Solid Power, Inc. 10-K

Item 8. Financial Statements and Supplementary Data ​ Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 54 Consolidated Balance Sheets 57 Consolidated Statements of Operations 58 Consolidated Statements of Stockholders’ Equity 59 Consolidated Statements of Cash Flows 60 Notes to Consolidated Financial Statements 61 ​ ​ ​ Solid Power, Inc. | 2022 Form 10-K | 53 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Solid Power, Inc. ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheets of Solid Power, Inc. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders ’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “ consolidated financial statements ” ). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company ’ s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework, and our report dated March 1, 2023 expressed an unqualified opinion thereon. ​ Basis for Opinion ​ These financial statements are the responsibility of the Company ’ s management. Our responsibility is to express an opinion on the Company ’ s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ Critical Audit Matter ​ The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates. ​ Solid Power, Inc. | 2022 Form 10-K | 54 Table of Contents Valuation of Private Placement Warrant Liability ​ Description of the Matter The fair value of the Private Placement Warrant Liability at December 31, 2022, was $4.2 million. During the year ended December 31, 2022, the fair value of the Private Placement Warrant Liability decreased by $19.3 million. As discussed in Note 8 to the consolidated financial statements, the fair value of the Private Placement Warrant Liability was estimated using a Black-Scholes model that utilized various assumptions, including term, stock price, volatility, risk free rate and dividend yield. Changes to the fair value of the Private Placement Warrant Liability are included within the Consolidated Statement of Operations. The volatility assumption significantly affects the fair value of the Private Placement Warrant Liability. The volatility is estimated based on implied volatility from the Company ’ s Public Warrants and from historical volatility of select peer companies ’ common stock that matches the expected remaining life of the warrants. Auditing the fair value of the Private Placement Warrant Liability was challenging due to the judgmental nature of selecting an appropriate valuation model and the model ’ s assumptions, especially the guideline public companies used to determine the volatility assumption. How We Addressed the Matter in Our Audit To test the fair value of the Private Placement Warrant Liability, our audit procedures included, among others, assessing the appropriateness of the use of the Black-Scholes model and accuracy of the underlying calculation, including testing the assumptions used to calculate the fair value of the Private Placement Warrant Liability. We compared the term, stock price, risk free rate and dividend yield to readily available information as of the valuation date at December 31, 2022. For the volatility assumption, we assessed the suitability of the peer companies used based on the similarity of their operations to that of the Company and developed an independent range of volatility based on the implied volatility of the Company ’ s Public Warrants and historical volatilities of the similarly sized peer companies. We involved our specialists to assist us with evaluating the Black-Scholes model, as well as to perform comparative range calculations using the assumptions previously discussed. ​ /s/ Ernst & Young LLP We have served as the Company ’ s auditor since 2021. Denver, Colorado March 1, 2023 ​ ​ ​ Solid Power, Inc. | 2022 Form 10-K | 55 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Solid Power, Inc. Opinion on Internal Control Over Financial Reporting We have audited Solid Power, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework (the COSO criteria). In our opinion, Solid Power, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated March 1, 2023 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) 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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Denver, Colorado March 1, 2023 ​ Solid Power, Inc. | 2022 Form 10-K | 56 Table of Contents ​ Solid Power, Inc. Financial Statements (in thousands, except par value and number of shares) Consolidated Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 Assets ​ ​ ​ ​ ​ ​ Current Assets ​ ​ Cash and cash equivalents ​ $ 50,123 ​ $ 513,447 Marketable securities ​ ​ 272,957 ​ ​ 75,885 Contract receivables ​ 1,840 ​ 829 Prepaid expenses and other current assets ​ 2,888 ​ 4,216 Total current assets ​ 327,808 ​ 594,377 Property, Plant and Equipment, net ​ 82,761 ​ 22,082 Right-Of-Use Operating Lease Asset, net ​ ​ 7,725 ​ ​ — Right-Of-Use Financing Lease Asset, net ​ ​ 922 ​ ​ — Other Assets ​ ​ 1,148 ​ ​ 602 Long-term Investments ​ ​ 172,974 ​ ​ — Intangible Assets, net ​ 1,108 ​ 619 Total assets ​ $ 594,446 ​ $ 617,680 Liabilities and Stockholders’ Equity ​ ​ ​ Current Liabilities ​ ​ ​ Accounts payable ​ $ 10,070 ​ $ 4,326 Current portion of long-term debt ​ 7 ​ 120 Deferred revenue ​ 4,050 ​ 500 Accrued and other current liabilities: ​ ​ ​ ​ Accrued compensation ​ 4,528 ​ 1,151 Other accrued liabilities ​ 1,256 ​ 2,269 Operating lease liabilities, short-term ​ ​ 549 ​ ​ — Financing lease liability, short-term ​ ​ 273 ​ ​ — Total current liabilities ​ 20,733 ​ 8,366 Long-term Debt ​ — ​ 10 Warrant Liabilities ​ ​ 9,117 ​ ​ 50,020 Operating Lease Liabilities, Long-Term ​ ​ 8,622 ​ ​ — Financing Lease Liabilities, Long-Term ​ 602 ​ — Other Long-term Liabilities ​ — ​ 393 Deferred Taxes ​ — ​ 226 Total liabilities ​ ​ 39,074 ​ ​ 59,015 Stockholders’ Equity ​ ​ Common Stock, $ 0.0001 par value; 2,000,000,000 shares authorized; 176,007,184 and 167,557,988 shares issued and outstanding as of December 31, 2022 and 2021, respectively ​ 18 ​ 17 Additional paid-in capital ​ 577,603 ​ ​ 568,183 Accumulated deficit ​ ( 19,090 ) ​ ( 9,535 ) Accumulated other comprehensive loss ​ ​ ( 3,159 ) ​ ​ — Total stockholders’ equity ​ 555,372 ​ 558,665 Total liabilities and stockholders’ equity ​ $ 594,446 ​ $ 617,680 ​ See accompanying Notes to Consolidated Financial Statements. ​ Solid Power, Inc. | 2022 Form 10-K | 57 Table of Contents Solid Power, Inc. Financial Statements (in thousands, except number of shares and per share amounts) Consolidated Statements of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ ​ 2022 2021 2020 Revenue ​ $ 11,789 ​ $ 2,712 ​ $ 2,103 Operating Expenses ​ ​ ​ ​ ​ ​ ​ ​ Direct costs ​ ​ 9,592 ​ ​ 3,073 ​ 1,670 Research and development ​ ​ 38,592 ​ 17,102 ​ 9,594 Marketing and sales ​ ​ 3,692 ​ 3,428 ​ 1,205 General and administrative ​ ​ 19,032 ​ 5,655 ​ 1,227 Total operating expenses ​ ​ 70,908 ​ 29,258 ​ 13,696 Operating Loss ​ ​ ( 59,119 ) ​ ( 26,546 ) ​ ( 11,593 ) Nonoperating Income (Expense) ​ ​ ​ ​ ​ ​ ​ ​ Interest income ​ ​ 4,692 ​ ​ 56 ​ 28 Change in fair value of warrant liabilities ​ ​ 40,903 ​ ​ 51,233 ​ ​ — Interest expense ​ ​ ( 42 ) ​ ( 394 ) ​ ( 361 ) Other income (expense) ​ ​ 3,784 ​ ​ ( 3,602 ) ​ ​ — Loss from change in fair value of debt ​ ​ — ​ — ​ ( 437 ) Loss from change in fair value of embedded derivative liability ​ ​ — ​ ( 2,680 ) ​ ( 2,817 ) Gain on loan extinguishment ​ ​ — ​ — ​ 923 Total nonoperating income (expense) ​ ​ 49,337 ​ 44,613 ​ ( 2,664 ) Pretax Income (Loss) ​ ​ ( 9,782 ) ​ 18,067 ​ ( 14,257 ) Income tax (benefit) expense ​ ​ ( 227 ) ​ ( 25 ) ​ 118 Net Income (Loss) ​ $ ( 9,555 ) ​ $ 18,092 ​ $ ( 14,375 ) Premium paid on repurchase of redeemable convertible preferred stock ​ ​ — ​ ( 5,436 ) ​ — Net Income (Loss) Attributable to Common Stockholders ​ $ ( 9,555 ) ​ $ 12,656 ​ $ ( 14,375 ) Other Comprehensive Loss ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized loss on marketable securities ​ ​ ( 3,159 ) ​ ​ — ​ ​ — Comprehensive Income (Loss) Attributable to Common Stockholders ​ $ ( 12,714 ) ​ $ 12,656 ​ $ ( 14,375 ) Basic earnings (loss) per share ​ ​ ( 0.05 ) ​ ​ 0.13 ​ ​ ( 0.21 ) Diluted earnings (loss) per share ​ ​ ( 0.05 ) ​ ​ 0.11 ​ ​ ( 0.21 ) Weighted average shares outstanding – basic ​ ​ 174,374,386 ​ 95,477,472 ​ 69,228,444 Weighted average shares outstanding – diluted ​ ​ 174,374,386 ​ 114,910,129 ​ 69,228,444 ​ See accompanying Notes to Consolidated Financial Statements. ​ ​ Solid Power, Inc. | 2022 Form 10-K | 58 Table of Contents Solid Power, Inc. Financial Statements (in thousands, except number of shares) Consolidated Statements of Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mezzanine ​ ​ ​ ​ ​ ​ ​ Additional ​ Accumulated ​ Accumulated ​ Total Stockholders’ ​ Equity Shares Amount paid-in capital deficit OCI Equity Balance - December 31, 2019 ​ $ 29,096 ​ ​ 7,213,730 ​ ​ 1 ​ $ — ​ $ ( 16,197 ) ​ $ — ​ $ ( 16,196 ) Retroactive application of recapitalization ​ ​ ( 29,096 ) ​ ​ 61,573,943 ​ ​ 6 ​ ​ 26,145 ​ ​ 2,945 ​ ​ — ​ $ 29,096 Adjusted Balance Beginning of Period ​ $ — ​ ​ 68,787,673 ​ $ 7 ​ $ 26,145 ​ $ ( 13,252 ) ​ $ — ​ $ 12,900 Net loss ​ — ​ — ​ — ​ ​ — ​ ( 14,375 ) ​ ​ — ​ ( 14,375 ) Bank warrant issuance ​ — ​ — ​ — ​ ​ 16 ​ — ​ ​ — ​ 16 Beneficial Conversion feature on convertible debt ​ — ​ — ​ — ​ ​ 5,125 ​ — ​ ​ — ​ 5,125 Stock options exercised ​ — ​ 1,097,370 ​ — ​ ​ 24 ​ — ​ ​ — ​ 24 Stock-based compensation expense ​ — ​ — ​ — ​ ​ 182 ​ — ​ ​ — ​ 182 Balance - December 31, 2020 ​ $ — ​ ​ 69,885,043 ​ $ 7 ​ $ 31,492 ​ $ ( 27,627 ) ​ $ — ​ $ 3,872 Net income ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 18,092 ​ ​ — ​ ​ 18,092 Business Combination, net of redemptions and transaction costs of $ 47,888 ​ ​ — ​ ​ 63,039,829 ​ ​ 6 ​ ​ 394,587 ​ ​ — ​ ​ — ​ ​ 394,593 Beneficial Conversion feature on convertible debt ​ ​ — ​ ​ — ​ ​ — ​ ​ 4,875 ​ ​ — ​ ​ — ​ ​ 4,875 Redemption of Series A-1 redeemable preferred stock* ​ ​ — ​ ​ ( 1,065,432 ) ​ ​ — ​ ​ ( 6,041 ) ​ ​ — ​ ​ — ​ ​ ( 6,041 ) Issuance of Series B redeemable preferred stock net of issuance costs of $ 4,511 and settlement of associated convertible preferred stock liability* ​ ​ — ​ ​ 27,930,997 ​ ​ 3 ​ ​ 140,436 ​ ​ — ​ ​ — ​ ​ 140,439 Warrants exercised ​ ​ — ​ ​ 6,606,621 ​ ​ 1 ​ ​ 14 ​ ​ — ​ ​ — ​ ​ 15 Stock options exercised ​ ​ — ​ ​ 1,160,930 ​ ​ — ​ ​ 106 ​ ​ — ​ ​ — ​ ​ 106 Stock-based compensation expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,714 ​ ​ — ​ ​ — ​ ​ 2,714 Balance - December 31, 2021 ​ $ — ​ ​ 167,557,988 ​ $ 17 ​ $ 568,183 ​ $ ( 9,535 ) ​ $ — ​ $ 558,665 Net loss ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 9,555 ) ​ ​ — ​ ​ ( 9,555 ) Withholding of Employee taxes related to stock-based compensation ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 58 ) ​ ​ — ​ ​ — ​ ​ ( 58 ) Shares issued for the vesting of restricted stock units ​ ​ — ​ ​ 20,672 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ​ Stock options exercised ​ ​ — ​ ​ 8,428,524 ​ ​ 1 ​ ​ 818 ​ ​ — ​ ​ — ​ ​ 819 Transaction costs ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 12 ) ​ ​ — ​ ​ — ​ ​ ( 12 ) Unrealized loss on marketable securities ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 3,159 ) ​ ​ ( 3,159 ) Stock-based compensation expense ​ ​ — ​ ​ — ​ ​ — ​ ​ 8,672 ​ ​ — ​ ​ — ​ ​ 8,672 Balance - December 31, 2022 ​ $ — ​ ​ 