What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-28 · 110 added, 70 removed, 86 unchanged (68% of the section changed)

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The forward-looking statements are dependent upon events, risks, and uncertainties that may be outside of our control.

Our actual results could differ materially from those

Solid Power, Inc.

| 2024 Form 10-K | 35

discussed in these forward-looking statements.

Our actual results could differ materially from those discussed in these forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed elsewhere in this Report under “Part I, Item 1A.

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Key Factors Affecting Operating Results

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

We are a research and development-stage company and have not generated cash flows through the sale of our electrolyte or licensing of our cell designs to adequately cover our costs.

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

Prior to reaching commercialization, we must improve our products to ensure they meet the performance requirements of our customers.

We also will have to continue to negotiate commercial agreements with our customers on terms and conditions that are mutually acceptable.

We also will have to negotiate commercial agreements with our customers on terms and conditions that are mutually acceptable.

To satisfy anticipated demand, we will need to scale production of our electrolyte.

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

All of these will take time, require capital, and affect our operating results.

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

Revenue generated to date has primarily come from performance on research and development licensing agreements and government contracts.

Revenue generated to date has primarily come from performance on research and development licensing agreements, the line installation agreement, and government contracts.

We will need to continue to deploy substantial capital to expand our production capabilities and engage in research and development programs.

We also expect to continue to incur administrative expenses as a publicly traded company.

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

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Basis of Presentation

We currently conduct our business through one operating segment.

As a research and development company with no commercial operations, our activities were conducted primarily in the United States as well as Republic of Korea.

We currently conduct our business through one operating segment and one reportable segment.

As a research and development company with no commercial operations, our activities to date have been limited and conducted primarily in the United States and the Republic of Korea.

Our historical results are reported under U.S.

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Results of Operations

During the year ended December 31, 2024, we increased capital and operational investments centered on expanding our electrolyte capabilities and advancing our cell designs.

Our most significant capital investment in 2024 was the EIC, which is designed to develop, improve, and test electrolyte manufacturing processes.

Our operational investments were focused on the strategic enhancement of our research and development workforce, strengthening our presence in the Republic of Korea, as well as efforts to improve electrolyte and cell performance.

We have entered into various collaborative arrangements for research and development efforts related to our technologies.

In 2024, we generated revenue of $20.1 million, which represented a $2.7 million, or 16%, increase compared to our 2023 revenue of $17.4 million.

This increase was driven primarily by our performance on the SK On Agreements, with strong execution on the line installation agreement and completion of key steps in the transfer of our technology, which together accounted for $11.8 million of our 2024 revenue.

We intend to continue executing on the SK On Agreements and anticipate an increase in revenue in 2025 as we achieve

During the year ended December 31, 2025, our capital and operational investments supported our 2025 development objectives.

Revenue and Grant Income

Year Ended December 31,

(in thousands)

Collaborative

Total revenue and grant income

Revenue recognized for the year ended December 31, 2025 consisted of performance on our non-government contracts as well as certain government contracts.

Grant income recognized consisted of performance on the Assistance Agreement.

Revenue and grant income increased $1.6 million for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily driven by the performance on our Assistance Agreement.

We recognized $15.8 million and $17.4 million of collaborative revenue for the years ended December 31, 2025 and 2024, respectively, which primarily consisted of performance on the SK On Agreements .

During the year ended December 31, 2025, we completed factory acceptance testing and neared completion of site acceptance testing of the SK On Line under the line installation agreement.

We have substantially completed the deliverables for site acceptance testing of the SK On Line and expect site acceptance to be complete in the first quarter of 2026.

We recognized $6.0 million and $2.7 million of government revenue for the years ended December 31, 2025 and 2024, respectively.

Government revenue and government grant income consisted primarily of grant income from the Assistance Agreement.

During the year ended December 31, 2025, we conducted detailed design of the continuous electrolyte production pilot line.

Grant income is recognized on the non-capital costs of the project.

While there can be no assurance that we will continue to receive funding under our government contracts and grants in the amounts we expect or at all, we may continue to recognize grant income as we execute on the Assistance Agreement and construct a pilot electrolyte line using a continuous manufacturing process.

