UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~(Mark One)~~
☒ ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the quarterly period ended ~~March 31, 2021~~

☐ ~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~June 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number:001-40284

SOLID POWER, INC.

(Exact name of registrant as specified in its charter)


Delaware		86-1888095
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

~~Decarbonization Plus Acquisition Corporation III~~486 S. Pierce Ave., Suite E
Louisville, Colorado		80027
~~(Exact name of registrant as specified in its charter)~~
~~Delaware~~	~~001-40284~~		~~86-1888095~~
(State or other jurisdiction of incorporation)	~~(Commission File Number)~~		(I.R.S. Employer Identification No.)

~~2744 Sand Hill Road, Suite 100~~ ~~Menlo Park, California~~		~~94025~~
(Address of principal executive offices)			(Zip Code)

~~(212) 993-0076~~
~~(Registrant’s telephone number, including area code)~~

~~Not Applicable~~
~~(Former name or former address, if changed since last report)~~

(303) 219-0720

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading ~~Symbol(s)~~symbol(s)		Name of each exchange on which registered
~~Units, each consisting of one share of Class A common stock and one-third of one warrant~~	~~DCRCU~~		~~Nasdaq Capital Market~~
~~Class A common~~Common stock, par value $0.0001 per share	SLDP	~~DCRC~~		The Nasdaq ~~Capital~~Stock Market LLC
Warrants, each whole warrant exercisable for one share of ~~Class A~~ common stock at an exercise price of $11.50 ~~per share~~	SLDPW	~~DCRCW~~		The Nasdaq ~~Capital~~Stock Market LLC

Indicate by check mark whether the ~~registrant:~~registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ No ☒

Explanatory Note: The registrant did not become subject to the filing requirements of the Securities Exchange Act of 1934 until March 23, 2021; however, the registrant has filed all reports that would have been required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months had the registrant been subject to such filing requirements.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer☐	☐	Accelerated filer☐		Non-accelerated filer ☒	Smaller reporting company ☐
			~~Non-accelerated filer~~		☒	~~Smaller reporting company~~	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ No ☐

~~As of June 4, 2021, 35,500,000~~174,545,062 shares of ~~Class A~~ common stock ~~par value $0.0001 per share, and 8,750,000 shares of Class B common stock, par value $0.0001 per share,~~ were issued and ~~outstanding.~~outstanding as of August 5, 2022.

DECARBONIZATION PLUS ACQUISITION CORPORATION III
Quarterly Report on Form 10-Q

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SOLID POWER, INC.

FORM 10-Q

Table of Contents

Table of Contents

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Report”) of Solid Power, Inc. (f/k/a Decarbonization Plus Acquisition Corporation III, “Solid Power,” the “Company,” “we,” “us,” or “our”) contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this Report, regarding our future financial performance and our strategy, expansion plans, market opportunity, future operations, future operating results, estimated revenues, losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “will,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “project” or the negative of such terms or other similar expressions. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Report. We caution you that the forward-looking statements contained herein are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control.

In addition, we caution you that the forward-looking statements regarding the Company contained in this Report are subject to the following factors:

●

risks relating to the uncertainty of the success of our research and development efforts, including our ability to achieve the technological objectives or results that our partners require, and to commercialize our technology in advance of competing technologies;

●

risks relating to the non-exclusive nature of our original equipment manufacturers and joint development agreement relationships;

●

our ability to negotiate and execute supply agreements with our partners on commercially reasonable terms;

●

our ability to protect our intellectual property, including in jurisdictions outside of the United States;

●

broad market adoption of electric vehicles and other technologies where we are able to deploy our all-solid-state batteries, if developed successfully;

●

our success in retaining or recruiting, or changes required in, our officers, key employees, including technicians and engineers, or directors;

●

changes in applicable laws or regulations;

●

risks related to technology systems and security breaches;

●

the possibility that COVID-19 or a future pandemic may adversely affect our results of operations, financial position and cash flows;

●

the possibility that we may be adversely affected by other economic, business or competitive factors, including supply chain interruptions, and may not be able to manage other risks and uncertainties;

●

risks relating to our status as an early stage company with a history of financial losses, and an expectation to incur significant expenses and continuing losses for the foreseeable future;

●

rollout of our business plan and the timing of expected business milestones;

●

the termination or reduction of government clean energy and electric vehicle incentives;

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●

delays in the construction and operation of production facilities;

●

changes in domestic and foreign business, market, financial, political and legal conditions; and

●

those factors discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.

We caution you that the foregoing list does not contain all of the risks or uncertainties that could affect the Company.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, operating results, financial condition and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Report to reflect events or circumstances after the date of this Report or to reflect new information or the occurrence of unanticipated events, except as required by law. You should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

iTRADEMARKS

Our logo and trademark appearing in this Report and the documents incorporated by reference herein are our property. This document and the documents incorporated by reference herein contains references to trademarks and service marks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Report may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of it by, any other companies.

MARKET AND INDUSTRY DATA

We obtained the industry and market data used throughout this Report or any documents incorporated herein by reference from our own internal estimates and research, as well as from independent market research, industry and general publications and surveys, governmental agencies, publicly available information and research, and surveys and studies conducted by third parties. Internal estimates are derived from publicly available information released by industry analysts and third-party sources, our internal research and our industry experience, and are based on assumptions made by us based on such data and our knowledge of our industry and market, which we believe to be reasonable. In some cases, we do not expressly refer to the sources from which this data is derived. In addition, while we believe the industry and market data included in this Report or any documents incorporated herein by reference is reliable and based on reasonable assumptions, such data involve material risks and other uncertainties and is subject to change based on various factors, including those discussed in the section entitled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties or by us.

Table of Contents

INFORMATION ABOUT SOLID POWER

We use our website (www.solidpowerbattery.com) and various social media channels as a means of disclosing information about Solid Power and our products to our customers, investors and the public (e.g., @SolidPowerInc on Twitter, Solid Power Inc. on LinkedIn, and Solid Power on YouTube). The information posted on our website and social media channels is not incorporated by reference in this Report or in any other report or document we file with the United States Securities and Exchange Commission (“SEC”). The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings, and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about Solid Power when you enroll your e-mail address by visiting the “Investor Email Alerts” section of our website at https://ir.solidpowerbattery.com.

Table of Contents

PART I -– FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements~~

~~DECARBONIZATION PLUS ACQUISITION CORPORATION III~~Item 1. Financial Statements

~~UNAUDITED BALANCE SHEET~~Solid Power, Inc.

March 31, 2021

ASSETS:

Current Assets:

Cash

$
2,986,880

Short term prepaid insurance

551,380

Total Current Assets

3,538,261

Cash equivalent held in Trust Account

350,000,172

Long term prepaid insurance

560,596

Total assets

$
354,099,028

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable - offering costs (affiliate)

$
160,538

Accounts payable - affiliate

1,317,442

Accrued offering costs

480,200

Total current liabilities

1,958,180

Warrant liabilities

26,883,334

Deferred underwriting fee payable

12,250,000

Total liabilities

41,091,514

Commitments and Contingencies

Class A common stock subject to possible redemption, 30,800,751 shares at $10.00 per share

308,007,510

Stockholders' Equity

Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding

-

Class A common stock, $0.0001 par value; 250,000,000 shares authorized; 4,199,249 shares issued and outstanding (excluding 30,800,751 shares subject to possible redemption)

420

Class B common stock, $0.0001 par value, 20,000,000 shares authorized, 10,062,500 shares issued and outstanding (1)

1,006

Additional paid-in capital

6,043,810

Accumulated deficit

(1,045,232
)
Total stockholders' equity

5,000,004

Total liabilities and stockholders' equity

$
354,099,028

Condensed Consolidated Balance Sheets

~~The accompanying notes are an integral part~~(in thousands, except par value and number of ~~these financial statements.~~shares)


	June 30, 2022
	(Unaudited)		December 31, 2021
Assets
Current Assets
Cash and cash equivalents	$	301,603	$	513,447
Marketable securities		182,694		75,885
Contract receivables		2,031		829
Prepaid expenses and other current assets		2,864		4,216
Total current assets		489,192		594,377

Property, Plant and Equipment, net		59,409		22,082
Right-Of-Use Operating Lease Asset, net		7,346		—
Right-Of-Use Financing Lease Asset, net		204		—
Other Assets		1,209		602
Long-term Investments		49,873		—
Intangible Assets, net		843		619
Total assets	$	608,076	$	617,680

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	9,540	$	4,326
Current portion of long-term debt		58		120
Deferred revenue		214		500
Accrued and other current liabilities:
Accrued compensation		2,227		1,151
Other accrued liabilities		805		2,269
Operating lease liabilities, short-term		674		—
Financing lease liabilities, short-term		47		—
Total current liabilities		13,565		8,366
Long-term Debt		—		10
Operating Lease Liabilities, Long-Term		7,312		—
Financing Lease Liabilities, Long-Term		152		—
Warrant Liabilities		21,837		50,020
Other Long-term Liabilities		—		393
Deferred Taxes		240		226
Total liabilities		43,106		59,015
Stockholders’ Equity
Common stock, $0.0001 par value; 2,000,000,000 shares authorized; 174,447,804 and 167,557,988 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		17		17
Additional paid in capital		572,456		568,183
Accumulated other comprehensive loss		(1,291)		—
Accumulated deficit		(6,212)		(9,535)
Total stockholders’ equity		564,970		558,665
Total liabilities and stockholders’ equity	$	608,076	$	617,680

~~(1)~~

2See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

~~Includes 1,312,500~~4

Table of Contents

Solid Power, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(in thousands, except number of shares ~~of Class B Common Stock subject to forfeiture if the over-allotment option is not exercised in full (See Note 5).~~and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue	$	2,582	$	561	$	4,778	$	1,041
Operating expenses
Direct costs		2,987		540		5,017		1,055
Research and development		8,440		3,203		15,101		6,309
Marketing and sales		957		535		1,752		1,090
General and administrative		4,894		2,332		8,918		2,929
Total operating expenses		17,278		6,610		30,788		11,383
Operating loss		(14,696)		(6,049)		(26,010)		(10,342)
Non-operating income (expense)
Interest income		735		9		936		9
Interest expense		(5)		(121)		(10)		(342)
Other income (expense)		196		(3,100)		235		(3,100)
Change in fair value of warrant liabilities		27,473		—		28,183		—
Loss from change in fair value of embedded derivative liability		—		—		—		(2,680)
Total non-operating income (expense)		28,399		(3,212)		29,344		(6,113)

Pretax income (loss)		13,703		(9,261)		3,334		(16,455)
Income tax expense (benefit)		36		12		13		(41)
Net income (loss)	$	13,667	$	(9,273)	$	3,321	$	(16,414)
Other comprehensive loss		(961)		—		(1,291)		—
Comprehensive income (loss) attributable to common stockholders	$	12,706	$	(9,273)	$	2,030	$	(16,414)
Basic earnings (loss) per share		0.08		(0.10)		0.02		(0.21)
Diluted earnings (loss) per share		0.08		(0.10)		0.02		(0.21)
Weighted average shares outstanding – basic		174,128,230		88,944,577		173,266,760		79,568,181
Weighted average shares outstanding – diluted		174,703,533		88,944,577		173,566,001		79,568,181

~~DECARBONIZATION PLUS ACQUISITION CORPORATION III~~See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

~~UNAUDITED STATEMENT OF OPERATIONS~~

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Solid Power, Inc.

~~FOR THE PERIOD FROM JANUARY 29, 2021 (INCEPTION) TO MARCH 31, 2021~~Condensed Consolidated Statement of Stockholders’ Equity (Unaudited)

Operating expenses:

General and administrative expenses

$
205,486

Loss from operations

(205,486
)

Other income:

Interest earned on marketable securities held in Trust Account

$
172

Offering costs allocated to warrant liabilities

(956,584
)
Change in fair value of warrant liabilities

116,666

Net loss

(1,045,232
)

Weighted average number of Class A redeemable common stock, basic and diluted

2,868,852

Basic and diluted net income per common share, Class A redeemable common stock

0.00

Weighted average shares outstanding of Class B non-redeemable common stock, basic and diluted

9,072,746

Basic and diluted net loss per common share, Class B non-redeemable common stock

(0.12
)

(in thousands, except number of shares)

~~The~~


	Common Stock			Additional Paid in		Accumulated		Accumulated Other		Total Stockholders’
	Shares	Amount		Capital		Deficit		Comprehensive Loss		Equity
Balance as of December 31, 2021	167,557,988	$	17	$	568,183	$	(9,535)	$	—	$	558,665
Net loss	—		—		—		(10,344)		—		(10,344)
Transaction fees			—		(12)						(12)
Stock options exercised	6,212,964		—		270		—		—		270
Stock-based compensation expense	—		—		1,596		—		—		1,596
Unrealized loss on marketable securities	—		—		—		—		(330)		(330)
Balance as of March 31, 2022	173,770,952	$	17	$	570,037	$	(19,879)	$	(330)	$	549,845
Net income	—		—		—		13,667		—		13,667
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	656,180		—		163		—		—		163
Stock-based compensation expense	—		—		2,314		—		—		2,314
Unrealized loss on marketable securities	—		—		—		—		(961)		(961)
Balance as of June 30, 2022	174,447,804	$	17	$	572,456	$	(6,212)	$	(1,291)	$	564,970


	Common Stock			Additional Paid in		Accumulated		Accumulated Other		Total Stockholders’
	Shares	Amount		Capital		Deficit		Comprehensive Loss		Equity
Balance as of December 31, 2020	69,885,043	$	7	$	31,492	$	(27,627)	$	—	$	3,872
Net loss	—		—		—		(7,141)		—		(7,141)
Beneficial conversion feature on convertible debt	—		—		4,875		—		—		4,875
Stock options exercised	276,822		—		17		—		—		17
Stock-based compensation expense	—		—		70		—		—		70
Balance as of March 31, 2021	70,161,865	$	7	$	36,454	$	(34,768)	$	—	$	1,693
Net loss	—		—		—		(9,273)		—		(9,273)
Redemption of Series A-1 redeemable preferred stock	(1,065,432)		—		(6,041)		—		—		(6,041)
Issuance of redeemable preferred stock	27,930,998		3		140,436		—		—		140,439
Stock options exercised	501,995		—		53		—		—		53
Warrants exercised	4,731,542				15						15
Stock-based compensation expense	—		—		147		—		—		147
Balance as of June 30, 2021	102,260,968	$	10	$	171,064	$	(44,041)	$	—	$	127,033

See accompanying ~~notes are an integral part~~Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of ~~these financial statements.~~Contents

Solid Power, Inc.