176,007,184 ​ $ 18 ​ $ 577,603 ​ $ ( 19,090 ) ​ $ ( 3,159 ) ​ $ 555,372 ​ * All outstanding shares of Legacy Solid Power’s preferred stock were exchanged for shares of Solid Power common stock at the closing of the business combination See accompanying Notes to Consolidated Financial Statements. ​ ​ Solid Power, Inc. | 2022 Form 10-K | 59 Table of Contents Solid Power, Inc. Financial Statements (in thousands, except par value, share amounts, and per share amounts) Consolidated Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2022 2021 2020 Cash Flows from Operating Activities ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ ( 9,555 ) ​ $ 18,092 ​ $ ( 14,375 ) Adjustments to reconcile net income (loss) to net cash and cash equivalents from operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 5,176 ​ 2,360 ​ 2,067 Amortization of right-of-use assets ​ ​ 745 ​ ​ — ​ ​ — Loss on sale of property, plant and equipment ​ ​ 11 ​ 11 ​ 7 (Gain) on extinguishment of debt ​ ​ — ​ — ​ ( 923 ) Stock compensation expense ​ ​ 8,672 ​ 2,714 ​ 182 Stock warrant issuance ​ ​ — ​ — ​ 16 Deferred taxes ​ ​ ( 227 ) ​ ( 25 ) ​ 118 Change in fair value of warrant liabilities ​ ​ ( 40,903 ) ​ ​ ( 51,233 ) ​ ​ — Amortization of premiums and accretion of discounts on marketable securities ​ ​ ( 3,118 ) ​ ​ — ​ ​ — Accrued interest on convertible notes payable to be paid in kind ​ ​ — ​ 263 ​ 165 Non-cash interest expense on convertible notes payable ​ ​ — ​ — ​ 437 Loss from change in fair value of embedded derivative liability ​ ​ — ​ 2,680 ​ 2,817 Change in operating assets and liabilities that provided (used) cash and cash equivalents: ​ ​ ​ ​ ​ ​ ​ Contract receivable ​ ​ ( 1,012 ) ​ ( 552 ) ​ ( 248 ) Due from related party ​ ​ — ​ — ​ 244 Prepaid expenses and other assets ​ ​ 2,687 ​ ( 3,865 ) ​ 23 Accounts payable ​ ​ ( 94 ) ​ 778 ​ ( 120 ) Deferred revenue ​ ​ 3,550 ​ 462 ​ ( 421 ) Accrued and other liabilities ​ ​ 645 ​ 2,801 ​ 77 Operating lease liability ​ ​ ( 401 ) ​ ​ — ​ ​ — Deferred rent ​ ​ — ​ 74 ​ ( 61 ) Net cash and cash equivalents used in operating activities ​ ​ ( 33,824 ) ​ ( 25,440 ) ​ ( 9,995 ) Cash Flows from Investing Activities ​ ​ ​ ​ ​ ​ ​ Purchases of property, plant and equipment ​ ​ ( 58,296 ) ​ ( 12,617 ) ​ ( 1,020 ) Purchases of marketable securities and long-term investments ​ ​ ( 561,565 ) ​ ( 75,885 ) ​ — Proceeds from sales of marketable securities ​ ​ 190,374 ​ ​ — ​ ​ — Purchases of intangible assets ​ ​ ( 498 ) ​ ( 381 ) ​ ( 40 ) Net cash and cash equivalents used in investing activities ​ ​ ( 429,985 ) ​ ( 88,883 ) ​ ( 1,060 ) Cash Flows from Financing Activities ​ ​ ​ ​ ​ ​ ​ Proceeds from debt ​ ​ — ​ 960 ​ 923 Payments of debt ​ ​ ( 121 ) ​ ( 3,557 ) ​ ( 676 ) Proceeds from issuance of convertible note payable ​ ​ — ​ 4,875 ​ 5,125 Proceeds from exercise of common stock options ​ ​ 818 ​ 106 ​ 23 Proceeds from exercise of common stock warrants ​ ​ — ​ ​ 15 ​ — Proceeds from issuance of Series B preferred stock ​ ​ — ​ ​ 135,579 ​ ​ — Preferred stock issuance costs ​ ​ — ​ ​ ( 4,511 ) ​ ​ — Redemption of preferred stock ​ ​ — ​ ​ ( 6,041 ) ​ ​ — Cash paid for withholding of employee taxes related to stock-based compensation ​ ​ ( 58 ) ​ ​ — ​ ​ — Payments on finance lease liability ​ ​ ( 142 ) ​ ​ — ​ ​ — Business Combination, net of transaction costs ​ ​ — ​ ​ 495,370 ​ ​ — Transaction costs ​ ​ ( 12 ) ​ ​ — ​ ​ — Net cash and cash equivalents provided by financing activities ​ ​ 485 ​ ​ 622,796 ​ ​ 5,395 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (decrease) increase in cash and cash equivalents ​ ​ ( 463,324 ) ​ ​ 508,473 ​ ​ ( 5,660 ) Cash and cash equivalents at beginning of period ​ ​ 513,447 ​ ​ 4,974 ​ ​ 10,634 Cash and cash equivalents at end of period ​ ​ 50,123 ​ ​ 513,447 ​ ​ 4,974 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental information ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 42 ​ $ 144 ​ $ 351 Accrued capital expenditures ​ $ 7,561 ​ $ — ​ $ — Net assets acquired in Business Combination ​ $ — ​ $ ( 100,697 ) ​ $ — Gain on extinguishment of PPP loan ​ $ — ​ $ — ​ $ ( 923 ) ​ See accompanying Notes to Consolidated Financial Statements. ​ ​ Solid Power, Inc. | 2022 Form 10-K | 60 Table of Contents Notes to Consolidated Financial Statements Note 1 – Nature of Business Solid Power, Inc. (the “Company”) is developing solid state battery technology to enable the next generation of batteries for the fast-growing EV and other markets. The Company’s planned business model is to sell its sulfide-based solid electrolyte and to license its solid-state cell designs and manufacturing processes. For the years ended December 31, 2022, 2021, and 2020, the Company has not derived material revenue from its principal business activities. On December 8, 2021 (the “Closing Date”), the Company (f/k/a Decarbonization Plus Acquisition Corporation III (“DCRC”)) consummated its previously announced business combination pursuant to the Business Combination Agreement and Plan of Reorganization, dated June 15, 2021 (as amended, the “Business Combination Agreement”), among the Company, DCRC Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of DCRC (“Merger Sub”), and Solid Power Operating, Inc., a Colorado corporation (f/k/a Solid Power, Inc., “Legacy Solid Power”). Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into Legacy Solid Power, with Legacy Solid Power surviving the merger as a wholly owned subsidiary of the Company (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). Note 2 – Significant Accounting Policies Basis of Presentation and Principles of Consolidation The Consolidated Financial Statements of the Company have been prepared on the basis of generally accepted accounting principles in the United States (“GAAP”). The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements. Actual results could differ from those estimates. All amounts presented in the footnotes are in thousands, except share and per share amounts. Pursuant to the Business Combination Agreement, the merger between Merger Sub and Legacy Solid Power was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”). Under this method of accounting, DCRC was treated as the “acquired” company and Legacy Solid Power is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Legacy Solid Power issuing stock for the net assets of DCRC, accompanied by a recapitalization. The net assets of DCRC are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities, and results of operations prior to the Reverse Recapitalization are those of Legacy Solid Power. The shares and corresponding capital amounts and losses per share, prior to the Business Combination, have been retroactively restated based on the Exchange Ratio (defined below). The Consolidated Financial Statements include accounts of the Company and its wholly owned subsidiary, Solid Power Operating, Inc. All intercompany balances and transactions have been eliminated in consolidation. The accompanying Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern. Segment Reporting The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented as a single entity for purposes of making operating decisions, allocating resources, and evaluating financial performance. Solid Power, Inc. | 2022 Form 10-K | 61 Table of Contents Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and contingencies at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting periods. Estimates made by the Company include, but are not limited to, those related to the valuation of common stock prior to the Business Combination, valuation of stock warrants, and useful lives of long-term assets, among others. The Company bases these estimates on historical experience and other assumptions that it believes are reasonable under the circumstances. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2022 and periodically throughout the year, the Company’s cash accounts exceeded federally insured limits. Marketable Securities The Company’s investment policy is consistent with the definition of available-for-sale securities. The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Company’s policy is focused on the preservation of capital, liquidity, and return. From time to time, the Company may sell certain securities, but the objectives are not to generate profits on short-term differences in price. These securities are carried at estimated fair value with unrealized holding gains and losses included in other comprehensive loss in stockholders’ deficit until realized. Gains and losses on marketable security transactions are reported on the specific-identification method. Dividend and interest income are recognized when earned. Contract Receivables Contract receivables consist of amounts due from government entities and commercial contractors. Management considers all contract receivables collectible, and therefore, an allowance for doubtful accounts has not been recorded as of December 31, 2022 and 2021. Included within contract receivables are amounts for work performed but not billed as of December 31, 2022 and 2021, shown below. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 Contract receivables not billed ​ $ 1,083 ​ $ 310 ​ Credit Risk and Major Customers Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents, marketable securities, and long-term investments. The Company seeks to mitigate its credit risk with respect to cash and cash equivalents, marketable securities, and long-term investments by making deposits with several large, reputable financial institutions and investing in high credit rated instruments. The Company grants credit in the normal course of business to government entities and commercial contractors in the United States. The Company periodically performs credit analyses and monitors the financial condition of its customers to reduce credit risk. The Company performs ongoing credit evaluations of its customers, but generally does not require collateral to support contract receivables. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2022 2021 2020 Revenue Concentration ​ ​ ​ ​ Number of Customers ​ 4 4 3 ​ Related Total Revenue Percentage 82 % 87 % 81 % Contract Receivable Concentration ​ Number of Customers 2 2 1 ​ Related Contract Receivables Percentage 40 % 58 % 18 % ​ Solid Power, Inc. | 2022 Form 10-K | 62 Table of Contents Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist primarily of security deposits, prepaid Directors and Officers insurance and other minor miscellaneous expenses paid in advance. Property and Equipment Property and equipment are recorded at cost. The Company capitalizes property and equipment with useful lives exceeding one year. Assets are depreciated over their estimated useful lives. The straight-line method is used for computing depreciation and amortization. Depreciation and amortization expenses are recorded within the Direct costs and Research and development line items in the Consolidated Statements of Operations. Cost of maintenance and repairs are charged to expense when incurred. Construction in progress related to specialized equipment will be reclassified as Property and equipment and depreciated, once placed in service. ​ ​ ​ ​ ​ Depreciable Life - Years Commercial production equipment ​ 5 years Laboratory equipment ​ 5 years Furniture and Computer Equipment 3 - 7 years Leasehold improvements Lesser of asset life or lease term ​ Long-Term Investments The Company considers all investments with an original maturity of twelve months or more when purchased to be long-term investments. Intangible Assets Intangible assets consist of licenses and costs incurred for pending patents and pending trademarks. Licenses consist of rights to use patents and are amortized over their estimated useful life of three to 20 years . Patent and trademark costs are amortized over an estimated useful life upon award by the United States Patent and Trademark Office or expensed if the Company is unsuccessful in securing an issued patent. Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment if events or circumstances indicate an impairment may have occurred at least annually. Deferred Rent Prior to the adoption of ASU No. 2016-02, Leases (Topic 842) on January 1, 2022, the Company had entered into operating lease agreements for each of its two facilities, each of which contain provisions for future rent increases or periods in which rent payments are reduced. The Company records monthly rent expense equal to the total of the payments due over the lease term, divided by the number of months of the lease term. The difference between rent expense recorded and the amount paid is credited or charged to deferred rent, which is reflected in Other Long-term Liabilities in the accompanying Consolidated Balance Sheets. Deferred rent also includes the unamortized portion of landlord-financed tenant improvement allowances, which are amortized on a straight-line basis over the lease term as a reduction in rent expense. Leases The Company accounts for its leases under ASU No. 2016-02, Leases (Topic 842). Under this guidance, the Company classifies contracts meeting the definition of a lease as operating or financing leases, and leases are recorded on the condensed consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the right-of-use asset results in front-loaded expense over the lease term. Variable lease expenses, including common maintenance fees, insurance and property tax, are recorded when incurred. Solid Power, Inc. | 2022 Form 10-K | 63 Table of Contents In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components for all classes of assets. The Company excludes short-term leases having initial terms of 12 months or less as an accounting policy election, and instead recognizes rent expense on a straight-line basis over the lease term. Stock-based Compensation The Company recognizes expenses for employee services received in exchange for stock-based compensation based on the grant date fair value of the awards. The determination of the estimated fair value of stock-based payment awards on the date of grant using the Black-Scholes option-pricing model is affected by the Company’s stock price, as well as assumptions regarding risk-free rate, dividend yield, and the historical volatility of comparable entities. Stock-based compensation is recorded as an expense only for those awards that are expected to vest. Compensation cost is recognized on a straight-line basis over the requisite vesting service period and is allocated ratably within Operating Expenses in the Consolidated Statements of Operations. Revenue The Company records the elements of its joint development agreements that represent joint operating activities in accordance with Accounting Standards Codification (ASC) Topic 808, Collaborative Arrangements. Accordingly, the elements of the joint development agreements that represent activities in which both parties are active participants and to which both parties are exposed to the significant risks and rewards that are dependent on the commercial success of the activities are recorded as collaborative arrangements. The Company considers the guidance in ASC 606-10-15, Revenue from Contracts with Customers – Scope and Scope Exceptions, in determining the appropriate treatment for the transactions between the Company and its partners and the transactions between the Company and third parties. Generally, the classification of transactions under the joint development agreements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. The Company recognizes collaborative revenue from cost contracts on the basis of costs incurred during the period and cost plus fixed-fee contracts on the basis of costs incurred during the period plus the fee earned. Contract costs include all direct labor, subcontract, material, and indirect costs related to the contract performance that are allowable under contract provisions. Unbilled receivables are included in contract receivables and represent revenue recognized for which billings have not yet been presented to customers. Deferred revenue represents billings in advance of revenue recognized. Deferred revenue as of December 31, 2022 and 2021 was $ 4,050 and $ 500 , respectively. Beneficial Conversion Feature and Embedded Derivatives The beneficial conversion feature (the “BCF”) of a convertible note is normally characterized as the convertible portion or feature of certain notes payable that provide a rate of conversion that is below market value or in-the-money when issued. For convertible debt where the rate of conversion is below market value, the Company records a BCF and related debt discount. When Legacy Solid Power recorded a BCF, the intrinsic value of the BCF was recorded in equity to Additional paid-in capital and the difference between the debt proceeds and the BCF was a debt discount against the face amount of the respective debt instrument and amortized to interest expense over the life of the debt. A separate embedded derivative was recognized as a derivative liability that was subsequently adjusted to fair value at each Consolidated Balance Sheet date. Embedded derivatives that are required to be bifurcated from the underlying debt instrument (i.e., host) are accounted for and valued as separate financial instruments. Legacy Solid Power evaluated the terms and features of its 2020 convertible promissory notes (as defined below) and identified embedded derivatives requiring bifurcation and accounting at fair value, using the valuation techniques mentioned in the Fair Value Measurements section of this Note, because the economic and contractual characteristics of the embedded derivatives met the criteria for bifurcation and separate accounting due to the instruments containing mandatory redemption features that were not clearly and closely related to the debt host instrument. Warrant Liabilities The Company accounts for warrants as liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. Warrants recorded as liabilities are recorded at their fair value, within Warrant Liabilities on the Consolidated Balance Sheets and are remeasured on each reporting date with changes recorded in Change in fair value of warrant liabilities on the Company’s Consolidated Statements of Operations. Solid Power, Inc. | 2022 Form 10-K | 64 Table of Contents Fair Value Measurements The Company applies fair value accounting for selected financial assets and liabilities measured on a recurring and nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance ASC Topic 820 Fair Value Measurement established a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, used to determine the fair value of its financial instruments. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Level 1 – inputs include quoted market prices in an active market for identical assets or liabilities. Level 2 – inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. Level 3 – inputs are unobservable and corroborated by little or no market data. Research and Development Research and development expenditures of approximately $ 38,592 , $ 17,102 and $ 9,594 in 2022, 2021 and 2020, respectively, were charged to expense as incurred. Income Taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the Consolidated Financial Statements or tax returns. Deferred tax liabilities and assets are determined based on the differences between the Consolidated Financial Statements and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by the amount of any uncertain tax positions or tax benefits that are not expected to be realized based on available evidence. The Company records deferred tax assets and associated valuation allowances, when appropriate, to reflect amounts more likely than not to be realized based upon Company analysis. The Company’s temporary differences result primarily from capitalization of certain qualifying research and development expenses, accruals and reserves, depreciation of property and equipment, stock compensation expense, capitalization of operating or financing leases, and net operating loss carryovers. The Company accounts for any uncertainty in income taxes by recognizing the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company measures the tax benefits recognized in the Consolidated Financial Statements from such a position based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution. Interest and penalties associated with tax positions are recorded in the period assessed as General and administrative on the Consolidated Statement of Operations. No interest or penalties have been assessed during the years ended December 31, 2022, 2021 and 2020. Net Earnings (Loss) per Share of Common Stock Basic net earnings (loss) per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share adjusts basic earnings per share for the potentially dilutive impact of stock options and warrants. The Company reported a net loss in 2022 and 2020. As such all potentially dilutive securities including options and warrants, are antidilutive and accordingly, basic net loss per share equals diluted loss per share. As the Company reported net income in 2021, diluted earnings per share reflected any dilutive effect of stock options and warrants. Solid Power, Inc. | 2022 Form 10-K | 65 Table of Contents Mezzanine Equity In accordance with ASC 480, Legacy Solid Power’s Series A-1 Preferred Stock and Series B Preferred Stock (collectively, “Preferred Stock”) prior to the Business Combination were classified as mezzanine equity as the Preferred Stock included redemption features that were not solely within control of Legacy Solid Power. Immediately prior to the consummation of the Business Combination, 14,069,187 shares of Legacy Solid Power Series A-1 Preferred Stock and 8,777,812 shares of Legacy Solid Power Series B Preferred Stock, which represented all of the then-outstanding shares of Preferred Stock, converted to Legacy Solid Power common stock on a one -to-one basis. At the Closing (as defined below), all shares of Legacy Solid Power common stock were exchanged for shares of Solid Power Common Stock based on the Exchange Ratio. Recent Accounting Pronouncements Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), followed by other related ASUs that provided targeted improvements and additional practical expedient options. On January 1, 2022, the Company adopted the standards under Topic 842 using the modified retrospective method and elected a number of the practical expedients in its implementation of Topic 842. The key change that affected the Company relates to accounting for operating leases for which it is the lessee that were historically off-balance sheet. The impact of adopting the standards