ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
|
||
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
• | changes in domestic and foreign business, market, financial, political and legal conditions, including but not limited to the ongoing conflict between Russia and Ukraine; |
• | risks relating to the uncertainty of the projected financial information with respect to the Company; |
• | risks related to the development and commercialization of the Company’s battery technology and the timing and achievement of expected business milestones; |
• | the effects of competition on the Company’s business; |
• | the ability of the Company to issue equity or equity-linked securities or obtain debt financing in the future; |
• | the ability of the Company to integrate its products into electric vehicles (“EVs”); |
• | the risk that delays in the pre-manufacturing development of the Company’s battery cells could adversely affect the Company’s business and prospects; |
• | potential supply chain difficulties; |
• | risks resulting from the Company’s joint development agreements (“JDAs”) and other strategic alliances, if such alliances are unsuccessful; |
• | the quickly evolving battery market; |
• | the Company’s ability to accurately estimate future supply and demand for its batteries; |
• | the Company’s ability to develop new products on an ongoing basis in a timely manner; |
• | product liability and other potential litigation, regulation and legal compliance; |
• | the Company’s ability to effectively manage its growth; |
• | the Company’s ability to attract, train and retain highly skilled employees and key personnel; |
• | the willingness of vehicle operators and consumers to adopt EVs; |
• | developments in alternative technology or other fossil fuel alternatives; |
• | the Company’s ability to meet certain motor vehicle standards; |
• | a potential shortage of metals required for manufacturing batteries; |
• | risks related to the Company’s intellectual property; |
• | risks related to the Company’s business operations outside the United States, including in China; |
• | the Company has identified a material weakness in its internal control over financial reporting and may identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls; |
• | compliance with certain health and safety laws; |
• | changes in U.S. and foreign tax laws; and |
• | the other risks described in “Item 1A. Risk Factors” in this Annual Report. |
• | Alliance Bernstein, Electric Revolution Driving the Infinite Loop |
• | Alliance Bernstein, EV Tracker – Full Year 2020: EV sales hit 3 million (+40% YoY) despite pandemic, as December hits all-time high (+120% YoY) |
• | BlackRock, Insights: Here to Stay |
• | International Energy Agency, Global EV Outlook 2021: Trends and developments in electric vehicle markets |
• | U.S. Department of Energy, Alternative Fuels Data Center: Batteries for Hybrid and Plug-In Electric Vehicles |
Item 1. |
Business. |
• | deliver a step-change in energy density to deliver a lightweight and compact battery, and substantially eliminate range anxiety of EVs; |
• | provide fast-charge capability to reduce charging times significantly, to a charge of 80% in less than 15 minutes; |
• | incorporate advanced artificial intelligence (“AI”) powered safety management software, which will accurately monitor state of health of the battery and apply appropriate self-healing protocols; |
• | use similar manufacturing processes as required for Li-ion, but is expected to be substantially less costly than conventional Li-ion at scale due to Li-Metal’s high energy density; |
• | achieve rapid market adoption due to our strategic partnerships, including with leading global OEMs, such as GM, Hyundai and Honda; |
• | capitalize on the innovation occurring in Li-ion, including improvements in energy density, manufacturing efficiency and cost reduction, as Li-Metal shares similar cathode and manufacturing process with Li-ion. |
• | Canada: All new light-duty cars and passenger trucks sold to be zero-emission by 2035. |
• | United States: $174 billion proposed to boost the EV market and halve greenhouse gas emissions by 2030. |
• | Denmark: Denmark has urged the European Union to ban the sale of all petrol and diesel cars by 2040. |
• | Finland: 30% market share for EVs by 2030, including personal vehicles, trucks and buses. |
• | France: Ban on gasoline and diesel vehicle sales by 2040. |
• | Germany: 10 million EVs and one million electric car charge points by 2030. |
• | Iceland: Reduce carbon emissions by 40% by 2030 and become carbon-neutral by 2040. |
• | Ireland: Ban on sales of new petrol and diesel cars by 2030 and become carbon neutral by 2050. |
• | Israel: Eliminate imports of gas and diesel vehicles and coal-fired electricity generation by 2030. |
• | Netherlands: All new petrol and diesel cars to be emission free by 2030. |
• | Norway: EVs to account for 100% of all car sales by 2025 (already accounting for 58% of all car sales in March 2019). |
• | United Kingdom: Ban on selling new petrol, diesel or hybrid cars by 2035. |
• | Australia: A$1.9 billion investment package already approved, including A$1.6 billion for renewable energy. |
• | China: 20% of new cars sold by 2025 to be electrified. |
• | India: Various regulatory programs to increase EV sales to 30% of total new cars by 2030. |
• | Japan: All new passenger cars sold to be electric or hybrid by the mid-2030s. |
