What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-01 compared with 2022-03-23 · 140 added, 104 removed, 106 unchanged (70% of the section changed)

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Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed elsewhere in this Report, particularly in “Risk Factors.” We do not undertake, and expressly disclaim, any obligation to publicly update any forward-looking statements, whether as a result of new information, new developments or otherwise, except to the extent that such disclosure is required by applicable law.

Solid Power is developing all-solid-state battery cell technology that replaces the liquid or gel polymer electrolyte used in conventional lithium-ion battery cells with a sulfide-based solid electrolyte.

Our sole focus is on the development and commercialization of all-solid-state battery cells and solid electrolyte materials, which we are currently developing for the fast-growing battery-powered electric vehicle market.

Our All-Solid-State Platform is designed to meet the performance and cost demands from both consumers and automotive OEMs and outperform the best performing liquid or gel electrolyte-based lithium-ion technologies of today and tomorrow.

We are developing our all-solid-state battery cell technology with the goal to improve, among other things, driving range, battery life, safety, and cost.

We are currently producing 0.2, 2, and 20 Ah Silicon EV Cells using established manufacturing processes on our pilot production line.

We have partnered with industry leaders, such as Ford, BMW, and SK Innovation, to further refine and validate our all-solid-state cell designs and the sulfide-based solid electrolyte we manufacture at our headquarters in Louisville, Colorado.

Our business model – licensing our all-solid-state cell designs to top tier cell manufacturers and selling our electrolyte for solid-state cell development – allows for multiple revenue streams and distinguishes us from our competition.

By not needing to construct capital intensive gigafactories, we believe we can be “capital light” compared to other development-stage battery companies that plan to produce their battery designs in-house.

Please see “Business” above for a more thorough discussion of our business.

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| 2021 Form 10-K | 47

We are developing solid state battery technologies to enable the next generation of rechargeable batteries for the fast-growing EV and other markets.

Our core technology is our proprietary sulfide-based solid electrolyte material, which replaces the liquid or gel electrolyte used in conventional lithium-ion batteries.

We believe that our electrolyte material can enable extended driving range, longer battery life, improved safety, and lower costs compared to conventional lithium-ion.

We also are designing and developing solid state cells that utilize our electrolyte in the cathode, anode, and separator layers.

We currently produce 0.2 Ah, 2 Ah, 20 Ah, and EV cells on two pilot lines using established manufacturing processes.

In 2022, we installed our EV line, which allows us to produce EV cells between 60 Ah and 100 Ah.

The EV line is designed to produce cells as part of the automotive qualification process and for vehicle integration demonstration purposes.

We have partnered with industry leaders, including Ford, BMW, and SK On.

We are working closely with each of these partners to refine and validate our cell designs and electrolyte material with the ultimate goal to commercialize our technologies.

Our business model – selling our electrolyte to cell manufacturers and licensing our cell designs and manufacturing processes – distinguishes us from many of our competitors who plan to be commercial battery manufacturers.

Ultimately, we endeavor to be a leading producer and distributor of sulfide-based solid electrolyte material for powering both EVs and other applications.

Since we do not intend to commercially produce battery cells, we expect to invest less than other development-stage battery companies that plan to commercially manufacture their own cell designs and construct battery production facilities.

The products we currently make are in the development stage and require continued development and validation before we can commercialize either our electrolyte or cell technology.

The Business Combination

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As a result of the business combination, we became a Nasdaq-listed company, which will require that we continue to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.

We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources, including increased audit, compliance, and legal fees.

We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, additional internal and external accounting, legal, administrative resources, and increased audit, compliance, and legal fees.

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Our results of operations and statements of assets and liabilities may not be comparable between periods as a result of the business combination.

Key Factors Affecting Operating Results

We are a research and development-stage company, with the goal to reach commercialization of our all-solid-state battery cells and sulfide-based electrolyte by 2028.

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose significant risks and challenges, including those discussed in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” appearing in this Report, which are incorporated by reference.

Specifically, the success of our business is dependent upon our ability to successfully develop and commercialize our products, which will require significant capital and subject us to regulatory oversight.