resulted in the recognition of a right-of-use asset of $ 7,853 and lease liability of $ 8,246 on the Company’s condensed consolidated balance sheet on January 1, 2022, exclusive of previously recognized lease balances. The implementation of Topic 842 did not have a material effect on the Company’s condensed consolidated statement of operations or condensed consolidated statement of cash flows for the year ended December 31, 2022. Financial Instruments In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. ASU 2016-13 also provides updated guidance regarding the impairment of available-for-sale debt securities and includes additional disclosure requirements. The Company adopted this guidance as of January 1, 2022. The Company regularly reviews its available-for-sale marketable securities and evaluates the current expected credit losses by considering factors such as any changes in credit ratings, historical experience, market data, issuer-specific factors, and current economic conditions. Based on this analysis, an allowance for credit losses is recorded as a reduction to the carrying value of the asset. To date, management has not recorded an allowance for credit losses. The Company reviews its receivable aging on an individual customer level, considering collectability of cash flows based on the risk of past events, current conditions, and forward-looking information. The Company establishes allowances for bad debts equal to the estimable portions of accounts receivable for which failure to collect is expected to occur. Allowances for doubtful accounts are recorded as reductions to the carrying values of the related receivables. To date, the Company has not recorded an allowance for doubtful accounts. Income taxes In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which aims to reduce complexity in accounting standards by improving certain areas of GAAP without compromising information provided to users of financial statements. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company adopted this guidance beginning January 1, 2022 with no financial statement impact at adoption. Solid Power, Inc. | 2022 Form 10-K | 66 Table of Contents Note 3 – Business Combination Legacy Solid Power was deemed the accounting acquirer in the Business Combination based on the analysis of the criteria outlined in ASC 805. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Solid Power issuing stock for the net assets of DCRC, accompanied by a recapitalization. The net assets of DCRC are stated at historical cost, with no goodwill or other intangible assets recorded. Because Legacy Solid Power was deemed the accounting acquirer, the historical Consolidated Financial Statements of Legacy Solid Power became the historical Consolidated Financial Statements of the combined company. As a result, the Consolidated Financial Statements included in this report reflect (i) the historical operating results of Legacy Solid Power prior to the Business Combination; (ii) the combined results of the Company and Legacy Solid Power following the closing of the Business Combination (“Closing”); (iii) the assets and liabilities of Legacy Solid Power at their historical cost; and (iv) the Company’s equity structure for all periods presented as discussed below. In accordance with guidance applicable to the Business Combination, the equity structure has been restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company’s Common Stock, $ 0.0001 par value per share issued to Legacy Solid Power’s stockholders in connection with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Solid Power redeemable convertible preferred stock and common stock prior to the Business Combination have been retroactively restated to reflect the Exchange Ratio. Activity within the Consolidated Statements of Stockholders’ Equity for the issuances and repurchases of Legacy Solid Power’s redeemable convertible preferred stock were also retroactively converted to Legacy Solid Power common stock. In connection with the Closing, and subject to the terms and conditions of the Business Combination Agreement, each outstanding share of Legacy Solid Power’s common stock (including shares of Legacy Solid Power common stock issued upon the conversion of each share of Legacy Solid Power’s Preferred Stock immediately prior to the Closing) was canceled and converted into the right to receive the number of shares of the Company’s Common Stock (as defined below) based on an Exchange Ratio equal to approximately 3.182 (the “Exchange Ratio”), and each outstanding Legacy Solid Power option issued under Legacy Solid Power’s 2014 Equity Incentive Plan (the “2014 Plan”) was converted into a Company option based on the Exchange Ratio applicable to shares of Legacy Solid Power common stock, each in accordance with the terms of the Business Combination Agreement. At the Closing, the Company issued an aggregate of 104,518,159 shares of Common Stock to the equity-holders of Legacy Solid Power and the Legacy Solid Power option-holders’ held options in the Company to receive an aggregate 34,407,949 shares of Common Stock, subject to payment of the applicable exercise price and, in certain circumstances, vesting obligations. Furthermore, in connection with the Business Combination, (i) all shares of DCRC’s Class A common stock prior to the Business Combination were re-designated as “Common Stock, par value $ 0.0001 per share” of the Company (“Common Stock”) and (ii) all 40,000 shares of DCRC’s Class B common stock were converted, on a one -for-one basis, into an equivalent number of shares of the Company’s Common Stock. On the Closing Date, a number of purchasers, purchased from DCRC an aggregate of 19,500,000 shares of the Company’s Common Stock, for a purchase price of $ 10.00 per share and an aggregate purchase price of $ 195,000 (the “PIPE Financing”), pursuant to separate subscription agreements (each, a “Subscription Agreement”) entered into on June 15, 2021 or October 27, 2021. Prior to the Closing, DCRC had $ 1,500 outstanding under working capital loans from Decarbonization Plus Acquisition Sponsor III LLC (the “Sponsor”), which, in connection with the Closing, the Sponsor elected to convert into warrants to purchase 1,000,000 shares of Common Stock at a price of $ 1.50 per share, which are included in the 7,666,667 Private Placement Warrants (as defined below). Pursuant to the Business Combination Agreement, the Merger was accounted for as a Reverse Recapitalization in accordance with GAAP. Under this method of accounting, DCRC was treated as the “acquired” company and Legacy Solid Power is treated as the acquirer for financial reporting purposes. The following table reconciles the elements of the Business Combination to the Consolidated Statements of Cash Flows and the Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2021: ​ Solid Power, Inc. | 2022 Form 10-K | 67 Table of Contents ​ ​ ​ ​ ​ Recapitalization Cash – DCRC trust and cash, net of redemptions ​ $ 347,914 Cash – PIPE Financing ​ 195,000 Cash – Sponsor Funds ​ 264 Non-cash net assets acquired from DCRC ​ ( 100,697 ) Less: transaction costs and advisory fees for Legacy Solid Power allocated to equity ​ ( 5,991 ) Less: transaction costs and advisory fees for DCRC ​ ( 41,897 ) Net Business Combination ​ $ 394,593 Add: non-cash net assets acquired from DCRC ​ 100,697 Add: accrued transaction costs and advisory fees ​ 80 Net cash contributions from Business Combination ​ $ 495,370 ​ Non-cash net assets acquired from DCRC include the fair value of acquired Common Stock warrants of ($ 101,253 ). The following table sets forth the number of shares of Common Stock outstanding immediately following the consummation of the Business Combination: ​ ​ ​ ​ ​ Number of Shares DCRC Class A common stock outstanding prior to Business Combination 43,710,000 DCRC Class B common stock outstanding prior to Business Combination 40,000 Less: redemption of DCRC Class A common stock ( 210,171 ) Shares of Common Stock issued in PIPE Financing 19,500,000 Shares of Common Stock issued to Legacy Solid Power stockholders 104,518,159 Total shares of Common Stock outstanding immediately after Business Combination 167,557,988 ​ ​ Note 4 – Property, Plant and Equipment Property, plant and equipment at December 31 are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Commercial production equipment ​ $ 21,595 ​ $ 9,139 Laboratory equipment ​ ​ 3,278 ​ ​ 1,316 Leasehold improvements ​ 27,996 ​ 4,674 Furniture and computer equipment ​ 1,482 ​ 737 Construction in progress ​ 40,036 ​ 12,684 Total cost ​ 94,387 ​ 28,550 Accumulated depreciation ​ ( 11,626 ) ​ ( 6,468 ) Net property and equipment ​ $ 82,761 ​ $ 22,082 ​ Depreciation expenses are allocated ratably across operating expenses on the accompanying Consolidated Statements of Operations. Depreciation expenses for dedicated laboratory equipment and commercial production equipment are charged to research and development; other depreciation expenses are included in the Company’s overhead and are allocated across operating expenses on the accompanying Consolidated Statements of Operations based on Company personnel costs incurred. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ Depreciation expense ​ $ 5,167 ​ $ 2,351 ​ $ 2,066 ​ In 2022, the Company expanded its cell production capabilities through the construction of a second dry room and installation of a second cell pilot production line at its Louisville, Colorado facility, which is designed to produce larger format solid-state battery cells for the automotive qualification process. Solid Power, Inc. | 2022 Form 10-K | 68 Table of Contents The Company is expanding its electrolyte production to a second location in Thornton, Colorado. Scaling this production will allow it to produce larger quantities of electrolyte material required to feed cell-production lines and continue research and development efforts. The Company expects to begin producing electrolyte from this facility in 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 Construction in progress ​ ​ Louisville, Colorado – 2 nd cell pilot line ​ $ 2,010 ​ $ 6,875 Louisville, Colorado – Other capital projects ​ 2,206 ​ — Thornton, Colorado – Increased scale electrolyte production ​ 35,820 ​ 943 ​ ​ Note 5 – Intangible Assets Intangible assets of the Company at December 31 are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 ​ ​ Gross Carrying ​ Accumulated ​ Gross Carrying ​ Accumulated ​ Amount Amortization Amount Amortization Intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Licenses ​ $ 149 ​ $ ( 51 ) ​ $ 149 ​ $ ( 42 ) Patents pending ​ 984 ​ — ​ 503 ​ — Trademarks and trademarks pending ​ 26 ​ — ​ 9 ​ — Total amortized intangible assets ​ $ 1,159 ​ $ ( 51 ) ​ $ 661 ​ $ ( 42 ) ​ Amortization expense for intangible assets totaled $ 9 for the years ended December 31, 2022, 2021 and 2020. Useful lives of intangible assets range from three to 20 years . Amortization expenses are allocated ratably across operating expenses on the accompanying condensed consolidated statements of operations. Note 6 – Long-term Debt Long-term debt at December 31 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 Various equipment notes payable to banks in monthly installments ranging from $ 1 to $ 2 , including interest at 6.255 percent to 12.18 percent maturing from April 