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Item 7. Management’s Discussion and Analysis

2025-03-20 compared with 2024-03-28 · 174 added, 211 removed, 122 unchanged (76% of the section changed)

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As a result of many factors, including those factors set forth in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Unless otherwise indicated or the context otherwise requires, references in this section to the “Company,” “Amprius,” “we,” “us,” “our” and other similar terms refer (i) prior to the Closing Date, to Legacy Amprius and (ii) after the Closing Date, to Amprius Technologies, Inc.

We have developed and, since 2018, been in commercial production of ultra-high energy density lithium-ion batteries for mobility applications leveraging a disruptive silicon anode.

Our silicon anode technology enables batteries with higher energy density, higher power density, and extreme fast charging capabilities over a wide range of operating temperatures, which results in our batteries providing superior performance compared to conventional graphite lithium-ion batteries.

Our silicon anode is a direct drop-in replacement of the graphite anode in traditional lithium-ion batteries, and our manufacturing process leverages the manufacturing process for conventional lithium-ion batteries and the related supply chain.

Currently, our batteries are primarily used for existing and emerging aviation applications, including unmanned aerial systems, such as drones and high-altitude pseudo satellites.

We develop, manufacture and market lithium-ion batteries for mobility applications, including the aviation, electric vehicle (“EV”) and light electric vehicle (“LEV”) industries.

We have been in commercial battery production since 2018 and our disruptive 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.

This results in our batteries providing superior performance compared to conventional graphite lithium-ion batteries.

Our silicon anodes are a direct drop-in replacement of the graphite anode in traditional lithium-ion batteries, and our manufacturing processes leverage the manufacturing processes for conventional lithium-ion batteries and the related supply chain.

Currently, our batteries are primarily used for existing and emerging aviation applications, including UAS, such as drones and HAPS.

We believe our proprietary technology has the potential for broad application in electric transportation.

Our batteries and their performance specifications have been tested and validated for application by over 100 customers, including AALTO Airbus, AeroVironment, BAE Systems, the U.S.

Our batteries and their performance specifications have been tested and validated for application by various customers, including our longtime partners such as AALTO Airbus, AeroVironment, BAE Systems, Kraus Hamdani Aerospace, Teledyne FLIR and the U.S.

Our total customer engagements since inception grew to over 260 with shipments to 235 customers during the year ended December 31, 2024.

In addition, from our inception through December 31, 2024, we

Index to Consolidated Financial Statements

and Teledyne FLIR, and from inception through December 31, 2023, we have shipped approximately 50,000 batteries, which have enabled mission critical applications.

Our proprietary silicon anode structures, battery cell designs and manufacturing processes are defended by our portfolio of patents, trade secrets and know-how developed over 10 years of research and development.

have shipped over 800,000 units of batteries, which have enabled mission critical applications.

Our proprietary silicon anode structures, battery cell designs and manufacturing processes are protected by our portfolio of patents, trade secrets and know-how developed over 15 years of research and development.

We currently offer high performance silicon anode batteries under the following product platforms:

SiMaxx and SiCore.

Our SiMaxx batteries are currently manufactured at our headquarters in Fremont, California, where we believe demand for our SiMaxx batteries exceeds our manufacturing capacity.

By the end of 2023, we had made significant progress in expanding our current kWh-scale manufacturing line into a MWh-scale manufacturing facility.

Once our expansion is in full operation, which we expect to achieve exiting 2024, we anticipate that we will manufacture SiMaxx batteries up to 2 MWh capacity, which is about 10 times our production capacity in 2023.

Our SiCore batteries are developed in collaboration with Berzelius.

We are also working to meet the expected demand in several rapidly growing addressable markets by designing and building out our newly leased large-scale facility in Brighton, Colorado that can manufacture at a GWh+ scale through an automated, high-volume manufacturing line.

Business Combination

On September 14, 2022, we completed the Business Combination pursuant to the Business Combination Agreement, dated May 11, 2022, by and among the Company, Legacy Amprius, Kensington and Kensington Capital Merger Sub Corp.

We accounted for the Business Combination as a reverse recapitalization, with Legacy Amprius deemed to be the acquirer and Kensington deemed to be the acquiree for financial statement reporting purposes.

As a result, the assets, liabilities and results of operations of Legacy Amprius became the historical financial statements after the Business Combination.

Our assets and liabilities continued to be stated at historical cost and there were no goodwill or other intangible assets recorded.

Immediately prior to the closing of the Business Combination, a number of PIPE Investors purchased from us an aggregate of 2,052,000 units at a price of $10.00 per share, pursuant to separate subscription agreements.

Each PIPE unit consisted of (i) one share of common stock and (ii) one PIPE warrant to purchase one share of common stock at an exercise price of $12.50 per share.

Our net proceeds from the Business Combination and the PIPE were $70.9 million, after deducting transaction and issuance costs.

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 the prospectus supplement dated October 10, 2023 filed with the Securities and Exchange Commission.

During the year ended December 31, 2023, we sold a total of 89,383 shares of our common stock for an aggregate net proceeds of $0.4 million under the Sales Agreement.

Committed Equity Financing

On September 27, 2022, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with B.

Riley Principal Capital II, LLC (“ BRPC II”), pursuant to which BRPC II was committed to purchase up to $200.0 million of shares of common stock until January 1, 2025 (the “Committed Equity Financing”) .

Under the Purchase Agreement, we had the right to direct BRPC II to purchase a specified maximum number of shares of common stock, not to exceed certain limitations.

As consideration for BRPC II’s commitment to purchase shares of common stock, we issued 84,793 shares of common stock to BRPC II upon execution of the Purchase Agreement.

Shares of common stock issued under the Committed Equity Financing to BRPC II other than the Commitment Shares were purchased by BRPC II at current market prices less a 3.0% fixed discount.

During the year ended December 31, 2023, we sold an aggregate of 2,952,763 shares of our common stock for aggregate net proceeds of $19.1 million under the Purchase Agreement.

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 in connection with our entrance into the Sales Agreement.

Index to Consolidated Financial Statements

(i) SiCore and (ii) SiMaxx.

Our SiCore batteries were developed in collaboration with Berzelius.

We began limited shipment of SiCore batteries in 2023, which generated a strong demand from our customers.

In order to support such demand, we entered into the Exclusive Supply Agreement with Berzelius in November 2023, which gives us exclusive rights to purchase its proprietary silicon anode materials in the United States, Canada and Mexico.

In January 2024, we announced the full commercial launch of our SiCore batteries and accelerated engagement with our addressable markets.

We entered into manufacturing supply agreements with three global contract manufacturing companies, which provided us an opportunity to rapidly scale production and ship a large volume of SiCore batteries to our customers.

As of December 31, 2024, we had access, through our manufacturing supply agreements with our global contract manufacturers, to annual production of up to 800 MWh of SiCore batteries in pouch form and up to 1 GWh of SiCore batteries in cylindrical form.

Our SiMaxx batteries are currently manufactured at our facility in Fremont, California.

We believe that the demand for our SiMaxx batteries exceeds our existing kWh-scale manufacturing capacity and, in order to support such demand, we are expanding this facility into a MWh-scale manufacturing facility.

The completion of the expansion has been delayed through the first quarter of 2025 due to a delay in our customers’ order commitments.

We believe that this facility will be able to manufacture batteries up to 2 MWh capacity annually when our expansion is completed, which is approximately 10 times our existing production capacity.

In April 2023, we entered into a lease agreement to lease approximately 774,000 square feet of premises in Brighton, Colorado and announced a plan to build a GWh-scale manufacturing facility in those premises.

As of December 31, 2024, we completed our pre-construction planning for this facility.

However, the scope and schedule of the construction of this facility will be determined based on, among other factors, the availability and timing of funding.

In addition, we are currently monitoring the larger industry dynamics.

Changes in demand, supply, battery cost structure, government incentives, trade tariffs, and other considerations may also influence our decision, including whether to proceed with the construction at all.

Sales Agreement

During the year ended December 31, 2024 and from the date of the Sales Agreement through December 31, 2024, we sold shares of our common stock under the Sales Agreement resulting in aggregate net proceeds of approximately $33.4 million and $33.8 million, respectively.

Known Trends, Demands, Commitments, Events, or Uncertainties Impacting Our Business

We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section titled “Risk Factors.”

Establishing Global Network of Contract Manufacturing Partnerships

As of December 31, 2024, we produce SiCore batteries by leveraging Berzelius’ existing production line and through our manufacturing supply agreements with three global contract manufacturers.

In order to meet the increased demand for our SiCore batteries, we plan to expand our global network of contract manufacturing partnerships in the future.

Some of the challenges that we may encounter when we enter into a manufacturing supply arrangement include, among others, risk of losing control over the manufacturing process of our SiCore batteries, which could lead to quality control issues, delay in production, increase in production costs, and non-compliance with our established standards.

In addition, we may encounter a risk of losing control of some of our intellectual property.

While we plan to set up business processes, including adding oversight and quality control procedures, in order to manage our contract manufacturing supply arrangements, there can be no assurance that such processes will be effective.

In 2024, we entered into manufacturing supply agreements with three global contract manufacturing companies.

As of December 31, 2024, we had access, through our manufacturing supply agreements with our global contract manufacturers, to annual production of up to 800 MWh of

Index to Consolidated Financial Statements

SiCore batteries in pouch form and up to 1 GWh of SiCore batteries in cylindrical form.

In addition, if we partner with other contract manufacturers in the future, we plan to select large, experienced and reputable contract manufacturing companies.

Establishing Manufacturing Capacity

In January 2023, we entered into an amendment to the lease agreement of our facility in Fremont, California, pursuant to which we leased approximately 25,000 square feet of additional space located in the same building as our current headquarters.

The additional space enables us to increase our manufacturing line in Fremont, California to MWh-scale capacity.

This expansion is expected to accelerate our development of technological processes for building batteries at a GWh-scale as we prepare for the design and build out of our high-volume manufacturing facility.

In addition , in order to support our customers’ roadmaps and supply forecasts, w e entered into an Exclusive Supply Agreement with Berzelius, which gives us exclusive rights to purchase its proprietary silicon anode materials in the United States, Canada and Mexico, and allows us to leverage its existing large-scale production line and manufacturing partners to produce SiCore batteries.

Our SiCore batteries will complement our existing SiMaxx batteries and serve as a capacity bridge until our GWh-scale manufacturing facility becomes operational.

On April 15, 2023, we entered into a lease agreement for premises consisting of approximately 774,000 square feet of space located in Brighton, Colorado.

In order to meet increased demand for our products, we plan to design and build our GWh-scale manufacturing facility on these premises.

To achieve capacity at commercial scale, we need to establish supply relationships for necessary materials, components and equipment to mass produce our silicon technology for our prospective markets, which will allow us to develop an automated, high-volume manufacturing line to increase production volume.

We plan to procure manufacturing equipment that allows for anode and cathode fabrication, battery assembly, and battery testing.

The capacity and timing of our future manufacturing requirements, and related capital expenditures, remain uncertain and will depend on a variety of factors, including:

our ability to design and construct new manufacturing sites and develop an automated, high-volume manufacturing line for our silicon anode, to mitigate supply chain constraints and manage a new labor force, to utilize planned capacity in our existing facilities, to obtain the required regulatory and zoning permits and approvals, to realize the benefits of any government incentives, and to operate in new geographic areas apart from our current headquarters.

Our potential suppliers and other equipment vendors may also encounter delays, including to our expected initial production capacity of up to 500 MWh, along with additional costs, and other obstacles in building our manufacturing line, which are currently unknown.

To the extent we are unable to develop an automated, high-volume manufacturing line for our silicon anode, our ability to grow will be adversely affected.

Additionally, although we already received and are currently testing the large-scale anode production equipment from centrotherm for our manufacturing line expansion in Fremont, California, the equipment required certain modifications for our needs and there is uncertainty as to whether our planned manufacturing line will be successful.

We expect our operating requirements and capital expenditures to increase as we ramp up our manufacturing capacity and expand operations.

Achieving capacity at commercial scale of our high energy density lithium-ion batteries will require us to make significant and increasing capital expenditures to scale our manufacturing capacity and improve our supply chain processes.