We are a research and development-stage company and have not generated significant revenue through the sale of our electrolyte or licensing of our cell designs.

Our ability to commercialize our products depends on several factors that present significant opportunities for us but also pose material risks and challenges, including those discussed in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” appearing in this Report, which are incorporated by reference.

Prior to reaching commercialization, we must test and validate our products to ensure they meet the performance and safety requirements of our customers.

We also will have to negotiate licensing and supply contracts with our customers on terms and conditions that are mutually acceptable.

We also will need to scale production of our sulfide-based solid electrolyte material to satisfy anticipated demand.

All of these factors will take time and affect our operating results, and, since many are difficult to quantify, our actual operating results may be different than we currently anticipate.

In addition to meeting our development goals on the expected timeline, future growth and demand for our products is highly dependent upon consumers adopting electric vehicles.

The market for new energy vehicles is still rapidly evolving, characterized by rapidly changing technologies, competitive pricing and factors, evolving government regulation and industry standards, and changing consumer demands and behaviors.

For more information, please see “Business” above.

As a development-stage company, we have not yet generated significant revenues through production of our electrolyte material or all-solid-state battery cell designs.

Our revenue generated to date has primarily come from research and development performance on government contracts.

We anticipate deploying substantial capital to expand our sulfide-based electrolyte production, to install our EV Line, and in connection with research and development programs.

These expenditures are needed to further development of our products and overall business.

We will need to scale production of our electrolyte material to satisfy anticipated demand.

All of these factors will take time and affect our operating results.

Since many factors are difficult to quantify, our actual operating results may be different than we currently anticipate.

Our revenue generated to date has primarily come from research and development performance on government contracts and research and development licensing activities.

We have and are deploying substantial capital to expand our production capabilities and engage in research and development programs.

We also expect to incur significantly more administrative expenses as a publicly traded company than we did previously.

For additional information, see “Liquidity and Capital Resources,” and “Results of Operations.”

The COVID-19 pandemic has disrupted supply chains and affected production and sales across a range of industries.

The long-term extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the virus, mutations in the virus, vaccine distribution and uptake and the impact on our customers, employees, and vendors.

The ultimate outcome of these matters is uncertain and, accordingly, the impact on our financial condition or results of operations is also uncertain.

While the COVID-19 pandemic has presented challenges to our business, including having to

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devote additional time to managing our supply chain, having personnel out sick, implementing social distancing measures, and requiring certain employees to work from home in order to reduce office density, to date, we have not materially altered any terms with our contractors, suppliers, customers, other business partners or financing sources as a result of the COVID-19 pandemic.

In addition to meeting our development goals, commercialization, and future growth and demand for our products is highly dependent upon consumers adopting EVs.

The market for new energy vehicles is still rapidly evolving due to emerging technologies, competitive pricing, government regulation and industry standards, and changing consumer demands and behaviors.

Basis of Presentation

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Our historical results are reported under GAAP and in U.S.

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Results of Operations

Comparison of the Year Ended December 31, 2021 to the Year Ended December 31, 2020

The following table sets forth our historical operating results for the periods indicated:

The following table is a consolidated summary of our operating results for the periods indicated:

Year Ended December 31,

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Interest expense

Other income (expense)

Loss from change in fair value of embedded derivative liability

Total nonoperating income

Pretax Income (Loss)

Income tax benefit

Net Income (Loss)

Premium paid on repurchase of redeemable convertible preferred stock

Net Income (Loss) attributable to Common Stockholders

Other Comprehensive Loss

Unrealized loss on marketable securities

Comprehensive loss attributable to Common Stockholders

NM = Not meaningful

The key factors driving our 2022 increase in operating loss were as follows:

● Revenue and direct costs – our overall revenue and related direct costs increased as a result of additional performance under our JDAs and government contracts, as well as additional product sales.

● Research and development – our research and development costs increased primarily as a result of increased labor costs and material consumption as we expanded the development efforts of our battery cells and electrolyte material.

We expect our development costs to continue to increase as we continue to accelerate both the pace and scope of our development efforts.

