What changed in this filing

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Item 9A. Controls and Procedures

2023-03-01 compared with 2022-03-23 · 53 added, 37 removed, 175 unchanged (34% of the section changed)

4 unchanged sentences

Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this Report, our disclosure controls and procedures were effective.

Inherent Limitations over Internal Control Over Financial Reporting

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Our internal control over financial reporting includes those policies and procedures that:

● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;

● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of our management and directors;

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management, including our principal executive officer and principal financial officer, does not expect that our internal controls will prevent or detect all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Solid Power, Inc.

| 2022 Form 10-K | 84

Management’s Report on Internal Control Over Financial Reporting

This Report does not include a report of management’s assessment regarding our internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Additionally, our independent registered public accounting firm will not be required to opine on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act until we are no longer an “emerging growth company,” as defined in the JOBS Act.

We previously identified two material weaknesses for DCRC and Legacy Solid Power due to deficiencies identified in the operating effectiveness of controls over financial reporting related to (1) failure to correctly apply the nuances of the complex accounting standards that apply to our financial statements, including with respect to certain complex equity instruments and equity linked instruments and related earnings per share impacts, and (2) the review of complex transactions for proper accounting treatment as our control environment would have failed to detect the misstatement prior to the financial statement issuance.

However, we have determined that we have remediated the material weakness for DCRC related to a failure to correctly apply the nuances of the complex accounting standards that apply to our financial statements, including with respect to certain complex equity instruments and equity linked instruments and related earnings per share impacts as of December 31, 2021.

The second material weakness for Legacy Solid Power, which relates to the review of complex transactions for proper accounting treatment, remains unremediated because our control environment would have failed to detect the misstatement prior to the issuance of financial statements.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act).

Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on our assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2022 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

Our independent registered public accounting firm, Ernst & Young LLP, has issued their report on our internal control over financial reporting, which appears in Part II, Item 8 of this Form 10-K.

Changes in Internal Control over Financial Reporting

Other than the actions taken as described in Management’s Remediation Initiatives below to improve the Company’s internal control over financial reporting, there have been no changes in our internal control over financial reporting during the most recent fiscal quarter that materially affected, or which are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Remediation Initiatives

We have taken the following steps to remediate the identified material weakness and to enhance our internal controls:

As previously disclosed in Part II, Item 9A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, management previously identified a material weakness for Legacy Solid Power due to deficiencies identified in the operating effectiveness of controls over financial reporting related to the review of complex transactions for proper accounting treatment as our control environment would have failed to detect the misstatement prior to the financial statement issuance.

During 2022, we implemented our previously disclosed remediation plan, which included the following remediation actions:

● Hiring additional personnel.

1 unchanged sentence

● Designing and implementing a formalized internal control framework.

Solid Power, Inc.

| 2021 Form 10-K | 81

Continuing efforts to improve and strengthen our control processes and procedures.

● Improving and strengthening our control processes and procedures.

● Working with our auditors and other outside advisors to ensure that our controls and procedures are adequate and effective.

We will continue to improve our internal controls over 2022 as we test the controls around the material weakness.

We expect to remediate the material weakness by December 31, 2022.

However, we cannot make any assurances that we will successfully remediate the material weakness within our anticipated timeframe.

See the section titled “ Risk Factors—Risks Related to Finance and Accounting—Our auditors identified a material weakness in our internal control over financial reporting as of December 31, 2021.

If we are unable to develop and maintain an effective system of internal controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our stock price, business and operating results .”

We have completed the necessary testing to conclude that the material weakness was remediated as of December 31, 2022.

Except for the material weakness remediation described above, there were no changes during the fourth quarter of 2022 that were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

1 unchanged sentence

Not applicable.

Solid Power, Inc.

| 2022 Form 10-K | 85

Directors, Executive Officers and Corporate Governance

21 unchanged sentences

Incorporated by Reference

Schedule Form

Exhibit/Annex

Business Combination Agreement and Plan of Reorganization, dated as of June 15, 2021, by and among the Company, Merger Sub and Legacy Solid Power

5 unchanged sentences

Amended and Restated Bylaws

December 13, 2021

November 21, 2022

Specimen Common Stock Certificate

4 unchanged sentences

March 26, 2021

Solid Power, Inc.

| 2021 Form 10-K | 83

Amended and Restated Registration Rights Agreement

4 unchanged sentences

Description of Securities

March 23, 2022

Solid Power, Inc.

| 2022 Form 10-K | 87

Private Placement Warrants Purchase Agreement, dated March 23, 2021, between DCRC, the Sponsor and the other purchasers named therein

30 unchanged sentences

December 13, 2021

Solid Power, Inc.

| 2021 Form 10-K | 84

Amendment No.

4 to Joint Development Agreement, dated December 20, 2022, between Legacy Solid Power and BMW of North America, LLC

December 21, 2022

Agreement for the Joint Development of Solid State Batteries for Automotive Applications between Ford Motor Company and Legacy Solid Power, dated December 28, 2018

October 13, 2021

Solid Power, Inc.

| 2022 Form 10-K | 88

Series B Preferred Stock Financing Letter Agreement between the Ford Motor Company and Legacy Solid Power, dated May 5, 2021

14 unchanged sentences

December 13, 2021

Letter Agreement with Douglas Campbell, dated August 5, 2021

December 13, 2021

Letter Agreement with David Jansen, dated August 5, 2021

December 13, 2021

Interim CEO Agreement with David Jansen, dated November 29, 2022

November 29, 2022

Letter Agreement with Derek Johnson, dated August 5, 2021

December 13, 2021

Letter Agreement with Joshua Buettner-Garrett, dated August 5, 2021

Offer Letter with James Liebscher, dated June 9, 2021

Offer Letter with Kevin Paprzycki, dated September 30, 2021

Letter Agreement with Douglas Campbell, dated August 5, 2021

December 13, 2021

Offer Letter with Jon Jacobs, dated September 26, 2021

Executive Change in Control and Severance Plan Participation Agreement with Jon Jacobs, dated December 21, 2021

March 23, 2022

Separation and Release Agreement with Jon Jacobs, dated February 10, 2023

Form of Retention Agreement, dated November 29, 2022

November 29, 2022

Lease Agreement between the Company and Red Pierce, LLC, dated November 29, 2016

2 unchanged sentences

December 13, 2021

Second Amendment to Lease Agreement by and between the Company and Red Pierce, LLC, dated December 1, 2022

December 2, 2022

Solid Power, Inc.

| 2022 Form 10-K | 89

Industrial Lease Agreement between the Company and 25 North Investors SPE1, LLC, dated September 1, 2021

2 unchanged sentences

December 17, 2021

Solid Power, Inc.

| 2021 Form 10-K | 85

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm

28 unchanged sentences

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Douglas Campbell, David Jansen, Kevin Paprzycki and James Liebscher, and each of them, as his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact, proxy and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, proxy and agent, or his or her substitute, may lawfully do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints David Jansen, Kevin Paprzycki and James Liebscher, and each of them, as his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact, proxy and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, proxy and agent, or his or her substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Chief Executive Officer and Director

Interim Chief Executive Officer, President and Director

/s/ David Jansen

(Principal Executive Officer)

/s/ Douglas Campbell

March 1, 2023

Douglas Campbell

Chief Financial Officer and Treasurer

3 unchanged sentences

Kevin Paprzycki

/s/ David Jansen

President and Director

March 23, 2022

/s/ Erik Anderson

13 unchanged sentences

John Stephens

/s/ Robert Tichio

/s/ MaryAnn Wright

March 1, 2023

Robert Tichio

MaryAnn Wright

Solid Power, Inc.

1 unchanged sentence

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 9A. Controls and Procedures