Based on our current expectations, we estimate that our capital equipment expenditures will range between $75.0 million and $100.0 million to achieve up to 500 MWh per year of manufacturing capacity, which estimate does not include costs related to the construction and build-out of the new manufacturing facility.

Because our SiMaxx silicon anode process requires different equipment than traditional anode manufacturing, our capital equipment costs are likely to be higher than equipment used for production of graphite anodes.

Although, as of December 31, 2024, we had access to annual production of up to 800 MWh of SiCore batteries in pouch form and up to 1 GWh of SiCore batteries in cylindrical form through our existing manufacturing supply agreements with our global contract manufacturers, we believe that expanding our existing manufacturing facility would help us meet the growing demand of our customers.

In order to meet the increased demand for our batteries, we are expanding our existing manufacturing capacity in Fremont, California.

The completion of the expansion has been delayed through the first quarter of 2025 due to a delay in our customers’ order commitments.

We believe that this facility will be able to manufacture batteries up to 2 MWh capacity annually when our expansion is completed, which is approximately 10 times our existing production capacity.

We have also announced a plan to build a GWh-scale manufacturing facility in our leased premises in Brighton, Colorado.

As of December 31, 2024, we completed our pre-construction planning for this facility.

However, the scope and schedule of the construction of this facility will be determined based on, among other factors, the availability and timing of funding.

In addition, we are currently monitoring the larger industry dynamics.

Achieving capacity at commercial scale of our high energy density lithium-ion batteries may require us to make significant and increasing capital expenditures to scale our manufacturing capacity and improve our supply chain processes.

Our ability in the future to generate revenue sufficient to achieve profitability will depend largely on our ability to scale production to meet the expected market demand for our products.

Accordingly, the drivers of our future financial results, as well as the components of such results, may not be comparable to our historical results of operations.

Reducing Costs of Manufacturing

We believe focusing on reducing the manufacturing costs of our batteries on a $/kWh basis is an important factor to accelerate the demand for our batteries and the expansion of our customer base.

As a result, we will continue to work to develop further and validate our manufacturing processes to enable high-volume manufacturing and reduce manufacturing costs.

As the production of our SiMaxx silicon anode requires different equipment than traditional graphite anode manufacturing, our capital equipment costs are likely to be initially higher than equipment used for the production of

Index to Consolidated Financial Statements

graphite anodes.

As we scale, we believe we will benefit from reduced per-unit fixed costs, such as overhead, labor and capital expenditures, tool utilization improvements and volume pricing for equipment and materials.

We will also seek to reduce costs by optimizing material utilization, throughput and yield.

This is complemented by our plans to continue to invest in research and development to improve both battery performance and manufacturing processes.

However, until we are able to successfully design and implement an automated, high-volume manufacturing line for our silicon anode and manufacture our batteries at scale, we cannot accurately forecast our manufacturing costs, which may adversely affect our ability to achieve reduced costs in our manufacturing processes.

In addition, high inflation may affect our manufacturing costs.

If our costs become subjected to significant inflationary pressures, we may not be able to fully offset such higher costs through the increase in prices of the products we sell.

Highly Competitive Market

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We believe the manufacturers of these batteries will continue to invest funds, time and effort to improve the capabilities of their batteries with the recent developments of silicon anode batteries as a potential alternative to conventional graphite batteries.

Currently, we are the only known manufacturer using a 100% silicon anode that is free of any inactive additives.

We believe we are the leading company in the market that has a high-performance battery that can meet the requirements of aviation applications.

Currently, we believe that we are the only known manufacturer using a 100% silicon anode that is free of any inactive additives.

In addition, we believe that we are the leading company in the market that has a high-performance battery that can meet the requirements of aviation and LEV applications.

We are not currently producing batteries for EVs.

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As such, we may be at a competitive disadvantage and be unable to retain or grow our market share.

Product Development

We expect to continue investing in the development of battery technology with the goal of enabling commercial production.

We continue to develop customized battery solutions and deliver standardized samples (i.e., prototypes) of batteries to industry leading manufacturers as well as the federal government.

We continue to develop customized battery solutions and deliver standardized samples (i.e., prototypes) of batteries to industry leading manufacturers as well as to certain federal government agencies.

We plan to focus our research and development on the following key areas:

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As we expand our customer base, we expect to develop larger form factor batteries for broader electrified transportation applications.

Index to Consolidated Financial Statements

As a result of these efforts, our goal is to fully realize the benefits of our silicon anode technology and develop the highest performing products in the market.

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As we process, store, dispose of, transport, and use hazardous materials, we are subject to laws and regulations surrounding battery safety and transportation, as well as health and production safety laws and regulations governing hazardous materials.

We expect that environmental regulations under the current administration could, if adopted, facilitate market demand and revenue growth, while other potential regulations, if adopted, could result in additional operating costs.

If we fail to comply with existing and future laws and regulations, our business and results of operations could be adversely affected, such as the imposition of fines, litigation, criminal charges, sanctions by regulators,

Index to Consolidated Financial Statements

or other liabilities.

As future regulatory changes are uncertain, we are unable to measure the impact of such changes on our business and our results of operations.

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Although our business has not been directly impacted by such events, as we have no assets or operations, and we have not purchased materials from Russia, Belarus, Ukraine or the Middle East, it is impossible to predict the extent to which our operations, or those of our customers, suppliers and manufacturers, will be impacted in the short and long term, or the ways in which the conflict may impact our business.

The extent and duration of military action, sanctions and resulting market disruptions and inflationary pressures, and the impact of such changes on our business and our results of operations are impossible to predict, but could be material.

The COVID-19 pandemic 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 may continue to experience an adverse impact to our business as a result of its global economic impact, including any economic recession that has occurred or may occur in the future.

Comparability of Financial Information

Our future results of operations and financial position may not be comparable to historical results as a result of the Business Combination.

Since the closing of the Business Combination, we have incurred, and expect to continue to incur, higher capital expenditures related to both the design and build out of our new GWh-scale manufacturing facility and the development of an automated, high-volume manufacturing line for our silicon anode, as well as higher costs for continued research and development efforts, compliance with regulatory matters and other general and administrative expenses, including those related to being a public company.

Basis of Presentation

Our consolidated financial statements included elsewhere in this Annual Report on Form 10-K were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

We carry on our business through one operating segment.

Given that Amprius Holdings, which held approximately 99.6% of the Legacy Amprius common stock prior to the Business Combination, has not historically prepared financial statements for Legacy Amprius, the historical results for Legacy Amprius have been prepared from the financial records of Amprius Holdings on a carve-out basis derived from the accounting records of Amprius Holdings using the historical results of operations and the historical basis of assets and liabilities of our business, adjusted as necessary to conform to U.S.

In addition, we face risks related to significant changes in the United States’ trade policy, such as the imposition or plan to impose significant tariffs on certain product categories imported from China and other countries.

These countries have taken or plan to take retaliatory actions, including imposing additional tariffs on their importation of a wide range of products from the United States, which could potentially lead to adverse impacts on global trade.

The extent and future outcome of these global risks are highly unpredictable and uncertain and may adversely affect our future financial condition, results of operations and cash flows.

Components of Our Results of Operations

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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.

We also generate revenue from a U.S.

federal government expense reimbursement grant that is recognized in the period when we have the right to bill and collect the payment, which is the period in which the qualifying costs have been incurred.

We also receive government grants from time to time, which we present as a component of revenue.

We recognize and measure government grants at fair value when there is a reasonable assurance that we will comply with the conditions of the grants and we will receive the grants.

We recognize government grants on a systematic basis over the periods in which we recognize as expenses the related costs for which the grants are intended to compensate.

Cost of Revenue

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 SiCore batteries purchased from Berzelius.

Cost of revenue, which includes the cost of finished goods sold and the cost of customization design services, are comprised primarily of purchase costs of SiCore batteries from Berzelius and our global contract manufacturing partners, costs of raw materials, labor costs, and allocation of overhead costs incurred in producing SiMaxx batteries or in performing the customization design services.

Labor costs consist of personnel-related expenses such as salaries, employee benefits and stock-based compensation expense.

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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

Index to Consolidated Financial Statements

preliminary stage of our plan to construct a GWh-scale manufacturing facility in Brighton, Colorado, such as re-zoning costs and engineering studies.

We expect that our cost of revenue will increase as we ramp up manufacturing in our existing facility and when we start building a GWh-scale manufacturing facility.

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 in Brighton, Colorado, such as re-zoning costs and engineering studies.

We expect that our cost of revenue will increase for the foreseeable future as we increase the volume of orders for SiCore batteries and scale our business.

Research and Development (“R&D”) Expenses

R&D expenses consist mainly of personnel-related expenses 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.

Index to Consolidated Financial Statements

alternative future use, and allocation of overhead costs, which include utilities, rent, depreciation expense and other facilities-related costs.

Our R&D activities include the conceptual formulation and design of preproduction experimental prototypes and models.

R&D expenses are expensed as incurred.

We expect that our R&D expenses will increase for the foreseeable future as we continue to invest in activities to develop and enhance product capabilities, as well as build and test battery prototypes to meet the expected market demand.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist mainly of personnel-related expenses such as salaries, employee benefits and stock-based compensation expense of our executive and administrative employees, as well as fees for professional and advisory services such as legal, accounting and audit.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses consist mainly of personnel-related expenses such as salaries, employee benefits and stock-based compensation expense of our executive and administrative employees, as well as fees for professional and advisory services such as legal, accounting and audit.

Selling, general and administrative expenses also include corporate insurance expense, including directors’ and officers’ insurance costs, and allocation of overhead costs, which include utilities, rent, depreciation expense and other facilities-related costs.

We expect that our selling, general and administrative expenses will increase due to the additional costs for compliance-related requirements resulting from being a public company and investment in additional sales, general and administrative personnel to support the growth of our business.

We expect that our selling, general and administrative expenses will increase for the foreseeable future primarily due to costs for compliance-related requirements resulting from being a public company and investment in additional SG&A personnel to support the growth of our business.

Loss on Retirement of Property, Plant and Equipment

Loss on retirement of property, plant during the year ended December 31, 2024 pertained to the retirement of certain equipment that management decided not to use for our operations.

In addition, such equipment had no alternative use.

Other Income, Net

Other income consists mainly of interest income.

Other expense during the year ended December 31, 2023 pertains to the loss on write-off of deferred stock issuance costs.

Other income, net consists mainly of interest income.

Other expense during the year ended December 31, 2023 pertained mainly to a non-recurring loss on write-off of deferred stock issuance costs.

Provision for Income Taxes

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federal and state net deferred tax assets because it is not more likely that our deferred tax assets will be recoverable.

Index to Consolidated Financial Statements

Results of Operations

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Selling, general and administrative 18,726 20,356 (1,630) (8) %

Loss on retirement of property, plant and equipment 1,862 — 1,862 — %

Total operating expenses 27,932 24,033 3,899 16 %

Loss from operations (46,262) (38,709) (7,553) 20 %

Other income (expense):

Interest and other income 2,514 709 1,805 255 %

Other income, net:

Interest income and other 1,591 2,514 (923) (37) %

Loss on write-off of deferred stock issuance costs — (581) 581 (100) %

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Net loss $ (44,671) $ (36,776) $ (7,895) 21 %

Index to Consolidated Financial Statements

Cost of revenue and operating expenses reported above include stock-based compensation as follows (amounts in thousands):

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Revenue increased by $15.1 million, or 167%, to $24.2 million during the year ended December 31, 2024 from $9.1 million in the prior year.

The increase was primarily due to a $2.6 million increase in sales of batteries resulting from an increase in volume of orders from existing and new customers and a $2.0 million increase in non-recurring development service revenue due to the completion of customization design services for certain customers.

The increase in product revenue during the year ended December 31, 2023 included a $1.9 million increase in sales of SiCore batteries.

Cost of Revenues

Cost of revenues increased by $13.7 million, or 136%, to $23.7 million during the year ended December 31, 2023 from $10.1 million in the prior year.

The increase was primarily due to a $10.3 million increase in our production costs, which included a $4.8 million increase in outside services and consulting fees, a $1.6 million increase in direct costs, a $1.6 million increase in personnel-related costs and a $2.3 million increase in other indirect and overhead costs, primarily shared-facility costs, equipment and utility costs.