Operating Expenses

Year Ended December 31,

(in thousands)

Research and development

Selling, general and administrative

Total operating expenses

Operating expenses decreased $2.9 million in the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a decrease in our selling, general and administrative costs as a result of a decrease in external contractors and outside consultants.

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milestones under the SK On Agreements.

The decrease in government revenue in 2024 was related to the completion of certain government grants in 2023 and the timing of entry into the Assistance Agreement with DOE.

While there can be no assurance that we will continue to receive funding under our government contracts and grants in the amounts we expect or at all, government revenue may increase in 2025 compared to 2024 as we execute on the Assistance Agreement and begin facility engineering and construction of a pilot electrolyte line using a continuous manufacturing process.

Operating Expenses

Our operating expenses consist primarily of research and development costs focused on improving the performance of our electrolyte and cell designs.

In 2024, operating expenses were $125.5 million, an increase of $17.5 million compared to our operating expenses of $108.0 million in 2023.

This increase was largely attributable to a 30% increase in electrolyte production in 2024 compared to 2023.

This resulted in a corresponding increase to our production costs, such as materials, lab supplies, and hazardous waste removal.

In 2025, we expect production costs to be consistent with 2024.

Although we anticipate increasing electrolyte production in 2025, we intend to offset the increase in production cost with more favorable pricing on input materials and hazardous waste disposal.

The increase in operating expenses in 2024 also resulted from equipment purchases made in the performance of the SK On Agreements, which accounted for $8.2 million of our operating expenses in 2024.

In 2025, we expect expenses associated with the execution of the SK On Agreements to increase in correlation with an increase in revenue as we achieve the next milestones under the SK On Agreements.

Additionally, we had an increase in costs related to scaling our operations in the United States and the Republic of Korea in 2024.

Overall, we expect operating expenses to increase in 2025 compared to 2024 as we continue to focus on our collaborative arrangements and research and development efforts.

Direct costs consisted of costs incurred to support execution of our collaborative and government agreements.

Direct costs remained consistent for the year ended December 31, 2025 compared to December 31, 2024.

The majority of the direct costs during the years ended December 31, 2025 and 2024 were driven by the services provided and equipment purchased by Dahae Energy Co., Ltd.

(“Dahae”), a strategic partner serving as installer of the SK On Line.

Direct costs during the year ended December 31, 2025 included materials and internal labor to support site acceptance testing at SK On’s facility under the line installation agreement.

We expect direct costs to continue to correlate with our recognized revenue as we complete site acceptance testing and continue to execute on the project milestones supporting construction of our continuous electrolyte production pilot line .

Research and Development

Research and development-related operating expenses largely consisted of employee compensation and employee benefit costs incurred to maintain our skilled workforce, including engineers, scientists, operators, chemists, and technicians.

Total research and development costs remained consistent during the year ended December 31, 2025 compared to the same period ended December 31, 2024.

Selling, General and Administrative

Selling, general and administrative expenses were largely comprised of employee compensation and personnel related costs for our administrative functions as well as costs driven by insurance and regulatory requirements.

Selling, general and administrative expenses decreased by $2.4 million in the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to a decrease in stock-based compensation expense as a result of forfeitures of unvested stock options and restricted stock units.

The decrease of selling, general and administrative expenses was also driven by the decision to reduce external contractor and consultant support.

Overall, we expect operating expenses for 2026 to remain consistent with 2025 as we continue to execute on our objectives and focus on cost reduction efforts to offset overall rising costs.

Nonoperating Income and Expense

Our nonoperating income and expense consists of interest income earned on our investments, the non-cash change in our fair value of our warrant liabilities, and non-recurring expense items.

In 2024, nonoperating income and expense was $10.1 million, a decrease of $15.0 million compared to our nonoperating income and expense of $25.1 million in 2023.

This decrease was driven in part by the reduced cash balance of our investments in 2024, which resulted in a lower actual book return of our investments.

As a result, interest income in 2024 was $17.7 million, a decrease of $2.6 million compared to interest income of $20.3 million in 2023.