2022 through April 2023. The notes are collateralized by the financed equipment. ​ $ 7 ​ $ 130 Total ​ 7 ​ 130 Less current portion ​ 7 ​ 120 Long-term portion ​ $ — ​ $ 10 ​ The remaining balance of debt is all short-term. The Company anticipates paying off the remaining balance in the subsequent year. Note Payable On December 7, 2021, prior to the Closing, the Company used available cash to pay off the outstanding balance and remaining fees of a note payable to a commercial bank. The Company was in compliance with all financial covenants through the loan payoff on December 7, 2021. Interest expense on long-term debt for the years ended December 31, 2022, 2021 and 2020 was $ 6 , $ 131 and $ 196 , respectively. Solid Power, Inc. | 2022 Form 10-K | 69 Table of Contents Note 7 – Convertible Notes Payable 2020 Convertible Promissory Notes On December 10, 2020 and December 18, 2020, the Company issued unsecured convertible promissory notes to investors in the total principal amount of $ 5,125 , and on February 4, 2021, and March 1, 2021, the Company issued additional unsecured convertible promissory notes to investors in the total principal amount of $ 4,875 , as part of a single financing (collectively, the “2020 Notes”). The 2020 Notes accrued interest at eight percent per annum. The 2020 Notes were converted into 1,007,965 shares of Legacy Solid Power Series B Preferred Stock on May 5, 2021, in conjunction with the closing of the Legacy Solid Power Series B Preferred Stock (“Series B Financing”). The outstanding balance on the 2020 Notes, including accrued interest, was $ 10,228 when the 2020 Notes were converted to Legacy Solid Power Series B Preferred Stock. Interest expense for 2021 was $ 210 for the 2020 Notes. The principal of the 2020 Notes was included in Additional paid-in capital and the fair value of the embedded derivative was recorded as a liability on the Legacy Solid Power’s Consolidated Balance Sheet. The fair value of the embedded derivative was $ 5,497 . This balance was transferred, along with the accrued interest, to mezzanine equity upon conversion of the 2020 Notes to Series B Preferred Stock in conjunction with the Series B Financing. 2020 Convertible Promissory Notes Embedded Derivative The 2020 Notes contained the following embedded derivatives: (i) a share settled redemption upon Qualified Financing; (ii) share settled redemption upon De-SPAC and; (iii) share settled redemption at maturity. Embedded derivatives are separated from the host contract and carried at fair value when: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (b) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. The Company has concluded that certain embedded derivatives within the 2020 Notes meet these criteria and, as such, must be valued separate and apart from the 2020 convertible promissory notes as one embedded derivative and recorded at fair value each reporting period. 2019 Convertible Promissory Notes On December 4, 2019, the Company issued an unsecured convertible promissory note to an investor in the principal amount of $ 3,000 (the “2019 Note,” and together with the 2020 Notes, the “Convertible Promissory Notes”). The 2019 Note accrued interest at 5 percent per annum. The 2019 Note converted into 254,899 shares of Legacy Solid Power Series B Preferred Stock, in conjunction with the Series B Financing. Upon this conversion, the 2019 Note converted to Series B Preferred Stock at a 30 percent discount. Interest expense incurred for the year ended December 31, 2020 was $ 150 . Prior to conversion, interest expense incurred for the year ended December 31, 2020 was $ 53 . For all debt instruments, including any for which the Company has elected fair value accounting, the Company classifies interest that has been accrued during each period as Interest expense on the Consolidated Statements of Operations. ​ Note 8 – Fair Value Measurements The Company considers all highly liquid instruments with original maturities of less than 90 days to be cash equivalents. As of December 31, 2022, there were no long-term marketable securities. The carrying amounts of certain financial instruments, such as cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities. The fair value of debt instruments for which the Company has not elected fair value accounting is based on the present value of expected future cash flows and assumptions about the then-current market interest rates as of the reporting period and the creditworthiness of the Company. The book values of the Company’s long-term debt approximate fair value because interest rates charged are similar to other financial instruments with similar terms and maturities and the rates vary in accordance with a market index. Most of the Company’s debt is carried on the Consolidated Balance Sheets on a historical cost basis net of unamortized discounts and premiums because the Company has not elected the fair value option of accounting. Changes to the inputs used in these valuation models can have a significant impact on the estimated fair value of the Convertible Promissory Notes and the Company’s embedded derivatives. Solid Power, Inc. | 2022 Form 10-K | 70 Table of Contents Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis As discussed in Note 7, all Convertible Promissory Notes were converted to Legacy Solid Power Series B Preferred Stock in May 2021. As of December 31, 2022 and 2021, the Company’s financial liabilities measured and recorded at fair value on a recurring basis were classified within the fair value hierarchy as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Level 1 Level 2 Level 3 Total Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Paper ​ $ 165,179 ​ $ — ​ $ — ​ $ 165,179 Corporate Bonds ​ $ 227,957 ​ $ — ​ $ — ​ $ 227,957 Government Bonds ​ $ 42,865 ​ $ — ​ $ — ​ $ 42,865 U.S. Treasuries ​ 9,930 ​ ​ — ​ ​ — ​ 9,930 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Public Warrants ​ $ 4,900 ​ $ — ​ $ — ​ $ 4,900 Private Warrants ​ $ — ​ $ 4,217 ​ $ — ​ $ 4,217 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ Level 1 Level 2 Level 3 Total Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Paper ​ $ 33,275 ​ $ — ​ $ — ​ $ 33,275 Corporate Bonds ​ $ 39,593 ​ $ — ​ $ — ​ $ 39,593 Government Bonds ​ $ 3,017 ​ $ — ​ $ — ​ $ 3,017 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Public Warrants ​ $ 26,483 ​ $ — ​ $ — ​ $ 26,483 Private Warrants ​ $ — ​ $ 23,537 ​ $ — ​ $ 23,537 ​ The change in fair value of the Company’s marketable securities is included in Other Comprehensive loss. There were no transfers in and out of Level 3 fair value hierarchy during the years ended December 31, 2022 and 2021. For the year ended December 31, 2022 the Company purchased $ 561,565 of marketable securities. Fair Value Methodology 2020 Notes Embedded Derivative The fair value of the 2020 Notes was estimated using the present value of probability weighted scenario analysis, considering the as-converted value and the downside protection. The embedded derivative is valued using a “with-and-without method,” where the value of the 2020 Notes, including the embedded derivative, is defined as the “with”, and the value of the 2020 Notes, excluding the embedded derivative, is defined as the “without.” This method estimates the value of the embedded derivative by comparing the difference in the values between the 2020 Notes with the embedded derivative and the value of the 2020 Notes, without the embedded derivative. The probability weighted scenario analysis requires the following inputs: (i) probability of qualified financing, maturity, and other contingent scenarios; (ii) equity value; (iii) conversion price; (iv) maturity date; (v) risk-free interest rate; and (vi) estimated volatility. The changes during the twelve months ended December 31, 2021 in the fair values of the embedded derivatives are primarily related to the change in the value of the conversion features and are reflected in the Consolidated Statements of Operations as “Loss from change in fair value of embedded derivative liability.” The embedded derivative liability was settled as of December 31, 2021. Solid Power, Inc. | 2022 Form 10-K | 71 Table of Contents Fair Value of Debt - 2019 Note The 2019 Note was converted to Legacy Solid Power Series B Preferred Stock in May 2021. At December 31, 2020, the contractual outstanding principal of the 2019 Note was $ 3,000 , and the fair value was $ 3,612 . The fair value was estimated using the present value of probability weighted scenario analysis, considering the as-converted value and the downside protection. The probability weighted scenario analysis requires the following inputs: (i) probability of qualified financing, maturity and other contingent scenarios; (ii) equity value; (iii) conversion price; (iv) maturity date; (v) risk-free interest rate; and (vi) estimated volatility. Fair Value of Common Stock Warrant Liabilities The fair value of the Private Placement Warrant Liabilities have been estimated using a Black-Scholes model as of the Closing Date and subsequently as of the December 31, 2022 and 2021 Consolidated Balance Sheet dates. The fair value of the Public Warrants (defined below) has been measured based on the quoted price of such warrants on the Nasdaq Stock Market, a Level 1 input. The estimated fair value of the Private Placement Warrants (defined below) is determined using Level 2 inputs. Inherent in a Black-Scholes model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. Material increases (or decreases) in any of those inputs may result in a significantly higher (or lower) fair value measurement. The Company estimates the volatility of its Private Placement Warrants based on implied volatility from the Company’s Public Warrants and from historical volatility of select peer company’s common stock that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend yield is based on the historical rate, which the Company anticipates remaining at zero. The following table provides quantitative information regarding Level 2 inputs used in the recurring valuation of the Private Placement Warrants as of their measurement dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 Exercise Price ​ $ 11.50 ​ $ 11.50 ​ Stock Price ​ $ 2.54 ​ $ 8.74 ​ Volatility ​ 71.3 % 48.9 % Term ​ 3.94 ​ 4.94 ​ Risk-free rate ​ 4.03 % 1.24 % ​ The following table provides a reconciliation of the Public Warrants measured at fair value using Level 1 directly observable inputs and Private Placement Warrants measured at fair value using Level 2 directly or indirectly observable inputs: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Public Warrants ​ Private Warrants ​ Level 1 Fair Value Level 2 Fair Value December 31, 2021 ​ $ 2.27 ​ $ 3.07 Change in fair value ​ $ ( 1.85 ) ​ $ ( 2.52 ) December 31, 2022 ​ $ 0.42 ​ $ 0.55 ​ The following tables provides a reconciliation of the change in fair value for the Public and Private Placement Warrants for the years ended December 31, 2022 and 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change in Fair ​ December 31, Warrant Class Level Shares 2021 Value 2022 Public Warrants 1 11,666,636 ​ $ 26,483 ​ $ ( 21,583 ) ​ $ 4,900 Private Warrants 2 7,666,667 ​ $ 23,537 ​ $ ( 19,320 ) ​ $ 4,217 Total 19,333,303 ​ $ 50,020 ​ $ ( 40,903 ) ​ $ 9,117 ​ ​ ​ Solid Power, Inc. | 2022 Form 10-K | 72 Table of Contents Note 9 – Common Stock Warrant Liabilities As of December 31, 2022 and December 31, 2021, there were 11,666,636 publicly traded warrants (“Public Warrants”) and 7,666,667 private placement warrants (“Private Placement Warrants,” and together with the Public Warrants, “Warrants”) outstanding. Each whole Warrant entitles the holder thereof to purchase one share of Common Stock at a price of $ 11.50 per share, subject to customary adjustments. Only whole Warrants are exercisable. The Warrants became exercisable on January 7, 2022 and will expire on December 8, 2026. Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $ 18.00 . The Company may redeem all of the outstanding Public Warrants: ● in whole and not in part; ● upon at least 30 days ’ prior written notice; ● at a price of $ 0.01 per Public Warrant; and ● if the last sale price of the Company’s Common Stock equals or exceeds $ 18.00 per share, subject to customary adjustments, for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date on which notice of the redemption is given. Redemption of Public Warrants when the price per share of Common Stock equals or exceeds $ 10.00 . The Company may redeem all of the outstanding Public Warrants: ● in whole and not in part; ● upon at least 30 days ’ prior written notice; ● at a price of $ 0.10 per Public Warrant, provided that holders will be able to exercise their Warrants on a cashless basis prior to redemption and receive a number of shares of Common Stock determined in part by the redemption date and the “fair market value” of the Common Stock; and ● if the last sale price of the Company’s Common Stock equals or exceeds $ 10.00 per share, subject to customary adjustments, on the trading day prior to the date on which notice of redemption is given. The “fair market value” of the Company’s Common Stock means the average reported last sale price of the Company’s Common Stock for the ten trading days immediately following the date on which the notice of redemption is sent to the holders of Warrants. The Company classifies the outstanding Warrants as Warrant Liabilities on the condensed consolidated balance sheets in accordance with the guidance contained in ASC 815. None of the Private Placement Warrants are redeemable by the Company so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees. The Warrant Liabilities were initially measured at fair value upon Closing of the Business Combination for $ 101,253 and subsequently re-measured on December 31, 2021 and December 31, 2022 for $ 50,020 and $ 9,117 , respectively. The Public Warrants were allocated a portion of the proceeds from the issuance of the units of common stock and one-third warrants in DCRC’s initial public offering equal to their fair value. The Company recognized a gain in connection with changes in the fair value of warrant liabilities of $ 40,903 and $ 51,233 as of December 31, 2022 and 2021, respectively. Solid Power, Inc. | 2022 Form 10-K | 73 Table of Contents Note 10 – Mezzanine Equity In accordance with ASC 480, Legacy Solid Power’s Preferred Stock prior to the Business Combination was classified as mezzanine equity. Immediately prior to the Closing, Legacy Solid Power had 14,069,187 shares of Series A-1 Preferred Stock outstanding and 8,777,812 shares of Series B Preferred Stock outstanding. Legacy Solid Power issued the Series B Preferred Stock in May 2021 in exchange for $ 135,579 of cash and the conversion of the 2019 Note and the 2020 Notes. Prior to the Business Combination, the Preferred Stock had a redemption feature, at the option of the holders of a majority of the outstanding Preferred Stock, any time after April 30, 2031. The Preferred Stock was redeemable for the greater of its original issue price, plus all declared but unpaid dividends thereon, or fair value. Since the Preferred Stock had redemption provisions that were not solely within control of Legacy Solid Power, the Preferred Stock was classified prior to the Business Combination as mezzanine equity on Legacy Solid Power’s balance sheets. Immediately prior to the Business Combination, 14,069,187 shares of Series A-1 Preferred Stock and 8,777,812 shares of Series B Preferred Stock were converted to the equivalent number of shares of Legacy Solid Power common stock. At the Closing, those shares of Legacy Solid Power common stock were exchanged for Common Stock in accordance with the Exchange Ratio. Note 11 – Stockholders’ Equity Common Stock Stock options exercised for Common Stock are summarized in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 2020 Stock options exercised ​ 8,428,524 ​ 1,160,930 ​ 1,097,370 ​ Cash received from options exercised under the Legacy Solid Power, Inc. 2014 Equity Incentive Plan (the “2014 Plan”) for the years ended December 31, 2022, 2021 and 2020 was $ 818 , $ 106 and $ 24 , respectively. During the years ended December 31, 2022, 2021 and 2020, restricted stock units (“RSUs”) vested for 29,108 , 0 , and 0 shares of Common Stock, respectively. Legacy Solid Power Warrants During 2015, Legacy Solid Power issued warrants to a third party to purchase 276,000 shares of Legacy Solid Power common stock at an exercise price of $ 0.00001088 per share, in conjunction with a licensing agreement. Management determined that equity classification is appropriate for these warrants. Legacy Solid Power recognized expense totaling $ 18 on the date of the grant that has been included as a component of Additional Paid In Capital within the consolidated statement of stockholders’ equity. During 2020, Legacy Solid Power issued additional warrants to purchase 45,730 shares of common stock at an exercise price of $ 0.53 per share. Legacy Solid Power recognized expense totaling $ 16 on the date of the grant. In May 2021, Legacy Solid Power issued warrants to purchase 1,755,557 shares of Legacy Solid Power common stock at an exercise price of $ 0.01 per share, in connection with the Series B Financing. These warrants were detachable from the Legacy Solid Power Series B Preferred Stock and in all cases would physically settle or net share settle. Therefore, Legacy Solid Power determined that these warrants represented equity in Legacy Solid Power. Prior to the Closing, all Legacy Solid Power warrants were either exercised for cash or net exercised and the holders thereof received shares of Legacy Solid Power common stock. Solid Power, Inc. | 2022 Form 10-K | 74 Table of Contents Note 12 – Stock Based Compensation 2014 Equity Incentive Plan and 2021 Equity Incentive Plan Options granted under the 2014 Plan generally had a ten-year term and vest as to 1/4 th of these shares after one year after the initial date of service of a service provider and with the balance of the shares vesting in a series of 36 successive equal monthly installments following the first vesting date. Option awards under the 2014 Plan were generally granted with an exercise price equal to the fair market value of Legacy Solid Power’s common stock at the date of grant. Certain option awards issued under the 2014 Plan provide for accelerated vesting if there is a change in control (as defined in the plan agreements). On December 8, 2021 and in connection with the Closing, the Company adopted the Solid Power, Inc. 2021 Equity Incentive Plan (the “2021 Plan”). The 2021 Plan originated with 18,900,000 shares of Common Stock available for issuance. Beginning on January 1, 2022, the number of shares of common stock available for issuance under the 2021 Plan shall increase each year by an amount equal to the lesser of (i) 18,900,000 shares of Common Stock (ii) five percent of the total number of shares of common stock outstanding on the last day of the immediately preceding fiscal year; or (iii) a number of shares of common stock determined by the administrator no later than the last day of the immediately preceding fiscal year. Awards may be issued in the form of stock options, stock appreciation rights, restricted stock, and restricted stock units. The Company believes that such awards better align the interests of its employees with those of its stockholders. Options granted under the 2021 Plan generally have a ten-year term and vest as to 1/4 th of these shares per year beginning one year after the initial date of service of a service provider. Option awards under the 2021 Plan were generally granted with an exercise price equal to the fair market value of the Company’s common stock at the date of grant. Certain option awards issued under the 2021 Plan provide for accelerated vesting if there is a change in control (as defined in the plan agreements). Effective April 1, 2022, the Company began granting RSUs in accordance with the terms of the 2021 Plan. The grant date fair value of RSUs awarded are determined based on the Company’s closing common share price on the NASDAQ on the trading day preceding the grant date. RSU awards for employees generally vest 25 % per year commencing on the first anniversary of the grant date. RSU awards upon initial service as a director vest in 12 equal quarterly installments. For initial service grants, vested RSUs are settled in common stock upon the earlier of the director no longer serving on the board of directors or the date the RSU has fully vested. Annual RSU awards to directors generally fully vest on the one-year anniversary of the grant date. Upon vesting, granted RSUs entitle the grantee to receive one share of common stock of the Company at no additional cost. Holders of unvested RSUs do not have voting or dividend rights. At December 31, 2022 and 2021 the Company had 24,766,176 and 34,407,949 shares of common stock underlying stock options outstanding under the 2014 Plan respectively. Upon the Closing, the 2014 Plan was terminated and no additional grants were made under the 2014 Plan. As of December 31, 2022, the 2021 Plan permitted the Company to grant up to 24,466,527 shares of common stock to its employees, directors, and consultants, as designated by the board of directors. ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 Option awards granted under 2021 Plan 1,730,564 — RSU awards granted under 2021 Plan ​ 1,292,429 ​ — ​ Compensation Expense for Stock Based Compensation The fair value of stock options and RSUs issued to employees and directors is recognized as compensation expense over the period of service that generally coincides with the vesting period of the award. When calculating the amount of annual compensation expense, the Company has elected not to estimate forfeitures and instead accounts for forfeitures as they occur. Solid Power, Inc. | 2022 Form 10-K | 75 Table of Contents For the years ended December 31, 2022, 2021 and 2020 the Company recognized compensation costs totaling: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 2020 Equity-based compensation costs related to RSUs ​ $ 1,567 ​ $ — ​ $ — Equity-based compensation costs related to stock options ​ 7,076 ​ 2,714 ​ 182 Equity-based compensation costs related to ESPP ​ 29 ​ — ​ — Total equity-based compensation costs ​ $ 8,672 ​ $ 2,714 ​ $ 182 Future compensation costs related to unvested options ​ $ 19,322 ​ $ 23,307 ​ $ 593 ​ The fair value of stock options and other equity-based compensation issued to employees is recognized as compensation expense over the period of service that generally coincides with the vesting period of the award. The Company allocated compensation ratably across Operating Expenses within the following financial statement lines: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 2020 Direct Costs ​ $ 1,580 ​ $ 332 ​ $ 22 Research and Development ​ ​ 4,474 ​ ​ 1,698 ​ ​ 115 Sales and Marketing ​ ​ 493 ​ ​ 308 ​ ​ 23 General and Administrative ​ ​ 2,125 ​ ​ 376 ​ ​ 22 Total equity-based compensation cost ​ $ 8,672 ​ $ 2,714 ​ $ 182 ​ Stock Options The fair value for purposes of determining the compensation cost of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses the weighted-average assumptions noted in the following table. Expected volatilities are based on historical volatility of comparable companies. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of each option grant during the years ended December 31, 2022, 2021 and 2020 was estimated on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions used: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Approximate risk-free rate ​ 2.84 % ​ 1.04 % ​ 1.29 % Volatility ​ 44.69 % ​ 41.45 % ​ 43.92 % Average expected life (years) ​ 6 years ​ 6 years ​ 6 years Dividend yield ​ 0 % ​ 0 % ​ 0 % Weighted-average grant date fair value ​ $ 7.26 ​ $ 5.10 ​ $ 0.84 ​ Estimated fair value of total options granted ​ $ 5,659 ​ $ 25,353 ​ $ 246 ​ ​ When calculating the amount of annual compensation expense, the Company has elected not to estimate forfeitures and instead accounts for forfeitures as they occur. Solid Power, Inc. | 2022 Form 10-K | 76 Table of Contents A summary of option activity under the 2014 Plan and 2021 Plan for the years ended December 31, 2022, 2021, and 2020 is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ Number of ​ Weighted-average ​ Contractual Term Options Shares Exercise Price (in years) Outstanding at January 1, 2020 23,020,981 ​ $ 0.06 7.06 Granted 1,719,754 ​ $ 0.16 Exercised ( 1,097,370 ) ​ $ 0.02 Forfeited or expired ( 167,381 ) ​ $ 0.15 Outstanding at December 31, 2020 23,475,984 ​ $ 0.06 6.53 ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at January 1, 2021 ​ 23,475,984 ​ $ 0.06 ​ 6.53 Granted 12,285,359 ​ $ 5.10 ​ Exercised ​ ( 1,160,930 ) ​ $ 0.09 ​ ​ Forfeited or expired ( 192,464 ) ​ $ 0.84 ​ Outstanding at December 31, 2021 ​ 34,407,949 ​ $ 1.86 ​ 6.98 ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at January 1, 2022 ​ 34,407,949 ​ $ 1.86 ​ 6.98 Granted ​ 1,730,564 ​ $ 7.19 ​ ​ Exercised ​ ( 8,428,524 ) ​ $ 0.10 ​ ​ Forfeited or expired ​ ( 1,711,817 ) ​ $ 4.64 ​ ​ Outstanding at December 31, 2022 ​ 25,998,172 ​ $ 2.60 ​ 6.31 ​ ​ ​ ​ ​ ​ ​ ​ Exercisable at December 31, 2020 ​ 18,023,695 ​ $ 0.04 ​ 5.96 Exercisable at December 31, 2021 ​ 19,603,474 ​ $ 0.05 ​ 5.21 Exercisable at December 31, 2022 ​ 18,202,064 ​ $ 1.19 ​ 5.14 ​ Cash received from options exercised under the 2014 Plan for December 31, 2022, 2021 and 2020 was $ 818 , $ 106 and $ 23 , respectively. The aggregate intrinsic value of exercisable options at December 31, 2022 was $ 35,058 . The aggregate intrinsic value of exercised options at December 31, 2022 was $ 63,287 . Restricted Stock Units The following table summarizes non-vested RSUs at December 31, 2022 and the changes for the period ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ Number of Weighted-average ​ ​ Shares ​ Grant Date Fair Value Balance at January 1, 2022 — ​ Granted 1,292,429 ​ $ 7.11 Vested ( 29,108 ) ​ $ 7.26 Forfeited ( 205,341 ) ​ $ 7.33 Outstanding at December 31, 2022 1,057,980 ​ $ 7.06 ​ As of December 31, 2022 unrecognized compensation costs related to restricted stock units was $ 6,144 and is expected to be recognized over a weighted average period of 2.97 years. The vested RSUs had no intrinsic value as of December 31, 2022. Solid Power, Inc. | 2022 Form 10-K | 77 Table of Contents 2021 Employee Stock Purchase Plan The 2021 Employee Stock Purchase Plan (“2021 ESPP”) originated with 3,778,000 shares of Common Stock available for issuance. As of December 31, 2021, 3,778,000 shares remained available for issuance. Beginning on January 1, 2022, the number of shares of Common Stock available for issuance under the 2021 ESPP shall increase by an amount equal to the lesser of (i) 3,778,000 shares of Common Stock (ii) one percent (1%) of the total number of shares of Common Stock outstanding on the last day of the immediately preceding fiscal year or (iii) a number of shares of Common Stock determined by the Administrator no later than the last day of the immediately preceding fiscal year. As of December 31, 2022 5,463,579 shares remained available for issuance. As of December 31, 2022 the 2021 ESPP permitted the Company to issue up to 5,463,579 shares of common stock. The Company recorded $ 29 of expense related to the 2021 ESPP in the year ended December 31, 2022. No shares have been purchased under the ESPP as of December 31, 2022. As of December 31, 2022, there was $ 58 of unrecognized stock-based compensation expense related to the ESPP that is expected to be recognized by the end of second quarter of 2023. The 2021 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. Substantially all employees are eligible to participate and, through payroll deductions, can purchase shares on dates determined by the administrator. However, with respect to the Section 423 Component, an employee may not be granted rights to purchase stock under the ESPP if the employee, immediately after the grant, would own (directly or through attribution) stock possessing 5 % or more of the total combined voting power or value of all classes of the Company’s Common Stock. The purchase price per share sold pursuant to the 2021 ESPP will be the lower of (i) 85 % of the fair market value of Common Stock on the enrollment or (ii) 85 % of the fair market value on the exercise date. Each offering period will span up to six months. Purchases may be up to 15 % of qualified compensation, with an annual limit of $ 25,000 . Note 13 – Earnings (Loss) Per Share The table below reconciles basic weighted average common shares outstanding to diluted weighted average shares outstanding for December 31, 2022, 2021 and 2020. Basic earnings per share is based on the weighted average number of common shares outstanding for the period. Basic earnings per share represents net earnings or loss attributable to Common Stock divided by the basic weighted average number of common shares outstanding during the period. Diluted earnings per share also includes the dilutive effect of additional potential common shares issuable from stock-based awards and are determined using the treasury stock method. Diluted earnings per share represents net earnings divided by diluted weighted average number of common shares, which includes the average dilutive effect of all potentially dilutive securities that are outstanding during the period. The unvested stock awards, warrants, and options are included in the number of shares outstanding for diluted earnings per share calculations, unless a net loss is reported, in which situation unvested stock awards, warrants, and options are excluded from the number of shares outstanding for diluted earnings per share calculations. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ 2022 ​ 2021 ​ 2020 Net income (loss) attributable to common stockholders ​ $ ( 9,555 ) ​ $ 12,656 ​ $ ( 14,375 ) Weighted average shares outstanding – basic ​ ​ 174,374,386 ​ ​ 95,477,472 ​ ​ 69,228,444 Weighted average shares outstanding – diluted ​ 174,374,386 ​ 114,910,129 ​ ​ 69,228,444 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings (loss) per share ​ $ ( 0.05 ) ​ $ 0.13 ​ $ ( 0.21 ) Diluted earnings (loss) per share ​ $ ( 0.05 ) ​ $ 0.11 ​ $ ( 0.21 ) ​ Solid Power, Inc. | 2022 Form 10-K | 78 Table of Contents Due to the net loss to common stockholders in 2022 and 2020 presented above, diluted loss per share was computed without consideration of potentially dilutive instruments as their inclusion would have been anti-dilutive. Warrants outstanding in 2022 and 2021 were not included in the computation of diluted earnings per share because the warrant’s exercise price for the period was greater than the average market price of the common shares. As of December 31, 2022, 2021 and 2020, potentially dilutive securities excluded from the diluted earnings (loss) per share calculation are as follows (in shares): ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Common Stock Warrants 19,333,303 19,333,303 ​ 1,023,745 2014 & 2021 Equity Incentive Plan - Stock Options 26,328,279 — ​ 23,476,182 2021 Equity Incentive Plan - Restricted Stock Units 710,385 — ​ — 2021 Employee Stock Purchase Plan ​ 26,589 ​ — ​ — Contingently Issuable Common Stock ​ 5,339 ​ — ​ — Total potentially dilutive securities ​ 46,403,895 ​ 19,333,303 ​ 24,499,927 ​ ​ Note 14 – Leases The Company leases its two facilities and certain equipment. Fixed rent generally escalates each year, and the Company is responsible for a portion of the landlords’ operating expenses such as property tax, insurance and common area maintenance. The Company’s facility in Louisville, Colorado is under a noncancelable operating lease with a maturity date in September 2029. In 2022, the Company amended the lease to incorporate a prior subleased space into the base lease and extend the term of the lease. The Company has the right to renew this lease for an additional five-year period. On September 1, 2021, the Company entered into an industrial operating lease agreement for its facility in Thornton, Colorado, with the initial term through March 31, 2029. Under this operating lease, the Company has one option to renew for five years , which has been included in the calculation of lease liabilities and right-of-use assets at the adoption date of the lease accounting standard on January 1, 2022, as the exercise of the option was reasonably certain. As the renewal rent has not been negotiated, the Company used an estimated rent rate which approximated the fair market rent at adoption of ASC 842 on January 1, 2022 for the extension period. The Company has certain equipment leases classified as finance leases as of December 31, 2022. The Company’s leases do not have any contingent rent payments and do not contain residual value guarantees. The components of lease expense are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 Finance lease costs: ​ ​ Amortization of right-of-use assets ​ $ 92 ​ $ — Interest on lease liabilities ​ 28 ​ — Operating lease costs ​ 850 ​ — Total lease expense ​ $ 970 ​ $ — ​ Solid Power, Inc. | 2022 Form 10-K | 79 Table of Contents The components of cash flow information related to leases are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 December 31, 2021 Operating outgoing cash flows – finance lease ​ $ 24 ​ $ — Financing outgoing cash flows – finance lease ​ 142 ​ — Operating outgoing cash flows – operating lease ​ 568 ​ — Right-of-use assets obtained in exchange for new finance lease liabilities ​ 1,014 ​ — Right-of-use assets obtained in exchange for new operating lease liabilities ​ 8,947 ​ — ​ ​ ​ ​ ​ ​ December 31, 2022 Finance lease ​ Weighted-average remaining lease term – finance lease (in years) 3.37 ​ Weighted-average discount rate – finance lease 5.9 % Operating lease ​ Weighted-average remaining lease term – operating lease (in years) 10.18 ​ Weighted-average discount rate – operating lease 6.9 % ​ As