D~~ECARBONIZATION PLUS ACQUISITION CORPORATION~~ ~~III~~Condensed Consolidated Statements of Cash Flows (Unaudited)

~~UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY~~(in thousands)

~~FOR THE PERIOD FROM JANUARY 29, 2021 (INCEPTION) TO MARCH 31, 2021~~


	Six Months Ended June 30,
	2022		2021
Cash Flows from Operating Activities
Net income (loss)	$	3,321	$	(16,414)
Adjustments to reconcile net income (loss) to net cash and cash equivalents from operating activities:
Depreciation and amortization		1,782		1,102
Amortization of right-of-use assets		16		—
Loss on sale of property, plant and equipment		—		2
Stock compensation expense		3,910		217
Deferred taxes		13		(41)
Change in fair value of warrant liabilities		(28,183)		—
Accrued interest on convertible notes payable to be paid in kind		—		263
Loss from change in fair value of embedded derivative liability		—		2,680
Changes in operating assets and liabilities that provided (used) cash and cash equivalents:
Contract receivables		(1,202)		(110)
Prepaid expenses and other assets		744		(74)
Accounts payable		(2,796)		792
Deferred revenue		(286)		(38)
Accrued and other liabilities		(465)		1,500
Operating lease liability		188		(35)
Net cash and cash equivalents used in operating activities		(22,958)		(10,156)
Cash Flows from Investing Activities
Purchases of property, plant and equipment		(30,957)		(3,770)
Purchase of marketable securities and long-term investments		(212,792)		—
Proceeds from sales of marketable securities		54,819		—
Purchases of intangible assets		(228)		(85)
Net cash and cash equivalents used in investing activities		(189,158)		(3,855)

Cash Flows from Financing Activities
Proceeds from debt		—		958
Payments of debt		(71)		(1,574)
Proceeds from issuance of convertible note payable		—		4,875
Proceeds from exercise of common stock options		354		70
Receivable for exercise of common stock options		79		—
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		(20)		—
Transaction costs		(12)		—
Net cash and cash equivalents provided by financing activities		272		129,371

Net (decrease) increase in cash and cash equivalents		(211,844)		115,360
Cash and cash equivalents at beginning of period		513,447		4,974
Cash and cash equivalents at end of period		301,603		120,334

Supplemental information
Cash paid for interest	$	5	$	82
Accrued capital expenditures	$	8,146	$	2

Additional

Class A Common
Stock

Class B Common
Stock

Paid-in

Accumulated

Stockholders'

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balance as of January 29, 2021 (inception)

0

$
0

0

$
0

$
0

$
0

$
0

Class B Common Stock issued to Sponsor (1)

-

-

10,062,500

1,006

23,994

-

25,000

Sale of Class A Common Stock to Public, net of underwriting discounts and initial classification of warrant liabilities

35,000,000

3,500

-

-

313,746,500

-

313,750,000

Offering Costs

-

-

-

-

(678,838
)

-

(678,838
)

Cash paid in excess of fair value for Private Placement Warrants

-

-

-

-

956,584

-

956,584

Class A common stock subject to possible redemption

(30,800,751
)

(3,080
)

-

-

(308,004,430
)

-

(308,007,510
)

Net loss

-

-

-

-

-

(1,045,232
)

(1,045,232
)

Balance as of March 31, 2021

4,199,249

420

10,062,500

1,006

6,043,810

(1,045,232
)

5,000,004

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

~~The accompanying notes are an integral part~~

Table of ~~these financial statements.~~Contents

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~(1)Includes up to 1,312,500 shares of subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (See Note 5)~~

D~~ECARBONIZATION PLUS ACQUISITION CORPORATION~~ ~~III~~

~~UNAUDITED STATEMENT OF CASH FLOWS~~

~~FOR THE PERIOD FROM JANUARY 29, 2021 (INCEPTION) TO MARCH 31, 2021~~

Cash flow from operating activities:

Net loss

$
(1,045,232
)
Adjustments to reconcile net loss to net cash used in operating activities:

Change in fair value of warrant liabilities

(116,666
)
Offering costs allocated to warrant liabilities

956,584

Interest earned on marketable securities held in Trust Account

(172
)
Changes in operating assets and liabilities:

Accounts payable - affiliate

1,317,442

Prepaid insurance

(1,111,977
)
Net cash used in operating activities

(20
)

Cash flows from investing activities:

Investment of cash in Trust Account

(350,000,000
)
Net cash used in investing activities

(350,000,000
)

Cash flows from financing activities:

Proceeds from sale of Units, net of underwriting discounts paid

343,000,000

Proceeds from sale of Private Placement Warrants

10,000,000

Proceeds from sale of Class B Common Stock to Sponsor

25,000

Payment of offering costs

(38,100
)
Net cash provided by financing activities

352,986,900

Net increase in cash

2,986,880

Cash at beginning of period

-

Cash at end of period

$
2,986,880

Supplemental disclosure of non-cash financing activities:

Initial classification of Class A common stock subject to possible redemption

$
307,889,890

Change in initial value of Class A common stock subject to possible redemption

117,620

Accrued offering costs

$
640,738

~~The accompanying notes are an integral part of these financial statements.~~

Note 1 ~~— Description~~– Nature of ~~Organization~~Business

Solid Power, Inc. (the “Company”), headquartered in Louisville, Colorado, is developing all-solid-state battery cell technology primarily for the electric vehicle market. The Company’s planned business model is to license its all-solid-state battery cell designs and ~~Business Operations~~manufacturing know-how to top tier battery manufacturers or automotive original equipment manufacturers and to sell its sulfide-based solid electrolyte for incorporation into all-solid-state battery cells. As of June 30, 2022, the Company has not derived material revenue from its principal business activities.

~~Organization and General~~

On December 8, 2021 (the “Closing Date”), the Company (f/k/a Decarbonization Plus Acquisition Corporation III ~~(the “Company~~”(“DCRC”)) ~~was incorporated in Delaware on January 29, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar~~consummated its business combination ~~with one or more businesses (the “Initial~~pursuant to the Business Combination~~”). The Company is an “emerging growth company,” as defined in Section 2(a)~~ Agreement and Plan of Reorganization, dated June 15, 2021 (as amended, the ~~Securities Act of 1933, as amended, or the “Securities Act~~“Business Combination Agreement”),~~” as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).~~

~~At March 31, 2021,~~ among the Company, ~~had not commenced any operations. All activity for the period from January 29, 2021 (inception) to March 31, 2021 relates to the Company’s formation~~DCRC Merger Sub Inc., a Delaware corporation and ~~the initial public offering~~wholly owned subsidiary of DCRC (“~~Initial Public Offering”) described below, as well as the identification and evaluation~~of prospective acquisition targets for an Initial Business Combination and ongoing administrative and compliance matters. The Company will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Initial Public Offering. The Company has selected December 31st as its fiscal year end.

~~The registration statement for the Initial Public Offering was declared effective on March 23, 2021. On March 26, 2021, the Company consummated the Initial Public Offering of 35,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units sold, the “Public Shares~~”Merger Sub”), ~~at $10.00 per Unit, generating gross proceeds of $350,000,000, which is described in Note 4.~~

~~Simultaneously with the closing of the Initial Public Offering, the Company consummated the private sale of 6,666,667 warrants (the “Private Placement Warrants”) at~~and Solid Power Operating, Inc., a ~~price of $1.50 per Private Placement Warrant in~~ Colorado corporation (f/k/a ~~private placement~~Solid Power, Inc., “Legacy Solid Power”). Pursuant to ~~Decarbonization Plus Acquisition Sponsor III LLC (the “Sponsor”) and certain of the Company’s independent directors, generating gross proceeds of $10,000,000, which is described in Note 5.~~

Transaction costs amounted to $19,928,838 consisting of $7,000,000 of underwriting fees, $12,250,000 of deferred underwriting fees and $678,838 of other offering costs. In addition, at March 31, 2021, cash of $2,986,880 was held outside of the Trust Account (as defined below) and is available for working capital purposes.

Following the closing of the Initial Public Offering on March 26, 2021, an amount of $350,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “~~Trust Account~~”) located in the United States. The proceeds held in the Trust Account will be invested only in U.S. government treasury bills with a maturity of one hundred eighty (185) days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940 and that invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of the Initial Business Combination or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.

The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to pay taxes, if any, none of the funds held in the Trust Account will be released until the earlier of: (i) the completion of the Initial Business Combination; (ii) the redemption of any shares of Class A common stock included in the Units (the “~~Public Shares~~”) being sold in the Initial Public Offering that have been properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timing of its obligation to redeem 100% of the Public Shares if it does not complete the Initial Business Combination within 24 months from the closing of the Initial Public Offering; and (iii) the redemption of 100% of the Public Shares if the Company is unable to complete an Initial Business Combination within 24 months from the closing of the Initial Public Offering (subject to the requirements of law). The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.

~~Initial Business Combination~~

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward consummating an Initial Business Combination. The Initial Business Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the Initial Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect an Initial Business Combination.

The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of the Initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Initial Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable, or (ii) provide stockholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable. The decision as to whether the Company will seek stockholder approval of the Initial Business Combination or will allow stockholders to sell their Public Shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the ~~transaction would otherwise require~~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 ~~to seek stockholder approval, unless a vote is required~~(the “Merger” and, together with the other transactions contemplated by ~~law or under NASDAQ rules. If~~ the ~~Company seeks stockholder approval, it will complete its Initial~~ Business Combination ~~only if a majority of~~Agreement, the ~~outstanding shares of common stock voted are voted in favor of~~“Business Combination”).

Pursuant to the Initial Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Initial Business Combination ~~and instead may search~~Agreement, the Merger was accounted for ~~an alternate Initial Business Combination.~~

~~If the Company holds~~as a stockholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a public stockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable. As a result, such shares of Class A common stock will be recorded at redemption amount and classified as temporary equity upon the completion of the Initial Public Offering,reverse recapitalization (the “Reverse Recapitalization”) in accordance with ~~the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”~~

Pursuant to the Company’s amended and restated certificate of incorporation, if the Company is unable to complete the Initial Business Combination within 24 months from the closing of the Initial Public Offering, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned and not previously released to pay the Company’s franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholder’s rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The Sponsor and the Company’s independent director nominees will not be entitled to rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined below) held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Initial Public Offering. However, if the Sponsor or any of the Company’s directors, officers or affiliates acquires shares of Class A common stock in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the Initial Business Combination within the prescribed time period.

In the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject to the limitations described herein.

~~Note 2 — Correction of Previously Issued Financial Statements~~

~~On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the~~generally accepted accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“~~SPACs”)” (the “SEC Statement~~”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing the Company’s warrants. As a result of the SEC Statement, the Company reevaluated the accounting treatment of (i) the 11,666,667 redeemable warrants (the “~~Public Warrants”) that were included in the units issued by the Company in its initial public offering (the “Initial Public Offering~~”) and (ii) the 6,666,667 redeemable warrants that were issued to the Company’s sponsor in a private placement that closed concurrently with the closing of the Initial Public Offering (together with the Public Warrants, the “Warrants”). The Company previously accounted for the Warrants as components of equity.