The decrease in nonoperating income and expense was also due to a change in the fair value of our warrant liabilities that drove a year-over-year increase in expense of $9.4 million as well as a $2.0 million non-cash loss on the disposal of assets.

Year Ended December 31,

(in thousands)

Interest income

Change in fair value of warrant liabilities

Interest expense

Other expense

Total nonoperating income and expense

Nonoperating income and expense includes interest income, the non-cash impact from the change in the fair value of our warrant liabilities, and other irregular items, such as the gain or loss on asset sales and impacts from transacting in foreign currency.

For the year ended December 31, 2025, nonoperating income and expense decreased $2.8 million compared to the year ended December 31, 2024 primarily due to a decrease in interest income earned as well as a change in other expense.

Interest income earned decreased $4.5 million for the year ended December 31, 2025 compared to the prior period, primarily due to a reduction in the average available-for-sale securities balance earning interest of $301.9 million in 2025 compared to $364.5 million in 2024.

Other expense decreased $2.3 million for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The decrease in other expense was due to a decrease in loss on sale of assets, with a loss of $0.6 million in 2025 compared to $2.0 million in 2024, and an $0.8 million loss on the extinguishment of a promissory note executed and extinguished in 2024.

Overall, we expect nonoperating income and expense for 2026 to remain consistent with 2025 and 2024 other than interest income, which we expect to increase in 2026 as the balance in our investment portfolio has increased as a result of the Registered Direct Offering that occurred in January 2026.

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Liquidity and Capital Resources

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The sale of equity has historically been our primary source of cash, with a smaller portion of cash coming from achievement of performance milestones under agreements with our partners and our government contracts.

As of December 31, 2024 and 2023, we had total liquidity as set forth below:

Our total liquidity as of December 31, 2025 and 2024 was as follows:

(in thousands)

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Total liquidity

As of December 31, 2025, total liquidity, which includes all cash and cash equivalents as well as our available-for-sale securities, was $336.5 million, an increase of $9.0 million compared to December 31, 2024.

As of December 31, 2025, contract assets and accounts receivables were $9.6 million and total current liabilities were $16.8 million.

As of December 31, 2024, contract receivables were $1.4 million, deferred revenue was $3.2 million, and total current liabilities were $20.0 million.

As of December 31, 2023, contract receivables were $1.6 million, deferred revenue and deferred revenue from related parties was $0.8 million, and total current liabilities were $15.9 million.

Short-Term Liquidity Requirements

Our short-term liquidity requirements include operating and capital expenses needed to further our research and development programs and to install our continuous electrolyte production line.

We anticipate that our most significant capital expenditures in 2025 will relate to facility engineering and construction of a pilot electrolyte line using a continuous manufacturing process and improvements to our cell development capabilities.

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We anticipate our total combined capital expenditures and cash flow from operations for 2025 will be between $100 million and $120 million, excluding any benefit from the Assistance Agreement.

Our short-term liquidity requirements include operating and capital expenses needed to further our research and development programs and to install our continuous electrolyte production pilot line.

We anticipate that our most significant capital expenditures in 2026 will relate to facility engineering and construction of a pilot electrolyte line using a continuous manufacturing process.

We believe that our cash on hand is sufficient to meet our operating cash needs and working capital and capital expenditure requirements for a period of at least the next 12 months.

We anticipate our total combined capital expenditures and cash flow from operations for 2026 will be between $85 million and $100 million.

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

Long-Term Liquidity Requirements

We believe that our cash on hand is sufficient to meet our operating cash needs and working capital and capital expenditure requirements for a period of at least the next 12 months.

Longer-term, we believe we have adequate liquidity to support our operations until we generate adequate cash flows from electrolyte sales and/or licensing activities or we raise additional capital.

We also believe that we have adequate cash on hand for our stock repurchase program should we choose to execute additional share repurchases.

We may require additional liquidity sources if there are material changes to our business conditions or other developments, including changes to our operating plan;

Longer-term, we believe that our cash on hand will be sufficient to meet our current and expected needs for the next several years.

