SES AI CORP Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) – Marketscreener.com

Overview
We have incurred the following net losses for the periods noted:
? $27.0 million for three months ended March 31, 2022; and $3.6 million for three
months ended March 31, 2021.
? We have an accumulated deficit of approximately $121.3 million from our
inception through March 31, 2022.
Business Combination
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Upon Closing, the following occurred:
Each share of Old SES common stock, excluding shares held by the Company’s
Chief Executive Officer and certain entities affiliated with him (the “SES
Founder Group“), and each redeemable convertible preferred share that was
? outstanding immediately prior to the Closing was cancelled and converted into a
number of fully paid and nonassessable shares of Class A Common Stock at an
exchange ratio of 5.9328 (“Exchange Ratio”), rounded down to the nearest whole
number;
Each share of Old SES common stock held by the SES Founder Group that was
outstanding immediately prior to the Closing was cancelled and converted into a
? number of fully paid and nonassessable shares of the Company’s Class B common
stock, par value $0.0001 per share (“Class B Common Stock”) at the Exchange
Ratio, rounded down to the nearest whole number;
Each Old SES restricted share that was issued, outstanding and subject to
restrictions (including vesting) immediately prior to the Closing was assumed
? by the Company and converted into a number of shares of restricted Class A
Common Stock at the Exchange Ratio, rounded down to the nearest whole number,
which remain subject to the same terms and conditions as were applicable prior
to the Closing; and
Each Old SES option that was outstanding immediately prior to the Closing,
whether vested or unvested, was assumed by the Company and converted into an
? option to acquire Class A Common Stock with the same terms as were applicable
prior to the Closing, except for the number of shares exercisable and the
exercise price, each of which was adjusted using the Exchange Ratio, rounded
down to the nearest whole number.
Key Trends, Opportunities and Uncertainties
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discussed below, and the Risk Factors set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A. of the 2021 Annual Report.
Partnering with Industry-Leading OEMs
Product and Manufacturing Process Development
Scale-up: Our design is further being customized with and validated by several
OEMs. Based on our collaborations with OEMs, we believe that a roughly 100 Ah
? cell-size manufactured at GWh scale (five to seven cells-per-minute) is needed
to achieve commercialization in EVs at a large, global scale. We are developing
processes and equipment to scale up the manufacturing of current cell design
from three to nine Ah capacity to approximately 100 Ah.
Module and pack design: Li-Metal cells must be integrated into modules and
? packs as part of their integration into vehicles. We have active development in
integration of our Li-Metal cells in modules to ensure that our Li-Metal cells
critical to ongoing monitoring of battery health and safety. We continue to
? develop advanced AI algorithms to diagnose battery cell-related health issues,
develop advanced control algorithms and charging methods to enhance cycle life
Advanced materials and coatings: We continue to research and develop advanced
? electrolyte and anodes to further improve cycle life and safety. In addition,
we also continue to develop novel methods of laminating or depositing lithium
metal anode that can be deployed at commercial GWh scale.
Cathode materials and design: We develop our Li-Metal cells for a variety of
? different cathode materials, cathode design and cathode processing methods that
can provide ultra-high energy density and/or significant cost-reduction.
Lithium metal recycling: Along with other battery components that are already
? being recycled today, Li-Metal foil will also need to be recycled in the
future. We continue to explore methods of recycling that are productive and
cost-effective.
Commercialization
Competition
Capital Needs
We have incurred net losses and negative cash flows from operations since our inception. Assuming we experience no significant delays in the research and development of our Li-Metal battery, we believe that our cash resources are sufficient to fund the completion of our Pilot Facility and creation of our Expansion I Facility. For more information, see “-Liquidity and Capital Resources” below.
Government Regulation and Compliance
Components of Results of Operations
General and Administrative
Upon commencement of commercial operations, we also expect to incur customer and sales support and advertising costs.
Interest income
Interest income primarily consists of interest earned on our cash and cash equivalents, which are primarily invested in money market funds.
Other (expense) income, net
Provision for Income Taxes
Comparison of the three months ended March 31, 2022 and 2021
The following table sets forth our historical operating results for the periods indicated (amounts in thousands):
(4,439) (14,758) (332) %
(3,609) $ (23,315) (646) %
“nm” means not meaningful.
Operating Expenses: Research and Development
Operating Expenses: General and Administrative
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Interest Income
Interest income for the three months ended March 31, 2022 and March 31, 2021 was immaterial.
Other (expense) income, net
Provision for Income Taxes
The provision for income taxes for the three months ended March 31, 2022 and March 31, 2021 was immaterial.
Liquidity and Capital Resources
Cash Flows
The following table provides a summary of our cash flow data for the periods indicated (amounts in thousands):
Months Ended March 31,
Cash Used in Operating Activities
Cash Used in Investing Activities
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Cash Provided by Financing Activities
Net cash provided by financing activities for the three months ended March 31, 2022 was $282.9 million, primarily due to proceeds related to the Business Combination and PIPE Financing, net of transaction costs.
There were no cash flows related to financing activities during the three months ended March 31, 2021.
Contractual Obligations and Commitments
(1) Includes commitment under the construction and fit-out agreement to build a
preproduction facility in South Korea.
Off-Balance Sheet Arrangements
The Company is not party to any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Critical Accounting Estimates and Judgments
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provisions of ASC Topic fair value model to be a material increase or 718 – Stock Compensation. used for valuing
Differ
any
Emerging Growth Company Accounting Election
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Recent Accounting Pronouncements
Other Information
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