~~In further consideration of the guidance in Accounting Standards Codification (“ASC”) 815-40,~~ ~~Derivatives and Hedging — Contracts in Entity’s Own Equity~~ (“~~ASC 815~~”), the Company concluded that a provision in the warrant agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants should be recorded as derivative liabilities on the balance sheet and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820, ~~Fair Value Measurement, with changes in fair value recognized in the Statement of Operations in the period of change.~~

~~In accordance with ASC Subtopic 825-10,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~ (“~~ASC 825-10~~”), as a result of the classification of the Warrants as derivative liabilities, the Company expensed a portion of the offering costs originally recorded as a reduction in equity. The portion of offering costs that was expensed was determined based on the relative fair value of the Public Warrants and shares of Class A common stock included in the Units to the proceeds raised.

~~The Company’s accounting for the warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported cash.~~

~~The following tables summarize the effect of the revision on each financial statement line item as of the dates, and for the period, indicated:~~

As Previously
Reported

Adjustment

As Revised

Balance Sheet as of March 26, 2021

Warrant liabilities

$
—

$
27,000,000

$
27,000,000

Total liabilities

13,086,989

27,000,000

40,086,989

Class A common stock subject to possible redemption

334,899,890

(27,000,000
)

307,899,890

Class A common stock

151

270

421

Additional paid-in capital

5,000,115

1,165,674

6,165,789

Retained earnings (accumulated deficit)

(1,271
)

(1,165,944
)

(1,167,215
)

~~Note 3 — Summary of Significant Accounting Policies~~

~~Basis of Presentation~~

~~The accompanying unaudited financial statements have been prepared in accordance with accounting~~ principles ~~generally accepted~~ in the United States (“GAAP”). Under this method of ~~America (“~~accounting, DCRC was treated as the “acquired” company and Legacy Solid Power is treated as the acquirer for financial reporting purposes. See Note 3.

Note 2 – Significant Accounting Policies

~~GAAP~~”The significant accounting policies followed by the Company are set forth in Note 2 – Significant Accounting Policies to the Company’s financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) and ~~pursuant~~are supplemented by the Notes to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentation have been included. Operating resultsCondensed Consolidated Financial Statements (Unaudited) (the “Notes”) included in this Quarterly Report on Form 10-Q for the period ~~from January 29, 2021 (inception) to March 31, 2021 are not necessarily indicative of~~ended June 30, 2022 (this “Report”). The financial statements included in this Report (including the ~~results that may~~Notes) should be ~~expected for the period from January 29, 2021 (inception) to December 31, 2021 or any future period.~~

~~Emerging Growth Company~~

~~The Company is an “emerging growth company,” as defined~~read in ~~Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act~~”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to complyconjunction with the ~~independent registered public accounting firm attestation requirements~~2021 Form 10-K.

Basis of ~~Section 404~~Presentation and Principles of ~~the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in the Company’s periodic reports and proxy~~Consolidation

The accompanying unaudited condensed consolidated financial statements ~~and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.~~

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

~~Net Income (Loss) Per Common Share~~

Net income (loss) per common share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period, excluding shares of common stock subject to forfeiture, plus, to the extent dilutive, the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock method. At March 31, 2021, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company ~~under~~have been prepared on the ~~treasury stock method. As a result, diluted income (loss) per common~~basis of GAAP. The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the unaudited condensed consolidated financial statements. Actual results could differ from those estimates. All dollar amounts presented herein are in U.S. dollars and are in thousands, except par value, share ~~is the same as basic income (loss) per common share for the period.~~

~~The Company’s statement of operations includes a presentation of income (loss)~~and per share ~~for common shares subject~~amounts.

The accompanying unaudited condensed 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.

Long-Term Investments

The Company considers all investments with an original maturity of twelve months or more when purchased to possible redemption in a manner similar to the two-class method of income per share. Net income per common share, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of Class A redeemable common stock outstanding for the period or since original issuance. Net loss per common share, basic and diluted for Class B non-redeemable common stock is calculated by dividing the net income (loss), less income attributable to Class A redeemable common stock, by the weighted average number of Class B non-redeemable common stock outstanding for the period. Class B non-redeemable common stock includes the Founder Shares (as defined below) as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.be long-term investments.

~~The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):~~

For the
Period from
January 29, 2021
(Inception)
to March 31, 2021

Class A Redeemable Common Stock

Numerator: Earnings allocable to Class A Redeemable Common Stock

Interest Income

$
172

Net Income

$
172

Denominator: Weighted Average Class A Redeemable Common Stock

Class A Redeemable Common Stock, Basic and Diluted

2,868,852

Income/Basic and Diluted Class A Redeemable Common Stock

$
0.00

Class B Non-Redeemable Common Stock

Numerator: Net Loss minus Redeemable Net Income

Net Loss

$
(1,045,232
)
Redeemable Net Income

(172
)
Non-Redeemable Net Loss

$
(1,045,404
)
Denominator: Weighted Average Class B Non-Redeemable Common Stock

Class B Non-Redeemable Common Stock, Basic and Diluted

9,072,746

Loss/Basic and Diluted Class B Non-Redeemable Common Stock

$
(0.12
)

~~Note: As of March 31, 2021, basic and diluted shares are the same as there are no securities that are dilutive to the Company’s common stockholders.~~

~~Concentration~~Concentrations of Credit Risk

Financial instruments that potentially subject the Company to ~~concentrations of~~ credit risk consist principally of cash ~~accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverage limits of $250,000.~~and cash equivalents, marketable securities, and long-term investments. The Company ~~has not experienced losses on these accounts~~seeks to mitigate its credit risk with respect to cash and ~~management believes the Company is not exposed to significant risks on such accounts.~~

~~Warrant Liabilities~~

~~The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms~~cash equivalents, marketable securities, and ~~applicable authoritative guidance~~long-term investments by making deposits with several large, reputable financial institutions and investing in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The Company utilized a Monte Carlo simulation model to value the Public Warrant liabilities at the date of the Initial Public Offering and at March 31, 2021, and utilizes a Black-Scholes model to value the Private Warrant liabilities that are categorized within Level 3 at each reporting period, with changes in fair value recognized in the Statement of Operations (see Note 8).

~~Fair Value of Financial Instruments~~

~~The Company applies ASC 820,~~ ~~Fair Value Measurement~~ (“ASC 820”), which establishes framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.

The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:

Level 1 – Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

~~Level 3 – Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.~~

high credit rated instruments. See Note 8 for ~~additional information on assets and liabilities measured at fair value.~~allocation of respective investment holdings.

Table of Contents

Leases

~~Use of Estimates~~

The preparation of the financial statement in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of this financial statement. Actual results could differ from those estimates.

~~Cash and cash equivalents~~

Cash includes amounts held at banks with an original maturity of less than three months. As of March 31, 2021, the Company held $2,986,880 in cash. Additionally, as of March 31, 2021, the Company held cash equivalents of $350,000,172 in the Trust Account.

~~Common stock subject to possible redemption~~

The Company accounts for its ~~common stock subject to possible redemption~~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 ~~accordance with~~ the ~~guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption~~lease or the Company’s incremental borrowing rate. Lease liabilities are ~~classified as a~~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 ~~instrument~~ and ~~are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within~~ the ~~control~~amortization of the ~~holder~~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.

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 ~~subject~~less as an accounting policy election, and instead recognizes rent expense on a straight-line basis over the lease term.

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 ~~redemption upon~~accounting for operating leases for which it is the ~~occurrence~~lessee that were historically off-balance sheet. The impact of ~~uncertain events not solely within~~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 ~~control) are classified as temporary equity. At all other times, common stock are classified as stockholders’ equity.~~condensed consolidated balance sheet on January 1, 2022, exclusive of previously recognized lease balances. The ~~Company’s common stock features certain redemption rights that are considered to be outside~~implementation of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at March 31, 2021, 30,800,751 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.

~~Offering Costs~~

Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that are directly related to the Initial Public Offering. The Company incurred offering costs amounting to $19,928,838 upon the completion of the Initial Public Offering.

~~The Company complies with the requirements of ASC 825-10.~~Offering costs directly attributable to the issuance of an equity contract to be classified in equity are recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company recorded $18,972,254 of offering costs as a reduction of equity in connection with the Public Shares included in the Units. The Company immediately expensed $956,584 of offering costs in connection with the Public Warrants included in the Units that were classified as liabilities.

~~As of March 31, 2021, the Company had 0 deferred offering costs on the accompanying balance sheet.~~

~~Income Taxes~~

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The deferred tax assets are de minimis after accounting for the net effect of the valuation allowance.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely thanTopic 842 did not to be sustained upon examination by taxing authorities. There were 0 unrecognized tax benefits as of March 31, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. NaN amounts were accrued for the payment of interest and penalties at March 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

~~The Company’s deferred tax assets and provision for income taxes were deemed to be de minimis as of March 31, 2021 and for the period from January 29, 2021 (inception) to March 31, 2021.~~

~~Recent Accounting Pronouncements~~

~~The Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would~~ have a material effect on the Company’s condensed consolidated statement of operations or condensed consolidated statement of cash flows for the six months ended June 30, 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 ~~statement.~~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.

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.

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.

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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 FASB Topic 805, Business Combinations. 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 condensed 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 an exchange ratio of approximately 3.182 (the “Exchange Ratio”). Activity within the condensed 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.

Note 4 ~~— Public Offering~~– Property, Plant and Equipment

~~Pursuant~~Property, plant and equipment are summarized as follows:


	June 30, 2022		December 31, 2021
Commercial production equipment	$	17,229	$	9,139
Laboratory equipment		1,422		1,316
Leasehold improvements		9,813		4,674
Computer equipment		468		416
Furniture and fixtures		394		321
Construction in progress		38,143		12,684
Total cost		67,654		28,550
Accumulated depreciation		(8,245)		(6,468)
Net property, plant and equipment	$	59,409	$	22,082

Depreciation and amortization expense related to property, plant and equipment are summarized as follows:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Depreciation and amortization expense	$	1,026	$	556	$	1,777	$	1,098

Depreciation expenses for dedicated laboratory equipment and commercial production equipment are charged to research and development; other depreciation and amortization expenses are included in the Company’s overhead and are allocated across operating expenses on the accompanying condensed consolidated statements of operations based on Company personnel costs incurred.

In the second quarter of 2022, the Company expanded its cell production capabilities through the construction of a second dry room and installation of a second EV cell pilot line at its Louisville, Colorado facility, which is designed to produce larger format all-solid-state battery cells for the automotive qualification process. Construction in progress related to these efforts was $2,145 and $6,875 as of June 30, 2022 and December 31, 2021, respectively. Construction in progress related to multiple other projects at the Louisville, Colorado facility was $2,176 as of June 30, 2022.

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The Company is expanding its sulfide-based solid 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 the cell-production lines and continue research and development efforts. The Company expects to begin producing sulfide-based electrolyte from this facility in the first quarter of 2023. Construction in progress related to these efforts was $33,822 and $5,809 as of June 30, 2022 and December 31, 2021, respectively.

Note 5 – Intangible Assets

Intangible assets of the Company are summarized as follows:


	June 30, 2022				December 31, 2021
	Gross Carrying		Accumulated		Gross Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
Intangible assets:
Licenses	$	149	$	(47)	$	149	$	(42)
Patents pending		718		—		503		—
Trademarks		9		—		9		—
Trademarks pending		14		—		—		—
Total amortized intangible assets	$	890	$	(47)	$	661	$	(42)

Amortization expense for intangible assets is summarized as follows:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Amortization expense	$	2	$	2	$	5	$	4

Useful lives of intangible assets range from 3 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 is as follows:


	June 30, 2022		December 31, 2021
Various equipment notes payable to banks in monthly installments ranging from $1 to $2, including interest at 6.26 percent to 12.18 percent maturing from July 2022 through April 2023. The notes are collateralized by the financed equipment and guaranteed by a stockholder of the Company.	$	58	$	130
Total		58		130
Less current portion		58		120
Long‑term portion	$	—	$	10

Note Payable

On December 7, 2021, prior to the ~~Initial Public Offering,~~Closing, the Company ~~sold 35,000,000 Units,~~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 was $2 and $38 for the three months ended June 30, 2022 and 2021, respectively, and $5 and $79 for the six months ended June 30, 2022 and 2021, respectively.

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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 8 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 the 2020 Notes during for three and six months ended June 30, 2021 was $66 and $210, respectively. 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 Legacy Solid Power’s 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 the closing of the Business Combination; 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.

See Note 8 – Fair Value Measurement for information about the assumptions that the Company used to measure the fair value of the embedded derivative.

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 ~~purchase~~30 percent discount.

See Note 8 – Fair Value Measurement for information about the assumptions that the Company used to measure the fair value of the 2019 Note. At December 31, 2020, the outstanding balance on the 2019 Note was $3,612. For three and six months ended June 30, 2021, interest expense of $16 and $53, respectively, was incurred related to the 2019 Note.

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 Condensed Consolidated Statements of Operations.

Note 8 – Fair Value Measurements

The carrying amounts of certain financial instruments, such as cash equivalents, short-term investments, accounts receivable, accounts payable, accrued liabilities, and equipment notes payable approximate fair value due to their 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 condensed consolidated balance sheets on a historical cost basis net of

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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.

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 June 30, 2022 and December 31, 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:



	June 30, 2022
	Level 1		Level 2		Level 3		Total
Assets
Commercial Paper	$	36,003	$	—	$	—	$	36,003
Corporate Bonds	$	173,076	$	—	$	—	$	173,076
Government Bonds	$	17,634	$	—	$	—	$	17,634
U.S. Treasuries	$	5,854	$	—	$	—	$	5,854

Liabilities
Public Warrants	$	12,483	$	—	$	—	$	12,483
Private Warrants	$	—	$	9,354	$	—	$	9,354


	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 0 transfers in and out of Level 3 fair value hierarchy during the three or six months ended June 30, 2022 and 2021.

Fair Value of Stock Warrants

The fair value of the Private Placement Warrants (defined below) has been estimated using a Black-Scholes model as of June 30, 2022 and December 31, 2021. The fair value of the Public Warrants (defined below) has been measured based on the quoted price of ~~$10.00 per Unit. Each Unit consists~~such warrants on the Nasdaq Stock Market, a level 1 input. The estimated fair value of ~~one share~~the Private Placement Warrants 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 ~~Class A~~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. Refer to Note 9 for additional details on the Company’s warrant liabilities.

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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:



	June 30, 2022			December 31, 2021
Exercise Price	$	11.50		$	11.50
Stock Price	$	5.38		$	8.74
Volatility		50.0	%		48.9	%
Term		4.44			4.94
Risk-free rate		2.96	%		1.24	%

The following table provides a reconciliation of the Public Warrants measured at fair value using Level 1 directly observable inputs and ~~one-third~~Private Placement Warrants measured at fair value using Level 2 directly or indirectly observable inputs:


	Public Warrants		Private Warrants
Date	Level 1 Fair Value		Level 2 Fair Value
December 31, 2021	$	2.27	$	3.07
Change in fair value		0.11		(0.26)
March 31, 2022		2.38		2.81
Change in fair value		(1.31)		(1.59)
June 30, 2022	$	1.07	$	1.22

The following tables provides a reconciliation of ~~one redeemable warrant~~the June 30,2022 three and six month change in fair value for the Public Warrants and Private Placement Warrants:


					Six months change in
Warrant Class	Level	Shares	December 31, 2021		fair value		June 30, 2022
Public Warrants	1	11,666,636	$	26,483	$	(14,000)	$	12,483
Private Warrants	2	7,666,667		23,537		(14,183)		9,354
Total		19,333,303	$	50,020	$	(28,183)	$	21,837


						Three months change in
Warrant Class	Level	Shares		March 31, 2022		fair value		June 30, 2022
Public Warrants	1		11,666,636	$	27,767	$	(15,284)	$	12,483
Private Warrants	2		7,666,667		21,543		(12,189)		9,354
Total			19,333,303	$	49,310	$	(27,473)	$	21,837

Note 9 – Common Stock Warrant Liabilities

As of June 30, 2022 and December 31, 2021, there were 11,666,636 publicly traded warrants (“Public ~~Warrant”~~Warrants”). and 7,666,667 private placement warrants (“Private Placement Warrants,” and together with the Public Warrants, “Warrants”) outstanding. Each whole ~~Public~~ Warrant entitles the holder thereof to purchase ~~one~~1 share of ~~Class A common stock~~Common Stock at a price of $11.50 per share, subject to ~~adjustment (see Note 7).~~

~~Note 5 — Related Party Transactions~~

~~Founder Shares~~

~~On February 4, 2021, the Company issued an aggregate of 10,062,500 shares of Class B common stock (the “Founder Shares”) in exchange for a $25,000 payment from the Sponsor to cover certain expenses on behalf of the~~

Company (approximately $0.002 per share). As used herein, unless the context otherwise requires, “Founder Shares” shall be deemed to include the shares of Class A common stock issuable upon conversion thereof. The Founder Shares are identical to the Class A common stock included in the Units being sold in the Initial Public Offering except that the Founder Shares automatically convert into shares of Class A common stock at the time of the Company’s Initial Business Combination and are subject to certain transfer restrictions, as described in more detail below. The Sponsor has agreed to forfeit up to an aggregate of 1,312,500 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters so that the Founder Shares will represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. As of March 31, 2021, the underwriters’ over-allotment option had not been exercised. On March 23, 2021, the Company, the Sponsor and the Company’s independent directors entered into several Securities Agreements, pursuant to which the Company issued an aggregate of 400,000 Founder Shares and the Sponsor agreed to forfeit 400,000 Founder Shares at no cost, which were cancelled by the Company. The Sponsor will not be entitled to redemption rights with respect to any Founder Shares and any Public Shares held by them in connection with the completion of the Initial Business Combination. If the Initial Business Combination is not completed within 24 months from the closing of the Initial Public Offering, the Sponsor will not be entitled to rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them.

The Company’s initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the Initial Business Combination or (B) subsequent to the Initial Business Combination, (x) if the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

~~Private Placement Warrants~~

Simultaneously with the closing of the Initial Public Offering, the Sponsor and the Company’s independent directors and an affiliate of the Company’s chief executive officer purchased 6,666,667 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $10,000,000 (see Note 3 for further information regarding the accounting treatment of the Private Placement Warrants). The Sponsor has agreed to purchase up to an additional 700,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, or an aggregate additional $1,050,000, to the extent the underwriter’s over-allotment option is exercised in full. As of March 31, 2021, the underwriters’ over-allotment option had not been exercised.

Each Private Placement Warrant is exercisable to purchase 1 share of Class A common stock at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within 24 months from the closing of the Initial Public Offering, the proceeds of the sale of the Private Placement Warrants held in the Trust Account will be used to partially fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants and all underlying securities will expire worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees.

The Sponsor and certain of the Company’s independent directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the Initial Business Combination.

~~Registration Rights~~

The holders of Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of working capital loans, if any, will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock) pursuant to a registration rights agreement to be signed on or before the date of the prospectus for the Initial Public Offering. These holders will be entitled to certain

~~demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements.~~

~~Related Party Loans~~

On February 4, 2021, the Company and the Sponsor entered into a loan agreement, whereby the Sponsor agreed to loan the Company an aggregate of $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “~~Note”). This loan was non-interest bearing and payable on the earlier of August 3, 2021 or the completion of the Initial Public Offering (the “Maturity Date”). As of March 31, 2021, 0 amount has been drawn down or is outstanding under the Note.~~

~~As of March 31, 2021, the Company owed the Sponsor $1.5 million for additional expenses paid on its behalf which has since been paid in full.~~

~~Administrative Support Agreement~~

The Company has agreed to pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the period from January 29, 2021 (Inception) to March 31, 2021, the Company had accrued $1,935 of monthly fees to the affiliate of the Sponsor,~~which were outstanding at March 31, 2021.~~

~~Working Capital Loans~~

In addition, in order to finance transaction costs in connection with its Initial Business Combination, the Sponsor or an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“~~Working Capital Loans~~”). If the Company completes its Initial Business Combination, the Company would repay the Working Capital Loans. In the event that the Initial Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. If the Sponsor makes any Working Capital Loans, up to $1,500,000 of such loans may be converted into warrants of the post business combination entity at the price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. As of March 31, 2021, the Company had 0 borrowings under the Working Capital Loans.

~~Note 6 — Commitments and Contingencies~~

~~Underwriting Agreement~~

The Company granted the underwriters a 45-day option from the date of the Initial Public Offering to purchase up to 5,250,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less applicable underwriting discounts and commissions. As of March 31, 2021, the underwriters’ over-allotment option had not been exercised.

The underwriters are entitled to a deferred fee of $0.35 per Unit, or $12,250,000 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes an Initial Business Combination, subject to the terms of the underwriting agreement.

~~Risks and Uncertainties~~

The Company continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Note 7 — Stockholders’ Equity~~

~~Common Stock~~

The authorized common stock of the Company includes up to 250,000,000 shares of Class A common stock (4,199,249 shares issued and outstanding, excluding 30,800,751 shares subject to possible redemption) with a par value of $0.0001 per share and 20,000,000 shares of Class B common stock (10,062,500 shares issued and outstanding) with a par value of $0.0001 per share. If the Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business Combination) be required to increase the number of shares of Class A common stock which the Company is authorized to issue at the same time as the Company’s stockholders vote on the Initial Business Combination to the extent the Company seeks stockholder approval in connection with the Initial Business Combination. Holders of the Company’s common stock are entitled to one vote for each share of common stock. At March 31, 2021, there were 35,000,000 shares of Class A common stock issued and outstanding, of which 30,800,751 shares were subject to possible redemption. At March 31, 2021, there were 10,062,500 shares of Class B common stock issued and outstanding.

The Sponsor has agreed to forfeit up to an aggregate of 1,312,500 Founder Shares depending on the extent to which the over-allotment option is not exercised by the underwriters so that the Founder Shares will represent 20% of the Company’s issued and outstanding shares after the Initial Public Offering. As of March 31, 2021, the underwriters’ over-allotment option had not been exercised.

~~Preferred Stock~~

The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At March 31, 2021, there were 0 shares of preferred stock issued or outstanding.

~~Warrants~~

~~Each whole Warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as described herein.~~customary adjustments. Only whole Warrants are exercisable. The Warrants ~~will become~~became exercisable on ~~the later of 30 days after the completion of the Initial Business Combination or 12 months from the closing of the Initial Public Offering,~~January 7, 2022 and will expire ~~five years after~~on December 8, 2026.

Redemption of Public Warrants when the completion of the Initial Business Combination or earlier upon redemption or liquidation. NaN fractional Warrants will be issued upon separation of the Units and only whole Warrants will trade. The Company has also granted the underwriters a 45-day option to purchase up to an additional 5,250,000 Units to cover over-allotments, if any.

Each whole Warrant is exercisable to purchase one share of our Class A common stock and only whole Warrants are exercisable. No fractional Warrants will be issued upon separation of the Units and only whole Warrants will trade.

~~The exercise~~ price of each Warrant is $11.50 per share, subject to adjustment as described herein. In addition, if we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the Initial Business Combination at an issue price or effective issue price of less than $9.20 per share of ~~Class A common stock (with such issue price~~Common Stock equals or effective issue price to be determined in good faith by our board and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “~~Newly Issued Price”), the exercise price of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price.~~

~~The Warrants will become exercisable on the later of:~~

•

~~30 days after the completion of the Initial Business Combination or,~~

•

~~12 months from the closing of the Initial Public Offering;~~

provided in each case that we have an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the

~~state of residence of the holder (or we permit holders to exercise their warrants on a cashless basis under the circumstances specified in the warrant agreement).~~exceeds $18.00.

The Company is not registering the shares of Class A common stock issuable upon exercise of the Warrants at this time. However, the Company has agreed that as soon as practicable, but in no event later than fifteen (15) business days, after the closing of the Initial Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Company’s Class A common stock is at the time of any exercise of a Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Warrants who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

The Warrants will expire at 5:00 p.m., New York City time, five years after the completion of the Initial Business Combination or earlier upon redemption or liquidation. On the exercise of any Warrant, the Warrant exercise price will be paid directly to us and not placed in the Trust Account.

~~Once the Warrants become exercisable, the~~ Company may redeem all of the outstanding ~~Warrants for cash (except as described herein with respect to the Private Placement Warrants):~~Public Warrants:

•

●

Inin whole and not in part;

•

●

Atupon at least 30 days’ prior written notice;

●

at a price of $0.01 per ~~Warrant;~~

Public Warrant; and

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•

~~Upon a minimum of 30 days’ prior written notice of redemption, referred to as the 30-day redemption period; and~~

•

●

~~if, and only~~ if the last sale price of ~~our Class A common stock~~the Company’s Common Stock equals or exceeds $18.00 per share, ~~(as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like)~~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 ~~Company sends~~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 ~~to the warrantholders.~~

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 ~~will not redeem~~classifies the outstanding Warrants ~~for cash unless a registration statement under~~as Warrant Liabilities on the ~~Securities Act covering~~condensed consolidated balance sheets in accordance with the shares of Class A common stock issuable upon exercise of the Warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period. If and when the Warrants become redeemable by the Company, it may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.guidance contained in ASC 815.

~~Except as described below, none~~None of the Private Placement Warrants ~~will be~~are redeemable by the Company so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees.

~~Once the Warrants become exercisable, the Company may redeem the outstanding Warrants (except as described below with respect to the Private Placement Warrants):~~

•

~~in whole and not in part;~~

•

at a price of $0.10 per Warrant, provided that holders will be able to exercise their Warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock determined in part by the redemption date and the “fair market value” of the Class A common stock except as otherwise below;

•

~~upon a minimum of 30 days’ prior written notice of redemption;~~

•

if, and only if, the last sale price of the Company’s Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice of redemption to the warrantholders; and

•

if the last sale price of the Company’s Class A common stock on the trading day prior to the date on which the Company send the notice of redemption to the warrantholders is less than $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Warrants, as described above.

The “fair market value” of the Company’s Class A common stock shall mean the average reported last sale price of the Company’s Class A common stock for the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of Warrants.