• | Singapore: Phase out petrol and diesel vehicles by 2040. |
• | South Korea: 33% of new vehicle sold to be electric or hydrogen-fueled by 2030. |
• | GM: Launch more than 30 new EV models by 2025 and sell only zero-emission light-duty vehicles by 2035. |
• | Hyundai: Fully electrify lineup in major global markets by 2040. |
• | Toyota: 70% of vehicle sales to be from EVs in 2030. |
• | Ford: Invest $29 billion in EVs and autonomous vehicles by 2025 and become carbon neutral by 2050. |
• | light and compact |
• | durable and safe |
• | capable of fast charge |
• | capable of high power discharge |
• | low-cost Li-ion manufacturing scale and best-practices to enable cost-reduction; |
• | capitalizing on the innovation occurring in Li-ion Li-ion; and |
• | smarter AI-powered health monitoring software that can predict safety incidents in real time and make appropriate safety recommendations. |
• | Scale-up cell-size manufactured at GWh scale (five to seven cells-per-minute) |
• | Module and pack design Li-Metal cells must be integrated into modules and packs as part of their integration into vehicles. Our active development efforts are focused on the integration of our Li-Metal cells into modules to enable our Li-Metal cells perform as intended once they are integrated into modules and vehicles. |
• | Advanced AI software and battery management systems (“BMS”) |
• | Advanced materials and coatings |
• | Cathode materials and design 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 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. |
• | Cell design |
• | Materials state-of-the |
• | Battery management |
• | Environmental low-impact production of cell materials and recyclability of spent materials. |
Item 1A. |
Risk Factors. |
• | develop and fund research and technological innovations; |
• | receive and maintain necessary intellectual property protections; |
• | obtain governmental approvals and registrations; |
• | comply with governmental regulations; and |
• | anticipate customer needs and preferences successfully. |
• | perceptions about EV quality, design and performance, especially if adverse events or accidents occur that are linked to the quality or safety of EVs; |
• | volatility in sales of EVs; |
• | the costs of purchasing and maintaining EVs; |
• | perceptions about vehicle safety in general, namely, safety issues that may be attributed to the use of advanced technology, including vehicle electronics; |
• | negative perceptions of EVs, such as that they are more expensive than nonelectric vehicles and are only affordable with government subsidies or that they have failed to meet customer expectations; |
• | the limited range over which EVs may be driven on a single battery charge and the effects of weather on this range; |
• | the decline of an EV’s range resulting from deterioration over time in the battery’s ability to hold a charge; |
• | concerns about electric charging infrastructure availability and reliability, which could derail past and present efforts to promote EVs as a practical solution to vehicles which require gasoline; |
• | concerns about charging station standardizations, convenience and cost influencing consumers’ perceptions regarding the convenience of EV charging stations; |
• | concerns of potential customers about the susceptibility of battery packs to damage from improper charging, as well as the lifespan of battery packs and the cost of their replacement; |
• | concerns regarding comprehensive vehicular insurance coverage related to EVs; |
• | developments in alternative technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, which could adversely affect sales of EVs; |
• | the environmental consciousness of consumers; |
• | the availability and volatility in the cost of natural gas, diesel, coal, oil, gasoline and other fuels relative to electricity, such as the sharp reduction in prices for gasoline in 2020 and the recent sharp increase in such prices; |
• | the availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased use of nonpolluting vehicles; |
• | concerns regarding the value and costs for upkeep of EVs in the used car market; |
• | the availability of enough skilled labor in after-sale maintenance and repair services of EVs; and |
• | macroeconomic factors. |
• | cease selling, incorporating or using products that incorporate the challenged intellectual property; |
• | pay damages; |
• | obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all; or |
• | redesign our batteries. |
• | general trade tensions between the United States and China have been escalating, and new legislation or regulations in either jurisdiction could impose additional restrictions and costs on our ability to operate in one or both jurisdictions, or even foreclose operations entirely; |
• | non-U.S. countries have enacted and could enact legislation or impose regulations or other restrictions, including unfavorable labor regulations or tax policies (such as Chinese regulations prohibiting our operating company from paying dividends out of accumulated distributable profits unless 10% of such profits (up to half of the company’s registered capital) are set aside annually, under Article 166 of China’s Company Law), which could have an adverse effect on our ability to conduct business in or expatriate profits from those countries; |
• | tax rates in certain non-U.S. countries may exceed those in the United States and non-U.S. earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls, or other restrictions, including restrictions on repatriation; |
• | the regulatory or judicial authorities of non-U.S. countries may not enforce legal rights and recognize business procedures in a manner to which we are accustomed or would reasonably expect; |
• | we may have difficulty complying with a variety of laws and regulations in non-U.S. countries, some of which may conflict with laws in the United States; |
• | changes in political and economic conditions may lead to changes in the business environment in which we operate, as well as changes in currency exchange rates; |
• | in the case of China, the degree of significant government control over China’s economic growth through restrictions and limitations on foreign investment in certain industries, control over the allocation of resources, control over payment of foreign currency-denominated obligations, implementation of monetary policy, data localization and privacy requirements, technology transfer requirements, national security laws, influence over the courts and preferential treatment of particular industries or companies, could materially affect our liquidity, access to capital, intellectual property and ability to operate our business; |
• | in the case of China, data localization requirements and restrictions on the use of foreign technology applications have already been enacted by the Chinese government, and restrictions on the use of Chinese technology and applications that have been or may be adopted in the future by the United States, may make it difficult to efficiently coordinate complex manufacturing supply chains in a global setting; |
• | restrictions or denials on visas for our personnel, limiting our ability to train and pass along proprietary information efficiently; |
• | differences in software usage and export controls, making it difficult to share certain engineering documents and resources between global subsidiaries; |
• | the adoption and expansion of trade restrictions, the occurrence or escalation of a “trade war,” or other governmental action related to tariffs or trade agreements or policies among the governments of the United States and other countries, such as China, could adversely impact our raw material prices, our ability to manufacture our products, and demand for our products in China, the U.S. and other global markets; |
• | changes to export controls and/or failure to obtain export licenses in the United States, China or other countries in which we do business could adversely affect our access to raw materials, ability to manufacture and ship our products or increase our costs to conduct research and development; |
• | regulatory changes and economic conditions following “Brexit” (the United Kingdom’s exit from the European Union), including uncertainties as to its effect on trade laws, tariffs, and taxes, could create instability and volatility in the global financial and currency markets, conflicting or redundant regulatory regimes in Europe and political instability; and |
• | natural disasters or international conflict, including terrorist acts, could interrupt our research and development, manufacturing or commercialization or endanger our personnel. |
• | provisions that authorize our board of directors (the “Board”), without action by our stockholders, to authorize by resolution the issuance of shares of preferred stock and to establish the number of shares to be included in such series, along with the preferential rights determined by our Board; provided that, our Board may also, subject to the rights of the holders of preferred stock, authorize shares of preferred stock to be increased or decreased by the approval of the Board and the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the corporation; |
• | provisions that permit only a majority of our Board, the Chairperson of the Board or the Chief Executive Officer to call special stockholder meetings; provided, that for so long as Dr. Qichao Hu and certain entities affiliated with Dr. Hu (the “SES Founder Group”) beneficially own at least 50% of the voting power of the then outstanding shares of our capital stock, special meetings of stockholders may also be called by or at the request of stockholders holding a majority of the voting power of the issued and outstanding shares of our capital stock; |
• | provisions that impose advance notice requirements and other requirements and limitations on the ability of stockholders to propose matters for consideration at stockholder meetings; and |
• | a staggered board whereby our directors are divided into three classes, with each class subject to retirement and reelection once every three years on a rotating basis. |
• | a limited availability of market quotations for our securities; |
• | reduced liquidity for our securities; |
• | a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
• | a limited amount of news and analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
• | actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us; |
• | changes in the market’s expectations about our operating results; |
• | success of competitors; |
• | our operating results failing to meet market expectations in a particular period; |
• | changes in financial estimates and recommendations by securities analysts concerning SES or the payments industry and market in general; |
• | operating and stock price performance of other companies that investors deem comparable to SES; |
• | our ability to market new and enhanced products on a timely basis; |
• | changes in laws and regulations affecting our business; |
• | commencement of, or involvement in, litigation; |
• | changes in our capital structure, such as future issuances of securities or the incurrence of additional debt; |
• | the volume of shares of our Class A common stock available for public sale; |
• | any significant change in our Board or management; |
• | sales of substantial amounts of our Class A common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and |
• | general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism including disruptions resulting from the conflict between Russia and Ukraine. |
• | the election of SES’s board of directors and the appointment and removal of our officers; |
• | mergers and other business combination transactions requiring stockholder approval, including proposed transactions that would result in our stockholders receiving a premium price for their shares; and |
• | amendments to SES’s certificate of incorporation or increases or decreases in the size of our board of directors. |
Item 1B. |
Unresolved Staff Comments. |
Item 2. |
Properties. |
Item 3. |
Legal Proceedings. |
Item 4. |
Mine Safety Disclosures. |
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Item 6. |
[Reserved]. |
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk. |
Item 8. |
Financial Statements and Supplementary Data. |
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
Item 9A. |
Controls and Procedures. |
(1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company, |
(2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and |
(3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Item 9B. |
Other Information. |
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. |
Item 10. |
Directors, Executive Officers and Corporate Governance. |
Name |
Age |
Position | ||
Dr. Qichao Hu | 36 | Chief Executive Officer and Chairman | ||
Rohit Makharia | 44 | President and Chief Operating Officer | ||
Jing Nealis | 42 | Chief Financial Officer | ||
Joanne Ban | 42 | Chief Legal and Corporate Officer | ||
Yongkyu Son | 47 | Chief Technology Officer | ||
Dr. Hong Gan | 61 | Chief Science Officer | ||
Dr. Jang Wook Choi | 46 | Director | ||
Robert Friedland | 71 | Director | ||
Kent Helfrich | 57 | Director | ||
Eric Luo | 56 | Director | ||
Dr. Jiong Ma | 58 | Director | ||
Michael Noonen | 58 | Director |
• | we have independent director representation on our audit, compensation and nominating and corporate governance committees, and our independent directors meet regularly in executive sessions without the presence of our corporate officers or non-independent directors; and |
• | at least one of our directors qualifies as an “audit committee financial expert” as defined by the SEC. |
• | our Class I directors are Dr. Ma, Mr. Noonen and Mr. Luo, and their terms will expire at the first annual meeting of stockholders following the date of the proxy statement; |
• | our Class II directors are Dr. Choi and Mr. Helfrich and their terms will expire at the second annual meeting of stockholders following the date of the proxy statement; and |
• | our Class III directors are Dr. Hu and Mr. Friedland and their terms will expire at the third annual meeting of stockholders following the date of the proxy statement. |
Item 11. |
Executive Compensation. |
• | Dr. Qichao Hu, SES’s Founder and Chief Executive Officer and a director of SES; |
• | Mr. Rohit Makharia, SES’s President and Chief Operating Officer, who joined SES in this role in March 2021; and |
• | Ms. Jing Nealis, SES’s Chief Financial Officer, who joined SES in this role in March 2021. |
Name and Principal Position |
Year |
Salary ($) (1) |
Bonus ($) (2) |
Stock Awards ($) (3) |
Option Awards ($) (3) |
Non-Equity Incentive Plan Compensation ($) (4) |
All Other Compensation ($) (5) |
Total ($) |
||||||||||||||||||||||||
Dr. Qichao Hu Founder, Chief Executive Officer and Director |
2021 | 328,333 | |
— |
|
— | — | 166,667 | 184,446 | 679,446 | ||||||||||||||||||||||
2020 | 241,667 | |
— |
|
— | 6,277 | 125,000 | 54,903 | 427,847 | |||||||||||||||||||||||
Rohit Makharia President and Chief Operating Officer |
2021 | 275,000 | 150,000 | — | 674,170 | 73,125 | 156,448 | 1,328,743 | ||||||||||||||||||||||||
Jing Nealis Chief Financial Officer |
2021 | 289,423 | 150,000 | 7,480,000 | 112,809 | 78,750 | 100,000 | 8,120,982 |
(1) (2) |
Amount reflects the named executive officer’s base salary earned during Fiscal 2021. Amount reflects (i) in the case of Dr. Hu, a bonus of $35,417 for performance from January 1, 2021 to March 31, 2021, a $175,000 annual performance bonus for performance from April 1, 2021 to March 31, 2022, prorated to $131,250 for the portion of that period in Fiscal 2021, (ii) in the case of Mr. Makharia, a sign-on bonus of $150,000 in connection with his joining SES in March 2021 and a $97,500 annual performance bonus for performance from April 1, 2021 to March 31, 2022, prorated to $73,125 for the portion of that period in Fiscal 2021, and (iii) in the case of Ms. Nealis, a sign-on bonus of $150,000 in connection with her joining SES in March 2021 and a $105,000 annual performance bonus for performance from April 1, 2021 to March 31, 2022, prorated to $78,750 for the portion of that period in Fiscal 2021, | |