● General and administrative – our general and administrative costs increased primarily as a result of increased headcount to support our operational and organizational capabilities, professional service fees, insurance costs, and labor resources as a result of our public company status and to support our growth.

We continue to expect our general and administrative costs to increase as a result of additional planned hiring and increased public company compliance costs.

● Non-cash stock compensation costs increased across Direct costs, Research and development, and General and administrative expenses related to increased labor costs.

● Nonoperating income – our nonoperating income increased primarily due to increased interest income following strategic cash investments, and the absence of other expense related to the buyout and termination of a manufacturing rights agreement, offset by a decrease in the gain on fair value adjustment of warrant liabilities.

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Year Ended December 31,

(in thousands)

Operating Expenses

Research and development

Marketing and sales

General and administrative

Total operating expenses

Operating Loss

Nonoperating Income (Expense)

Interest income

Change in fair value of warrant liabilities

Interest expense

Other expense

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Gain on loan extinguishment

Total nonoperating income (loss)

Total nonoperating income (expense)

Pretax Income (Loss)

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The key factors driving our 2021 increase in operating loss were as follows:

Revenue – our overall revenue increased, however we saw an increase in revenue from governmental contracts and corresponding decrease to commercial revenues driven by the timing of program execution.

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Direct costs – our direct costs increased as a result of an increase in costs associated with government programs and a corresponding decrease in costs associated with commercial programs.

Research and development – our research and development costs increased primarily as a result of increased labor costs and material consumption as we expanded the development efforts of our all-solid-state battery cells and electrolyte material.

We expect our development costs to increase significantly as we continue to accelerate both the pace and scope of our development efforts.

Marketing and sales – our marketing and sales costs increased as a result of increased labor costs, stock compensation expense, and an expansion of our sales and marketing efforts.

● Revenue and direct costs – our overall revenue and related direct costs increased, however we saw an increase in revenue from governmental contracts and corresponding decrease to commercial revenues driven by the timing of program execution.

● Marketing and sales – our marketing and sales costs increased as a result of increased labor costs and an expansion of our sales and marketing efforts.

● General and administrative – our general and administrative costs increased primarily as a result of professional service fees and labor costs as a result of our public company status.

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Sources of Liquidity

Our sources of cash are primarily derived from the sale of equity, including the Series B Financing and the business combination, with a small portion coming from performance on government contracts and commercial revenues.

As discussed further below, we expect our sources of liquidity and cash flows will be sufficient to fund ongoing operations, research and development efforts, and to meet our anticipated capital expenditure needs.

Our sources of cash have historically been primarily derived from the sale of equity and the business combination, with a small portion coming from performance on government contracts and commercial revenues.

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As of December 31, 2022 and 2021, we had $496.1, and $589.3 million of total liquidity, respectively, as set forth below:

(in thousands)

December 31, 2022

December 31, 2021

Cash and cash equivalents

Marketable securities

Long-term investments

Total liquidity

Short-Term Liquidity Requirements

As of the date of this Report, we have yet to generate material revenue from our principal business activities.

As of December 31, 2021, we had $513 million of cash and cash equivalents, $76 million of marketable securities, and our current liabilities were $8.4 million, primarily comprised of accounts payable, accrued compensation, and other accrued liabilities.

We anticipate that our most significant capital expenditures in 2022 will relate to construction of our second production facility in Thornton, Colorado.

The purpose of this facility is to scale production of our sulfide-based solid electrolyte to feed our EV Line.

We expect to begin producing our sulfide-based solid electrolyte from this facility in the second half of 2022.

We also expect to invest significant capital in 2022 in connection with the installation of our EV Line at our Louisville, Colorado headquarters.

The EV Line is designed to produce EV-scale all-solid-state battery cells as part of the automotive qualification process, which we expect to enter in late 2022.

We expect the EV Line will be operational in the third quarter of 2022.

We anticipate our total combined capital and operational expenditures for 2022 will be between $150 million and $170 million.

We anticipate that our most significant capital expenditures in 2023 will relate to finishing construction of our electrolyte facility, and enhancing production capabilities at this facility and our cell manufacturing lines.

In addition, our short-term liquidity requirements include operating and capital expenses needed to further our development programs and to optimize our pilot production lines and electrolyte manufacturing capabilities.

We expect to fund our short-term liquidity requirements through our cash on hand and other liquid assets.

We anticipate our total combined capital and operational expenditures for 2023 will be between $50 million and $60 million, which includes approximately $1.45 million for the payment of contractual cash obligations as of December 31, 2022, primarily related to payments for operating leases.

Long-Term Liquidity Requirements

We believe that our cash on hand is sufficient to meet our operating cash needs (including expenditures for the increased pace and scope of development as well as increased public company costs), working capital and capital expenditure requirements for a period of at least the next 12 months and longer term until we generate adequate cash flows from licensing activities and/or electrolyte sales.

We may, however, need additional cash if there are material changes to our business conditions or other developments, including changes to our operating plan, unanticipated delays in negotiations with OEMs and tier-one automotive suppliers or other

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suppliers, supply chain challenges, disruptions due to the COVID-19 pandemic, competitive pressures, and regulatory developments.

We may, however, need additional cash if there are material changes to our business conditions or other developments, including changes to our operating plan, development progress, delays in negotiations with OEMs, cell manufacturers or other suppliers, market adoption of EVs, supply chain challenges, competitive pressures, inflation, and regulatory developments.

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

If the 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 not seeking potential acquisition opportunities, or reducing or delaying our production facility expansions, which may adversely affect our business, operating results, financial condition and prospects.

For more information about risks related to our business, please see “Risk Factors.”

In January 2022, we updated our investment policy to provide greater flexibility in investment options.

We designed our revised investment policy primarily to maintain adequate liquidity to fund future operations, research and development, and anticipated capital expenditures, with a secondary goal to maximize yield on cash not required to be liquid for near term operations.

To reduce the risk of economic, supply chain, and operational disruptions during the COVID-19 pandemic, we have allocated a sufficient portion of capital to serve as reserve cash.

We also may opportunistically seek to enhance our liquidity through equity or debt financing, if such financing becomes available to us on terms that we consider favorable.

If the 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, which may adversely affect our development, business, operating results, financial condition and prospects.

Our cash investment policy is designed to provide flexibility in investment options.

Our investment policy is designed primarily to maintain adequate liquidity to fund future operations, research and development, and anticipated capital expenditures, with a secondary goal to maximize yield on cash not required to be liquid for near term operations.

The following tables summarize our cash flows from operating, investing, and financing activities for the periods presented.

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Net cash used in operating activities

Investing activities

Net purchases and proceeds of marketable securities and long-term investments

Purchases of property, plant and equipment

Purchases of intangible assets

Net cash used in investing activities

Net cash provided by financing activities

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Cash flows used in operating activities:

Cash used in operating activities increased by $15.4 million from 2020 to 2021.

This increase in cash use was primarily attributable to our operating loss of $26.5 million in 2021, compared to operating loss of $11.6 million in 2020.

The increase was primarily attributable to an increase in research and development costs as well as increased general and administrative expense due to increased headcount.

We expect cash flows used in operating activities to continue to increase as we continue to accelerate both the pace and scope of our development efforts, and work to achieve commercialization of our products.

We also anticipate increased expenditures for general and administrative functions in connection with our status as a public company.

Cash used in operating activities increased from 2021 to 2022 primarily attributable to our operating loss, which was driven by continued increase in research and development costs and general and administrative expenses.

We continue to expect cash flows used in operating activities to increase as we accelerate both the pace and scope of our development efforts, and work to achieve commercialization of our products.

We continue to anticipate increased expenditures for general and administrative functions in connection with our status as a public company and to support growth of our development efforts.

Cash used in operating activities increased from 2020 to 2021.

This increase in cash use was primarily attributable to our operating loss related to similar increases in research and development costs and general and administrative expenses.

Cash flows used in investing activities:

Cash used in investing activities increased by $88 million from 2020 to 2021.

This increase is due to capital expenditures of $12.6 million and purchase of marketable securities of $76 million in 2021.

Capital expenditures were primarily for custom manufacturing equipment in connection with our planned expansion of electrolyte production.

We expect cash used in investing activities to increase in 2022 and 2023 as we build out our second production facility and install our EV Line.

Each location will require investment in specialized equipment to facilitate the manufacturing process of sulfide-based solid electrolyte and our all-solid-state battery cells, respectively.

We expect capital expenditures to increase as our production processes are scaled in the future, especially with respect to our sulfide-based solid electrolyte.

Cash used in investing activities increased from 2021 to 2022 primarily due to capital expenditures, investments in patents, and the net effect of the purchase and sales of marketable securities.

Capital expenditures were primarily for custom manufacturing equipment in connection with our expansion of electrolyte production capabilities and installation of our EV line.

We continue to expect cash used in investing activities to increase as we finalize the build out of our electrolyte production facility and increase its production capabilities, and as we increase our electrolyte production scale.

Each of our locations will continue to require investment in specialized equipment to facilitate the manufacturing process of our electrolyte material and battery cells.

As our production processes are scaled in the future, especially with respect to our electrolyte material, we expect capital expenditures to increase.

Cash used in investing activities increased from 2020 to 2021 due to increases in capital expenditures and purchases of marketable securities in 2021.

Capital expenditures were primarily for custom manufacturing equipment in connection with our expansion of electrolyte production.

Cash flows provided by financing activities:

Through December 31, 2021, we have financed our operations through proceeds from a bank term loan, and the sales of convertible notes, redeemable convertible preferred stock, and the business combination.

We retired the bank term loan in December 2021.

Net cash provided by financing activities increased by $617.4 million from 2020 to 2021.

This increase is attributable to net proceeds of $135.6 million from the Series B Financing, and net proceeds of $495.4 million from the business combination in 2021.

Net cash provided by financing activities for the year ended December 31, 2022 was primarily from the cash exercise of stock options.

Net cash provided by financing activities for the year ended December 31, 2021 were primarily the proceeds from the business combination and the Series B Financing.

Net cash provided by financing activities for the year ended December 31, 2020 were primarily from the sale of convertible notes and proceeds from a bank term loan, which was retired in December of 2021.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, as defined under SEC rules.

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Critical Accounting Estimates

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Actual results may differ from those estimates.

Our critical accounting policies are those that materially affect our financial statements and involve difficult, subjective, or complex judgments by management.

A thorough understanding of these critical accounting policies is essential when reviewing our financial statements.

We believe that the critical accounting policies listed below involve the most difficult management decisions because they require the use of significant estimates and assumptions as described above.

Our critical accounting estimates are those that materially affect our financial statements and involve difficult, subjective, or complex judgments by management.

A thorough understanding of these critical accounting estimates is essential when reviewing our financial statements.

We believe that the critical accounting estimates listed below involve the most difficult management decisions because they require the use of significant estimates and assumptions as described above.

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Valuation of Private Placement Warrant Liability

Judgments and Uncertainties

Effect if Results Differ From Assumptions

The private placement warrant liability is classified as a liability, in accordance with ASC Topic 815, as they do not satisfy the criteria to be classified as equity based on the indexation criteria.

Public and private warrants are recorded at their fair value at the date of issuance, and subsequently remeasured at each reporting period end.

Any change in value is recognized through the consolidated statement of operations.

Valuation of private placement warrants requires that we make significant judgments and assumptions related to the fair value based on the Black-Scholes model including term, stock price, volatility and the selection of guideline public companies, risk free rate and dividend yield.

If we were to change our judgments or estimates used in valuation of private warrants, it could cause a material increase or decrease to the gain or loss realized from the change in fair value of private placement warrants, and to the underlying warrant liability.

Stock -Based Compensation

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We record stock-based compensation expense according to the provisions of ASC Topic 718 – Stock Compensation.

ASC Topic 718 requires all share-based awards to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values.

ASC Topic 718 requires all share-based awards to employees, including grants of employee stock options, restricted stock units, and shares purchased through the Company’s ESPP Plan to be recognized in the financial statements based on their fair values.

The grant date fair value of Legacy Solid Power’s common stock was historically determined by its board of directors with the assistance of management and an independent valuation.

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Common Stock Warrants

Judgments and Uncertainties

Effect if Results Differ From Assumptions

Common stock warrants are classified as a liability, in accordance with ASC Topic 815, as they do not satisfy the criteria to be classified as equity based on the indexation criteria.

Public and private warrants are recorded at their fair value at the date of issuance, and subsequently remeasured at each reporting period end.

Any change in value is recognized through the consolidated statement of operations.

Valuation of private warrants requires that we make significant judgments and assumptions related to the fair value based on the valuation model.

We consider the most significant assumption to be the estimated volatility of our common stock.

If we were to change our judgments or estimates used in valuation of private warrants, it could cause a material increase or decrease to expense realized from the change in fair value of public and private warrants, and to the underlying warrant liability.

Collaborative Revenue

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Contract costs include all direct labor, subcontract costs, costs for materials and indirect costs related to the contract performance that are allowable under the provisions of the contract.

Collaborative revenues from fee-based contracts are recognized based on costs incurred to meet contractually defined milestones and deliverables along with our assessment of achievement of those measurable deliverables under the contract.

If we were to change our judgments or estimates, it could cause a material increase or decrease in the amount of revenue or deferred revenue that we report in a particular period.

Judgments and Uncertainties

Effect if Results Differ From Assumptions

Under ASC 842, at contract inception we determine if an arrangement meets the definition of a lease, as either operating or financing leases.

At lease commencement, we record and recognize right-of-use assets for the lease liability amount and initial direct costs incurred, offset by lease incentives received.

We record lease liabilities for the net present value of future lease payments over the lease term.

The discount rate we use is generally our estimated incremental borrowing rate unless the lessor’s implicit rate is readily determinable.

We calculate discount rates periodically to estimate the rate we would pay to borrow the funds necessary to obtain an asset of similar value, over a similar term, with a similar security.

Judgments made by management for our lease obligations include the determination of our incremental borrowing rate and the length of the lease term, which includes the determination of renewal options that are reasonably assured.

We use our estimated incremental borrowing rate in determining the present value of lease payments for purposes of determining lease classification and recording lease liabilities and lease assets on our consolidated balance sheets.

Our incremental borrowing rate is determined based on a synthetic credit rating, determined using a valuation model, adjusted to reflect a secured credit rating and a developed spread curve, if applicable, applied to a risk-free rate yield curve.

The lease term can affect the classification of a lease as finance or operating for accounting purposes, the amount of the lease liability and corresponding right-of-use lease asset recognized, the term over which related leasehold improvements for each facility are amortized and any

These judgments may produce materially different amounts of depreciation, amortization and rent expense, right-of-use assets, and lease liabilities than would be reported if different assumed lease terms were used.

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Judgments and Uncertainties

Effect if Results Differ From Assumptions

rent holidays and/or changes in rental amounts for recognizing rent expense over the term of the lease.

Research and Development

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Our product offering relies heavily on new technology currently undergoing development and does not yet meet standard specifications to be sold commercially.

Therefore, all related costs are currently accounted for as part of research and development expense in the Consolidated Statement of Operations.

Therefore, all related costs are currently accounted for as part of research and development expense.

The criteria established by the Company to determine when commercialization has been reached includes the length of time the units have been operational in the field and the level of performance at which those units operate.

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As of December 31, 2022, the criteria for commercialization have not yet been met.

Research and development costs require us to make judgements regarding our progress toward commercialization.

Research and development costs require us to make judgments regarding our progress toward commercialization.

We routinely assess this progress to prepare for the change in cost treatment.

If we were to change our judgement regarding research and development costs or our progress toward commercialization, it could cause a material change in cost treatment.

Emerging Growth Company Status

We are an emerging growth company as defined in Section 2(a) of the Securities Act and have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards.

We expect to remain an emerging growth company at least through the end of the 2022 fiscal year and expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards.

This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Recent Accounting Pronouncements

See Note 2 to our audited financial statements, which are incorporated by reference, for more information.

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If we were to change our judgment regarding research and development costs or our progress toward commercialization, it could cause a material change in cost treatment.

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