We may require additional liquidity sources longer-term if there are material changes to our business conditions or other developments, including changes to our operating plan;

development progress or delays;

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

At-the-Market Offering

On September 5, 2025, we entered into the Distribution Agreement with Oppenheimer with respect to the ATM.

Under the Distribution Agreement, we may offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $150.0 million through Oppenheimer.

During the year ended December 31, 2025, we sold 18,023,085 shares of common stock at an average price of $5.06 per share, raising gross proceeds of $91.2 million before deducting offering costs, commissions, and fees.

Our net proceeds totaled $88.8 million after deducting offering costs, commissions, and fees.

We intend to use the net proceeds from shares offered and sold under the ATM for working capital and general corporate purposes.

As of December 31, 2025 approximately $58.8 million remained available for future sales under the Distribution Agreement.

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Stock Repurchase Program

On January 23, 2024, we announced that our Board approved a stock repurchase program authorizing us to purchase up to $50 million of our outstanding common stock.

Under the stock repurchase program, we may purchase shares of our common stock from time to time until the repurchase program expires on December 31, 2025.

The shares of common stock may be purchased on the open market, in unsolicited negotiated transactions, or in any manner that complies with the provisions of Rule 10b-18 of the Exchange Act.

Management’s decision to repurchase shares will depend on a number of factors, such as the price of our common stock, economic and market conditions, and corporate and regulatory requirements.

Under the stock repurchase program, we were authorized to purchase shares of our common stock from time to time until the program’s expiration on December 31, 2025.

During the year ended December 31, 2025, we repurchased 3,361,396 shares of common stock at an average cost of $1.05 per share for an aggregate cost of approximately $3.53 million.

During the year ended December 31, 2024, we repurchased 5,704,401 shares of common stock at an average cost of $1.59 per share for an aggregate cost of approximately $9.07 million.

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

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Net cash and cash equivalents used in operating activities

Net cash and cash equivalents provided by investing activities

Net cash and cash equivalents provided by (used in) investing activities

Net cash and cash equivalents provided by (used in) financing activities

Cash used in operating activities:

Cash used in operating activities increased $5.6 million from 2023 to 2024 primarily due to increased research and development costs related to improving our electrolyte and cell designs and increased electrolyte production.

The increase in cash used in operating activities was also due to increased direct equipment costs associated with execution of the SK On Agreements, with a portion of these costs reflected in Prepaid expenses and other current assets in the Consolidated Balance Sheets as of December 31, 2024.

The increase in cash used in operating activities was partially offset by increased cash received from customers, with $21.1 million of cash received from customers in 2024 compared to $12.6 million of cash received from customers in 2023.

Cash provided by investing activities:

Cash provided by investing activities increased $21.7 million from 2023 to 2024 primarily due to increased proceeds from purchases and sales of available-for-sale securities, which provided $86.8 million of proceeds in 2024 compared to $77.6 million of proceeds in 2023.

The increase in cash provided by investing activities was partially offset by capital expenditures for construction of the EIC in 2024 and cash used for our investment in a strategic partner in the Republic of Korea.

Cash used in operating activities for the year ended December 31, 2025 increased $9.5 million compared to the year ended December 31, 2024.

This increase was primarily driven by a decrease of $10.9 million of cash received from our partners, with $11.8 million of cash received from our partners in 2025 compared to $22.7 million in 2024.

Cash received from partners is paid based on achievement of milestones and changes based on the timing and the payment terms in our arrangements.

Cash used for operations independent of cash received from our partners decreased $1.3 million for the year ended December 31, 2025 compared to the prior year.

This change was driven by a decrease in direct payments and an increase in payments for operating activities.

Direct payments primarily consisted of payments to Dahae for services, equipment, and supplies supporting installation of the SK On Line.

Total payments to Dahae were $6.3 million in the year ended December 31, 2025 compared to $11.0 million in 2024.

This decrease was due to the timing of achieving milestone and the associated payment terms under our arrangement with Dahae.