The increase in outside services and consulting fees included nonrecurring fees incurred in connection with our plan to construct a GWh-scale manufacturing facility in Brighton, Colorado.

The increase in cost of revenues was also due to a $1.4 million increase in purchases of SiCore batteries from Berzelius and a $2.0 million increase in service costs due to the completion of non-recurring customization design services for certain customers.

Index to Consolidated Financial Statements

Research and Development Expense

Research and development expense increased by $1.7 million, or 81%, to $3.7 million during the year ended December 31, 2023 from $2.0 million in the prior year.

The increase was primarily due to a $0.7 million increase in personnel-related costs, including stock-based compensation expense, due to the hiring of additional personnel involved in research and development activities, and a $1.0 million increase in outside service fees and allocation of overhead costs, primarily shared-facility costs, equipment and utility costs.

Selling, General and Administrative Expense

Selling, general and administrative expense increased by $10.0 million, or 96%, to $20.4 million during the year ended December 31, 2023 from $10.4 million in the prior year.

The increase was primarily due to our transition to operating as a public company.

Drivers of this increase include a $5.2 million increase in professional and consulting fees as we obtained additional outside service assistance related to management initiatives after we became a public company, a $3.0 million increase in personnel-related and compensation costs, including stock-based compensation expense, due to the hiring of additional administrative personnel, a $1.2 million increase in corporate insurance costs, including director and officer insurance costs, and a $0.6 million increase in other general and administrative spend.

The increase was primarily due to a $17.2 million increase in sales of batteries, including a $14.9 million increase in sales of our SiCore batteries, resulting from an increase in new customers and the overall increase in volume of orders from new and existing customers;

and a $0.3 million increase in government grants.

The increase in revenue was offset by a $2.4 million decrease in customization design service revenue, which is non-recurring revenue.

Cost of Revenue

Cost of revenue increased by $18.8 million, or 79%, to $42.5 million during the year ended December 31, 2024 from $23.7 million in the prior year.

The increase was primarily due to the increase in the volume of purchases for resale of finished SiCore batteries, as well as the increase in costs to produce SiMaxx batteries including increases in personnel-related costs, the cost of materials, and overhead-related costs, primarily shared-facility costs, equipment and utilities.

Research and Development (“R&D”) Expense

R&D expense increased by $3.6 million, or 100%, to $7.3 million during the year ended December 31, 2024 from $3.7 million in the prior year.

The increase was primarily due to the increase in R&D headcount, which resulted in the increase in personnel-related costs, including stock-based compensation expense, and increase in overhead-related costs, primarily shared-facility costs, equipment and utility costs.

Selling, General and Administrative (“SG&A”) Expense

SG&A expense decreased by $1.7 million, or 8%, to $18.7 million during the year ended December 31, 2024 from $20.4 million in the prior year.

The decrease was primarily due to a $5.3 million decrease in non-recurring professional fees and corporate insurance costs, including a decrease in directors’ and officers’ insurance costs, offset by a $3.6 million increase in personnel-related and other administrative costs, including an increase in stock-based compensation expense, due to the hiring of additional SG&A personnel.

Loss on Retirement of Property, Plant and Equipment

The $1.9 million loss on retirement of property, plant and equipment during the year ended December 31, 2024 pertained to the retirement of certain equipment that management decided not to use for our operations.

In addition, such equipment had no alternative use.

Other Income, Net

Other income, net increased by $1.2 million, or 173%, to $1.9 million during the year ended December 31, 2023 from $0.7 million in the prior year.

The increase was primarily due to a $1.8 million increase in interest income attributed to a higher amount of funds held, offset by a $0.6 million loss on write-off of deferred stock issuance costs.

Other income, net decreased by $0.3 million, or 18%, to $1.6 million during the year ended December 31, 2024 from $1.9 million in the prior year.

The net decrease was primarily due to a decrease in interest income, offset by a $0.6 million non-recurring loss on write-off of deferred stock issuance costs in the prior year.

Liquidity and Capital Resources

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To meet our obligations, we must continually have sufficient liquid assets.

Prior to the Business Combination, we financed our operations primarily through capital contributions from Amprius Holdings and revenue generated from operations.

Since the Business Combination, we have financed our operations primarily though revenue generated from operations, the proceeds from the Business Combination and sale of shares of our common stock under our Purchase Agreement with BRPC II.

We expect to rely on our cash and cash equivalents, which was $45.8 million as of December 31, 2023 , cash flows from operations and proceeds from the At Market Issuance Sales Agreement to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date our financial statements included in this Annual Report on Form 10-K are issued.

We may receive additional funds from the offering and sale of our shares of our common stock, from time to time, under the At Market Financing with an aggregate offering price of not more than $100.0 million.

The At Market Financing became available for use on October 10, 2023.

As of December 31, 2023, aggregate proceeds from the At Market Financing were $0.4 million through the sale of 0.1 million shares and subsequent to December 31, 2023, aggregate proceeds were approximately $6.5 million through the sale of approximately 2.0 million shares as of March 18, 2024.

Actual sales, if any, of shares of common stock in the At Market Financing will depend on a variety of factors to be determined by us from time to time, including, among other things, market conditions, the trading price of our common stock and determinations by us as to appropriate sources of funding for our business and operations.

We cannot guarantee the extent to which we may be able to raise funds through the At Market Financing.

Concurrent with the execution of the Sales Agreement, we mutually agreed with BRPC II to terminate the Purchase Agreement.

From January 1, 2023 through the termination of the Purchase Agreement on October 10, 2023, we received aggregate proceeds of $19.1 million from sale of shares of our common stock under the Purchase Agreement.

In addition, we may receive up to $550.8 million from the exercise in full of all outstanding warrants.

The exercise price of our public warrants and private warrants is $11.50 per share, and the exercise price of the PIPE warrants is $12.50 per share.

As of December 31, 2023, we had an aggregate of 45,668,236 public warrants and private warrants and 2,052,500 PIPE warrants outstanding.

The likelihood that warrant holders will exercise the warrants and any cash proceeds that we would receive is dependent upon the market price of our common stock.