(3) | Amount represents the aggregate grant date fair value of restricted share or stock option awards made to the named executive officer computed in accordance with Financial Accounting Standards Codification Topic 718, Compensation - Stock Compensation (“Topic 718”). The fair value of options was calculated using the Black-Scholes value on the grant date. As required by SEC rules, awards are reported in the year of grant. | |
(4) | Amount reflects the prorated portion of an annual performance bonus based on performance from April 1, 2021 to March 31, 2022, (i) in the case of Dr. Hu, of $175,000 (prorated to $131,250 for the portion of that period in Fiscal 2021), (ii) in the case of Mr. Makharia, $97,500 (prorated to $73,125 for the portion of that period in Fiscal 2021) and (iii) in the case of Ms. Nealis, $105,000 (prorated to $78,750 for the portion of that period in Fiscal 2021). | |
(5) | Amounts shown in this column represent (i) for all named executive officers, the aggregate amount of a monthly allowance for subsidized childcare benefits and other related benefits, and (ii) for Dr. Hu and Mr. Makharia, certain other personal benefits. This allowance is also provided to certain other key employees of the Company. See “Narrative Disclosure to Summary Compensation Table - Other Benefits.” |
Option Awards |
Stock Awards |
|||||||||||||||||||||||||||
Name |
Grant Date |
Number of Securities Underlying Unexercised Options Exercisable (#) |
Number of Securities Underlying Unexercised Options Unexercisable (#) |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares of Stock That Have Not Vested (#) |
Market Value of Shares of Stock That Have Not Vested ($) |
|||||||||||||||||||||
Dr. Qichao Hu |
4/1/2020 | (1) | 91,554 | — | 0.14 | 3/31/2030 | — | — | ||||||||||||||||||||
Rohit Makharia |
3/1/2021 | (2) | — | 7,091,082 | 0.16 | 2/28/2031 | — | — | ||||||||||||||||||||
Jing Nealis |
2/10/2021 | (2) | — | 1,186,555 | 0.16 | 2/9/2031 | — | — | ||||||||||||||||||||
|
8/16/2021 |
(3) |
— | — | — | — | 1,483,194 | 7,480,000 |
(1) | Reflects stock options that were granted under the 2018 Plan to compensate grantees, including Dr. Hu, for COVID-19-related |
(2) | Reflects time-based stock options that were granted under the 2018 Plan and vest 25% on the first anniversary of the grant date and in equal monthly installments over the following 36 months. For more information, see “Potential Payments Upon Termination or Change in Control—Equity Awards.” |
(3) | Reflects a restricted share award that was granted under the 2021 Plan and vests 25% on the first anniversary of the grant date and in equal monthly installments over the following 36 months. For more information, see “Potential Payments Upon Termination or Change in Control—Equity Awards.” |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
• | each of our current directors; |
• | each of our named executive officers; |
• | all of our current directors and executive officers as a group; and |
• | each person or “group” (as such term is used in Section 13(d)(3) of the Exchange Act) who is a beneficial owner of more than 5% of the outstanding Class A common stock or Class B common stock. |
Name and Address of Beneficial Owner |
Number of shares of Class A common stock |
% of Class A common stock |
Number of Shares of Class B common stock |
% of Class B common stock |
% of Total Voting Power** |
|||||||||||||||
Directors & executive officers (1) |
||||||||||||||||||||
Dr. Qichao Hu (2) |
43,981,987 | 12.8 | % | 43,881,251 | 100 | % | 56.5 | % | ||||||||||||
Jing Nealis (3) |
589,113 | * | — | — | * | |||||||||||||||
Rohit Makharia (4) |
2,631,681 | * | — | — | * | |||||||||||||||
Dr. Jang Wook Choi |
— | * | — | — | * | |||||||||||||||
Robert Friedland (5) |
319,166 | * | — | — | * | |||||||||||||||
Kent Helfrich |
— | * | — | — | * | |||||||||||||||
Eric Luo |
— | * | — | — | * | |||||||||||||||
Dr. Jiong Ma |
— | * | — | — | * | |||||||||||||||
Michael Noonen |
— | * | — | — | * | |||||||||||||||
All current directors and executive officers as a group (12 individuals) (6) |
7,893,444 | 2.6 | % | 43,881,251 | 100 | % | 59.1 | % | ||||||||||||
Greater-than-5% beneficial owners |
||||||||||||||||||||
Dr. Qichao Hu (2) |
100,736 | * | 43,881,251 | 100 | % | 56.5 | % | |||||||||||||
Long Siang Pte. Ltd. (7) |
27,280,647 | 9.0 | % | — | — | 3.7 | % | |||||||||||||
Vertex Legacy Continuation Fund Pte. Ltd. (8) |
32,256,315 | 10.6 | % | — | — | 4.3 | % | |||||||||||||
General Motors Ventures LLC and General Motors Holdings LLC (9) |
33,056,337 | 10.9 | % | — | — | 4.5 | % | |||||||||||||
Tianqi Lithium HK Co., Ltd. (10) |
30,522,386 | 10.0 | % | — | — | 4.1 | % | |||||||||||||
Affiliates of Temasek Holdings (Private) Limited (11) |
34,675,757 | 11.4 | % | — | — | 4.7 | % | |||||||||||||
SK Inc. (12) |
42,007,759 | 13.8 | % | — | — | 5.7 | % |
* | Indicates beneficial ownership of less than 1%. |
** | Percentage of total voting power represents the combined voting power with respect to all shares of Class A common stock and Class B common stock, voting as a single class. As described elsewhere in this Annual Report, subject to certain conditions, each share of Class B common stock is entitled to 10 votes per share and each share of Class A common stock is entitled to one vote per share. |
(1) | The business address of each of these stockholders is c/o SES AI Corporation, 35 Cabot Road, Woburn, MA 01801. |
(2) | Includes (i) 100,736 shares of Class A common stock, 9,182 of which are Earn-Out Shares held directly by Dr. Qichao Hu; (ii) 30,716,882 shares of our Class B common stock, 2,799,859 of which are Founder Earn-Out Shares, held directly by Dr. Hu and (iii) an aggregate of 13,164,369 shares of Class B common stock, 1,199,937 of which are Founder Earn-Out Shares, held by various trusts affiliated with Dr. Hu. These trusts consist of: (i) Qichao Hu 2021 Irrevocable Trust U/A/D March 31, 2021; (ii) Qichao Hu Family Delaware Trust U/A/D March 31, 2021; and (iii) Qichao Hu 2021 Annuity Trust March 31, 2021 (collectively, the “Trusts”), each owning 4,388,123 shares of Class B common stock and 399,979 Founder Earn-Out Shares, and the shares of Class A common stock underlying such shares. |
(3) | Consists of 321,358 shares Class A common stock underlying SES options and 267,755 Earn-Out Shares. |
(4) | Consists of 1,920,501 shares of Class A common stock underlying SES options and 711,180 Earn-Out Shares. |
(5) | Consists of (i) 240,000 Class A ordinary shares of Ivanhoe (purchased in the open market) that were automatically converted on a one-for-one |
(6) | Includes shares beneficially owned by all directors, named executive officers and other executive officers (namely, Joanne Ban, Hong Gan and Yongkyu Son). |
(7) | Consists of (i) 24,703,118 shares of Class A common stock issued at Closing and (ii) 2,477,529 Earn-Out Shares. Long Siang Pte. Ltd. (“Long Siang”) is the record holder of the shares of Class A common stock. As a shareholder of Long Siang, Xie Huefeng may be deemed to have beneficial ownership over the shares of Class A common stock directly owned by Long Siang. The principal business address of all persons named in this footnote is 238 Orchard Boulevard, #24-05, Singapore 237973. |
(8) | Consists of (i) 29,361,711 shares of Class A common stock issued at Closing and (ii) 2,894,604 Earn-Out Shares. Vertex Legacy Continuation Fund Pte. Ltd. (“VLCF”) is the record holder of the shares of Class A common stock. Vertex Legacy Fund (SG) LP (“VLFSG”) is the 100% shareholder of VLCF. VLC GP Pte. Ltd. (“VLCGP”) is the general partner of VLFSG and has appointed Vertex Ventures SEA Management Pte. Ltd. (“VVSEAMPL”) to serve as the fund manager of VLCF. VVSEAMPL is deemed to have dispositive and voting power over the shares of Class A common stock directly owned by VLCF pursuant to a management agreement between VLFSG and VVSEAMPL, whereby dispositive and voting decisions require the majority approval of the members of an investment committee established by VVSEAMPL. The principal business address of all persons named in this footnote is 250 North Bridge Road, #11-01 Raffles City Tower, Singapore 179101. |
(9) | Consists of (i) 30,134,387 shares of Class A common stock issued at Closing and (ii) 2,921,950 Earn-Out Shares. GM Ventures is the record holder of 21,090,498 shares of Class A common stock and 2,085,124 Earn-Out Shares. GM Holdings is the record holder of 9,043,889 shares of Class A common stock and 836,826 Earn-Out Shares. GM Ventures is a wholly owned subsidiary of GM Holdings. GM Holdings is a wholly owned subsidiary of General Motors Company (“GM”). GM may be deemed to share beneficial ownership over the shares of Class A common stock directly owned by GM Ventures and GM Holdings, and GM Holdings may be deemed to share beneficial ownership over the shares of Class A common stock directly owned by GM Ventures. The principal office of each of all persons named in this footnote is 300 Renaissance Center, Detroit, MI, 48265. |
(10) | Consists of (i) 27,740,256 shares of Class A common stock issued at Closing and (ii) 2,782,130 Earn-Out Shares. Tianqi Lithium HK Co., Limited (“Tianqi HK”) is the record holder of such shares of Class A common stock. Tianqi HK is wholly owned by Tianqi Lithium Co., Limited (“Tianqi Limited”), and Tianqi Lithium is wholly owned by Tianqi Lithium Corporation (“Tianqi Lithium”). Tianqi Lithium and Tianqi Lithium may thus be deemed to share beneficial ownership over the shares of Class A common stock owned by Tianqi HK. The principal business address of all persons named in this footnote is No.10 East Gaopeng Road, Chengdu, Sichuan 610041, China. |
(11) | Anderson Investments Pte. Ltd. (“Anderson”) is the record holder of 25,882,916 shares of Class A common stock and 2,595,854 Earn-Out Shares. Aranda Investments Pte. Ltd. (“Aranda”) is the record holder of 5,632,129 shares of Class A common stock and 564,858 Earn-Out Shares. Anderson is a direct wholly-owned subsidiary of Thomson Capital Pte. Ltd. (“Thomson”), which in turn is a direct wholly-owned subsidiary of Tembusu Capital Pte. Ltd. (“Tembusu”). Aranda is a direct wholly-owned subsidiary of Seletar Investments Pte. Ltd. (“Seletar”), which in turn is a direct wholly-owned subsidiary of Temasek Capital (Private) Limited (“Temasek Capital”). Each of Tembusu and Temasek Capital is a direct wholly-owned subsidiary of Temasek Holdings (Private) Limited (“Temasek Holdings”). In such capacities, each of Thomson, Tembusu, and Temasek Holdings may be deemed to have beneficial ownership over the shares of Class A common stock directly owned by Anderson, and each of Seletar, Temasek Capital and Temasek Holdings may be deemed to have beneficial ownership over the shares of Class A common stock directly owned by Aranda. The principal business address of all persons named in this footnote is 60B Orchard Road, #06-18 Tower 2, The Atrium@Orchard, Singapore 238891. |
(12) | Consists of (i) 38,178,731 shares of Class A common stock issued at Closing and (ii) 3,829,028 Earn-Out Shares. SK, Inc. is the record holder and ultimate beneficial owner of such shares of Class A common stock. The principal business address of SK, Inc. is 26, Jong-ro, Jongno-gu, Seoul, South Korea 03188. |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence. |
• | The audit committee or disinterested members of the board shall review the material facts of all related person transactions. |
• | In reviewing any related person transaction, the committee will take into account, among other factors that it deems appropriate: the importance and fairness of the transaction to us and the related person; the business rationale for engaging in the transaction; whether the value and terms of the transaction are substantially similar as compared to those of similar transactions previously entered into by us with non-related persons; the extent of the related person’s interest in the transaction; whether the transaction would likely impair the judgment of a director or executive officer to act in the best interests of us and our stockholders; and the impact on a director’s or a director nominee’s independence in the event the related person is a director or director nominee or an immediate family member of the director or director nominee. |
• | In connection with its review of any related person transaction, we shall provide the committee or disinterested members of the board with all material information regarding such related person transaction, the interest of the related person and any potential disclosure obligations of ours in connection with such related person transaction. |
• | If a related person transaction will be ongoing, the committee may establish guidelines for our management to follow in its ongoing dealings with the related person. |
Item 14. |
Principal Accounting Fees and Services. |
Item 15. |
Exhibits, Financial Statement Schedules. |
(1) | Financial Statements |
(2) | Exhibits |
* | Filed herewith. |
† | Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. |
# | Indicates management contract or compensatory plan or arrangement. |
** | Furnished herewith. |
Item 16. |
Form 10-K Summary |
SES AI CORPORATION | ||||||
Date: March 31, 2022 | By: | /s/ Qichao Hu | ||||
Name: | Qichao Hu | |||||
Title: | Chief Executive Officer |
Signature |
Title |
Date | ||
/s/ Qichao Hu |
Chief Executive Officer and Chairman | March 31, 2022 | ||
Qichao Hu | (Principal Executive Officer) | |||
/s/ Jing Nealis |
Chief Financial Officer | March 31, 2022 | ||
Jing Nealis | (Principal Financial Officer and Principal Accounting Officer) | |||
/s/ Jang Wook Choi |
Director | March 31, 2022 | ||
Jang Wook Choi | ||||
/s/ Robert Friedland |
Director | March 31, 2022 | ||
Robert Friedland | ||||
/s/ Kent Helfrich |
Director | March 31, 2022 | ||
Kent Helfrich | ||||
/s/ Eric Luo |
Director | March 31, 2022 | ||
Eric Luo | ||||
/s/ Jiong Ma |
Director | March 31, 2022 | ||
Jiong Ma | ||||
/s/ Michael Noonen |
Director | March 31, 2022 | ||
Michael Noonen |
Page No. |
||||
Consolidated Financial Statements |
||||
F-2 |
||||
F-3 |
||||
F-4 |
||||
F-5 |
||||
F-6 |
||||
F-7 |
December 31, |
||||||||
2021 |
2020 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash |
$ | $ | ||||||
Prepaid expenses |
— | |||||||
Total current assets |
||||||||
Investments held in Trust Account |
— | |||||||
Deferred offering costs associated with the initial public offering |
— | |||||||
Total Assets |
$ |
$ |
||||||
Liabilities, Class A Ordinary Shares Subject to Redemption and Shareholders’ Deficit |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | $ | ||||||
Due to related party |
— | |||||||
Accrued expenses |
||||||||
Note payable - related party |
— | |||||||
Total current liabilities |
||||||||
Accrued liabilities |
— | |||||||
Convertible note – related party |
— | |||||||
Deferred underwriting commissions |
— | |||||||
Derivative warrant liabilities |
— | |||||||
Total liabilities |
||||||||
Commitments and Contingencies |
||||||||
Class A ordinary shares subject to possible redemption, $ - |
— | |||||||
Shareholders’ Deficit: |
||||||||
Preference shares, $ |
— | |||||||
Class A ordinary shares, $ |
— | |||||||
Class B ordinary shares, $ |
||||||||
Additional paid-in capital |
— | |||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total shareholders’ deficit |
( |
) | ( |
) | ||||
Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders’ Deficit |
$ |
$ |
||||||
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2021 |
For the Period From July 8, 2020 (Inception) Through December 31, 2020 |
|||||||
General and administrative expenses |
$ | $ | ||||||
General and administrative expenses - related party |
— | |||||||
|
|
|
|
|||||
Total operating expenses |
( |
) | ( |
) | ||||
Other income (expenses): |
||||||||
Income from investments held in Trust Account |
— | |||||||
Change in fair value of derivative warrant liabilities |
( |
) | — | |||||
Change in fair value of convertible note – related party |
( |
) | — | |||||
Offering costs - derivative warrant liabilities |
( |
) | — | |||||
|
|
|
|
|||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
|||||
Basic and diluted weighted average shares outstanding, Class A ordinary shares |
— | |||||||
|
|
|
|
|||||
Basic and diluted net loss per ordinary share, Class A ordinary shares |
$ | ( |
) | $ | — | |||
|
|
|
|
|||||
Basic and diluted weighted average ordinary shares outstanding, Class B ordinary shares |
||||||||
|
|
|
|
|||||
Basic and diluted net loss per ordinary share, Class B ordinary shares |
$ | ( |
) | $ | ( |
) | ||
|
|
|
|
For the Year Ended December 31, 2021 |
||||||||||||||||||||||||||||
Ordinary Shares |
Additional Paid-in Capital |
Accumulated Deficit |
Total Shareholders’ Deficit |
|||||||||||||||||||||||||
Class A |
Class B |
|||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||
Balance - July 8, 2020 (inception) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||
Issuance of Class B ordinary shares to Sponsor |
— |
— |
— |
|||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
( |
) |
( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2020 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
Accretion of Class A ordinary shares subject to redemption |
— | — | — | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance - December 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2021 |
For the Period From July 8, 2020 (Inception) Through December 31, 2020 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
General and administrative expenses paid by Sponsor in exchange for issuance of Class B ordinary shares |
||||||||
Income from investments held in Trust Account |
( |
) | ||||||
Change in fair value of derivative warrant liabilities |
||||||||
Change in fair value of convertible note – related party |
||||||||
Offering costs - derivative warrant liabilities |
||||||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses |
( |
) | ||||||
Accounts payable |
||||||||
Due to related party |
||||||||
Accrued expenses |
||||||||
Accrued liabilities |
||||||||
|
|
|
|
|||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Cash Flows from Investing Activities: |
||||||||
Cash deposited in Trust Account |
( |
) | ||||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | ||||||
|
|
|
|
|||||
Cash Flows from Financing Activities: |
||||||||
Payment of note payable to related party |
( |
) | ||||||
Proceeds received from initial public offering, gross |
||||||||
Proceeds received from private placement |
||||||||
Offering costs paid |
( |
) | ||||||
Proceeds received from note payable to related party |
||||||||
Offering costs paid |
( |
) | ||||||
Proceeds from convertible note to related party |
||||||||
|
|
|
|
|||||
Net cash provided by financing activities |
||||||||
|
|
|
|
|||||
Net change in cash |
( |
) | ||||||
Cash - beginning of the period |
||||||||
|
|
|
|
|||||
Cash - end of the period |
$ |
$ |
||||||
|
|
|
|
|||||
Supplemental disclosure of noncash financing activities: |
||||||||
Deferred offering costs included in accounts payable |
$ | $ | ||||||
Offering costs included in accrued expenses |
$ | $ | ||||||
Deferred offering costs paid by Sponsor under promissory note |
$ | $ | ||||||
Deferred underwriting commissions |
$ | $ |
• | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
• | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
• | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Period From July 8, 2020 (Inception) Through December 31, 2020 |
||||||||||||||||
For the Year Ended December 31, 2021 |
||||||||||||||||
Class A |
Class B |
Class A |
Class B |
|||||||||||||
Basic and diluted net loss per ordinary share: |
||||||||||||||||
Numerator: |
||||||||||||||||
Allocation of net loss |
$ | ( |
) | $ | ( |
) | $ | |
$ | ( |
) | |||||
Denominator: |
||||||||||||||||
Basic and diluted weighted average ordinary shares outstanding |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic and diluted net loss per ordinary share |
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||
|
|
|
|
|
|
|
|
• |
in whole and not in part; |
• |
at a price of $ |
• |
upon a minimum of |
• |
if, and only if, the last reported sale price (the “closing price”) of Class A ordinary shares equals or exceeds $ |
• | in whole and not in part; |
• | at $ |
• | if, and only if, the closing price of Class A ordinary shares equals or exceeds $ |
|
|
|
|
|
Gross proceeds from Initial Public Offering |
$ | |||
Less: |
||||
Fair value of Public Warrants at issuance |
( |
) | ||
Offering costs allocated to Class A ordinary shares subject to possible redemption |
( |
) | ||
Plus: |
||||
Accretion on Class A ordinary shares subject to possible redemption amount |
||||
|
|
|||
Class A ordinary shares subject to possible redemption |
$ | |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
|||||||||
Assets: |
||||||||||||
Investments held in Trust Account |
$ | |
$ | |
$ | |||||||
Liabilities: |
||||||||||||
Derivative warrant liabilities - Public Warrants |
$ | $ | $ | |||||||||
Derivative warrant liabilities - Private Placement Warrants |
$ | $ | $ | |
||||||||
Convertible note – related party |
$ | $ | $ |
As of December 31, 2021 |
||||
Option term (in years) |
||||
Stock price |
$ | |||
Volatility |
% | |||
Risk-free interest rate |
% | |||
Expected dividends |
% |
Derivative warrant liabilities at January 1, 2021 |
$ | |||
Issuance of Public and Private Warrants |
||||
Transfer of Public Warrants to Level 1 measurement |
( |
) | ||
Change in fair value of derivative warrant liabilities |
||||
|
|
|||
Derivative warrant liabilities at December 31, 2021 |
$ | |||
|
|
As of December 31, 2021 |
||||
Option term (in years) |
||||
Stock price |
$ | |||
Volatility |
% | |||
Risk-free interest rate |
% | |||
Expected dividends |
% |
Fair Value at January 1, 2021 |
$ | |||
Initial fair value of convertible note - related party |
||||
Change in fair value of convertible note - related party |
||||
|
|
|||
Fair Value of convertible note - related party, December 31, 2021 |
$ | |
||
|
|