No fractional shares of Class A common stock will be issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number of the number of shares of Class A common stock to be issued to the holder.

As of March 31, 2021, there were 16,800,000 Public Warrants and 10,200,000 Private Placement Warrants outstanding. The Company classifies the outstanding Public Warrants and Private Placement Warrants as warrant liabilities ~~on the Balance Sheet in accordance with the guidance contained in ASC 815-40.~~

~~The Warrant liabilities are~~were initially measured at fair value upon ~~the closing~~Closing of the ~~Initial Public Offering~~Business Combination and subsequently re-measured at each reporting period. The Public Warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value. The Company recognized ~~gains (losses)~~a gain in connection with changes in the fair value of warrant liabilities of ~~$116,666~~$27,473 and $28,183 for the three and six months ending June 30, 2022, respectively.

Note 10 – 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. 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 as discussed in Note 7. See Note 11 for a discussion of warrants issued with the Legacy Solid Power Series B Preferred Stock.

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 ~~change in fair value~~control of ~~warrant liabilities~~Legacy Solid Power, the Preferred Stock was classified prior to the Business Combination as mezzanine equity on Legacy Solid Power’s balance sheets.

As a result of the Business Combination with DCRC on December 8, 2021 the Solid Power Series A-1 and Series B Preferred Stock converted to common stock. The 14,069,187 and 8,777,812 shares of Series A-1 Preferred Stock and Series B Preferred Stock were converted to the equivalent number of shares of Legacy Solid Power common stock prior to the impact of the common stock Exchange Ratio used to complete the Business Combination.

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Note 11 – Stockholders’ Equity

Common Stock

Stock options exercised are summarized in the ~~Statement~~table below:


	Three months ended June 30,		Six months ended June 30,
	2022	2021	2022	2021
Stock options exercised	656,180	501,995	6,869,144	778,817

Cash received from options exercised under the Legacy Solid Power, Inc. 2014 Equity Incentive Plan (the “2014 Plan”) for six months ended June 30, 2022 and 2021 was $354 and $70, respectively. As of ~~Operations during~~June 30, 2022, there is an additional receivable for $79, related to options exercised and paid subsequent to the ~~period~~report date.

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 condensed 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.

Note 12 – Stock Based Compensation

2014 Equity Incentive Plan and 2021 Equity Incentive Plan

At June 30, 2022, the Company had 27,181,312 shares of common stock underlying stock options outstanding under the 2014 Plan. Upon the Closing, the 2014 Plan was terminated and no additional grants will be made under the 2014 Plan.

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 ~~29,~~1, 2022, the number of shares of common stock available for issuance under the 2021 ~~(inception)~~Plan shall increase each year by an amount equal to ~~March 31, 2021.~~the lesser of (i) 18,900,000 shares of Common Stock (ii) 5 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.

~~Note 8 — Fair Value Measurements~~

~~At March 31,~~As of June 30, 2022, the 2021 ~~assets held~~Plan permitted the Company to grant up to 24,991,018 shares of common stock to its employees, directors, and consultants, as designated by the board of directors. Awards may be issued in the ~~Trust Account were comprised~~form of ~~$350,000,172 in money market funds which are invested in U.S. Treasury Securities. Through March 31, 2021,~~stock options, stock appreciation rights, restricted stock, and restricted stock units. The Company believes that such awards better align the ~~Company has not withdrawn any interest earned on the Trust Account to pay~~interests of its ~~franchise and income tax obligations.~~employees with those of its stockholders.

The fair value of stock options and restricted stock units (“RSUs”) issued to employees and directors is recognized as compensation expense over the ~~Company’s financial assets and liabilities reflects management’s estimate~~period of ~~amounts~~service that generally coincides with the vesting period of the award. When calculating the amount of annual compensation expense, the Company ~~would have received in connection~~has elected not to estimate forfeitures and instead accounts for forfeitures as they occur.

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For the three months and six months ended June 30, 2022, the Company recognized compensation costs totaling:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Equity-based compensation cost related to RSUs	$	514	$	—	$	514	$	—
Equity-based compensation cost related to stock options		1,800		147		3,396		217
Total equity-based compensation cost	$	2,314	$	147	$	3,910	$	217

The compensation costs are allocated ratably across operating expenses within the accompanying condensed consolidated statements of operations.

Stock Options

Options granted under the 2014 Plan generally had a ten-year term and vest as to 1/4th of these shares after one year after the initial date of service of a service provider and with the ~~sale~~balance of the ~~assets or paid~~shares vesting in ~~connection~~a series of 36 successive equal monthly installments following the first vesting date. Option awards under the 2014 Plan were generally granted with ~~the transfer of the liabilities in~~ an ~~orderly transaction between market participants at the measurement date. In connection with measuring~~exercise price equal to the fair market value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

~~Level 1:~~

Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

~~Level 2:~~

Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

~~Level 3:~~

~~Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.~~

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Description

Amount at
Fair Value

Level 1

Level 2

Level 3

March 31, 2021

Assets:

Marketable securities held in Trust Account – U.S.
Treasury Securities Money Market Fund

$
350,000,172

$
350,000,172

$
—

$
—

Liabilities:

Warrant liability – Public Warrants

$
16,684,334

$
—

$
—

$
16,684,334

Warrant liability – Private Placement Warrants

$
10,200,000

$
—

$
—

$
10,200,000

~~The Company utilized a Monte Carlo simulation model to value the Public Warrant liabilities~~Legacy Solid Power’s common stock at the date of grant. Certain option awards issued under the ~~Initial Public Offering~~2014 Plan provide for accelerated vesting if there is a change in control (as defined in the plan agreements).

Options granted under the 2021 Plan generally have a ten-year term and vest as to 1/4th of these shares each year, commencing after one year after the initial date of grant. Option awards under the 2021 Plan are generally granted with an exercise price equal to the fair market value of Solid Power’s common stock at ~~March 31,~~the date of grant. Certain option awards issued under the 2021 ~~and utilizes~~Plan provide for accelerated vesting if there is a change in control (as defined in the plan agreements).

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 ~~to value~~that uses the ~~Private Warrant liabilities that are categorized within Level 3 at each reporting period, with changes in fair value recognized~~weighted-average assumptions noted in the ~~Statement of Operations. The estimated fair value of the warrant liability is determined using Level 3 inputs. Inherent in a binomial options pricing model~~following table. Expected volatilities are ~~assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock~~ based on historical volatility ~~that matches~~of comparable companies. The Company uses historical data to estimate option exercise and employee termination within the ~~expected remaining~~valuation model. The risk-free rate for periods within the contractual life of the ~~warrants. The risk-free interest rate~~option is based on the U.S. Treasury ~~zero-coupon~~ yield curve in effect at the time of grant.

The fair value of each option grant during the six months ended June 30, 2022 and 2021 was estimated on the grant date ~~for a maturity similar~~using the Black-Scholes option pricing model with the following weighted-average assumptions used:


	Six months ended June 30,
	2022			2021
Approximate risk‑free rate		2.84	%		0.80	%
Volatility		44.69	%		46.94	%
Average expected life		6 years			6 years
Dividend yield		0	%		0	%
Weighted‑average grant date fair value	$	7.26		$	2.18
Estimated fair value of total options granted	$	5,659		$	1,004

Future compensation costs related to the ~~expected remaining life~~unvested portion of stock options at June 30, 2022 and 2021 was $25,316 and $1,469, respectively, over a period of four years.

The following table summarizes stock options granted under the 2021 Plan during the six months ended June 30, 2022 and under the 2014 Plan during the year ended December 31, 2021, respectively:


	June 30, 2022	December 31, 2021
2021 Plan stock option grants	1,674,284	—
2014 Plan stock option grants	—	12,285,359

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Restricted Stock Units

Effective April 1, 2022, the Company began granting RSUs in accordance with the terms of the ~~warrants.~~2021 Plan. The ~~expected life~~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 1/4th per year commencing on the first anniversary of the ~~warrants~~grant date. RSU awards upon initial service as a director vest 1/3rd per year commencing on the first anniversary of the grant date. 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.

The following table summarizes non-vested RSUs at June 30, 2022 and the changes for the period ended June 30, 2022:


		Weighted Average Grant
	RSU Shares	Date Fair Value
Non-vested, December 31, 2021	0	$	0
Granted	970,857		7.64
Vested	(29,108)		7.26
Forfeited	(767)		8.67
Non-vested, June 30, 2022	940,982	$	7.65

Future compensation costs related to the unvested portion of RSUs at June 30, 2022 was $6,366 over a period of four years.

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 June 30, 2022, 5,453,579 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 each year by an amount equal to the lesser of (i) 3,778,000 shares of Common Stock; (ii) 1 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. As of June 30, 2022, the 2021 ESPP permitted the Company to issue up to 5,463,579 shares of common stock. At June 30, 2022, 0 shares of common stock had been issued under the 2021 ESPP.

The 2021 ESPP is ~~assumed~~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 ~~equivalent~~granted rights to ~~their remaining contractual term.~~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 ~~dividend rate~~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.

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Note 13 – Earnings (Loss) Per Share

The table below reconciles basic weighted average common shares outstanding to diluted weighted average shares outstanding for June 30, 2022 and 2021. Basic earnings per share is based on the ~~historical rate,~~weighted average number of common shares outstanding for 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. 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 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.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net Income (loss)	$	13,667	$	(9,273)	$	3,321	$	(16,414)
Weighted average shares outstanding – Basic		174,128,230		88,944,577		173,266,760		79,568,181
Weighted average shares outstanding – Diluted		174,703,533		88,944,577		173,566,001		79,568,181
Basic earnings (loss) per share	$	0.08	$	(0.10)	$	0.02	$	(0.21)
Diluted earnings (loss) per share		0.08		(0.10)		0.02		(0.21)

Due to the net loss to common stockholders in 2021, diluted loss per share was computed without consideration to potentially dilutive instruments as their inclusion would have been anti-dilutive. As of the three and six months ended June 30, 2022 and 2021, potentially dilutive securities excluded from the diluted loss per share calculation are as follows:


	2022	2021
Warrant Common Stock	19,333,303	1,878,386
2014 Equity Incentive Plan	27,161,312	23,640,068
2021 Equity Incentive Plan	1,674,284	—
Total potentially dilutive securities	48,168,899	25,518,454

Note 14 – Leases

The Company leases its headquarters, other warehouse space and certain equipment. Fixed rent generally escalates each year, and the Company ~~anticipates~~is responsible for a portion of the landlords’ operating expenses such as property tax, insurance and common area maintenance.

The Company’s headquarters, in Louisville, Colorado, are under a noncancelable operating lease with a maturity date in September 2024. In 2019, the Company amended the lease, agreeing to ~~remain at zero.~~

~~The significant unobservable inputs used~~sublease additional space in the ~~Monte Carlo simulation model~~building, which sublease expires in December 2024.

On September 1, 2021, the Company entered into an Industrial Lease Agreement, in Thornton, Colorado, with the initial term through March 31, 2029. Under this operating lease, the Company has one option to ~~value~~renew for five years, which has been included in the ~~Public Warrants~~calculation of lease liabilities and right-of-use assets at the adoption date of the ~~Initial Public Offering~~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 is responsible for its proportionate share of common area maintenance, taxes, and insurance.

The Company has certain equipment leases classified as financing leases as of June 30, 2022.

The Company’s leases do not have any contingent rent payments and do not contain residual value guarantees.

Table of Contents

The components of lease expense are as follows:


	Three Months Ended		Six Months Ended
	June 30, 2022		June 30, 2022
Finance lease costs:
Amortization of right-of-use assets	$	6	$	15
Interest on lease liabilities		2		5
Operating lease costs		276		553
Total lease expense	$	284	$	573

The components of supplemental cash flow information related to leases are as follows:


	Three Months Ended		Six Months Ended
	June 30, 2022		June 30, 2022
Operating outgoing cash flows – finance lease	$	2	$	4
Financing outgoing cash flows – finance lease		10		20
Operating outgoing cash flows – operating lease		271		365
Right-of-use assets obtained in exchange for new finance lease liabilities		—		220
Right-of-use assets obtained in exchange for new operating lease liabilities		—		7,671


	June 30, 2022
Finance lease
Weighted-average remaining lease term - finance lease (in years)	4.7
Weighted-average discount rate - finance lease	5.2	%
Operating lease
Weighted-average remaining lease term - operating lease (in years)	10.76
Weighted-average discount rate - operating lease	5.9	%

As of June 30, 2022, future minimum payments during the next five years and thereafter are as follows:


Fiscal year	Finance Lease		Operating Lease
2022 (remaining six months)	$	28	$	546
2023		56		1,123
2024		56		1,068
2025		24		779
2026		22		802
Thereafter		38		6,584
Total		224		10,902
Less present value discount		(25)		(2,916)
Total lease liabilities	$	199	$	7,986

Note 15 – Retirement Plans

The Company sponsors a 401(k) plan for all eligible employees. The plan provides for the Company to make a discretionary matching contribution. Contributions to the plan totaled $151 and $67 for the three months ended June 30, 2022 and 2021, respectively, and $295 and $149 for the six months ended June 30, 2022 and 2021, respectively.

Note 16 – Income Taxes

The Company’s effective tax rate was 0.27% and (0.13)% for the three months ended June 30, 2022 and 2021, respectively, and 0.49% and 0.25% for the six months ended June 30, 2022 and 2021, respectively. Differences between the statutory rate and the ~~Black-Scholes model~~Company’s effective tax rate resulted from changes in valuation allowance and permanent differences for tax purposes in the treatment of certain nondeductible expenses.

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Note 17 – Contingencies

In the normal course of business, the Company may be party to ~~measure~~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 ~~Private Warrant liabilities~~Company. DCRC, the predecessor to the Company, received a demand letter dated August 31, 2021 from counsel purporting to represent a shareholder of DCRC alleging that ~~are categorized within Level 3~~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 ~~fair value hierarchy are~~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 ~~follows:~~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 the Company’s accrual.

As of
March 26, 2021
(initial
measurement)

As of
March 31,
2021

Stock price

$
9.52

$
9.48

Strike price

$
11.50

$
11.50

Term (in years)

6.02

6.00

Volatility

23.6
%

23.6
%
Risk-free rate

1.09
%

1.16
%
Dividend yield

0.0
%

0.0
%
Fair value of warrants

$
1.44 – 1.53

$
1.43 – 1.53

~~The following table provides a summary~~

Table of ~~the changes in fair value of the Level 3 warrant liabilities:~~Contents

Private
Placement

Public

Level 3 Warrant
Liabilities

Beginning balance as of January 29, 2021 (inception)

$
-

$
-

$
-

Initial measurement at March 26, 2021

10,200,000

16,800,000

27,000,000

Change in valuation inputs or other assumptions

-

(116,666
)

(116,666
)
Fair value as of March 31, 2021

$
10,200,000

$
16,683,334

$
26,883,334

~~There were 0 transfers between Levels 1, 2 or 3 during the period from January 29, 2021 (inception) to March 31, 2021.~~

~~Note 9 — Subsequent Events~~

Management has evaluated the impact of subsequent events through the date the financial statements were issued. All subsequent events required to be disclosed are included in these financial statements.

~~Item 2.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations

References to the “Company,” “our,” “us” or “we” refer to Decarbonization Plus Acquisition Corporation III. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the ~~unaudited~~consolidated financial statements and ~~the~~related notes thereto ~~contained~~included elsewhere in ~~Item 1. of~~ this ~~report. Certain information contained in the~~Report. The following discussion ~~and analysis set forth below includes~~contains forward-looking statements that ~~involve~~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.~~ uncertainties that may be outside of our control. Our actual results ~~may~~could differ materially from those ~~anticipated~~discussed in these forward-looking ~~statements as a result of many factors.~~

~~Cautionary Note Regarding Forward-Looking Statements~~

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Such statements include, but are not limited to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements of historical fact included in this Form 10-Q. Factors that ~~might~~could cause or contribute to such ~~a discrepancy~~differences include, but are not limited to, those ~~described~~identified below and those discussed elsewhere in this Report and under Part I, Item 1A. “Risk Factors” of our ~~other Securities~~Annual Report on Form 10-K for the year ended December 31, 2021. We do not undertake, and ~~Exchange Commission (“SEC”) filings.~~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 developing all-solid-state battery cell technology that replaces the liquid or gel polymer electrolyte used in conventional lithium-ion battery cells with a sulfide-based solid electrolyte. Our sole focus is on the development and commercialization of all-solid-state battery cells and solid electrolyte materials, which we are currently developing for the fast-growing battery-powered electric vehicle market.

We are currently producing 0.2, 2, and 20 ampere-hour (“Ah”) high-content silicon all-solid-state battery cells using established manufacturing processes on our initial pilot production line. We recently installed a ~~blank check company incorporated~~second pilot production line, which we refer to as the EV cell pilot line, at our headquarters in Louisville, Colorado. The EV cell pilot line has been designed to produce 60 to 100 Ah all-solid-state battery cells, which we refer to as EV-scale. We expect to begin producing EV-scale cells for internal testing during the third quarter of 2022 and begin delivering EV-scale cells to our automotive original equipment manufacturer (“OEM”) partners by the end of 2022 to commence the formal automotive qualification process. In addition, we are constructing a second facility in Thornton, Colorado primarily to expand our sulfide-based electrolyte production capability. Due to supply chain and permitting delays, we currently expect to begin producing sulfide-based solid electrolyte from this facility in the first quarter of 2023. However, as of the date of this Report, we do not expect this delay to materially impact our development timeline.

We are developing our All-Solid-State Platform to meet the performance and cost demands from both consumers and automotive OEMs, with the goal of outperforming the best performing liquid or gel electrolyte-based lithium-ion technologies in driving range, battery life, safety, and cost. We have partnered with industry leaders, such as Ford Motor Company, BMW of North America LLC, and SK On Co., Ltd., to refine and validate our all-solid-state cell designs and the sulfide-based solid electrolyte we manufacture at our headquarters in Louisville, Colorado. Specifically, we are developing our all-solid-state battery cell technology with the goal to improve, among other things:

●

Driving range through increased energy by enabling higher capacity anodes and cathodes that are otherwise not considered viable in a traditional lithium-ion battery cell.

●

Battery life through higher temperature stability compared to traditional lithium-ion and hybrid battery cells.

●

Safety of electric vehicle batteries through the removal of flammable and volatile liquids and gels from the battery cells.

●

Cost through simplifying the manufacturing process and removal or reduction of battery pack cooling systems and pack-level safety features typically seen in traditional lithium-ion battery packs.

Our business model comprises two strategic elements:

●

Licensing our all-solid-state battery cell designs and manufacturing know-how to our commercialization partners.

●

Selling our proprietary sulfide-based solid electrolyte material.

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We expect our business model to allow for multiple revenue streams, which we believe distinguishes us from our competition. Longer-term, we endeavor to be a leading producer and distributor of sulfide-based solid electrolyte material, which may be employed both in powering all-solid-state battery cells in electric vehicles and in other commercial applications. By not needing to construct capital intensive battery manufacturing facilities, which are commonly referred to as gigafactories, we believe we can be “capital light” compared to other development-stage battery companies that plan to produce their battery designs in-house.

The Business Combination

On December 8, 2021 (the “Closing Date”), Solid Power consummated its previously announced business combination pursuant to that certain Business Combination Agreement and Plan of Reorganization, dated June 15, 2021 (as amended, the “Business Combination Agreement”), by and among the Company, DCRC Merger Sub Inc., a Delaware corporation and ~~formed for~~wholly owned subsidiary of the ~~purpose~~Company (“Merger Sub”), and Solid Power Operating, Inc., a Colorado corporation (f/k/a Solid Power, Inc., “Legacy Solid Power”), following the approval at a special meeting of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “initial business combination”). Our Sponsor isthe stockholders of the Company held on December 7, 2021. Decarbonization Plus Acquisition ~~Sponsor~~Corporation III LLC, a Delaware limited liability company (“Sponsor”) and an affiliate of Riverstone Investment Group LLC, a Delaware limited liability company, and its affiliates (“Riverstone”). Although we may pursue an acquisition opportunity in any business or industry, we intend to capitalize on the Riverstone platform to identify, acquire and operate a business in industries that may provide opportunities for attractive risk-adjusted returns in one of the multiple sectors that may advance the objectives of global decarbonization. This includes the energy and agriculture, industrials, transportation and commercial and residential sectors.

The Registration Statement for our initial public offering was declared effective on March 23, 2021 (the “Public Offering”). On March 23, 2021, (the “Closing Date”) we consummated the Public Offering of 35,000,000 units (the “Units”) at $10.00 per Unit, generating gross proceeds of $350.0 million, and incurring transaction costs of approximately $20.0 million, consisting of $7.0 million of underwriting fees, $12.3 million of deferred underwriting fees and approximately $679,000 of other offering costs. The underwriters were granted a 45-day option from the date of the final prospectus relatingprior to the Public Offering to purchase up to 5,250,000 additional units to cover over-allotments, if any, at $10.00 per unit, less underwriting discounts and commissions. As of March 31, 2021, the underwriters’ over-allotment option has not been exercised.

Simultaneously with the consummation of the Public Offering, we consummated the sale of 6,666,667 Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a private placement to our Sponsor and independent directors, generating gross proceeds of $10.0 million (the “Private Placement”).

Approximately $350.0 million ($10.00 per Unit) of the net proceeds of the Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (the “Trust Account”) located in the United States with the Continental Stock Transfer & Trust Company, and invested only in U.S. “government securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(1), (d)(2), (d)(3) and (d)(4) of Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by

~~the Company, until the earlier of: (i) the completion of our initial~~ business combination ~~and (ii) the distribution of the Trust Account~~is referred to herein as ~~otherwise permitted under our amended and restated certificate of incorporation.~~“DCRC.”

If we are unable to complete an initial business combination within 24 months from the closing of the Public Offering, or March 26, 2023, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses and net of taxes payable), divided by the number of then-outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

~~Results of Operations~~

Our only activities from January 29, 2021 (inception) to March 31, 2021 related to our formation and the Public Offering, as well as due diligence costs incurred to identify a target company for a potential Business Combination. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as costs in the pursuit of our acquisition plans.

For the period from January 29, 2021 (inception) to March 31, 2021, we had a net loss of approximately $1.1 million, which consisted of approximately $0.2 million in general and administrative expenses, including due diligence costs incurred in the pursuit of our acquisition plans, $1.0 million of offering costs allocated to warrant liabilities offset by $0.1 million due to the change in the fair value of warrant liabilities.

~~Liquidity and Capital Resources~~

Our liquidity needs up to the Public Offering were satisfied through receipt of a $25,000 capital contribution from our Sponsor in exchange for the issuance of Class B common stock (the “Founder Shares”) to our Sponsor and a loan from our Sponsor for an aggregate amount of $300,000 to cover organizational expenses and expenses related to the Public Offering pursuant to a promissory note (the “Note”). As of March 31, 2021, no amount has been drawn down or is outstanding under the Note. Subsequent to the consummation of the Public Offering, our liquidity needs have been satisfied through the net proceeds of approximately $1.1 million from the Private Placement held outside of the Trust Account.

In addition, in the short term and long term, in connection with a business combination, our Sponsor or an affiliate of our Sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. As of March 31, 2021, there were no amounts outstanding under any working capital loans.

~~Contractual Obligations~~

~~Registration Rights~~

The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of working capital loans, if any, and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of working capital loans and upon conversion of the Founder Shares will be entitled to registration rights pursuant to a registration rights agreement. These holders will be entitled to certain demand and “piggyback” registration rights. We will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriting Agreement~~

~~The underwriters were entitled to an underwriting discount of $0.20 per unit, or $7.0 million in the aggregate, paid upon closing of the Public Offering.~~

In addition, $0.35 per unit, or approximately $12.3 million in the aggregate, will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a business combination, subjectPursuant to the terms of the ~~underwriting agreement.~~

~~Administrative Services~~Business Combination Agreement,

~~Commencing~~ 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”). On the Closing Date, the Company changed its name from “Decarbonization Plus Acquisition Corporation III” to “Solid Power, Inc.” and on December 9, 2021, the Company’s common stock and warrants began trading on the ~~date~~Nasdaq Global Select Market under the trading symbols “SLDP” and “SLDPW,” respectively.

The business combination was accounted for as a reverse recapitalization, in accordance with generally accepted accounting principles in the United States (“GAAP”). Under this method of accounting, DCRC was treated as the “acquired” company for financial reporting purposes. Accordingly, the business combination was treated as the equivalent of Legacy Solid Power issuing stock for the net assets of DCRC, accompanied by a recapitalization, whereby no goodwill or other intangible assets was recorded. Operations prior to the business combination are those of Legacy Solid Power. While DCRC was the legal acquirer, because Legacy Solid Power was deemed the accounting acquirer, the historical financial statements of Legacy Solid Power became the historical financial statements of the combined company upon the consummation of the business combination.

As a result of the business combination, we became a Nasdaq-listed company, which requires that we continue to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, and additional internal and external accounting, legal, and administrative resources, including increased audit, compliance, and legal fees.

Our results of operations and statements of assets and liabilities may not be comparable between periods as a result of the business combination.

Key Factors Affecting Operating Results

We are a research and development-stage company, with the goal to reach commercialization of our all-solid-state battery cells and sulfide-based electrolyte by 2028. We believe that our ~~securities were first listed~~performance and future success depend on several factors that present significant opportunities for us but also pose significant risks and challenges, including those discussed in “Cautionary Note Regarding Forward-Looking Statements” appearing in this Report, which are incorporated by reference.

Specifically, the success of our business is dependent upon our ability to successfully develop and commercialize our products, which will require significant funding for capital and operating expenses and subject us to regulatory oversight. Prior to reaching commercialization, we must test and validate our products to ensure they meet the performance and safety requirements of our customers. We also will have to negotiate licensing and supply contracts with our customers on terms and conditions that are mutually acceptable. We also will need to scale production of our sulfide-based solid electrolyte material to satisfy anticipated demand. All of these factors will take time and affect our operating results, and, since many are difficult to quantify, our actual operating results may be different than we currently anticipate.