of December 31, 2022, future minimum payments during the next five years and thereafter are as follows: ​ ​ ​ ​ ​ ​ ​ Fiscal year Finance Lease Operating Lease 2023 ​ $ 315 ​ $ 1,138 2024 ​ ​ 315 ​ ​ 1,173 2025 ​ ​ 192 ​ ​ 1,210 2026 ​ ​ 85 ​ ​ 1,248 2027 ​ ​ 37 ​ ​ 1,288 Thereafter ​ ​ 16 ​ ​ 6,571 Total ​ ​ 960 ​ ​ 12,628 Less present value discount ​ ​ 85 ​ ​ 3,457 Total lease liabilities ​ $ 875 ​ $ 9,171 ​ ​ Note 15 – Related Party Transactions During 2020, the Company entered into a subcontractor agreement with Roccor, LLC, which was a related party until October 30, 2020. Under the subcontractor agreement, the Company provided technical support to Roccor on a government research contract. The total value of the subcontract is $ 331 to the Company. The period of performance commenced during 2020 and extended to late 2021. Related party revenue from Roccor was $ 163 for the year ended December 31, 2020. During 2022, the Company entered into a collaborative arrangement with BMW of North America, LLC (“BMW”). Pursuant to the terms of the agreement, the Company granted BMW a research and development-only license to certain of the Company’s intellectual property relating to solid-state battery cell manufacturing (the “R&D License”). The R&D License allows, among other things, BMW to install a solid-state prototype cell manufacturing line based upon the Company’s proprietary information. The R&D License is limited to BMW’s research and development activities and may not be used for commercial battery cell production. The Company and BMW also agreed to negotiate a non-exclusive short-term electrolyte supply agreement for the Company to supply BMW with electrolyte material for use in BMW’s cell manufacturing, which is expected to commence in 2024 following commissioning of BMW’s solid-state protype cell manufacturing line. Solid Power, Inc. | 2022 Form 10-K | 80 Table of Contents Pursuant to the agreement, prior to installation of BMW’s anticipated prototype cell manufacturing line, the Company and BMW have agreed to undertake development and manufacturing activities jointly at the Company’s facilities. Any intellectual property developed jointly by the Company and BMW at the Company’s facilities will be solely owned by the Company (“Joint Onsite Foreground IP”). To the extent intellectual property is jointly conceived but not considered Joint Onsite Foreground IP, the Company and BMW will jointly own such intellectual property. Each party will solely own intellectual property developed solely by such party. The Company and BMW will each have the right to utilize the other party’s technical improvements for research and development purposes only. Subject to certain limitations, the Company has the right to cause BMW to license BMW’s technical improvements to the Company for commercial purposes. In consideration of the R&D License and additional development activities contemplated by the agreement BMW will pay the Company $ 20 million between December 2022 and June 2024, subject to the Company achieving certain milestones. For the year ended December 31, 2022, the Company has recognized $ 2 million of revenue from BMW and recorded $ 4 million of deferred revenue related to cash paid from BMW in advance of services provided. Unrelated to the terms under the R&D License agreement the Company received $ 375 from BMW in exchange for initial prototype cells. ​ Note 16 – Retirement Plans ​ The Company sponsors a 401(k) plan for all employees. The plan provides for the Company to make a discretionary matching contribution. Contributions to the plan totaled $ 802 , $ 352 and $ 226 for the years ended December 31, 2022, 2021 and 2020, respectively. ​ Note 17 – Income Taxes The Company provides deferred U.S. federal, state, or foreign income tax benefits for all of the periods presented. The Company has also provided a valuation allowance on the net deferred tax asset because of uncertainty regarding its realizability. Realization of deferred tax assets is dependent on generating sufficient taxable income prior to the expiration of loss carryforwards. Deferred tax assets and liabilities arise primarily from net operating loss carryforwards and temporary differences arising from the amortization of intangible assets, depreciation on property and equipment, and various accrued liabilities. Income taxes included in the Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020 are detailed below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Years Ended December 31, ​ 2022 2021 2020 Deferred income tax (benefit) expense: ​ ​ ​ ​ ​ Federal ​ $ ( 195 ) ​ $ ( 22 ) ​ $ 96 State ​ ​ ( 32 ) ​ ( 3 ) ​ 22 Total income tax (benefit) expense ​ $ ( 227 ) ​ $ ( 25 ) ​ $ 118 ​ Solid Power, Inc. | 2022 Form 10-K | 81 Table of Contents The tables below represent a reconciliation of the statutory federal income tax expense to income tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 2020 Income tax expense at the federal statutory rate ​ 21.00 % 21.00 % 21.00 % State income taxes - net of federal income tax benefits ​ 13.07 % ( 5.97 ) % 2.96 % Permanent Differences ​ ( 3.14 ) % 0.25 % 1.08 % Permanent Differences – Related to Convertible Debt ​ 0.00 % 0.31 % ( 5.04 ) % Permanent Differences – Fair Value Adjustments– Warrant Liability ​ 66.21 % ( 56.44 ) % 0.00 % Permanent Differences – Fair Value Adjustments– Marketable Securities ​ ( 5.13 ) % 0.00 % 0.00 % Prior year provision to return ​ 0.03 % ( 0.03 ) % ( 0.03 ) % Net change in valuation allowance ​ ( 104.28 ) % 40.73 % ( 20.81 ) % Research and Development ​ 13.65 % 0.00 % 0.00 % Other ​ 0.33 % 0.01 % 0.00 % Total income tax (benefit) ​ 1.75 % ( 0.14 ) % ( 0.84 ) % ​ For the years ended December 31, 2022, 2021 and 2020, the effective tax rate was approximately 1.75 %, ( 0.14 %) and ( 0.84 %), respectively. Differences between the statutory rate and the Company’s effective tax rate resulted from changes in valuation allowance and permanent differences for tax purposes in the treatment of certain nondeductible expenses. The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2022 2021 Deferred tax assets: ​ ​ ​ ​ Net operating loss ​ $ 17,962 ​ $ 15,591 R&D Credit ​ ​ 1,908 ​ ​ — Stock compensation ​ ​ 1,991 ​ ​ 417 Section 174 Capitalization ​ ​ 5,731 ​ ​ — ROU Lease Liability ​ ​ 2,459 ​ ​ — Other ​ 748 ​ 49 Total income tax expense (benefit) ​ 30,799 ​ 16,057 Valuation allowance ​ ( 28,030 ) ​ ( 14,536 ) Net deferred tax assets: ​ 2,769 ​ 1,521 Deferred tax liabilities: ​ ​ Intangibles (non-goodwill) ​ $ ( 1 ) ​ $ — Property and equipment ​ ( 652 ) ​ ( 1,747 ) ROU Asset ​ ​ ( 2,116 ) ​ ​ — Total deferred tax liabilities ​ ( 2,769 ) ​ ( 1,747 ) Total net deferred tax liability ​ $ — ​ $ ( 226 ) ​ The ultimate realization of deferred tax assets is dependent upon the existence, or generation, of taxable income in the periods when those temporary differences and net operating loss carryovers are deductible. Management considers the scheduled reversal of deferred tax liabilities, taxes paid in carryover years, projected future taxable income, available tax planning strategies, and other factors in making this assessment. Based on available evidence, management does not believe it is more likely than not that all of the deferred tax assets will be realized. Accordingly, the Company has established a valuation allowance equal to the net realizable deferred tax assets. The valuation allowance increased by $ 13,494 in 2022. Solid Power, Inc. | 2022 Form 10-K | 82 Table of Contents At December 31, 2022, 2021 and 2020, the Company had total domestic Federal net operating loss carryovers of approximately $ 73,367 , $ 63,391 and $ 29,836 , respectively. Federal net operating losses generated on or prior to December 31, 2017 expire in 2037. Federal net operating losses generated on or after January 1, 2018 have an indefinite carryforward and are only available to offset 80 % taxable income beginning in 2021. The determination of state net operating loss carryforwards is dependent upon apportionment percentages and state laws that can change from year to year and that can thereby impact the amount of such carryforwards. The majority of the state net operating losses have an indefinite carryforward. Accounting for uncertainty in income taxes is based on a recognition threshold and measurement attribute for the Consolidated Financial Statements recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes in its Consolidated Financial Statements only those tax positions that are more-likely-than-not to be sustained as of the adoption date, based on the technical merits of the position. Each year the Company performs a comprehensive review of its material tax positions. The Company’s policy is to recognize interest and penalties related to uncertain tax benefits in income tax expense. As the Company had no uncertain tax benefits before the year ending December 31, 2022, there is no accrual of interest or penalties related to uncertain tax positions. The following table summarizes the Company’s unrecognized tax benefits: ​ ​ ​ ​ ​ ​ December 31, 2022 Balance, beginning of year ​ $ — Gross increases related to prior period tax position ​ — Gross increases related to current period tax position ​ 636 Gross decreases related to prior period tax position ​ — Balance, end of year ​ $ 636 ​ Included in the balance of unrecognized tax benefits at December 31, 2022, are potential benefits of $ 636 that if recognized would affect the effective tax rate. The 2018 through 2021 tax years remain open to examination by the Internal Revenue Service and, with few exceptions, various other state tax agencies. These taxing authorities have the authority to examine those tax years until the applicable statutes of limitations expire. ​ Note 18 – Contingencies In the normal course of business, the Company may be party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that resolution of such litigation will not have a material adverse effect on the Company. DCRC, the predecessor to the Company, received a demand letter dated August 31, 2021 from counsel purporting to represent a stockholder of DCRC alleging that the proposed vote on the Authorized Share Charter Proposal (“Proposal”) for the proposed business combination with Legacy Solid Power violated Section 242(b)(2) of the Delaware General Corporation law and demanded that DCRC provide DCRC’s Class A stockholders with a separate class vote on the Proposal. DCRC subsequently provided for the Class A stockholders to have a separate class vote on the Proposal share increase. The Proposal was approved and the Business Combination closed. The counsel who issued this demand letter made a fee demand (the “Fee Demand”) for prompting the change in the Proposal. The Company accrued a liability of $ 500 on its Consolidated Balance Sheets as of December 31, 2021 in anticipation of settling the Fee Demand. On March 10, 2022, the Company settled the Fee Demand for an amount that is materially consistent with our accrual. Based on cash on hand at December 31, 2022, management believes the Company has sufficient capital to execute its strategic plan and fund operations through at least the next 12 months from the date these Consolidated Financial Statements are issued. ​ Solid Power, Inc. | 2022 Form 10-K | 83 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.