Solid Power, Inc.: Form 10-Q for the period ended Sep 30, 2025

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Report. The following discussion contains forward-looking statements that reflect future plans, estimates, beliefs, and expected performance. For additional discussion, see “Cautionary Note Regarding Forward-Looking Statements” above. 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 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. Risk Factors” of the 2024 Form 10-K, and under “Part II, Item 1A. Risk Factors” in the Q2 Form 10-Q, as such descriptions may be updated or amended in future filings we make with the SEC. Unless indicated otherwise, the following discussion and analysis of results of operations and financial condition and liquidity relates to our current continuing operations and should be read in conjunction with the consolidated financial statements and notes thereto of this Report and the 2024 Form 10-K. We do not undertake, and expressly disclaim, any obligation to publicly update any forward-looking statements, whether as a result of new information, new developments, or otherwise, except to the extent that such disclosure is required by applicable law.

Overview

Solid Power is a U.S.-based leader in solid-state battery technology and manufacturing processes. Our core technology is a sulfide-based solid electrolyte material, which replaces the liquid or gel electrolyte used in traditional lithium-ion battery cells. We believe our electrolyte technology has the potential to enable a step-change improvement in battery cell performance beyond what is currently achievable in conventional lithium-ion battery cells, including improved energy density, battery life, and safety performance. We are currently targeting the battery electric vehicle market due to the size and perceived demand for next generation battery technology but believe our technologies can have a broader application as they mature.

2025 Development Objectives

We made progress on our 2025 development objectives as the solid-state battery landscape continues to evolve. Below is a summary of recent progress towards our goals.

• Drive electrolyte innovation and performance through feedback from cell development and customers; ramp electrolyte sampling and identify long-term customers - We announced a Joint Evaluation Agreement with Samsung SDI Co., Ltd. and BMW AG to progress the development of all-solid-state batteries, marking meaningful progress on our path towards commercialization.
• Continue executing on our electrolyte development roadmap – We conducted detailed design for the planned installation of a pilot line designed to manufacture electrolyte on a continuous process. We expect detailed design to be substantially completed by the end of 2025 and remain on track for commissioning of the line in 2026.
• Execute on the SK On Agreements – We conducted site acceptance testing under our line installation agreement with SK On Co., Ltd. (“SK On”). We remain on track for completion of site acceptance testing at SK On’s facility by the end of 2025.
• Remain fiscally disciplined – We remained fiscally disciplined, balancing financial discipline with appropriate investments in technology developments and process improvements. We also raised net proceeds of $32.9 million through sales of our shares of common stock under an at-the-market offering program (the “ATM”). See “—Results of Operations” and “—Liquidity and Capital Resources” for more information.

Key Factors Affecting Operating Results

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 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 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, 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.

In addition to meeting our development goals, commercialization and future growth and demand for our products are highly dependent upon consumers adopting EVs. The market for new energy vehicles is still rapidly evolving due to emerging technologies, competitive pricing, government regulation and industry standards, and changing consumer demands and behaviors.

Basis of Presentation

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 were conducted primarily in the United States and the Republic of Korea. Our historical results are reported under U.S. generally accepted accounting principles and in U.S. dollars.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2025 to the Three and Nine Months Ended September 30, 2024

During the three and nine months ended September 30, 2025, our capital and operational investments supported our key 2025 development objectives.

Revenue and Grant Income

Revenue recognized consists of performance on our non-government contracts as well as certain government contracts. Grant income recognized consists of performance on our assistance agreement, dated January 1, 2025 (as amended effective May 15, 2025, the “Assistance Agreement”), with the U.S. Department of Energy (“DOE”).

Revenue and grant income remained consistent with a $0.1 million decrease for three months ended September 30, 2025 compared to the three months ended September 30, 2024. Revenue and grant income increased $2.4 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily driven by the performance on our Assistance Agreement in the nine months ended September 30, 2025.

We recognized $3.0 million and $13.4 million of collaborative revenue for the three and nine months ended September 30, 2025, respectively. The collaborative revenue primarily consists of performance on our research and development technology license agreement, line installation agreement, and electrolyte supply agreement with SK On (collectively, the “SK On Agreements”). During the three months ended September 30, 2025, we conducted site acceptance testing of the SK On line under the line installation agreement. We plan to complete site acceptance testing by the end of this year, which would result in additional revenue recognition.

We recognized $1.6 million and $4.7 million of government revenue and government grant income for the three and nine months ended September 30, 2025, respectively. Government revenue and government grant income consisted primarily of grant income from the Assistance Agreement. The Assistance Agreement stipulates that the DOE will provide us with funding of up to $50 million for our installation of equipment necessary for the continuous production of sulfide-based solid electrolyte material. During the three and nine months ended September 30, 2025, we continued developing the detailed design of the continuous electrolyte production pilot line. Grant income is recognized on the non-capital costs of the project. As we continue to execute on the project milestones, we expect to recognize additional grant income.

Operating Expenses

Operating expenses decreased $3.3 million in the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily due to direct costs related to initial design costs associated with the line installation agreement with SK On in the period ended September 30, 2024. Operating expenses decreased $3.6 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 attributable to decreases in our direct costs as well as selling, general and administrative costs.

Direct Costs

Direct costs decreased $3.3 million for the three months ended September 30, 2025 compared to the same period in 2024 due to timing of achievements of milestones under our collaboration agreements. Executing on the milestones under our collaboration agreements required greater investments in 2024 than in the same period ended in 2025. In the three months ended September 30, 2025, we incurred $2.1 million in services and equipment provided by Dahae Energy Co., Ltd. (“Dahae”), a strategic partner serving as installer of the SK On line. Costs this period included material and internal labor to support site acceptance testing under the line installation agreement.

Direct costs decreased $1.9 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 mostly due to a decrease in services and equipment provided by Dahae in the nine months ended September 30, 2025 compared to the same period in the prior year.

We expect an increase in direct costs corresponding to our revenue growth as we complete site acceptance testing of the line at SK On’s facility this year and continue to execute on the construction of the project milestones supporting 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 increased $1.0 million and $0.9 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods ended September 30, 2024 due to an $0.8 million patent impairment loss in the three months ended September 30, 2025. Aside from this impairment loss, research and development costs remained consistent.

Selling, General and Administrative

Selling, general and administrative expenses are 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 $0.9 million and $2.6 million in the three and nine months ended September 30, 2025, respectively, compared to the same periods ended September 30, 2024 largely 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 strategic decision to reduce contractor and consultant support.

Overall, we expect operating expenses for the remainder of the year to decrease as we continue to execute on our objectives and focus on cost reduction efforts to offset overall rising costs.

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 immaterial income and expense items.

For the three months ended September 30, 2025, nonoperating income and expense decreased $6.1 million compared to the three months ended September 30, 2024 due to both the change in fair value of the warrant liabilities as well as the change in interest income earned. Interest income earned decreased $1.2 million for the three months ended September 30, 2025 due to a reduction in the total available-for-sale securities available to earn interest compared to prior year. The change in the fair value of the warrant liabilities for the three months ended September 30, 2025 caused a $3.5 million loss compared to the three months ended September 30, 2024 where the change in the fair value caused a gain of $1.6 million. The impact of these changes caused a period-over-period loss in the fair value of warrant liabilities of $5.1 million.

For the nine months ended September 30, 2025, nonoperating income and expense decreased $7.0 million compared to the nine months ended September 30, 2024 due to both the change in fair value of the warrant liabilities as well as the change in interest income earned. Interest income earned decreased $3.8 million for the nine months ended September 30, 2025 compared to the same period in 2024 due to a reduction in the total available-for-sale securities available to earn interest. The change in the fair value of the warrant liabilities for the nine months ended September 30, 2025 caused a $0.8 million loss compared to the nine months ended September 30, 2024 where the change in the fair value caused gain of $1.8 million. The impact of these changes caused a period-over-period loss in the fair value of warrant liabilities of $2.6 million.

Liquidity and Capital Resources

Sources of Liquidity

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 government contracts. We also receive cash from the interest earned on our available-for-sale securities.

As of September 30, 2025 and December 31, 2024, we had total liquidity, as set forth below:

(in thousands)

As of September 30, 2025 total liquidity, which includes all cash and cash equivalents as well as our available-for-sale securities, was $300.4 million, a decrease of $27.0 million compared to December 31, 2024. As of September 30, 2025, contract assets and contract receivables were $7.2 million and total current liabilities were $16.6 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 pilot line. We anticipate that our most significant capital expenditures for the remainder of the year will relate to facility engineering and construction of our continuous electrolyte production pilot line as well as improvements to our cell development capabilities. 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.

Long-Term Liquidity Requirements

Longer term, we may require additional liquidity prior to being able to generate adequate cash flows from electrolyte sales and/or licensing activities. We also may require funding if there are material changes to our business conditions or other developments, including changes to our operating plan; development progress or delays; negotiations with OEMs, cell manufacturers, or other customers; market adoption of EVs; supply chain challenges; competitive pressures; government regulations, including tariffs; and inflation. To the extent that our resources, including our ability to use the ATM to generate additional proceeds, are insufficient to satisfy our cash requirements, we may need to seek equity or debt financing. We also may opportunistically seek to enhance our liquidity through equity or debt financing, if such financing becomes available to us on terms that we consider favorable. If 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 an Equity Distribution Agreement (the “Distribution Agreement”) with Oppenheimer & Co. Inc., serving as agent (“Oppenheimer”), with respect to the ATM under which 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 three months ended September 30, 2025, we sold 8,471,849 shares of common stock at an average price of $4.02 per share raising gross proceeds of $34.1 million before deducting offering costs, commissions, and fees. Our net proceeds totaled $32.9 million. We intend to use the net proceeds from shares offered and sold under the ATM for working capital and general corporate purposes.

As of September 30, 2025, approximately $115.9 million remained available for future sales under the Distribution Agreement.

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 of common stock will depend on a number of factors, such as the price of the common stock, economic and market conditions, and corporate and regulatory requirements. During the nine months ended September 30, 2025, we repurchased 3,361,396 shares of common stock at an average price of $1.05 per share for an aggregate cost excluding commissions of approximately $3.53 million. During the nine months ended September 30, 2024, we repurchased 5,000,000 shares of common stock at an average price of $1.63 per share for an aggregate cost of approximately $8.27 million.

Cash Flows

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

(in thousands)

Cash used in operating activities:

Cash used in operating activities for the nine months ended September 30, 2025 increased $5.0 million compared to the nine months ended September 30, 2024 primarily driven by a decrease in cash received from our partners in the period ending September 30, 2025. We received $12.1 million of cash from our partners in the nine months ended September 30, 2025, compared to $20.4 million of cash received from our partners in the nine months ended September 30, 2024. The cash received from partners is paid based on achievement of milestones and will change based on the timing of those milestone payments and the payment terms in our arrangements.

Cash used for operations independent of cash received from our partners decreased $3.3 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 mainly due to a decrease in cash used for payments to Dahae for services, equipment and supplies. Cash used for payments to Dahae were $5.3 million in the nine months ended September 30, 2025 compared to $8.2 million in the nine months ended September 30, 2024. This change is due to the timing of milestone payments under our agreement with Dahae in connection with the SK On arrangement.

Cash used for employee compensation and other employee benefit related costs, including the payout of annual performance-based incentive compensation, totaled $31.3 million in the nine months ended September 30, 2025 compared to $33.7 million for the same period in prior year. The remaining cash used in operating activities for the nine months ended September 30, 2025 were costs to operate our facilities, purchases of materials and supplies, and hazardous waste removal. We anticipate cash used in operations for the remainder of the year to remain consistent, with decreased cash receipts from partners partially offsetting decreased cash used for expenses.

Cash provided by investing activities:

Cash provided by investing activities decreased by $16.0 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to the change in the activity on our proceeds and purchases of our available-for-sale securities, change in capital expenditures, and cash used for loan receivables.

Proceeds from our available-for-sale security activity decreased $25.8 million in the nine months ending September 30, 2025 compared to the same period in prior year. This change was due to the timing of the individual security maturity date and the sale of fewer securities in the nine months ended September 30, 2025 compared to the same period in 2024.

Cash used for capital expenditures and intangibles decreased $5.3 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Capital expenditures in 2025 were primarily for the construction of our continuous electrolyte production pilot line. Cash used for capital expenditures for the same period in 2024 was for construction of our Electrolyte Innovation Center, or EIC. Capital expenditures for the nine months ended September 30, 2025 totaled $8.1 million partially offset by cash received of $2.5 million from the DOE under the Assistance Agreement. We anticipate cash used in investing for capital expenditures for the remainder of the year to increase as we continue to make progress toward the installation of the continuous electrolyte production pilot line.

Cash paid for a loan receivable from our equity method investee, Dahae, was $0 in the nine months ended September 30, 2025 and $4.5 million in the nine months ended September 30, 2024.

Cash provided by financing activities:

Cash provided by financing activities increased $39.5 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily due to receipt of $32.9 million of proceeds, net of offering costs, commissions, and fees, for the sale of shares of our common stock under the Distribution Agreement. Cash used in our stock repurchase program decreased $4.7 million in the nine months ended September 30, 2025 compared to nine months ended September 30, 2024. We repurchased $3.6 million of our stock under the stock repurchase program in the nine months ended September 30, 2025 compared to $8.3 million of our common stock in the nine months ended September 30, 2024. The remaining cash used in financing activities for the nine months ended September 30, 2025 was cash paid for withholding of employee taxes related to stock-based compensation and payments on finance lease liabilities, partially offset by proceeds from the exercise of stock options.

Off-Balance Sheet Arrangements

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

Critical Accounting Estimates

Except as set forth below, there have been no significant and material changes in our critical accounting policies and use of estimates during the nine months ended September 30, 2025 as compared to those disclosed in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in the 2024 Form 10-K.

Collaborative Revenue

Recent Accounting Pronouncements

See Note 2 of our unaudited financial statements included in this Report as well as Note 2 of our audited financial statements included in the 2024 Form 10-K for more information.

We are a smaller reporting company as defined in Rule 12b-2 under the Exchange Act. As a result, pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information required by this Item.

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 September 30, 2025.

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.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the three months ended September 30, 2025 covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our business, prospects, reputation, results of operations and financial condition, as well as the price of our common stock and warrants, can be affected by a number of factors, whether currently known or unknown, including those described in “Part I, Item 1A. Risk Factors” of the 2024 Form 10-K and “Part II, Item 1A. Risk Factors” of the Q2 Form 10-Q, as such descriptions may be updated or amended in future filings we make with the SEC. When any one or more of these risks materialize from time to time, our business, reputation, results of operations and financial condition, as well as the price of our common stock and warrants, can be materially and adversely affected. There have been no material changes to our risk factors since the Q2 Form 10-Q.