If the market price for our common stock

Index to Consolidated Financial Statements

is less than $11.50 per share, in the case of the public warrants or private warrants, or $12.50 per share, in the case of the PIPE warrants, we believe warrant holders will be unlikely to exercise their warrants.

Furthermore, while we have been successful in obtaining certain external funding through government grants or incentives, future efforts to obtain such funds may be unsuccessful.

For example, in October 2022, we were awarded a $50.0 million cost sharing grant from the U.S.

Department of Energy (“DOE”).

The cost sharing grant was dependent on the successful negotiation of a final contract.

In June 2023, we and the DOE mutually agreed to discontinue the negotiation of the cost sharing contract.

Our ability to become profitable is dependent upon future events, including obtaining adequate financing to fund our business plan, completing the design and build out of our GWh-scale manufacturing facility, obtaining adequate supplier relationships, building our customer base, successfully executing our business and marketing strategy and hiring appropriate personnel.

We expect our capital expenditures and working capital requirements to increase materially in the near future.

At our headquarters in Fremont, California, we currently operate a kWh-scale manufacturing line that we are expanding in order to achieve production on a MWh-scale.

To meet the demand for our batteries, we are in the process of designing and then building a new GWh-scale manufacturing facility in Brighton, Colorado.

We are continuing the design and pre-construction work of the initial phase of up to 500 MWh that will allow us to be operational in 2025, and we expect to build out additional manufacturing in phases thereafter.

During the years ended December 31, 2024 and 2023, we have financed our operations primarily though revenue generated from operations and proceeds from the issuance of shares of our common stock.

We expect to rely on our cash and cash equivalents, which was $55.2 million as of December 31, 2024, and revenue that we expect to generate from operations to meet our working capital and capital expenditure requirements for a period of at least twelve months from the date our financial statements included in this Annual Report on Form 10-K are issued.

As described below, we may receive additional cash if we sell shares of our common stock under the At Market Financing and if our stock warrants are exercised for cash.

Under the At Market Financing, we may receive additional cash from the offering and sale of our shares of our common stock with an aggregate offering price of not more than $100.0 million.

From the date of the Sales Agreement through December 31, 2024, the cumulative proceeds from the sales of shares of our common stock under the Sales Agreement totaled $33.8 million.

As of December 31, 2024, the remaining cash that we could potentially raise under the At Market Financing was approximately $66.2 million.

However, future sales, if any, of shares of common stock under the At Market Financing will depend on a variety of factors to be determined by us from time to time, including, among other things, market conditions, the trading price of our common stock and determinations by us as to appropriate sources of funding for our business and operations.

We cannot guarantee the extent to which we may be able to raise funds through the At Market Financing.

We may also receive additional cash from our outstanding stock warrants if those stock warrants are exercised for cash.

During the year ended December 31, 2024, we offered the holders of the public and private warrants the opportunity to exercise, for cash, their warrants at a temporarily reduced exercise price of $1.10 per warrant, and we also made a separate tender offer to the holders of private warrants to exchange their warrants, on a cashless basis, for shares of our common stock.

The net proceeds from our cash tender offer, which expired on June 11, 2024, totaled $13.6 million.

As of December 31, 2024, we had a total of 16,692,572 public warrants, 300,000 private warrants and 2,052,500 PIPE warrants outstanding.

The exercise price of our public warrants and private warrants is $11.50 per warrant, and the exercise price of the PIPE warrants is $12.50 per warrant, although we have, and, in certain cases, together with the warrant agent have, the ability to amend the applicable warrant agreement to reduce the exercise price, including to a price that is below the trading price of our common stock at that time.

We believe that the likelihood that warrant holders will exercise the warrants and any cash proceeds that we would receive is dependent upon market conditions.

Our ability to become profitable is dependent upon future events, including obtaining adequate financing to fund our business plan, optimizing our manufacturing capacity, obtaining adequate supplier relationships, building our customer base, successfully executing our business and marketing strategy and hiring appropriate personnel.

We have incurred net losses to date.

During the year ended December 31, 2023, we incurred a net loss of $36.8 million.

We expect to incur additional losses and increased expenses in future periods, including those associated with the design and build out of our GWh-scale manufacturing facility, continued research and development, and increased employee headcount to support those efforts.

We expect our working capital requirements may increase materially in the near future as we scale our business, which could result in additional net losses.

During the year ended December 31, 2024, our net loss was $44.7 million.

We expect that the additional net losses in the future could be attributed to an increase in our operating expenses as we increase our headcount and incur costs to continue developing new products and other R&D initiatives.

We also expect that our capital expenditure requirements may increase materially as we continue to expand our kWh-scale manufacturing facility in Fremont, California into a MWh-scale manufacturing facility and as we plan to build a GWh-scale manufacturing facility in Brighton, Colorado.

The completion of the expansion of our Fremont, California facility had been delayed through the first quarter of 2025 due to the delay in our customers’ order commitments.

As of December 31, 2024, we completed our pre-construction planning to build a GWh-scale manufacturing facility on our leased premises in Brighton, Colorado.

However, the scope and schedule of the construction of this facility will be determined based on, among other factors, the availability and timing of funding.

In addition, we are currently monitoring the larger industry dynamics.

As of December 31, 2024, our contractual obligations consisted primarily of our noncancellable operating lease agreements for our corporate headquarters and manufacturing facilities in Fremont, California and in Brighton, Colorado.

As of December 31, 2023, the total future minimum lease payments under these operating lease agreements were approximately $71.3 million over a weighted-average lease term of 14.4 years, of which a total of $1.1 million is payable over the next twelve months.

For additional information about our leases, please refer to Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

As of December 31, 2024, the total future minimum lease payable, net of tenant improvement allowance, over the remaining weighted-average lease term of 13.5 years was approximately $70.0 million.

Approximately $3.5 million of which is payable over the next twelve months.

Please refer to Note 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information about our leases.

To the extent that our resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing.

If financing is not available, or if the terms of financing are less desirable than we expect, we may be forced to take actions to reduce our capital or operating expenditures, including by reducing or delaying our production facility expansion, which may adversely affect our business, operating results, financial condition and prospects.

For example, because we expect to expand through a Copy Exact methodology, to the extent we have less cash than expected and additional financing is unavailable on acceptable terms, we expect that we would reduce the initial production capacity of our large-scale facility and thereafter add capacity as appropriate.

Any such reduction or delay may have an adverse impact on our business plan and our results of operations.

If financing is not available, or if the terms of financing are less desirable than we expect, we may

Index to Consolidated Financial Statements

be forced to take actions to reduce our capital or operating expenditures, including by reducing or delaying our production capacity expansion, which may adversely affect our business, operating results, financial condition and prospects.

The following table summarizes our cash flows from operating, investing and financing activities for the periods presented (in thousands):

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Net Cash Used in Operating Activities

Our primary source of cash provided by operations is revenue from the sale of batteries and customization design services.

Our uses of cash in our operating activities primarily include payments for personnel-related costs, procurement

Index to Consolidated Financial Statements

of finished batteries or materials used to produce our batteries, professional and outside service fees, and other general corporate expenses.

Net cash used in operating activities increased to $25.6 million during the year ended December 31, 2023 from $13.9 million during the year ended December 31, 2022 primarily due to increases in personnel-related costs as we hired additional employees, professional and consulting fees as we utilized additional outside services after we became a public company, and corporate insurance costs, including directors’ and officers’ insurance costs.

We also incurred non-capitalizable preliminary design costs related to our GWh-scale manufacturing facility in Brighton, Colorado.

Our primary source of cash provided by operations is revenue from the sale of batteries and from non-recurring customization design services.

Our uses of cash in our operating activities primarily include payments for personnel-related costs, procurement of SiCore batteries, procurement of materials used to produce SiMaxx batteries and to conduct research, as well as professional fees, and other general corporate expenses.

Net cash used in operating activities increased to $33.4 million during the year ended December 31, 2024 from $25.6 million during the year ended December 31, 2023 primarily due to the increase in the volume of purchases for resale of finished SiCore batteries and personnel-related costs as we hired additional employees.

Net Cash Used in Investing Activities

Our primary use of cash in investing activities is for purchases of property, plant and equipment.

Net cash used in investing activities increased to $17.6 million during the year ended December 31, 2023 from $1.5 million during the year ended December 31, 2022 primarily due to purchases of production equipment and improvements made to expand our manufacturing facility in Fremont, California as well as initial designs costs for our manufacturing facility in Brighton, Colorado.

Net cash used in investing activities decreased to $3.2 million during the year ended December 31, 2024 from $17.6 million during the year ended December 31, 2023 primarily due the timing of the construction of leasehold improvements in our manufacturing facilities and the timing of purchases of other production equipment in connection with our planned expansion as well as a $4.2 million refund that we received during the fourth fiscal quarter of 2024 pertaining to a cash deposit that we made to a vendor in 2023 related to plans to expand our manufacturing capacity.

Net Cash Provided by Financing Activities

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Our primary cash usage for financing activities consists of payments related to the issuance of common stock.

Net cash provided by financing activities decreased to $19.2 million during the year ended December 31, 2023 from $73.6 million during the year ended December 31, 2022.

Net cash provided by financing activities during the year ended December 31, 2023 consisted primarily of the net proceeds from the issuance of common stock in connection with the Purchase Agreement and Sales Agreement.

The decrease was due primarily to the approximately $70.9 million non-recurring net proceeds from the consummation of the Business Combination and PIPE investment in September 2022.

Net cash provided by financing activities increased to $47.2 million during the year ended December 31, 2024 from $19.2 million during the year ended December 31, 2023.

Our primary source of cash from financing activities during the year ended December 31, 2024 consisted primarily of the net proceeds from the issuance of common stock under the Sales Agreement and exercise of our public and private warrants.

Our primary source of cash from financing activities in the prior year consisted primarily of the net proceeds from the issuance of common stock in connection with the Common Stock Purchase Agreement with B.

Riley Principal Capital II, LLC, which was terminated in October 2023.

Related Party and Other Transactions

Related Party Transactions

Prior to the closing of the Business Combination, 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.

The total deemed capital contributions during the year ended December 31, 2022 was $0.5 million and none during the year ended December 31, 2023.

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 included elsewhere in this Annual Report on Form 10-K.

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 for our SiCore product platform from Berzelius.

We do not have purchase commitments with these previous related parties.

On October 23, 2024, our former parent company, Amprius Holdings, voluntarily liquidated and dissolved.

As a result of such liquidation and dissolution, Amprius Holdings distributed, on a pro rata basis, an aggregate of approximately 57.2 million shares of our common stock to its stockholders, which include some of our executive officers and directors.

In addition, we assumed all of Amprius Holdings’ outstanding options to purchase shares of Amprius Holdings’ Class A common stock, which include outstanding options held by some of our executive officers and directors, in exchange for, among other things, Amprius Holdings contributing to us a total of 5.5 million shares of our common stock that it owned.

Those shares that were contributed to us were immediately cancelled and returned to our authorized but unissued share capital.

Please refer to Notes 1 and 7 to our consolidated financial statements included elsewhere in this Annual Report on

Index to Consolidated Financial Statements

Form 10-K for additional information about the liquidation and dissolution of Amprius Holdings and the assumption of its outstanding options.

Other Transactions

Our CEO serves as a member of the board of directors of Berzelius and its holding company.

As of December 31, 2024 and 2023, our CEO and our company had no direct or indirect controlling interest in Berzelius and its affiliates and, similarly, Berzelius and its affiliates had no direct or indirect controlling interest in our company.

We developed our SiCore batteries through our collaboration with Berzelius.

In November 2023, we entered into the Exclusive Supply Agreement with Berzelius, which gives us exclusive rights to purchase its proprietary silicon anode materials in the United States, Canada and Mexico.

We purchased, and may continue to purchase, SiCore batteries and raw materials for our SiMaxx battery production and R&D activities from Berzelius.

As of December 31, 2024, we had no purchase commitments with Berzelius.

Our CEO also served as a member of the board of directors of Amprius Wuxi Co., Ltd (“Wuxi”), a former subsidiary of Amprius Holdings, until November 2023.

We also purchased, and may continue to purchase, raw materials for our SiMaxx battery production and R&D activities from Wuxi.

Emerging Growth Company and Smaller Reporting Company Status

We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) and may take advantage of reduced reporting requirements that are otherwise applicable to public companies.

Section 107 of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards.

We are an emerging growth company as defined in the JOBS Act and may take advantage of reduced reporting requirements that are otherwise applicable to public companies.

Section 107 of the JOBS Act exempts an emerging growth company from being required to comply with new or revised financial accounting standards until private companies are required to comply with those standards.

This means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, we have the option to adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

We have elected to use the extended transition period for complying with new or revised accounting standards unless we otherwise early adopt selected standards.

Index to Consolidated Financial Statements

We have elected to use the extended transition period for complying with new or revised accounting standards unless we otherwise early adopt select standards.

We are also a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.

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Our summary of significant accounting policies are more fully described in Note 2 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We recognize on the commencement date a right-of-use (“ROU”) asset and a lease liability on our lease agreements, or agreements that contains a lease.

The lease liability is estimated based upon the present value of the fixed lease payments over the non-cancelable lease term.

The ROU asset is estimated based on the amount of initial lease liability recorded and adjustment for certain lease-related transactions.

When we estimate the lease liability, we use an incremental borrowing rate(“IBR”) if the implicit rate of the lease is not determinable.

The IBR is estimated by using a recovery rate approach, which includes certain subjective assumptions such as performing a credit analysis on the company, leveraging the corporate default and recovery rates published by a credit rating agency, and using risk-free and undiscounted rates of comparable companies based on our credit analysis.

Changes in the IBR, or the assumptions used to estimate the IBR, may significantly affect the amount of lease liability and ROU asset that we recognize.

Stock-Based Compensation

We measure stock-based compensation for stock options at fair value on the date of grant using the Black-Scholes option-pricing model, which requires the use of certain assumptions such as the expected term, expected volatility, risk-free interest rate and expected dividend.

The inputs used in the Black-Scholes option-pricing model are based on subjective estimates.

Additionally, the Black-Scholes option-pricing model requires us to input the fair value of our common stock.

Prior to becoming a public company, we estimated the fair value of our common stock based on the determination of the board of directors, input from management and a contemporaneous valuation analysis from a third-party.

Due to the subjective nature of the inputs used to measure the grant-date fair value of stock options, any changes in those inputs may significantly affect the amount of stock-based compensation expense that we recognize.

• Expected Term — Since we do not have sufficient historical experience for determining the expected term, we derive the expected term based on the simplified method for awards that qualify as plain-vanilla options.

• Expected Volatility — Since we have limited trading history on our common stock, we estimate volatility for stock option grants 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 grant’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 estimate expected dividend yield to be zero because we have not paid dividends in the past and have no plans to pay dividends on our common stock.

• Fair Value of Common Stock — For stock option grants made prior to the Business Combination, we estimated the fair value of Legacy Amprius common stock based on the determination of our board of directors at the date of the stock option grant, with inputs from management and third-party valuations.

The third-party valuations were performed in accordance with the American Institute of Certified Public Accountants’ Accounting and

Our lease liabilities and right-of-use (“ROU”) assets are recognized based upon estimates.

Our lease liabilities are initially recognized based upon the present value of the fixed lease payments while our ROU assets are initially recognized based upon the amount of the initial lease liabilities and adjustments for certain lease-related transactions.

When we estimate the present value of our fixed lease payments, we generally use an incremental borrowing rate (“IBR”) since the implicit rates of our leases are not determinable.

The IBR is determined based on an estimation process that includes subjective inputs, such as using a hypothetical credit analysis about the company, leveraging the corporate default and recovery rates published by a credit rating agency, and using risk-free and undiscounted rates of comparable companies.

Index to Consolidated Financial Statements

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 Legacy Amprius’ common stock at each valuation date.

The probability-weighed expected return method and the Option Pricing Method were the most appropriate methods used for determining the fair value of Legacy Amprius’ common stock.

In addition to the third-party valuations, our board of directors considered various objective and subjective factors to determine the fair value of our common stock as of the grant date, including:

• stage of development;

• external market conditions affecting the industry and trends within the industry, including a review of the performance and metrics of guideline public companies;

• financial position, including cash on hand, and historical and forecasted performance and operating results;

• the lack of an active public market for such common stock;

• the likelihood of achieving a liquidity event, such as a “Special Purpose Acquisition Company” transaction or sale of our company in light of prevailing market conditions;

• an analysis of initial public offerings and the market performance of similar companies in the industry.

Carve-out Basis of Historical 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 and adjusted as necessary to conform with U.S.

Those carve-out basis financial statements include certain general and administrative expenses that were allocated to us from Amprius Holdings.

Those allocations were based on estimates, and if those estimates were not accurate or not complete, the amounts reported on our historical balance sheet and statements of operations prior to the Business Combination may not be reasonable.

We believe that the assumptions we used were reasonable and consistently applied for the periods presented prior to the Business Combination.

change in the IBR, or the assumptions used to estimate the IBR, could have a significant effect on the amounts of the lease liabilities and ROU assets that we initially recorded and the amounts that are currently shown on our consolidated balances sheets included elsewhere in this Annual Form 10-K.

Stock-Based Compensation

Stock option grants are measured at fair value on the date of grant and recognized as stock-based compensation expense over the vesting period.

The grant date fair value of our stock option grants is estimated using the Black-Scholes option-pricing model, which requires inputs that are based on subjective assumptions, such as the following:

• Expected term .

Since we do not have a sufficient historical experience for determining the expected term, we derive the expected term based on the simplified method for awards that qualify as plain-vanilla options.

• Expected volatility .

Since there is no sufficient trading history on the underlying 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.

This is estimated based on a term equivalent to the estimated expected term of the option.

• Expected dividend .

We use an expected dividend yield of zero because there had been no dividend payments in the past and there is no plan to pay dividends in the future associated with the underlying common stock.

• Fair value of the underlying common stock .

For stock option grants made by Amprius Holdings to our employees or board members, the fair value of its common stock, which had no public market, is determined by its board of directors by considering a number of factors, including a valuation performed by an independent third party, which requires various assumptions.

Since the inputs used in the Black-Scholes option-pricing model described above are based on estimates, a change in any of those inputs could have a significant effect on the amount of stock-based compensation expense that we have already recognized and the remaining amount that we still have to recognize.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis