompanying notes are an integral part of these consolidated financial statements. 62 Table of Contents Index to Consolidated Financial Statements A MPRIUS T ECHNOLOGIES, I NC. C ONSOLIDATED S TATEMENTS OF C ASH F LOWS Year ended December 31, (In thousands) 2023 2022 Cash flows from operating activities: Net loss $ ( 36,776 ) $ ( 17,332 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 3,880 2,709 Depreciation and amortization 1,806 1,539 Amortization of deferred costs 3,057 1,585 Non-cash operating lease expense 1,148 556 Loss on write-off of deferred stock issuance costs 581 — Changes in operating assets and liabilities: Accounts receivable ( 579 ) ( 424 ) Inventories ( 230 ) — Deferred costs ( 1,572 ) ( 1,939 ) Prepaid expenses and other current assets 407 ( 2,282 ) Other assets ( 9 ) — Accounts payable 616 517 Accrued and other current liabilities 3,065 1,155 Deferred revenue 54 516 Operating lease liabilities ( 1,001 ) ( 482 ) Net cash used in operating activities ( 25,553 ) ( 13,882 ) Cash flows from investing activities: Purchase of property, plant and equipment ( 17,550 ) ( 1,481 ) Net cash used in investing activities ( 17,550 ) ( 1,481 ) Cash flows from financing activities: Proceeds from issuance of common stock in connection with the Stock Purchase Agreement 19,087 — Proceeds from issuance of common stock in connection with the At Market Issuance Sales Agreement 371 — Payment of financing costs in connection with the Stock Purchase and At Market Issuance Sales agreements ( 601 ) ( 326 ) Proceeds from issuance of common stock in connection with Business Combination and PIPE investment — 77,884 Payment of transaction and issuance costs in connection with Business Combination and PIPE investment — ( 6,946 ) Proceeds from exercise of stock options 310 44 Proceeds from exercise of stock warrants 1 2,465 Capital contributions from Amprius Holdings — 505 Net cash provided by financing activities 19,168 73,626 Net (decrease) increase in cash, cash equivalents and restricted cash ( 23,935 ) 58,263 Cash, cash equivalents and restricted cash, beginning of year 69,752 11,489 Cash, cash equivalents and restricted cash, end of year $ 45,817 $ 69,752 Components of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 45,761 $ 69,696 Restricted cash included in other assets 56 56 Total cash, cash equivalents and restricted cash $ 45,817 $ 69,752 Supplemental disclosure of non-cash investing and financing information: Unpaid purchases of property, plant and equipment $ 1,864 $ 83 Unpaid financing costs in connection with a stock purchase agreement $ — $ 263 The accompanying notes are an integral part of these consolidated financial statements. 63 Table of Contents Index to Consolidated Financial Statements A MPRIUS T ECHNOLOGIES, I NC. N OTES T O C ONSOLIDATED F INANCIAL S TATEMENTS Note 1. Nature of Operations and Organization Nature of Operations Amprius Technologies, Inc. (hereafter referred to as the “Company,” “we,” “us,” or “our”) has developed, and since 2018, been in commercial production of lithium-ion batteries for mobility applications leveraging a disruptive silicon anode. Our silicon anode technology is intended to enable batteries with higher energy density, higher power density and fast charging capabilities over a wide range of operating temperatures. Our headquarters is located in Fremont, California. Until the agreement was terminated in May 2022, we previously had an intercompany agreement with o ur former parent company and current majority shareholder, Amprius, Inc. (“Amprius Holdings”), to license intellectual property rights to continue to develop silicon nanowire technology. Under this agreement, Amprius Holdings provided us with management oversight, access to personnel, access to cash and rights to use its assets, such as the use of intellectual property, equipment, and manufacturing and office facilities. In 2020, Amprius Holdings assigned its assets to us, which we treated as capital contributions. Business Combination On September 14, 2022 (the “Closing Date”), we completed a business combination pursuant to the Business Combination Agreement, dated May 11, 2022 (the “Business Combination Agreement”), by and among the Company, Amprius Technologies Operating, Inc. (formerly known as Amprius Technologies, Inc. or “Legacy Amprius”), Kensington Capital Acquisition Corp. IV, and Kensington Capital Merger Sub Corp. (“Merger Sub”). Pursuant to the terms of the Business Combination Agreement, Kensington Capital Acquisition Corp. IV changed its jurisdiction of incorporation by domesticating as a corporation incorporated under the laws of the State of Delaware (the “Domestication”), upon which it changed its name to “Amprius Technologies, Inc.,” and a business combination between Kensington Capital Acquisition Corp. IV and Legacy Amprius was effected through the merger of Merger Sub with and into Legacy Amprius, with Legacy Amprius surviving as a wholly owned subsidiary of the Company (together with the Domestication and the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). Unless the context otherwise provides, the “Company” refers (i) prior to the Closing Date, to Legacy Amprius and (ii) on and after the Closing Date, to Amprius Technologies, Inc. and its subsidiaries, including Legacy Amprius. Prior to the Business Combination, Kensington Capital Acquisition Corp. IV is referred to herein as “Kensington.” The Business Combination was treated as a reverse recapitalization. Legacy Amprius was determined as the accounting acquirer and Kensington as the accounting acquiree for financial reporting purposes based on evaluation of the following facts and circumstances: • the stockholders of Legacy Amprius owned a majority of the shares of the Company following the Business Combination; • the board of directors of the Company following the Business Combination was comprised of all of the board members of Legacy Amprius; • the senior management of the Company following the Business Combination was the senior management of Legacy Amprius; and • Legacy Amprius is larger than Kensington in terms of existing operations and number of employees. Liquidity and Capital Resources Since our inception, we have incurred recurring losses and negative cash flows from operations. During the year ended December 31, 2023, we incurred a net loss of $ 36.8 million and at December 31, 2023, the accumulated deficit was $ 129.7 million. We expect to incur additional losses in the future as we scale our business and increase our operating expenditures, such as increasing our research and development spend and headcount. Additionally, we expect to increase our capital expenditures as we complete the design and build-out of a GWh-scale manufacturing facility in Brighton, Colorado. We may need to raise additional funds in order to meet our future operating and capital expenditure requirements, and we may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. If sufficient funding is not raised, we may need to reduce our spending activities, which may 64 Table of Contents Index to Consolidated Financial Statements negatively affect our ability to achieve our operating goals. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional dilution. On October 2, 2023, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc., Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC, as sales agents (the “Sales Agents”), pursuant to which we may offer and sell, from time to time, through or to any Sales Agent, shares of our common stock with an aggregate offering price of not more than $ 100.0 million. In connection with our execution of the Sales Agreement, we mutually agreed with B. Riley Principal Capital II, LLC (“BRPC II”), an affiliate of B. Riley Securities, Inc., to terminate the Common Stock Purchase Agreement (“Purchase Agreement”), whereby BRPC II had committed to purchase up to $ 200.0 million of our common stock until January 1, 2025. The termination of the Purchase Agreement became effective on October 10, 2023. The cumulative proceeds from the sale of shares under the Purchase Agreement was $ 19.1 million. On June 2, 2023, we and the U.S. Department of Energy’s Office of Manufacturing and Energy Supply Chains mutually agreed to end the negotiation for a $ 50.0 million cost-sharing grant demonstration project under the Bipartisan Infrastructure Law. We had cash and cash equivalents of $ 45.8 million as of December 31, 2023. We believe that our cash and cash equivalents and cash flows from operations will be sufficient to fund our obligations over twelve months from the date these consolidated financial statements are issued. Other Risk and Uncertainties We face risks related to abrupt political change, terrorist activity, and armed conflict such as the military conflicts between Russia and Ukraine and in the Middle East, which has led to significant volatility in the global economy, resulting in inflation, volatility in the credit and capital markets, and interruption in the global supply chain. Although these conflicts did not have an adverse impact on us to-date, the future outcome of such conflicts is highly unpredictable and uncertain and may adversely affect our future financial condition, results of operations and cash flows. We also faced risks related to the COVID-19 pandemic, which has been unpredictable and unprecedented and resulted in significant national and global economic disruption. The extent to which public health emergencies such as the COVID-19 pandemic may impact our business, financial condition, prospects and results of operations is highly uncertain and cannot be predicted. Even after the COVID-19 pandemic has subsided, we and our customers may continue to experience its negative effect, which may adversely affect our future financial condition, results of operations and cash flows. Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany accounts and transactions have been eliminated. The significant accounting policies described below, together with Note 1 and other notes that follow, are an integral part of the consolidated financial statements. In connection with the closing of the Business Combination in fiscal year 2022, whereby Legacy Amprius was determined as the accounting acquirer for accounting and reporting purposes, the historical financial statements of Legacy Amprius became the historical financial statements of the combined company and no goodwill or other intangible assets were recorded. As a result, the accompanying consolidated financial statements reflect (i) the assets and liabilities of Legacy Amprius at their historical cost; (ii) the historical operating results of Legacy Amprius prior to the Business Combination; and (iii) Legacy Amprius’ equity structure, which has been retroactively restated in the period prior to the Business Combination to reflect the number of shares of the Compa ny’s common stock issued to Legacy Amprius stockholders. As such, the shares, corresponding capital amounts, and net loss per share related to Legacy Amprius common stock have been retroactively restated to reflect the effect of the exchange ratio of 1.45590 (the “Exchange Ratio”) established in the Business Combination. 65 Table of Contents Index to Consolidated Financial Statements Prior to the Business Combination, our financial statements were presented on a carve-out basis using our historical results of operations and historical basis of assets and liabilities derived from the accounting records of Amprius Holdings, adjusted as necessary to conform with U.S. GAAP. The underlying assumptions in our presentation of our financial statements prior to the Business Combination include: • Balance sheet includes all of our owned assets, assets assigned or contributed by Amprius Holdings, and liabilities incurred by Amprius Holdings on our behalf. • Statement of operations reflects all activities directly attributable to us, which include an allocation of certain general and administrative expenses of Amprius Holdings. • Certain general and administrative expenses of Amprius Holdings, such as the payroll-related expenses for two executive employees, legal, tax, insurance and accounting fees, were shared between us, Amprius Holdings and its other subsidiaries. Since those two executive employees provided us and Amprius Holdings’ other subsidiaries with governance and management oversight, those shared expenses were allocated between us and Amprius Holdings’ other subsidiaries. The level of effort spent by Amprius Holdings’ executives was not correlated with the level of our business activity, revenue or other financial operating metrics and of Amprius Holdings’ other subsidiaries. As a result, those shared expenses were allocated equally between us and Amprius Holdings’ other subsidiaries. • Prior to the distribution of Amprius Holdings’ other subsidiaries in February 2022, the shared expenses of Amprius Holdings were allocated equally between us and Amprius Holdings’ other subsidiaries. After February 2022, and up to the Closing Date of the Business Combination, those expenses were fully allocated to us. Management believes that the assumptions described above, including the allocation of certain shared expenses, are reasonable and consistently applied for the periods presented prior to the Business Combination. However, the financial statements that were presented prior to the Business Combination may not be indicative of our future performance and do not necessarily reflect what the financial position, results of operations and cash flows would have been had we operated as a separate and standalone entity. Reclassification Certain accounts in the prior year consolidated financial statements were reclassified to conform with the current year presentation. The reclassification had no impact on our consolidated balance sheet, net loss and cash flows in the prior year period. Emerging Growth Company We are an emerging growth company as defined in Section 2(a) of the Securities Act of 1933 (as amended) (“Securities Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised accounting standards until private companies are required to comply with such standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected to not opt out of such extended transition period. This means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt such new or revised standard unless we are no longer deemed an emerging growth company. As a result, the accompanying consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances; the results of which form the basis for making judgements that are not readily apparent from other sources. Actual results could materially differ from management estimates using different assumptions or under different conditions. 66 Table of Contents Index to Consolidated Financial Statements Our significant accounting estimates include useful lives of property, plant and equipment; valuation of deferred taxes; lower of cost or net realizable adjustment of inventory; carve-out of financial statements including the allocation of assets, liabilities and expenses prior to the Business Combination; incremental borrowing rate used in calculating lease obligations and right-of-use assets; and fair value of common stock and other inputs used to value stock-based compensation awards prior to the Business Combination. Fair Value Measurement Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to the valuation of these assets or liabilities are as follows: Level 1 – Inputs that are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 – Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, and which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considering counterparty credit risk in our assessment of fair value. We had a money market fund amounting to $ 36.7 million and $ 69.4 million as of December 31, 2023 and 2022, respectively, which was measured at Level 1 fair value based on the active market price of such instrument. We did not have assets or liabilities measured at fair value on a recurring basis using Level 2 or Level 3 inputs as of December 31, 2023 and 2022. There were no transfers of financial instruments between Level 1, Level 2 and Level 3 during the years ended December 31, 2023 and 2022. Cash, Cash Equivalents and Restricted Cash Cash consists of bank deposits and cash equivalents consist of a money market fund with original maturity of less than 90 days from the date of purchase. Restricted cash pertains to a cash collateral required by our lessor to satisfy a letter of credit requirement under a lease agreement. Restricted cash, which is included in other assets in the accompanying consolidated balance sheets, was $ 56 thousand as of December 31, 2023 and 2022. Concentration of Credit Risk Financial instruments that potentially subject us to concentration of credit risk consist of cash, cash equivalents, restricted cash and accounts receivable. We maintain our cash, cash equivalents and restricted cash with major financial institutions that may at times exceed federally insured limits. We have not experienced losses on our financial assets held in these financial institutions. Management believes that these financial institutions are financially sound with minimal credit risk. Accounts receivable consist mainly of amounts due from U.S. government agencies or sponsored entities and large public entities which limits our credit risk. Through December 31, 2023, we have not experienced any credit losses. During the year ended December 31, 2023, three customers individually represented 37 %, 18 % and 12 % of our revenue. During the year ended December 31, 2022, four customers individually represented 24 %, 20 %, 18 % and 11 % of our revenue. 67 Table of Contents Index to Consolidated Financial Statements As of December 31, 2023 and 2022, three customers represented 80 % and 88 %, respectively, of our total accounts receivable. Segment Reporting We have determined that the Chief Executive Officer is our Chief Operating Decision Maker (“CODM”). The CODM reviews financial information presented on an aggregate basis for the purposes of assessing our performance and making decisions on how to allocate resources. Accordingly, we have determined that we operate in a single operating and reportable segment. All of our revenues are geographically earned in the United States and our property, plant and equipment are located in the United States. Revenue Recognition We generate revenue from the (i) sale of finished battery products and (i) arrangements for customization design services. The customization design services generally include designing and developing custom batteries by applying our existing technology into a customer’s required specifications and delivery of prototype batteries. We recognize revenue when a customer obtains control of promised goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. To achieve the core principle of revenue recognition, we apply the following steps pursuant to Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers : 1. Identify the contract with the customer . We generally enter into fixed-price agreements which outline the terms of our arrangements with the customers. We may also receive purchase orders or enter into statements of work to establish the terms of our arrangements with our customers. 2. Identify the performance obligations in the contract . Our contract to sell finished battery products do not require customization. Our contract for customization design services vary depending on the customers’ requirements, which may include (i) designing custom batteries, (ii) providing progress reporting, (iii) developing preliminary batteries, (iv) testing battery performance and (v) delivering final battery prototypes. Those promises are generally inputs to a combined output and are accounted for as a single performance obligation. 3. Determine the transaction price . Transaction price is based upon the amount of consideration that our customers agree to pay for the goods or services we deliver. Payment terms for our customization design service contracts are generally based on the achievement of defined milestones. Since revenue is generally recognized at the point in time when control transfers to the customer , the variable consideration, if any, is not considered to be constrained at the inception of the contract and the transaction price equals the cumulative payments to which we are entitled to. 4. Allocate the transaction price to the performance obligations in the contract . Generally, our contracts with customers contain a single performance obligation; therefore, allocation is not necessary. 5. Recognize revenue when, or as, a performance obligation is satisfied . We recognize revenue at the point in time when control is transferred to the customers, which is generally (i) upon shipment, in the case of sale of finished battery products, and (ii) upon completion and/or delivery of prototype batteries, in the case of customization design services. In case a customer requests us to keep the finished products, such as in a “bill-and-hold” arrangement, we recognize revenue from such arrangement when the control is transferred to such customer. Control under a bill-and-hold arrangement occurs when the title and risk of loss on the finished products have passed to the customer and we do not have the ability to use or sell them to other customers. Finished products under a bill-and-hold arrangement are stored in our premises, but segregated from our own inventories. Grant Revenue Payment from the U.S. federal government under a nonrefundable expense reimbursement arrangement is treated as government grant. An expense reimbursement grant entitle us to claim reimbursement of certain qualified expenses incurred in support of our product development programs. The nature and amount of such expenses are determined by each respective grant. 68 Table of Contents Index to Consolidated Financial Statements We determined that government grants are outside the scope of Topic 606, Revenue from Contracts with Customers , because such grants do not involve a reciprocal transfer in which each party receives and sacrifices approximately commensurate value. Therefore, the grants meet the definition of a contribution and are non-exchange transactions. In absence of explicit US GAAP guidance on contributions received from government agencies, we apply by analogy the recognition and measurement guidance under International Accounting Standard 20, Accounting for Government Grants and Disclosure of Government Assistance . Following this approach, we recognize grants at fair value only when there is reasonable assurance that we will comply with the conditions of the grants, and that the grants will be received. We recognize as revenue the amounts received or receivable from expense reimbursement grants to the extent, and in the period in which, the qualifying costs have been incurred. Accounts Receivable Accounts receivable are recorded at the invoiced amount, less any estimated allowance for credit losses. An allowance for credit losses is recognized based on our evaluation of relevant information, such as the age of the receivable, collection experience and certain credit risk factors affecting our customers. A receivable deemed to be uncollectible is written off against a previously established allowance and recoveries are recognized when the cash is received. We do not accrue interest on past due balances and require no collateral. We have not experienced any significant losses from accounts receivable. We had no allowance for credit losses as of December 31, 2023 and 2022. Inventories Inventories, which consist of raw materials, work-in-process and finished goods, are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. Net realizable value is determined based upon the estimated selling price of the inventory in the ordinary course of business, less reasonably predictable costs of completion or disposal and transportation. The cost of raw materials, work-in-process and finished goods generally exceeds their respective realizable value. When an inventory is adjusted to its net realizable value, a new cost basis is established and such cost is not adjusted for any potential recovery or increase in cost. Obsolete inventories are written off to cost of goods sold. Property, Plant and Equipment, Net Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets as shown below. Production equipment 4 to 7 years Lab equipment 4 years Furniture, fixtures and other equipment 3 to 5 years Leasehold improvements Lesser of their useful lives or the term of the lease Assets that are being built or constructed are recorded as construction in progress. Depreciation for those assets begins when the assets are ready for their intended use. Expenditures for repairs and maintenance are expensed as incurred. Upon disposition, the cost and related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations. Impairment of Long-Lived Assets We review the valuation of long-lived assets, which consisted mainly of property, plant and equipment, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The recoverability of long-lived assets or asset groups is calculated based on the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset. An impairment loss is recognized based on the amount by which the carrying value exceeds the fair value of the asset. Fair value is determined using the estimated cash flows discounted at a rate commensurate with the risk involved. Based on management’s assessment, there were no impairment losses recorded during the years ended December 31, 2023 and 2022. 69 Table of Contents Index to Consolidated Financial Statements Leases We determine if an arrangement is a lease, or contains a lease, by evaluating whether there is an identified asset and whether we control the use of the identified asset throughout the period of use. We determine the classification of the lease, whether operating or finance lease, at the lease commencement date, which is the date we obtain control of the leased asset. We recognize the right-of-use (“ROU”) assets and lease liabilities on the lease commencement date based upon the present value of the fixed lease payments over the non-cancelable lease term, unless it is reasonably certain that any renewal or termination option will be exercised. Variable costs, such as common area maintenance fees, property insurance and property taxes, are not included in the measurement of the ROU assets and lease liabilities, but are expensed as incurred. As the implicit rate of the leases is not determinable, we use an incremental borrowing rate in determining the present value of the lease payments. We do not recognize ROU assets on lease arrangements with a term of 12 months or less. Lease expense for such arrangements is recognized on a straight-line basis over the term of the lease. We account for the lease components and non-lease components as a single lease component. Modifications are assessed to determine whether incremental differences result in new contract terms and should be accounted for as a new lease or whether the additional right of use should be included in the original lease and continue to be accounted for with the remaining ROU asset. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset results in front-loaded expense over the lease term. Warranty Liability We provide guarantee that products sold to customers will meet the published or agreed upon specification. Products that do not meet specification are replaced at no charge to the customer. We had no significant warranty claims based on our historical experience. Based on our assessment, we have not recorded a warranty liability as of December 31, 2023 and 2022. Loss Contingencies In the normal course of business, we may be involved in claims and legal proceedings. We record a liability for such matters when it is probable that a loss has been incurred and the amounts can be reasonably estimated. When only a range of possible loss can be established, the most probable amount in the range is accrued. If no amount within this range is a better estimate than any other amount within the range, the minimum amount in the range is accrued. Legal costs associated with these loss contingencies are expensed as incurred. Deferred Costs Certain costs, which consist primarily of payroll-related costs, are initially deferred when (i) the costs relate directly to a customer contract, (ii) the costs generate or enhance our resources that will be used in satisfying future performance obligations, and (iii) the costs are expected to be recovered. If these criteria are not met, the costs are expensed as incurred. Deferred costs are recognized as cost of revenues in the period when the related revenue is recognized, except when the costs incurred exceed the amount expected to be recovered, in which case they are expensed as incurred. The recoverable amount is estimated to equal the amount of consideration that we have received but not yet recognized as revenue, plus the amount that we expect to receive in the future. Cost of Revenues Cost of revenue, which includes the cost of finished goods sold and the cost of customization design services, are comprised primarily of costs of raw materials, labor costs and the allocation of overhead costs incurred in producing batteries or performing the customization development work, and the costs of silicon anode batteries purchased from Berzelius (Nanjing) Co. Ltd., which prior to February 2022 was a subsidiary of Amprius Holdings. Labor costs consist of personnel-related expenses such as salaries, employee benefits and stock-based compensation expense. Overhead and other costs consist primarily of outside services, utilities, rent, depreciation expense and other facilities-related costs. Costs related to batteries and design services are recognized in the same period as the associated revenue is recognized. In addition, we include under cost of revenue certain non-capitalizable expenses incurred during the preliminary stage of our plan to construct a GWh-scale manufacturing facility, such as re-zoning costs and engineering studies. 70 Table of Contents Index to Consolidated Financial Statements Research and Development Costs Research and development (“R&D”) costs are expensed as incurred. These costs consist mainly of personnel-related costs such as salaries, employee benefits and stock-based compensation expense of our R&D personnel, outside contractors, materials, R&D equipment for which there is no alternative future use, and allocation of overhead costs, which include utilities, rent, depreciation expense and other facilities-related costs. R&D activities relate to the conceptual formulation and design of preproduction experimental prototypes and models. Advertising Costs Advertising costs, which were not material during the years ended December 31, 2023 and 2022, are expensed as incurred. Stock-Based Compensation Since the Business Combination, after becoming a public company, the fair value of the shares of common stock underlying stock grants is determined based on the closing price of our common stock. Amprius Holdings granted certain of its employees, directors and contract workers stock-based awards under its Equity Incentive Plan (“Amprius Holdings 2008 Stock Plan”). When we were formed, certain employees and contract workers of Amprius Holdings were transferred, or provided services, to us. We recorded the stock -based compensation costs associated with the outstanding stock-based awards granted to those individuals with a corresponding increase in additional paid-in capital. In 2016, we adopted the 2016 Equity Incentive Plan (“2016 Plan”), which was separate from the Amprius Holdings Plan. We granted stock-based awards under the 2016 Plan to certain employees, directors and contract workers of Amprius Holdings who provided services to the Company. We recorded the stock -based compensation costs associated with those awards. In September 2022, we adopted the 2022 Equity Incentive Plan (“2022 Plan”) and terminated the 2016 Plan. We measure stock-based compensation for stock options at fair value on the date of grant using the Black-Scholes option-pricing model. We measure stock-based compensation for restricted stock units (“RSUs”) based on the closing price of our common stock on the date of grant. We recognize stock-based compensation expense on a straight-line basis over the period from the date of the grant to the date the award is fully vested, which is generally four years . We have elected to account for forfeitures as they occur. The Black-Scholes option-pricing model requires the use of highly subjective assumptions which determine the fair value of stock option awards. These assumptions include: • Expected Term — The expected term of stock options represents the period that our stock-based awards are expected to be outstanding. The expected term had been derived based on the simplified method for awards that qualify as plain-vanilla options because we have no sufficient historical experience for determining the expected term. • Expected Volatility — Since we have no sufficient trading history on our common stock, we estimate volatility by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the option’s expected term. • Risk-Free Interest Rate — We base the risk-free interest rate on the implied yield available on the U.S. Treasury zero coupon issues with a remaining term equivalent to the expected term of the option. • Expected Dividend — We have not paid dividends and have no plans to pay dividends on our common stock. Therefore, we use an expected dividend yield of zero. The Black-Scholes option-pricing model also requires input on the fair value of the underlying common stock. There is no public market for Amprius Holdings’ common stock and prior to the Business Combination, there was no public market for Legacy Amprius’ common stock. As such, the fair value of the shares of common stock underlying stock option grants prior to the Business Combination had been determined by our board of directors at the time of grant by considering a number of objective and subjective factors including important developments in our operations, valuations performed by an independent third party, the rights, preferences, and privileges of Amprius Holdings’ preferred securities as compared to those of Legacy Amprius’ and Amprius Holdings’ common stock, including liquidation preferences of Amprius Holdings’ 71 Table of Contents Index to Consolidated Financial Statements preferred stock, the Company’s stage of development and financial position, the market conditions affecting the industry, the stock price performance and volatility of comparable public companies, and the likelihood of achieving a liquidity event, among other factors. The third-party valuations were performed in accordance with the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (the “Practice Aid”). The Practice Aid identifies various available methods for allocating the enterprise value across classes of capital stock in determining the fair value of our common stock at each valuation date. The valuations for Amprius Holdings’ common stock were prepared using the Option Pricing Method (“OPM”), and the valuations for Legacy Amprius’ common stock were prepared using the probability-weighed expected return method (“PWERM”), both of which used market approaches to estimate our enterprise value. PWERM is a hybrid method where the equity value in one or more of the scenarios is calculated using an OPM. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the company, assuming various outcomes. The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock. The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company’s securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. Common Stock Warrants We have classified our freestanding common stock warrants as equity in accordance with the applicable guidance in ASC 815-40, Derivatives and Hedging - Contracts in Entity’s Own Equity . Accordingly, a freestanding instrument, such as a stock warrant, is classified as equity when (i) the instrument is considered indexed to an entity’s own stock and (ii) when certain criteria for equity classification are met. When assessing whether our stock warrants are indexed to our own stock, we evaluated the stock warrants’ exercise contingencies and adjustment features. The stock warrants’ exercise contingencies, which are not based on observable market or index, include restriction to exercise a portion of the stock warrants if the holder exceeds specified beneficial ownership limitations and the holder being required to exercise the stock warrants in the event of a reorganization or a warrant redemption. Since the exercise contingencies are not based on observable market or index, the stock warrants were not precluded from being considered indexed to our own stock. In addition, the stock warrants’ adjustment features, such as a change in exercise price in the event of a stock split or stock dividend and a downward adjustment on the exercise price at our discretion, did not preclude the stock warrants from being considered indexed to our own stock. We also evaluated other provisions in the warrant agreement, such as the share-settlement provision and the replacement of the instrument in the event of a reorganization, and determined that those provisions do not preclude the stock warrants from being classified as equity. Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes . Deferred tax balances are recognized for the estimated future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets are also recognized for temporary differences that arise from net operating losses and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax balances of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. We recognize accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. Concurrent with the execution of the Business Combination Agreement, we and Amprius Holdings entered into a Tax Sharing Agreement which provides that with respect to any U.S. federal consolidated group of which Amprius Holdings and the Company are members, Amprius Holdings will be responsible for and will indemnify us for the tax 72 Table of Contents Index to Consolidated Financial Statements liability of such group. In addition, Amprius Holdings will be responsible for and will indemnify us for state taxes of any consolidated, combined or unitary tax group for state tax purposes that includes Amprius Holdings and the Company. The Tax Sharing Agreement also provides that Amprius Holdings will generally control any tax returns and any tax audits or other proceedings for the taxes addressed by the Tax Sharing Agreement. The Tax Sharing Agreement did not have a material impact and is not expected to have a material impact on our future results of operations. Prior to the Business Combination, any income taxes in our financial statements have been allocated in a manner that is systematic, rational and consistent. Our results of operations had historically been included in Amprius Holdings’ combined U.S. income tax returns. Since the Company and Amprius Holdings were members of a consolidated group for federal and state income tax purposes prior to the Business Combination, the net operating loss carryover of the consolidated group would be available to be utilized by either us or other members for periods prior to the Business Combination. Since we did not file separate income tax returns from Amprius Holdings prior to the Business Combination, payments to certain tax authorities during the periods prior to the Business Combination may have been made directly by Amprius Holdings, and not by us. For tax jurisdictions where we were included with Amprius Holdings’ consolidated tax filings, we did not recognize a tax payable to or from Amprius Holdings, and the payments of taxes were deemed to be settled immediately with the legal entities paying for the taxes in the respective tax jurisdictions. Net Loss Per Share Basic net loss per share of common stock is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share of common stock is calculated by dividing the net loss attributable to common stockholders by the sum of the weighted-average number of shares of common stock outstanding and potentially dilutive securities during the period. Potentially dilutive securities include shares issuable upon the exercise of stock options, vesting of RSUs and exercise of common stock warrants; however, these have been excluded from the diluted net loss per share calculation because their effect were anti-dilutive given our net loss. Therefore, the basic and diluted net loss per share of common stock for all periods presented were the same. Recent Accounting Pronouncements Adopted On January 1, 2023, we adopted the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and related amendment under ASU 2019-10, which requires that credit losses on financial assets, such as trade and other receivables, be recognized as allowance for credit losses. Credit losses on trade and other receivables will reflect the current estimate of the expected credit losses that generally will result in the earlier recognition of allowance for credit losses. The adoption of this ASU did not have a material impact on our consolidated financial statements. Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU requires entities to disclose, among others, (i) specific categories in the rate reconciliation table (ii) additional information for reconciling items that meet a quantitative threshold and (iii) the amount of income taxes paid on a disaggregated level. This ASU is required to be adopted on a prospective basis. As an emerging growth company, this ASU is effective starting on our annual reporting for the year ending December 31, 2026. Early adoption is permitted. We are currently evaluating this ASU. We believe that the impact of the additional required disclosures will enhance our current financial statement disclosure. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . This ASU requires entities to disclose, among others, (i) significant segment expenses that are regularly provided to the CODM for measuring segment profit or loss, (ii) amounts for other significant items by reportable segment and (iii) an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding resource allocation. This ASU is required to be adopted on a retrospective basis starting on our annual reporting for the year ending December 31, 2024. Early adoption is permitted. We are currently evaluating this ASU. We believe that the impact of the additional required disclosures will enhance our financial statement disclosure. 73 Table of Contents Index to Consolidated Financial Statements Note 3. Business Combination On September 14, 2022, we completed the Business Combination, discussed further in Note 1, which was treated as a reverse recapitalization. The effects of the Business Combination include the following: • our certificate of incorporation was amended and restated to, among other things, authorize the issuance of 1,000,000,000 shares, of which 950,000,000 shares are designated as common stock, $ 0.0001 par value per share, and 50,000,000 shares are designated as preferred stock, $ 0.0001 par value per share; • all outstanding shares of Legacy Amprius’ common stock were exchanged for a number of our common stock equal to the number of Legacy Amprius’ shares multiplied by the Exchange Ratio of approximately 1.45590 , or for an aggregate of 65,776,550 shares of our common stock; and • Each option to purchase Legacy Amprius’ common stock (a “Legacy Amprius Option”), whether vested or unvested, was converted into an option to purchase a number of our common stock (an “Option”), subject to substantially the same terms and conditions as were applicable prior to the merger, equal to the product of the number of shares of Legacy Amprius’ common stock subject to such Legacy Amprius Option immediately prior to the closing and the Exchange Ratio, at an exercise price per share calculated by dividing the exercise price per share of such Legacy Amprius Option immediately prior to the Business Combination by the Exchange Ratio. At Closing Date, the Legacy Amprius Options were converted to Options to receive an aggregate of 14,223,410 shares of common stock, of which 6,664,919 shares remained subject to vesting obligations. Immediately prior to the closing of the Business Combination, a number of investors (the “PIPE Investors”) purchased from the Company an aggregate of 2,052,500 PIPE units at a price of $ 10.00 per share (such transaction, the “PIPE”), pursuant to separate subscription agreements (each, a “Subscription Agreement”) entered into with the PIPE Investors. Each PIPE unit consists of (i) one share of common stock and (ii) one warrant (each, a “PIPE warrant”) to purchase one share of common stock. The exercise price of each PIPE warrant is $ 12.50 per share. We may be able to redeem the PIPE warrants if the price per share of our common stock equals or exceeds $ 20.00 per share for at least 20 trading days during a period of 30 consecutive trading days prior to the redemption date. Our outstanding shares of common stock immediately after giving effect to the Business Combination and the PIPE totaled 84,168,916 shares. We received net proceeds from the Business Combination and the PIPE totaling $ 70.9 million, after deducting transaction and issuance costs. Transaction and issuance costs paid by us, which consisted of direct and incremental costs, such as legal, consulting and advisory fees incurred in connection with the Business Combination, totaled $ 6.9 million. These costs were classified as a reduction of additional paid-in capital in the accompanying consolidated balance sheets. Note 4. Revenue Disaggregation of Revenue Revenue from customers consists mainly of sale of battery products and customization design services arrangements. We disaggregate our revenue from customers by the type of arrangement, either as sale of battery products or as customization design services, as this depicts how the nature, amount, timing, and uncertainty of our revenue and cash flows are affected by economic factors. The table below shows the composition of revenue from customers, as disaggregated by type of arrangement in accordance with Topic 606, and other revenue from a government grant accounted for using the analogy from IAS 20 (in thousands). Year ended December 31, 2023 2022 Revenue from customers: Sale of battery products $ 4,900 $ 2,346 Customization design services 3,891 1,836 Total revenue from customers 8,791 4,182 Other revenue – government grant 262 227 Total revenue $ 9,053 $ 4,409 Revenue from sale of battery products include s a bill-and-hold arrangement with a customer, which amounted to $ 1.1 million and $ 0.8 million during the years ended December 31, 2023 and 2022, respectively. 74 Table of Contents Index to Consolidated Financial Statements Contract Balances The timing of revenue recognition, billings and cash collections can result in accounts receivable, contract assets recorded as unbilled receivables, and contract liabilities recorded as deferred revenue. Accounts receivable represents our right to consideration that is unconditional. A right to consideration is unconditional if only the passage of time is required before payment of that consideration is due. Accounts receivable was $ 1.3 million, $ 0.7 million and $ 0.3 million as of December 31, 2023, December 31, 2022 and January 1, 2022, respectively. Contract assets primarily relate to the rights to consideration for progress on contractual requirements performed but not billed at the reporting date. The contract assets are transferred to accounts receivable when the rights become unconditional. We had no contract assets as of December 31, 2023 and 2022. Contract liabilities consist primarily of deferred revenue, which is the amount of progress payments received or billed in advance of revenue recognition. Deferred revenue is subsequently recognized as revenue when the performance obligation is satisfied. Deferred revenue was $ 3.4 million, $ 3.4 million and $ 2.9 million as of December 31, 2023, December 31, 2022, and January 1, 2022, respectively. Deferred revenue as of December 31, 2022 increased compared to the deferred revenue as of January 1, 2022 primarily due to progress payments for certain customer contracts that have not been recognized as revenue as of the end of the period. During the years ended December 31, 2023 and 2022, revenue recognized from the prior year deferred revenue balance was $ 2.7 million and $ 1.7 million , respectively. Remaining Performance Obligations We have performance obligations associated with commitments in customer contracts for future services that have not yet been recognized as revenue. As of December 31, 2023, the aggregate amount of the transaction price allocated to the remaining performance obligations related to customer contracts that were unsatisfied or partially unsatisfied, including deferred revenue, was approximately $ 9.4 million. Given the applicable contract terms, approximately $ 8.1 million is expected to be recognized as revenue within one year and approximately $ 1.3 million is expected to be recognized between two to five years. This amount does not include contracts to which the customer is not committed. The estimated timing of the recognition of remaining unsatisfied performance obligations is subject to change and is affected by changes to scope, changes in timing of delivery of products and services, or contract modifications. Deferred Costs Deferred costs, which consist primarily of capitalized payroll-related costs to fulfill obligations under our customer contracts, tot aled $ 0.8 million and $ 2.3 million as of December 31, 2023 and 2022, respectively. The amortization of deferred costs, which is included in cost of revenue in the accompanying consolidated statements of operations, were $ 3.1 million and $ 1.6 million during the years ended December 31, 2023 and 2022, respectively. The Co mpany evaluates deferred costs for impairment and recognizes any impairment loss in cost of revenues in the current period. During the years ended December 31, 2023 and 2022, cost of revenues includes costs incurred on certain customization design service contracts that were in excess of the amount expected to be recovered. Grant Revenue The U.S. Department of Energy’s Advanced Manufacturing Office awarded us a grant in 2022 that ended in 2023 that we used to further mature our process for manufacturing nanowire-based silicon anodes. The total amount that we received and recognized as other revenue in the accompanying consolidated statements of operations were $ 0.3 million and $ 0.2 million during the years ended December 31, 2023 and 2022, respectively. 75 Table of Contents Index to Consolidated Financial Statements Note 5. Inventories Inventories consisted of the following (in thousands): December 31, 2023 2022 Raw materials $ 172 $ 180 Work in process 113 218 Finished goods 445 102 Total inventories $ 730 $ 500 Note 6. Property, Plant and Equipment, Net Property, plant and equipment, net consisted of the following (in thousands): December 31, 2023 2022 Production equipment $ 6,253 $ 4,488 Lab equipment 2,502 2,304 Leasehold improvements 11,152 3,525 Furniture, fixtures and other equipment 376 206 Construction in progress 10,527 957 Property, plant and equipment, at cost 30,810 11,480 Less: accumulated depreciation and amortization ( 9,050 ) ( 7,244 ) Property, plant and equipment, net $ 21,760 $ 4,236 Construction in progress consisted primarily of production and other equipment that have not been placed in service as of December 31, 2023 and 2022 . Depreciation and amortization expens e was $ 1.8 million and $ 1.5 million during the years ended December 31, 2023 and 2022, respectively. Note 7. Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following (in thousands): December 31, 2023 2022 Accrued compensation and benefits $ 3,070 $ 481 Accrued professional fees 1,703 1,840 Accrued purchases of finished goods for resale 447 — Accrued financing costs — 194 Other 374 193 Total accrued and other current liabilities $ 5,594 $ 2,708 Note 8. Stockholders’ Equity Common and Preferred Stock As of December 31, 2023, we had a total of 1,000,000,000 shares of stock authorized to be issued, of which 950,000,000 shares are designated as common stock, $ 0.0001 par value per share, and 50,000,000 shares are designated as preferred stock, $ 0.0001 par value per share. Holders of common stock are entitled to one vote for each share held and entitled to receive dividends when and if declared by the board of directors. We have not declared any dividends as of and through December 31, 2023. 76 Table of Contents Index to Consolidated Financial Statements Equity Incentive Plans We adopted the 2022 Plan effective September 14, 2022. The 2022 Plan authorizes awards in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, or performance awards and may be granted to directors, employees or consultants. As of December 31, 2023 , the total number of shares reserved for issuance under the 2022 Plan was 13,636,700 , which includes the annual increase in shares reserved pursuant to the evergreen provisions contained in the 2022 Plan and the assumed awards that were cancelled, expired or otherwise terminated without having been exercised in full, were tendered to or withheld for payment of an exercise price or for tax withholding obligations, or were forfeited to or repurchased due to failure to vest. The number of shares available for issuance under the 2022 Plan may be increased annually at the beginning of the fiscal year, subject to certain limitations. The 2016 Plan, which we maintained prior to the Business Combination, was terminated concurrently with the adoption of the 2022 Plan. However, the 2016 Plan continues to govern the terms and conditions of the outstanding awards previously granted under the 2016 Plan. The 2022 Plan and 2016 Plan are collectively referred to as the “Equity Incentive Plans.” Stock Options Stock options granted under the Equity Incentive Plans provided for an exercise price of not less than 100 % of the fair value at the grant date, unless the optionee is a 10 % stockholder, in which case the option price would not be less than 110 % of such fair market value. Options granted generally have a maximum term of 10 years from grant date or 90 days from the termination of the optionee, are exercisable upon vesting unless otherwise designated for early exercise by the board of directors at the time of grant, and generally vest over a period of 4 years , subject to the continued employment or services of the optionee . A summary of option activity under the Equity Incentive Plans as of December 31, 2023, and changes during the year ended December 31, 2023, is as follows: Number of shares Weighted- average exercise price per share Weighted- average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at January 1, 2023 14,073,874 $ 1.35 6.1 $ 92,629 Granted — $ — Exercised ( 1,188,137 ) $ 0.36 Expired / forfeited ( 72,795 ) $ 3.21 Outstanding at December 31, 2023 12,812,942 $ 1.43 6.3 $ 49,466 Vested and exercisable at December 31, 2023 8,770,262 $ 1.03 5.5 $ 37,346 Vested and expected to vest at December 31, 2023 12,812,942 $ 1.43 6.3 $ 49,466 There were no stock option grants during the year ended December 31, 2023. The weighted-average grant date fair value of options granted under the Equity Incentive Plans during the year ended December 31, 2022 was $ 1.68 per share. The fair value was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions: Year ended December 31, 2022 Dividend yield — % Expected volatility 59.2 % Expected term (in years) 6.2 Risk-free rate 2.7 % The total intrinsic value of options exercised during the years ended December 31, 2023 and 2022 was $ 5.1 million and $ 1.2 million, respectively. The intrinsic value was calculated as the difference between the market price of our 77 Table of Contents Index to Consolidated Financial Statements common stock and the exercise price of the in-the-money stock options at exercise. The fair value of stock options that vested during the years ended December 31, 2023 and 2022 was $ 2.7 million and $ 2.2 million, respectively. As of December 31, 2023, the total unamortized stock-based compensation expense related to the unvested stock options was approximately $ 5.6 million, which we expect to amortize over a weighted-average period of 2.2 years. Restricted Stock Units (“RSUs”) The fair value of RSUs is determined based upon the market closing price of our common stock on the date of grant. RSUs generally vest over a period of approximately 4 years from the date of grant, subject to the continued employment or services of the grantee . A summary of RSU activity under the Equity Incentive Plans as of December 31, 2023, and changes during the year ended December 31, 2023, is as follows: Number of shares Weighted-average grant date fair value Outstanding at January 1, 2023 185,000 $ 10.40 Granted 408,266 $ 7.06 Vested ( 48,125 ) $ 10.21 Forfeited — $ — Outstanding at December 31, 2023 545,141 $ 7.91 The weighted-average grant date fair value of RSUs granted during the year ended December 31, 2022 was $ 10.40 per share. The fair value of RSUs that vested during the year ended December 31, 2023 was $ 0.5 million. As of December 31, 2023, the total unamortized stock-based compensation expense related to the unvested RSUs was approximately $ 3.6 million, which we expect to amortize over a weighted-average period of 2.8 years. Amprius Holdings 2008 Stock Plan When we were formed, certain employees and contract workers of Amprius Holdings were transferred, or provided services, to us. As a result, we recorded the stock-based compensation costs associated with the outstanding stock options of those individuals under the Amprius Holdings 2008 Stock Plan with a corresponding increase in additional paid-in capital. Those outstanding stock options are exercisable for shares of Amprius Holdings’ common stock and expire 10 years from the date of grant or 90 days from the date of termination. The fair value of those stock options that vested was de minimis during the year ended December 31, 2023 and was $ 0.4 million during the year ended December 31, 2022. As of December 31, 2023, the unrecognized compensation cost related to those outstanding stock options under the Amprius Holdings 2008 Plan was de minimis. There were no stock grants to those individuals under the Amprius Holdings 2008 Stock Plan during the years ended December 31, 2023 and 2022. Employee Stock Purchase Plan (“ ESPP”) We adopted the ESPP effective September 14, 2022. As of December 31, 2023, the total number of shares reserved for issuance was 1,836,101 , which number may be increased annually at the beginning of the fiscal year, subject to certain limitations. The ESPP is intended to qualify under Section 423 of the Internal Revenue Code of 1986 (as amended) and will provide eligible employees an opportunity to purchase our common stock at a discount through payroll deductions. Under the ESPP, we may specify offering periods, provided that no offering period will have a duration exceeding 27 months. The purchase price per share is equal to 85 % of the fair market value of our common stock on the (i) offering date or (ii) purchase date, whichever is lower. As of December 31, 2023, there were no offerings established under the ESPP. Executive Incentive Compensation Plan On September 14, 2022, our board of directors approved our Executive Incentive Compensation Plan, which will allow us to grant incentive awards to certain executive employees, generally payable in cash, based upon achieving specified goals. We have the right to settle the award by granting an equity award, which may be subject to vesting conditions. All awards under the Executive Incentive Compensation Plan will be subject to reduction, cancellation, 78 Table of Contents Index to Consolidated Financial Statements forfeiture, or recoupment in accordance with any clawback policy that we are required to adopt pursuant to applicable laws. As of December 31, 2023, there were no grants under the Executive Incentive Compensation Plan. Common Stock Warrants Outstanding stock warrants consisted of the following as of December 31, 2023: Number of warrants Exercise price per share Expiration date Public warrants 29,268,236 $ 11.50 September 14, 2027 Private warrants 16,400,000 $ 11.50 September 14, 2027 PIPE warrants 2,052,500 $ 12.50 September 14, 2027 47,720,736 Holders of the public warrants and private warrants are entitled to purchase one share of our common stock at a price of $ 11.50 per share subject to adjustment pursuant to the Warrant Agreement, dated as of March 1, 2022. The public warrants are listed on the New York Stock Exchange and are redeemable by us when the price per share of our common stock equals or exceeds $ 18.00 per share for at least twenty trading days during a period of thirty consecutive trading days prior to the redemption date. The private warrants are not listed on any securities exchange and not redeemable. The PIPE warrants are substantially identical to the public warrants, except that the exercise price of each PIPE warrant is $ 12.50 per share. In addition, we may only be able to redeem the PIPE warrants if the price per share of our common stock equals or exceeds $ 20.00 per share for at least twenty trading days during a period of thirty consecutive trading days prior to the redemption date. The PIPE warrants are also not listed on any securities exchange. The warrants described above are classified as equity in accordance with the guidance under ASC 815-40, Derivatives and Hedging–Contracts in Entity’s Own Equity . Equity-classified contracts, such as stock warrants, are initially measured at fair value or allocated value. Any subsequent changes in fair value are not recognized as long as the contracts continue to be classified in equity. At Market Issuance Sales Agreement On October 2, 2023, we entered into the Sales Agreement with the Sales Agents, pursuant to which we may offer and sell, from time to time, through or to any Sales Agent, shares of our common stock with an aggregate offering price of not more than $ 100.0 million, as described in our prospectus supplement dated October 10, 2023 filed with the Securities and Exchange Commission (“SEC”). The unamortized deferred stock issuance cost related to the Sales Agreement, which is included in other assets in the accompanying consolidated balance sheets and will be charged proportionally against the proceeds from issuance of shares, was $ 0.2 million as of December 31, 2023. Stock Purchase Agreement On September 27, 2022, we entered into a Purchase Agreement with BRPC II, pursuant to which BRPC II committed to purchase up to $ 200.0 million of our common stock until January 1, 2025. On October 2, 2023, we and BRPC II mutually agreed to terminate the Purchase Agreement concurrent with our execution of the Sales Agreement. The termination of the Purchase Agreement became effective on October 10, 2023 upon the effectiveness of our registration statement on Form S-3 filed with the SEC. The cumulative proceeds from the sale of shares of common stock under the Purchase Agreement, which totaled 2,952,763 shares, was $ 19.1 million. The purchase price under the Purchase Agreement was determined by reference to the volume weighted average price of our common stock, less a discount of 3 %. The unamortized balance of the deferred stock issuance costs related to the Purchase Agreement, which amounted to $ 0.6 million, was expensed upon the termination of the Purchase Agreement on October 10, 2023. 79 Table of Contents Index to Consolidated Financial Statements Stock-Based Compensation Stock-based compensation from stock options and RSUs under the Equity Incentive Plans and from stock options under the Amprius Holdings 2008 Stock Plan that we recorded were included in the following lines in the accompanying consolidated statements of operations during the periods presented (in thousands): Year ended December 31, 2023 2022 Cost of revenue $ 865 $ 516 Research and development 186 27 Selling, general and administrative 2,829 2,166 Total stock-based compensation expense $ 3,880 $ 2,709 Note 9. Income Taxes Prior to the Business Combination, we did not file separate income tax returns as they were included in the consolidated income tax returns of Amprius Holdings. As a result, our provision for income taxes prior to the Business Combination was determined using a method consistent with a separate return basis, as if we were a separate taxpayer. The components of loss before provision for income taxes were as follows (in thousands): Year ended December 31, 2023 2022 Domestic $ ( 36,776 ) $ ( 17,332 ) Foreign — — Total $ ( 36,776 ) $ ( 17,332 ) There were no provision for income taxes during the years ended December 31, 2023 and 2022. The provision for income taxes differed from the amount computed by applying the federal statutory rate, which was 21.0% during the years ended December 31, 2023 and 2022, to the loss before provision for income taxes as follows (in thousands): Year ended December 31, 2023 2022 Expected benefit at U.S. federal statutory tax rate $ ( 7,723 ) $ ( 3,640 ) State tax ( 1,449 ) ( 764 ) Change in valuation allowance 8,228 ( 8,858 ) Transaction costs 515 — Stock-based compensation and other 429 ( 56 ) Deconsolidation adjustment — 13,318 Provision for income taxes $ — $ — 80 Table of Contents Index to Consolidated Financial Statements The components of deferred tax assets and deferred tax liabilities were as follows (in thousands): December 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards $ 16,699 $ 10,326 Operating lease liabilities 9,078 783 Tax credits 1,080 819 Capitalized research and development 1,511 336 Accruals and other 1,016 624 Stock-based compensation 715 725 Total deferred tax assets 30,099 13,613 Valuation allowance ( 21,128 ) ( 12,900 ) Deferred tax assets 8,971 713 Deferred tax liabilities: Operating lease right-of-use assets ( 8,971 ) ( 713 ) Total deferred tax liabilities ( 8,971 ) ( 713 ) Net deferred taxes $ — $ — In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences will become deductible. We assess available positive and negative evidences to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets. A significant piece of objective negative evidence is the cumulative losses incurred since inception, supported by negative subjective evidence of no expectations of future taxable income. Based on this evaluation, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax benefits is currently not likely to be realized and, accordingly, has provided a valuation allowance. The valuation allowance increased by $ 8.2 million and decreased by $ 7.8 million during the years ended December 31, 2023 and 2022, respectively. Net operating losses (“NOL”) and tax credit carryforwards were as follows as of December 31, 2023: Amount (In thousands) Expiration years NOL, federal (after December 31, 2017) $ 58,825 Do not expire NOL, federal (before January 1, 2018) $ 3,799 2037 NOL, state $ 52,061 2037—2043 Tax credits, federal $ 952 2037—2043 Tax credits, state $ 618 Do not expire The utilization of NOL and tax credit carryforwards are subject to certain limitations under Section 382 of the Internal Revenue Code of 1986, as amended, in the event of a change in our ownership, as defined in the current income tax regulations. Ownership changes prior to the Business Combination did not result in a limitation that will materially reduce the total amount of NOL carryforwards and credits that can be utilized. Subsequent ownership changes may affect the limitation in future years. During the year ended December 31, 2022, we were deconsolidated from Amprius Holdings for federal and state income tax purposes as a result of the Business Combination. The Internal Revenue Code and related regulations provide for a methodology for the allocation of the cumulative NOL carryovers between us and Amprius Holdings upon deconsolidation. Based on the methodology used, our federal and state NOL carryovers during the year ended December 31, 2022 were reduced by approximately $ 43.1 million and $ 40.3 million, respectively, and our federal and state R&D tax credit carryovers were reduced by approximately $ 0.7 million and $ 1.0 million, respectively. 81 Table of Contents Index to Consolidated Financial Statements A reconciliation of the unrecognized tax benefits is as follows (in thousands): Year ended December 31, 2023 2022 Balance at beginning of year $ 297 $ 709 Addition based on tax positions during the current year 96 2 Reduction of tax positions from prior years — ( 414 ) Balance at end of year $ 393 $ 297 The entire amount of the unrecognized tax benefits would not impact our effective tax rate if recognized and there would be no cash tax impact. We have elected to include interest and penalties as a component of income tax expense. During the years ended December 31, 2023 and 2022, we did no t recognize interest and penalties related to unrecognized tax benefits. We do not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease during the next 12 months. Prior to the Business Combination, we had been included in Amprius Holdings’ consolidated income tax returns in the U.S. federal and California tax jurisdictions. For periods after the Business Combination, we filed income tax returns separate from Amprius Holdings. The federal and state income tax returns from inception to December 31, 2023 remain subject to examination. Note 10. Leases As of December 31, 2023, we had non-cancelable operating leases for our corporate headquarters and manufacturing facility located in Fremont, California and our manufacturing facility located in Brighton, Colorado. Our Fremont lease, which expires in June 2027, provides us an option to extend the term for one additional five-year period. Our Brighton lease, which expires in May 2039, provides us an option to extend the term for two additional five-year periods. We determined with reasonable certainty that we will exercise our option to extend the lease term of the Fremont lease, but not the Brighton lease. Our operating leases do not contain any material residual value guarantees. We had no leases that were classified as finance leases as of December 31, 2023 and 2022. The components of lease expense during the years ended December 31, 2023 and 2022 are shown in the table below (in thousands). Year ended December 31, 2023 2022 Operating lease expense $ 1,147 $ 430 Variable lease expense 456 107 Short-term lease expense 81 55 Total lease expense $ 1,684 $ 592 Other information about our operating leases during the years ended December 31, 2023 and 2022 are shown in the table below (amounts in thousands). Year ended December 31, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 1,001 $ 482 Right-of-use assets obtained in exchange for new operating lease liabilities $ 32,966 $ 3,256 Weighted-average remaining lease term 14.4 years 6.5 years Weighted-average discount rate 9.4 % 7.9 % 82 Table of Contents Index to Consolidated Financial Statements Future operating lease payments as of December 31, 2023 are as follows (in thousands): Year ending December 31: Amount 2024 $ 1,126 2025 1,794 2026 4,377 2027 5,025 2028 5,185 Thereafter 53,784 Gross lease payments 71,291 Less - present value adjustments ( 35,724 ) Total operating lease liabilities $ 35,567 Note 11. Commitments and Contingencies From time to time, we may be involved in lawsuits, claims or legal proceedings that arise in the ordinary course of business. We accrue a contingent liability when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. Management believes that there are no claims against us for which the outcome is expected to have a material effect on our financial position, results of operations or cash flows. Note 12. Related Party Transactions Prior to the closing of the Business Combination on September 14, 2022, we had a service agreement with Amprius Holdings whereby Amprius Holdings provided certain services to us, such as management and administrative services, access to information technology and engineering services. The expenses incurred by Amprius Holdings in connection with the service agreement were allocated to us and were deemed as capital contributions. Amprius Holdings also provided cash advances to support our working capital requirements. Those cash advances were forgiven and deemed as capital contributions. There were no deemed capital contributions during the year ended December 31, 2023 and $ 0.5 million millions during the year ended December 31, 2022. In addition, we recorded the stock-based compensation costs associated with the outstanding stock options of those individuals from Amprius Holdings who were transferred or provided services to us, with a corresponding increase in additional paid-in capital, which was de minimis during the year ended December 31, 2023 and $ 0.4 million during the year ended December 31, 2022. We also had a licensing agreement with Amprius Holdings to use their patents and licenses. In February 2023, Amprius Holdings assigned to us all of its patents, patent applications, registered trademarks and trademark applications. The transfer of Amprius Holdings’ intellectual properties to us had no impact on our consolidated financial statements. Additionally, we purchased and may continue to purchase raw materials and development materials from two previous related parties that were owned and controlled by Amprius Holdings, including finished batteries from Berzelius. We do not have purchase commitments with these previous related parties. Note 13. Net Loss Per Share The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts): Year ended December 31, 2023 2022 Numerator: Net loss $ ( 36,776 ) $ ( 17,332 ) Denominator: Weighted-average number of common shares outstanding 86,196,391 71,342,720 Basic and diluted net loss per common share $ ( 0.43 ) $ ( 0.24 ) 83 Table of Contents Index to Consolidated Financial Statements The following table summarizes the outstanding shares of potentially dilutive securities that were excluded from the calculation of diluted net loss per share because their inclusion would have been anti-dilutive: December 31, 2023 2022 Stock warrants 47,720,736 47,720,836 Stock options 12,812,942 14,073,874 RSUs 545,141 185,000 Total 61,078,819 61,979,710 84 Table of Contents Index to Consolidated Financial Statements Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None.