In addition to meeting our development goals on the ~~NASDAQ Capital Market~~expected timeline, future growth and ~~continuing until~~demand for our products is highly dependent upon consumers adopting the ~~earlier~~use of electric vehicles. The market for electric vehicles is still rapidly evolving,

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characterized by rapidly changing technologies, competitive pricing and factors, evolving government regulation and industry standards, and changing consumer demands and behaviors.

As a development-stage company, we have not yet generated material revenues through production of our ~~consummation~~electrolyte material or all-solid-state battery cell designs. Our revenue generated to date has primarily come from research and development performance on government contracts. We have expended, and anticipate in the future expending, substantial funds to expand our sulfide-based solid electrolyte production, to install our EV cell pilot line, and in connection with research and development programs. These expenditures are needed to further development of ~~an initial~~our products and overall business. We also expect to incur significantly more administrative expenses as a publicly traded company than we did previously. For additional information, see “Results of Operations,” and “Liquidity and Capital Resources.”

COVID-19

The COVID-19 pandemic has disrupted supply chains and affected production and sales across a range of industries. The long-term extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the virus, mutations in the virus, vaccine distribution and uptake and the impact on our customers, employees, and vendors. The ultimate outcome of these matters is uncertain and, accordingly, the impact on our financial condition or results of operations is also uncertain. While the COVID-19 pandemic has presented challenges to our business, including having to devote additional time to managing our supply chain, having personnel out sick, implementing social distancing measures, and requiring certain employees to work from home in order to reduce office density, to date, we have not materially altered any terms with our contractors, suppliers, customers, other business partners or financing sources as a result of the COVID-19 pandemic.

Basis of Presentation

We currently conduct our business through one operating 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. Our historical results are reported under GAAP and in U.S. dollars.

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Results of Operations

Comparison of the Three and Six Months Ended June 30, 2022 to the Three and Six Months Ended June 30, 2021

During the three and six months ended June 30, 2022, we both expanded and accelerated our development efforts through increased capital and operational expenditures. We have invested in talent and expanded our facilities, production equipment, and capabilities. We expect to continue to increase our spending in all operational areas through the remainder of 2022 in order to execute our development strategy.

The following table sets forth our historical operating results for the periods indicated:


	Three Months Ended June 30,								Six Months Ended June 30,
($ in thousands)	2022		2021		Change		%		2022		2021		Change		%
Revenue	$	2,582	$	561	$	2,021	360	%	$	4,778	$	1,041	$	3,737	359	%
Operating Expenses
Direct costs		2,987		540		2,447	453	%		5,017		1,055		3,962	376	%
Research and development		8,440		3,203		5,237	164	%		15,101		6,309		8,792	139	%
Marketing and sales		957		535		422	79	%		1,752		1,090		662	61	%
General and administrative		4,894		2,332		2,562	110	%		8,918		2,929		5,989	204	%
Total operating expenses		17,278		6,610		10,668	161	%		30,788		11,383		19,405	170	%
Operating Loss		(14,696)		(6,049)		(8,647)	(143)	%		(26,010)		(10,342)		(15,668)	151	%
Nonoperating Income (expense)
Interest income		735		9		726	NM			936		9		927	NM
Interest expense		(5)		(121)		116	NM			(10)		(342)		332	NM
Other income (expense)		196		(3,100)		3,296	NM			235		(3,100)		3,335	NM
Change in fair value of warrant liabilities		27,473		—		27,473	NM			28,183		—		28,183	NM
Loss from change in fair value of embedded derivative liability		—		—		—	—			—		(2,680)		2,680	NM
Total nonoperating income (expense)		28,399		(3,212)		31,611	NM			29,344		(6,113)		35,457	NM
Pretax Income (loss)		13,703		(9,261)		22,964	NM			3,334		(16,455)		19,789	NM
Income tax (benefit) expense		36		12		24	NM			13		(41)		54	NM
Net income (loss)	$	13,667	$	(9,273)	$	22,940	NM		$	3,321	$	(16,414)	$	19,735	NM
Other comprehensive loss		(961)		—		(961)	NM			(1,291)		—		(1,291)	NM
Comprehensive income (loss) attributable to Common Stockholders	$	12,706	$	(9,273)	$	21,979	237	%	$	2,030	$	(16,414)	$	18,444	112	%

NM = Not meaningful

The key factors driving our results of operations for the three and six months ended June 30, 2022, including our increased operating loss as compared to the corresponding periods in 2021, were as follows:

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Revenue and direct costs increased, driven by execution of our government contracts and performance under our collaborative arrangements.

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Research and development costs increased as we invested more in both materials and labor to drive expanded development efforts of our all-solid-state battery cells.

●

General and administrative costs increased due to increased labor and professional services related to our status as a public company, as well to support ongoing development activities.

●

Nonoperating income increased as a result of a gain on the fair value adjustment of our warrant liabilities. Also

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contributing to the increase were an increase in interest income and the absence of expense associated with a manufacturing contract termination experienced in the same quarter of 2021.

Liquidity and Capital Resources

Sources of Liquidity

Our sources of cash have historically been primarily derived from the sale of equity and the business combination, orwith a small portion coming from performance on government contracts and commercial revenues.

As of June 30, 2022 and December 31, 2021, we had $534.2 and $589.3 million of total liquidity, respectively, as set forth below:


($ in thousands)	June 30, 2022		December 31, 2021
Cash and cash equivalents	$	301,603	$	513,447
Marketable securities		182,694		75,885
Long-term investments		49,873		—
Total liquidity	$	534,170	$	589,332

Short-Term Liquidity Requirements

We anticipate that our ~~liquidation, we have agreed~~most significant capital expenditures for the next 12 months will relate to ~~pay an affiliate~~construction of our ~~Sponsor a total~~second production facility in Thornton, Colorado. The purpose of ~~$10,000 per month for office space, utilities, secretarial support~~this facility is to scale production of our sulfide-based solid electrolyte to feed our EV cell pilot line. As discussed above, we expect to begin producing our sulfide-based solid electrolyte from this facility in the first quarter of 2023. In addition, our short-term liquidity requirements include operating and ~~administrative services.~~ capital expenses needed to further our development programs and to optimize our pilot production lines and electrolyte manufacturing capabilities.

Long-Term Liquidity Requirements

We ~~recorded an aggregate of $1,935~~believe that our cash on hand is sufficient to meet our operating cash needs (including expenditures for the increased pace and scope of development as well as increased public company costs), working capital and capital expenditure requirements for a period of at least the next 12 months, and longer term, until we generate adequate cash flows from ~~January 29, 2021 (inception)~~licensing activities and/or electrolyte sales.

We may, however, need additional cash if there are material changes to ~~March 31, 2021,~~our business conditions or other developments, including changes to our operating plan, unanticipated delays in negotiations with OEMs and tier-one automotive suppliers or other suppliers, supply chain challenges, disruptions due to the COVID-19 pandemic, competitive pressures, and regulatory developments. To the extent that our resources are insufficient to satisfy our cash requirements, we may need to seek additional equity or debt financing. If the 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 include not seeking potential acquisition opportunities, or reducing or delaying our production facility expansions, which may adversely affect our business, operating results, financial condition, and prospects. For more information about risks related to our business, please see “Risk Factors.”

Cash Flows

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


	Six Months Ended June 30,
($ in thousands)	2022		2021
Net cash (used in) operating activities	$	(22,958)	$	(10,156)
Net cash (used in) investing activities	$	(189,158)	$	(3,855)
Net cash provided by financing activities	$	272	$	129,371

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Cash flows used in operating activities:

The increase in cash used in operating activities was primarily attributable to an increase in research and development expenditures as well as increased general and administrative expense due to increased headcount and professional services related to public company expenses and ongoing development. We expect cash flows used in operating activities to continue to increase as we accelerate both the pace and scope of our development efforts and work to achieve commercialization of our products. We also anticipate increased expenditures for general and administrative functions in connection with our status as a public company.

Cash flows used in investing activities:

The increase in cash used in investing activities is due to capital expenditures, purchase of marketable securities and long-term investments. We invested in marketable securities and long-term investments in an effort to achieve higher returns on our cash balance. Our capital expenditures were primarily manufacturing equipment we acquired in connection with our ongoing expansion of electrolyte production capabilities and installation of our EV cell pilot line. We expect elevated investing activity as we complete build out our second production facility to manufacture sulfide-based solid electrolyte.

Cash flows provided by financing activities:

During the six months ended June 30, 2021 we financed our operations through proceeds from a bank term loan, and the sales of convertible notes and redeemable convertible preferred stock. We retired the bank term loan in connection with the ~~related agreement~~business combination in December 2021. During the ~~accompanying statement of operations.~~

~~As of March 31, 2021, we recorded an aggregate of approximately $1,935 in related party accrued expenses.~~

~~Critical Accounting Policies~~

~~Basis of Presentation~~

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and expenses during the periods reported. Actual results could materially differ from those estimates.

~~Warrant Liabilities~~

~~We account for the warrants issued in connection with our initial public offering in accordance with Accounting Standards Codification (“ASC”) 815-40,~~ ~~Derivatives and Hedging—Contracts in Entity’s Own Equity~~ (“ASC 815”), under which the warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are measured at fair value at inception and at each reporting date in accordance with ASC 820, ~~Fair Value Measurement, with changes in fair value recognized in the Statements of Operations in the period of change.~~

~~Common stock subject to possible redemption~~

We account for the Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock are classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events.

~~Impact of COVID-19~~

Our Sponsor continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on our financial position, results of operations and/or search for a target company, the specific impact is not readily determinable as of the date of the balance date.

~~Recent Accounting Pronouncements~~

~~We do not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a~~ ~~material~~ ~~impact on our financial statements.~~

~~Off-Balance Sheet Arrangements~~

~~As of the date of this Quarterly Report,~~six months ended June 30, 2022, we did not ~~have~~participate in any ~~off-balance sheet arrangements~~fundraising activities.

Critical Accounting Estimates

Except as discussed in Note 2 of our unaudited financial statements included in this Report, there were no significant and material changes in our critical accounting policies and use of estimates during the three months ended June 30, 2022, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our 2021 Annual Report on Form 10-K, filed with the SEC on March 23, 2022.

Emerging Growth Company Status

We are an emerging growth company as defined in ~~Item 303(a)(4)(ii)~~Section 2(a) of ~~Regulation S-K.~~

~~JOBS Act~~

~~On April 5, 2012,~~ the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBSSecurities Act and ~~are allowed~~have elected to ~~comply with~~take advantage of the benefits of the extended transition period for new or revised financial accounting ~~pronouncements based on~~standards. We expect to remain an emerging growth company through the ~~effective date for private (not publicly traded) companies. We elected~~end of the 2022 fiscal year. This may make it difficult or impossible to ~~delay~~compare our financial results with the ~~adoption~~financial results of ~~new~~another public company that is either not an emerging growth company or ~~revised~~is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards ~~and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result,~~used.

Recent Accounting Pronouncements

See Note 2 to our audited financial statements, ~~may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.~~

~~As an “emerging growth company,” we~~which are ~~not required to, among other things, (i) provide an auditor’s attestation report on our~~ ~~system~~ of internal controls over financial reporting, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies, (iii) comply with any requirement that may be adoptedincorporated by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose comparisons of the CEO’s compensation to median employee compensation. These exemptions will applyreference, for ~~a period of five years following the completion of our Public Offering or until we otherwise no longer qualify as an “emerging growth company.”~~more information.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

~~We are~~Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to the Company’s market risk during the three months ended June 30, 2022. For a ~~smaller reporting company as defined~~discussion of the Company’s exposure to market risk, refer to the Company’s market risk disclosures set forth in ~~Rule 12b-2 under~~Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the ~~Exchange Act. As a result, pursuant to Item 305(e) of Regulation S-K, we are not required to provide the~~ ~~information~~year ended December 31, 2021. ~~required by this Item.~~

~~Item 4.~~

~~Controls and Procedures~~

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Disclosure controls~~In designing and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

~~As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer~~ ~~carried~~ out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2021. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded thatevaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) ~~were not effective~~, management recognizes that any controls and procedures, no matter how well designed and operated, can provide

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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 ~~March 31, 2021, due solely to~~June 30, 2022. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the ~~material weakness in our internal control over financial reporting related to issues to the accounting for the Company’s warrants, as described below~~. ~~In light~~end of this material weakness, management performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period ~~presented.~~covered by this Report, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

~~During the most recently~~ ~~completed~~ ~~fiscal quarter, there has been~~There was no change in our internal control over financial reporting that occurred during the three months ended June 30, 2022 covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial ~~reporting as the circumstances leading~~reporting. We continue to ~~the revision of the financial statements were not yet identified.~~

On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC (the “SEC Staff”) issued a statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Staff Statement”). In the SEC Staff Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity, in accordance with ASC 815. Since issuance on March 26, 2021, the Company’s warrants, which includes (i) 11,416,667 redeemable warrants included as a part of the Units issued by the Company in the Public Offering (the “Public Warrants”) and (ii) 6,666,667 Private Placement Warrants (together with the Public Warrants, the “Warrants”), were accounted for as equity within the Company’s financial statements.

After consideration of the guidance in the SEC Staff Statement, the Company concluded that the Warrants should be accounted for as a liability and measured at fair value with changes in fair value for each period reported in the Company’s statement of operations. The Company has reflected this revision as a correction in the Company’s financial statements as of and for the period from January 29, 2021(inception) to March 31, 2021. Management has implemented remediation steps to addressremediate the material weakness ~~and to improve~~in our internal control over financial ~~reporting. Specifically,~~reporting as discussed in Part II, Item 9A., “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2021. Management expects to remediate the material weakness in our internal control over financial reporting by December 31, 2022. See the section titled “Risk Factors—Risks Related to Finance and Accounting—Our auditors identified a material weakness in our internal control over financial reporting as of December 31, 2021. If we ~~expanded~~are unable to develop and ~~improved~~maintain an effective system of internal controls and procedures required by Section 404(a) of the Sarbanes-Oxley Act, we may not be able to accurately report our ~~review process~~financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our stock price, business and operating results” in Part I, Item 1A., “Risk Factors” of our Annual Report on Form 10-K for ~~complex securities and related accounting standards. We plan to further improve this process by enhancing access to accounting literature, identification~~the year ended December 31, 2021.

Table of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.Contents

PART II – OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

~~None.~~Item 1. Legal Proceedings

From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

~~Item 1A.~~

~~Risk Factors~~

~~In addition to~~Item 1A. Risk Factors

Our business, prospects, reputation, results of operations and financial condition, as well as the ~~other information set forth~~price of our common stock and warrants, can be affected by a number of factors, whether currently known or unknown, including those described in ~~this Quarterly~~Part I, Item 1A. “Risk Factors” of our Annual Report on Form ~~10-Q, you should carefully consider~~10-K for the year ended December 31, 2021. When any one or more of these risks ~~discussed in our final prospectus filed with the SEC on March 25, 2021 (“Final Prospectus”). Additional risks and uncertainties not currently known~~materialize from time to ~~us or that we currently deem to be immaterial also may materially adversely affect~~time, our business, reputation, results of operations and financial condition, ~~or future results.~~as well as the price of our common stock and warrants, can be materially and adversely affected. There have been no material changes ~~in the~~to our risk factors ~~discussed our Final Prospectus except as described below.~~

~~Our Warrants are accounted for as liabilities and~~since the ~~changes in value of our Warrants could have a material effect~~Annual Report on ~~our financial results.~~

On April 12, 2021, the SEC Staff issued the SEC Statement, which focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing our Warrants. As a result of the SEC Statement, we reevaluated the accounting treatment of our Warrants and determined to classify the Warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings (see Note 2).

~~As a result, included on our balance sheet as of March 31, 2021 are derivative liabilities related to the embedded features contained within our Warrants. ASC 815 provides~~Form 10-K for the ~~remeasurement~~year ended December 31, 2021.

Table of ~~the fair value~~Contents

Item 6. 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	3.2	December 13, 2021
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.

Table of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly, based on factors which are outside of ourContents

SIGNATURE

control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our Warrants each reporting period and that the amount of such gains or losses could be material.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

~~All recent unregistered sales of securities have been previously reported.~~

~~Item 3.~~

~~Defaults Upon Senior Securities~~

~~None.~~

~~Item 4.~~

~~Mine Safety Disclosures~~

~~Not applicable.~~

~~Item 5.~~

~~Other Information~~

~~None.~~

~~Item 6.~~

~~Exhibits.~~

~~Exhibit~~ ~~Number~~		~~Description~~
~~3.1~~		Amended and Restated Certificate of Incorporation of Decarbonization Plus Acquisition Corporation III (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-40284) filed with the SEC on March 26, 2021

~~3.2~~		Bylaws of Decarbonization Plus Acquisition Corporation III (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1 (File No. 333-253094) filed with the SEC on February 12, 2021

~~4.1~~		~~Specimen Unit Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (File No. 333-253094) filed with the SEC on February 12, 2021~~

~~4.2~~		~~Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (File No. 333-253094) filed with the SEC on February 12, 2021)~~

~~4.3~~		~~Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1 (File No. 333-253094) filed with the SEC on February 12, 2021)~~

~~4.4~~		Warrant Agreement, dated March 23, 2021, between Decarbonization Plus Acquisition Corporation III and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-40284) filed with the SEC on March 26, 2021

~~31.1~~		~~Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)~~

~~31.2~~		~~Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)~~

~~32.1~~		~~Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350~~

~~32.2~~		~~Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350~~

~~101.INS~~		~~Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because 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 Document~~
~~101.DEF~~		~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~		~~Inline XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~		~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~
~~104~~		~~Cover Page Interactive Data File (embedded within the Inline XBRL document)~~

~~SIGNATURE~~

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the ~~registrant~~Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: August 10, 2022	~~DECARBONIZATION PLUS ACQUISITION CORPORATION III~~Solid Power, Inc.


	By:	/s/ Douglas Campbell
	Name:		Douglas Campbell
~~Date: June 4, 2021~~	~~By:~~Title:		~~/s/ Erik Anderson~~Chief Executive Officer
	~~Name:~~(Principal Executive Officer)


	By:	~~Erik Anderson~~/s/ Kevin Paprzycki
	~~Title:~~Name:	Kevin Paprzycki
	Title:	Chief ~~Executive~~Financial Officer ~~(Principal Executive~~and Treasurer
	(Principal Financial and Accounting Officer)

		~~Page No.~~

PART ~~I -~~I. FINANCIAL INFORMATION

Item 1.	Financial Statements	2
		4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
		22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
		27
Item 4.	Controls and Procedures	2327

PART ~~II –~~II. OTHER INFORMATION

Item 1.	Legal Proceedings	24
		29
Item 1A.	Risk Factors	24

~~Item 2.~~29	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	24

~~Item 3.~~	~~Defaults Upon Senior Securities~~	25

~~Item 4.~~	~~Mine Safety Disclosures~~	25

~~Item 5.~~	~~Other Information~~	25

Item 6.	~~Exhibits.~~Exhibits	2630

~~SIGNATURE~~Signatures	27	31

	March 31, 2021
ASSETS:
Current Assets:
Cash	$	2,986,880
Short term prepaid insurance		551,380
Total Current Assets		3,538,261
Cash equivalent held in Trust Account		350,000,172
Long term prepaid insurance		560,596
Total assets	$	354,099,028

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable - offering costs (affiliate)	$	160,538
Accounts payable - affiliate		1,317,442
Accrued offering costs		480,200
Total current liabilities		1,958,180
Warrant liabilities		26,883,334
Deferred underwriting fee payable		12,250,000
Total liabilities		41,091,514

Commitments and Contingencies
Class A common stock subject to possible redemption, 30,800,751 shares at $10.00 per share		308,007,510
Stockholders' Equity
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding		-
Class A common stock, $0.0001 par value; 250,000,000 shares authorized; 4,199,249 shares issued and outstanding (excluding 30,800,751 shares subject to possible redemption)		420
Class B common stock, $0.0001 par value, 20,000,000 shares authorized, 10,062,500 shares issued and outstanding (1)		1,006
Additional paid-in capital		6,043,810
Accumulated deficit		(1,045,232	)
Total stockholders' equity		5,000,004
Total liabilities and stockholders' equity	$	354,099,028

Operating expenses:
General and administrative expenses	$	205,486
Loss from operations		(205,486	)

Other income:
Interest earned on marketable securities held in Trust Account	$	172
Offering costs allocated to warrant liabilities		(956,584	)
Change in fair value of warrant liabilities		116,666

Net loss		(1,045,232	)

Weighted average number of Class A redeemable common stock, basic and diluted		2,868,852

Basic and diluted net income per common share, Class A redeemable common stock		0.00

Weighted average shares outstanding of Class B non-redeemable common stock, basic and diluted		9,072,746

Basic and diluted net loss per common share, Class B non-redeemable common stock		(0.12	)

											Additional
	Class A Common Stock						Class B Common Stock				Paid-in			Accumulated			Stockholders'
	Shares			Amount			Shares		Amount		Capital			Deficit			Equity
Balance as of January 29, 2021 (inception)		0		$	0			0	$	0	$	0		$	0		$	0
Class B Common Stock issued to Sponsor (1)		-			-			10,062,500		1,006		23,994			-			25,000
Sale of Class A Common Stock to Public, net of underwriting discounts and initial classification of warrant liabilities		35,000,000			3,500			-		-		313,746,500			-			313,750,000
Offering Costs		-			-			-		-		(678,838	)		-			(678,838	)
Cash paid in excess of fair value for Private Placement Warrants	-			-			-		-			956,584		-				956,584
Class A common stock subject to possible redemption		(30,800,751	)		(3,080	)		-		-		(308,004,430	)		-			(308,007,510	)
Net loss		-			-			-		-		-			(1,045,232	)		(1,045,232	)
Balance as of March 31, 2021		4,199,249			420			10,062,500		1,006		6,043,810			(1,045,232	)		5,000,004

Cash flow from operating activities:
Net loss	$	(1,045,232	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of warrant liabilities		(116,666	)
Offering costs allocated to warrant liabilities		956,584
Interest earned on marketable securities held in Trust Account		(172	)
Changes in operating assets and liabilities:
Accounts payable - affiliate		1,317,442
Prepaid insurance		(1,111,977	)
Net cash used in operating activities		(20	)

Cash flows from investing activities:
Investment of cash in Trust Account		(350,000,000	)
Net cash used in investing activities		(350,000,000	)

Cash flows from financing activities:
Proceeds from sale of Units, net of underwriting discounts paid		343,000,000
Proceeds from sale of Private Placement Warrants		10,000,000
Proceeds from sale of Class B Common Stock to Sponsor		25,000
Payment of offering costs		(38,100	)
Net cash provided by financing activities		352,986,900

Net increase in cash		2,986,880
Cash at beginning of period		-
Cash at end of period	$	2,986,880

Supplemental disclosure of non-cash financing activities:
Initial classification of Class A common stock subject to possible redemption	$	307,889,890
Change in initial value of Class A common stock subject to possible redemption		117,620
Accrued offering costs	$	640,738

	As Previously Reported			Adjustment			As Revised
Balance Sheet as of March 26, 2021
Warrant liabilities	$	—		$	27,000,000		$	27,000,000
Total liabilities		13,086,989			27,000,000			40,086,989
Class A common stock subject to possible redemption		334,899,890			(27,000,000	)		307,899,890
Class A common stock		151			270			421
Additional paid-in capital		5,000,115			1,165,674			6,165,789
Retained earnings (accumulated deficit)		(1,271	)		(1,165,944	)		(1,167,215	)

	For the Period from January 29, 2021 (Inception) to March 31, 2021
Class A Redeemable Common Stock
Numerator: Earnings allocable to Class A Redeemable Common Stock
Interest Income	$	172
Net Income	$	172
Denominator: Weighted Average Class A Redeemable Common Stock
Class A Redeemable Common Stock, Basic and Diluted		2,868,852
Income/Basic and Diluted Class A Redeemable Common Stock	$	0.00

Class B Non-Redeemable Common Stock
Numerator: Net Loss minus Redeemable Net Income
Net Loss	$	(1,045,232	)
Redeemable Net Income		(172	)
Non-Redeemable Net Loss	$	(1,045,404	)
Denominator: Weighted Average Class B Non-Redeemable Common Stock
Class B Non-Redeemable Common Stock, Basic and Diluted		9,072,746
Loss/Basic and Diluted Class B Non-Redeemable Common Stock	$	(0.12	)

Description	Amount at Fair Value		Level 1		Level 2		Level 3
March 31, 2021
Assets:
Marketable securities held in Trust Account – U.S. Treasury Securities Money Market Fund	$	350,000,172	$	350,000,172	$	—	$	—
Liabilities:
Warrant liability – Public Warrants	$	16,684,334	$	—	$	—	$	16,684,334
Warrant liability – Private Placement Warrants	$	10,200,000	$	—	$	—	$	10,200,000

	As of March 26, 2021 (initial measurement)			As of March 31, 2021
Stock price	$	9.52		$	9.48
Strike price	$	11.50		$	11.50
Term (in years)		6.02			6.00
Volatility		23.6	%		23.6	%
Risk-free rate		1.09	%		1.16	%
Dividend yield		0.0	%		0.0	%
Fair value of warrants	$	1.44 – 1.53		$	1.43 – 1.53

	Private Placement		Public			Level 3 Warrant Liabilities
Beginning balance as of January 29, 2021 (inception)	$	-	$	-		$	-
Initial measurement at March 26, 2021		10,200,000		16,800,000			27,000,000
Change in valuation inputs or other assumptions	-			(116,666	)		(116,666	)
Fair value as of March 31, 2021	$	10,200,000	$	16,683,334		$	26,883,334