Payments supporting the remainder of our operations which includes employee compensation, facility expenses, purchases of materials, and hazardous waste removal increased $3.4 million in the year ended December 31, 2025 compared to the same period in 2024, primarily due to timing of our annual contract payments.

We expect cash used in operating activities to decrease in 2026 as a result of decreased direct payments following completion of site acceptance testing under the line installation agreement.

Cash provided by (used in) investing activities:

Cash provided by investing activities decreased $84.1 million in the year ended December 31, 2025 compared to the year ended December 31, 2024 due primarily to proceeds received under the ATM during the year ended December 31, 2025 and the resulting impact on our investment portfolio.

Proceeds from sales of our available-for-sale securities contributed to a year-over year net cash flow decrease of $95.6 million.

This change was driven by the use of $88.8 million of proceeds, net of offering costs, commissions, and fees, in 2025 for the sale of shares of our common stock under the Distribution Agreement that were subsequently deployed to expand our investment portfolio.

Cash used for capital expenditures and intangibles decreased $5.3 million in the year ended December 31, 2025 compared to the year ended December 31, 2024.

Capital expenditures were primarily for the construction of our continuous electrolyte production pilot line, partially offset by receipt of $3.1 million under the Assistance Agreement, in 2025 and construction of the EIC in 2024.

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Cash paid for a loan receivable to our equity method investee, Dahae, was $0 in the year ended December 31, 2025 and $5.6 million in the year ended December 31, 2024.

We expect cash used in investing for capital expenditures for 2026 to increase as we transition from the design to construction and commissioning of the continuous pilot line construction.

Cash provided by (used in) financing activities:

Cash used in financing activities increased $9.6 million from 2023 to 2024 primarily as a result of cash utilized for the repurchase of $9.07 million of our common stock under the stock repurchase program.

Cash provided by financing activities increased $98.9 million in the year ended December 31, 2025 compared to the year ended December 31, 2024 due to proceeds received under the ATM.

Total proceeds received were $88.8 million, net of offering costs, commissions, and fees, for the sale of shares of our common stock under the Distribution Agreement.

The remaining increase was due to proceeds from the exercise of stock options, which provided an increase of $5.0 million of cash in 2025 compared to 2024, and the use of $5.5 million less cash for the repurchase of common stock in 2025 compared to 2024.

We expect cash provided by financing activities for 2026 to increase due to the Registered Direct Offering which occurred in January 2026.

Off-Balance Sheet Arrangements

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

We are not a party to any off-balance sheet arrangements.

Critical Accounting Estimates

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

Valuation of Private Placement Warrant Liability

Judgments and Uncertainties

Effect if Results Differ From Assumptions

The private placement warrant liability is classified as a liability, in accordance with Accounting Standards Codification (“ASC”) 815 – Hedge Accounting, as they do not satisfy the criteria to be classified as equity based on the indexation criteria.

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

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

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

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

Solid Power, Inc.

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Effect if Results Differ From Assumptions

We recognize revenue from our research and development collaboration agreements representing joint operating activities in accordance with ASC 808 – Collaborative Arrangements.

We assess revenue from our research and development collaboration agreements representing joint operating activities in accordance with ASC 808 – Collaborative Arrangements.

These agreements include the following components:

parties to the contract are active participants, both parties are exposed to significant risks and rewards, and both parties are dependent on the commercial success of the efforts under the contract.

Revenue recognition is recorded by analogy to ASC 606 – Revenue from Contracts with Customers.

Our revenue recognition accounting methodology requires us to make significant estimates and assumptions, and to apply professional judgment.

Our collaborative arrangements are recognized over time using the input measurement method utilizing labor hours in relation to total labor hours anticipated to satisfy the combined performance obligation.

Collaborative revenues from cost-based contracts are recognized based on costs incurred during each period plus any earned fee.

Prior to January 1, 2025, our collaborative arrangements were recognized using the input measurement method utilizing labor hours in relation to total labor hours anticipated to satisfy the performance obligation.

As of January 1, 2025, our collaborative arrangements recognize revenue over time using the input measurement method utilizing the cost-to-cost method to satisfy the combined performance obligation.

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis