Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In designing and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired controls. As required by Rule 13a-15(b) under the Exchange Act, our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this Report, our disclosure controls and procedures were effective.
Inherent Limitations over Internal Control Over Financial Reporting
Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:
● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;
● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Management, including our principal executive officer and principal financial officer, does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2022 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.
Our independent registered public accounting firm, Ernst & Young LLP, has issued their report on our internal control over financial reporting, which appears in Part II, Item 8 of this Form 10-K.
Changes in Internal Control over Financial Reporting
As previously disclosed in Part II, Item 9A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, management previously identified a material weakness for Legacy Solid Power due to deficiencies identified in the operating effectiveness of controls over financial reporting related to the review of complex transactions for proper accounting treatment as our control environment would have failed to detect the misstatement prior to the financial statement issuance.
During 2022, we implemented our previously disclosed remediation plan, which included the following remediation actions:
● Hiring additional personnel.
● Improving our capabilities to identify, research, and prepare support documentation for technical accounting issues.
● Designing and implementing a formalized internal control framework.
● Improving and strengthening our control processes and procedures.
● Working with our auditors and other outside advisors to ensure that our controls and procedures are adequate and effective.
We have completed the necessary testing to conclude that the material weakness was remediated as of December 31, 2022. Except for the material weakness remediation described above, there were no changes during the fourth quarter of 2022 that were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information regarding executive officers called for by Item 401(b) of Regulation S-K may be found under the caption “Information About our Executive Officers” in this Report. The other information required by this Item is included in the Company’s 2023 Proxy Statement to be filed with the SEC within 120 days after December 31, 2022 in connection with the solicitation of proxies for the Company’s 2023 annual meeting of stockholders, and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this Item is included in the Company’s 2023 Proxy Statement to be filed with the SEC within 120 days after December 31, 2022, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this Item is included in the Company’s 2023 Proxy Statement to be filed with the SEC within 120 days after December 31, 2022, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item is included in the Company’s 2023 Proxy Statement to be filed with the SEC within 120 days after December 31, 2022, and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information required by this Item is included in the Company’s 2023 Proxy Statement to be filed with the SEC within 120 days after December 31, 2022, and is incorporated herein by reference.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
(a)
Financial Statements, Financial Statement Schedules and Exhibits
(1)
Financial Statements.
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Mezzanine and Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2)
Financial Statement Schedules: None
(3)
Exhibits
Incorporated by Reference
Exhibit
Number
Description
Schedule
Form
File
Number
Exhibit/
Annex
Filing Date
2.1
Business Combination Agreement and Plan of Reorganization, dated as of June 15, 2021, by and among the Company, Merger Sub and Legacy Solid Power
424B3
333-258681
Annex A
November 10, 2021
2.2
First Amendment to the Business Combination Agreement, dated October 12, 2021, by and among the Company, Merger Sub and Legacy Solid Power
424B3
333-258681
Annex A-1
November 10, 2021
3.1
Second Amended and Restated Certificate of Incorporation
8-K
001-40284
3.1
December 13, 2021
3.2
Amended and Restated Bylaws
8-K
001-40284
3.1
November 21, 2022
4.1
Specimen Common Stock Certificate
8-K
001-40284
4.1
December 13, 2021
4.2
Specimen Warrant Certificate
8-K
001-40284
4.2
December 13, 2021
4.3
Warrant Agreement, dated March 23, 2021, between the Company and Continental Stock Transfer & Trust Company
8-K
001-40284
4.1
March 26, 2021
4.4
Amended and Restated Registration Rights Agreement
8-K
001-40284
10.2
December 13, 2021
4.5±
Board Nomination and Support Agreement between Solid Power, BMW Holding B.V. and the stockholders of Solid Power listed on Schedule A thereto, dated May 5, 2021
S-4
333-258681
4.4
August 10, 2021
4.6
Description of Securities
10-K
001-40284
4.6
March 23, 2022
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10.1
Private Placement Warrants Purchase Agreement, dated March 23, 2021, between DCRC, the Sponsor and the other purchasers named therein
8-K
001-40284
10.5
March 26, 2021
10.2#
Solid Power, Inc. 2021 Equity Incentive Plan
8-K
001-40284
10.7
December 13, 2021
10.3#
Solid Power, Inc. 2021 Employee Stock Purchase Plan
S-8
333-262714
99.3
February 14, 2022
10.4#
Solid Power, Inc. 2014 Equity Incentive Plan
S-8
333-262714
99.1
February 14, 2022
10.5#
Form of Stock Option Grant Notice under 2014 Equity Incentive Plan
S-8
333-262714
99.4
February 14, 2022
10.6#
Form of Notice of Stock Option Grant under 2021 Equity Incentive Plan
S-8
333-262714
99.5
February 14, 2022
10.7#
Form of Notice of Restricted Stock Unit Grant (Employee) under 2021 Equity Incentive Plan
S-8
333-262714
99.6
February 14, 2022
10.8#
Form of Notice of Restricted Stock Unit Grant (New Director) under 2021 Equity Incentive Plan
S-8
333-262714
99.7
February 14, 2022
10.9#
Form of Notice of Restricted Stock Unit Grant (Annual Award) under 2021 Equity Incentive Plan
S-8
333-262714
99.8
February 14, 2022
10.10±
Joint Development Agreement, dated July 1, 2017, by and among Legacy Solid Power and BMW of North America, LLC
S-4/A
333-258681
10.11
October 13, 2021
10.11±
Amendment No. 1 to Joint Development Agreement, dated February 18, 2021, between Legacy Solid Power and BMW of North America, LLC
S-4/A
333-258681
10.12
October 13, 2021
10.12±
Amendment No. 2 to Joint Development Agreement, dated March 22, 2021, between Legacy Solid Power and BMW of North America, LLC
S-4/A
333-258681
10.13
October 13, 2021
10.13±
Amendment No. 3 to Joint Development Agreement, dated November 1, 2021, between Legacy Solid Power and BMW of North America, LLC
8-K
001-40284
10.15
December 13, 2021
10.14±
Amendment No. 4 to Joint Development Agreement, dated December 20, 2022, between Legacy Solid Power and BMW of North America, LLC
8-K
001-40284
10.1
December 21, 2022
10.15±
Agreement for the Joint Development of Solid State Batteries for Automotive Applications between Ford Motor Company and Legacy Solid Power, dated December 28, 2018
S-4/A
333-258681
10.14
October 13, 2021
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10.16±
Series B Preferred Stock Financing Letter Agreement between the Ford Motor Company and Legacy Solid Power, dated May 5, 2021
S-4/A
333-258681
10.15
October 13, 2021
10.17±
Joint Development Agreement, dated October 28, 2021, between Legacy Solid Power and SK Innovation Co., Ltd.
S-4/A
333-258681
10.16
November 2, 2021
10.18
Solid Power, Inc. Outside Director Compensation Policy
8-K
001-40284
10.9
December 13, 2021
10.19#
Solid Power, Inc. Executive Incentive Compensation Plan
8-K
001-40284
10.10
December 13, 2021
10.20#
Solid Power, Inc. Executive Change in Control and Severance Plan
8-K
001-40284
10.11
December 13, 2021
10.21#
Solid Power, Inc. Form of Indemnification Agreement
8-K
001-40284
10.1
December 13, 2021
10.22#
Letter Agreement with David Jansen, dated August 5, 2021
8-K
001-40284
10.4
December 13, 2021
10.23#
Interim CEO Agreement with David Jansen, dated November 29, 2022
8-K
001-40284
10.1
November 29, 2022
10.24#
Letter Agreement with Derek Johnson, dated August 5, 2021
8-K
001-40284
10.5
December 13, 2021
10.25*±#
Letter Agreement with Joshua Buettner-Garrett, dated August 5, 2021
10.26*±#
Offer Letter with James Liebscher, dated June 9, 2021
10.27*±#
Offer Letter with Kevin Paprzycki, dated September 30, 2021
10.28#
Letter Agreement with Douglas Campbell, dated August 5, 2021
8-K
001-40284
10.3
December 13, 2021
10.29±#
Offer Letter with Jon Jacobs, dated September 26, 2021
10-K
001-40284
10.24
March 23, 2022
10.30*±#
Separation and Release Agreement with Jon Jacobs, dated February 10, 2023
10.31#
Form of Retention Agreement, dated November 29, 2022
8-K
001-40284
10.2
November 29, 2022
10.32
Lease Agreement between the Company and Red Pierce, LLC, dated November 29, 2016
8-K
001-40284
10.19
December 13, 2021
10.33
Amendment to Lease Agreement between the Company and Red Pierce, LLC, dated December 5, 2017
8-K
001-40284
10.20
December 13, 2021
10.34±
Second Amendment to Lease Agreement by and between the Company and Red Pierce, LLC, dated December 1, 2022
8-K
001-40284
10.1
December 2, 2022
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10.35
Industrial Lease Agreement between the Company and 25 North Investors SPE1, LLC, dated September 1, 2021
8-K
001-40284
10.21
December 13, 2021
21
List of Subsidiaries
S-1
333-261711
21
December 17, 2021
23.1*
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm
24.1*
Power of Attorney (included on the signature page of this Annual Report on Form 10-K)
31.1*
Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2*
Certification Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1**
Section 1350 Certification
32.2**
Section 1350 Certification
101.INS*
XBRL Instance Document – the instance document does not appear in the Interactive Data file because its Inline XBRL tags are embedded within the Inline XBRL document
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*
Inline XBRL Taxonomy Extension Definition Document
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Filed herewith.
**
Furnished herewith.
±
Certain portions of this exhibit have been omitted in accordance with Regulation S-K Item 601. The Company agrees to furnish an unredacted copy of the exhibit to the SEC upon request.
#
Indicates a management or compensatory plan.
Item 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 1, 2023
SOLID POWER, INC.
By:
/s/ Kevin Paprzycki
Name:
Kevin Paprzycki
Title:
Chief Financial Officer and Treasurer
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints David Jansen, Kevin Paprzycki and James Liebscher, and each of them, as his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact, proxy and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, proxy and agent, or his or her substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Name
Title
Date
Interim Chief Executive Officer, President and Director
/s/ David Jansen
(Principal Executive Officer)
March 1, 2023
David Jansen
Chief Financial Officer and Treasurer
/s/ Kevin Paprzycki
(Principal Financial and Accounting Officer)
March 1, 2023
Kevin Paprzycki
/s/ Erik Anderson
Director
March 1, 2023
Erik Anderson
/s/ Rainer Feurer
Director
March 1, 2023
Rainer Feurer
/s/ Steven H. Goldberg
Director
March 1, 2023
Steven H. Goldberg
/s/ Aleksandra Miziolek
Director
March 1, 2023
Aleksandra Miziolek
/s/ Lesa Roe
Director
March 1, 2023
Lesa Roe
/s/ John Stephens
Director
March 1, 2023
John Stephens
/s/ MaryAnn Wright
Director
March 1, 2023
MaryAnn Wright
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