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| PART I · |
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| Item 1. | Business | 6 |
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| Item 1A. | Risk Factors | 9 |
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| Item 1B. | Unresolved Staff Comments | 30 |
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| Item 1C. | Cybersecurity | 30 |
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| Item 2. | Properties | 31 |
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| Item 3. | Legal Proceedings | 31 |
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| Item 4. | Mine Safety Disclosures | 31 |
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| PART II | | |
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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 31 |
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| Item 6. | [Reserved] | 32 |
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| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 32 |
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| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 41 |
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| Item 8. | Financial Statements and Supplementary Data | 42 |
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| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 77 |
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| Item 9A. | Controls and Procedures | 77 |
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| Item 9B. | Other Information | 79 |
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| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 79 |
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| PART III | | |
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| Item 10. | Directors, Executive Officers and Corporate Governance | 79 |
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| Item 11. | Executive Compensation | 79 |
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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 79 |
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| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 79 |
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| Item 14. | Principal Accountant Fees and Services | 79 |
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| PART IV | | |
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| Item 15. | Exhibits, Financial Statement Schedules | 79 |
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| SIGNATURES | 84 | |
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EXPLANATORY NOTE
Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” “SES,” and the “Company” refer to SES AI Corporation, a Delaware corporation (f/k/a Ivanhoe Capital Acquisition Corp., a Cayman Islands exempted company (“Ivanhoe”)) and its consolidated subsidiaries, after giving effect to the Business Combination (as defined below).
We were originally formed as a Cayman Islands exempted company in July of 2020 for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization, recapitalization or other similar business combination with one or more businesses. On January 11, 2021, we consummated our initial public offering (the “IPO”), following which our securities began trading on the New York Stock Exchange (the “NYSE”).
On February 3, 2022 (the “Closing Date”), Ivanhoe consummated its previously announced business combination (the “Business Combination”) with SES Holdings Pte. Ltd., a Singapore private company limited by shares (“Old SES”), pursuant to the terms of that certain Business Combination Agreement (as amended, the “Business Combination Agreement”) by and among Ivanhoe, Old SES, and Wormhole Amalgamation Sub Pte. Ltd., a Singapore private company limited by shares, and a direct, wholly-owned subsidiary of Ivanhoe (“Amalgamation Sub”).
Pursuant to the terms of the Business Combination Agreement and in connection with the closing of the Business Combination (the “Closing”), (i) Ivanhoe migrated out of the Cayman Islands and domesticated as a Delaware corporation (the “Domestication”) by way of continuation and deregistration under Part XII of the Cayman Islands Companies Act and domestication under Section 388 of the Delaware General Corporation Law (“DGCL”), (ii) Ivanhoe changed its name to “SES AI Corporation” (“SES,” or the “Company”), and (iii) Amalgamation Sub merged with and into Old SES, with Old SES as the surviving company (the “Amalgamation”) (the time that the Amalgamation became effective is referred to as the “Effective Time”). As a result of the Amalgamation, Old SES became our wholly-owned subsidiary.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS AND RISK FACTORS SUMMARY
This Annual Report on Form 10-K (this Annual Report”) contains statements that the Company believes are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements relating to expectations for future financial performance, business strategies or expectations for our business. These statements are based on the beliefs and assumptions of the management of the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, it cannot provide assurance that it will achieve or realize these plans, intentions or expectations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Annual Report, words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “strive,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
You should not place undue reliance on these forward-looking statements. Should one or more of a number of known and unknown risks and uncertainties materialize, or should any of our assumptions prove incorrect, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to the risks below, which also serves as a summary of the principal risks of an investment in our securities:
| ● | We expect to continue to incur losses for the foreseeable future. While we expect to become profitable eventually, our projects are based on internal assumptions that may prove incorrect, and we may never achieve or maintain profitability. |
| ● | We will need substantial additional capital in the future to fund our business and may be unable to meet our future capital requirements, impairing our financial position and results of operations. |
| ● | We may not be able to successfully integrate UZ Energy’s operations with our business. |
| ● | The market for UAM, and for use of Li-Metal technology in UAM applications, is still emerging and may not achieve the growth potential we expect. |
| ● | We may face challenges in developing National Defense Authorization Act (“NDAA”)-compliant manufacturing capacity for drone cells, and even if we develop the manufacturing capacity, demand for NDAA-compliant drone cells may not develop. |
| ● | If our batteries fail to perform as expected our ability to develop, market and sell our batteries could be harmed. |
| ● | We may not be able to engage target original equipment manufacturers (“OEMs”) customers successfully and to convert such contacts into meaningful orders in the future. |
| ● | We may not be able to establish new, or maintain existing, supply relationships for necessary raw materials, components or equipment or may be required to pay costs for raw materials, components or equipment that are more expensive than anticipated, which could delay the introduction of our product and negatively impact our business. |
| ● | Our ability to manufacture our batteries at scale depends on our ability to build, operate and staff our facilities successfully, as well as to obtain sufficient contract manufacturing specificity. |
| ● | We have pursued and may continue to pursue joint development agreements (“JDAs”), service contracts and other strategic alliances, which could have an adverse impact on our business if they are unsuccessful or if we are unable to enter into new strategic alliances. |
| ● | The battery market continues to evolve and is highly competitive, and certain other battery manufacturers have significantly greater resources than we do. |
| ● | We may not be able to estimate accurately the future supply and demand for our batteries, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to predict accurately our manufacturing requirements, we could incur additional costs or experience delays. |
| ● | Certain components of our batteries pose safety risks that may cause accidents. We may be subject to financial and reputational risks due to product recalls and product liability claims, and we could face substantial liabilities that exceed our resources. |
| ● | We may not be able to develop and commercialize newly discovered materials. |
| ● | The use of artificial intelligence in our products and services may result in reputational harm and competitive harm. |
| ● | Our use of artificial intelligence and machine learning may result in legal and regulatory risks. |
| ● | The market for our AI-based services such as Molecular Universe is still emerging and our AI programs may not achieve the growth potential we expect. |
| ● | The economic benefit of our ESS products to our customers depends on the cost of electricity available from alternative sources, including local electric utility companies, which cost structure is subject to change. |
| ● | Our ESS products performance may not meet customers’ expectations or needs. |
| ● | We depend upon component and product manufacturing and logistical services provided by third parties, many of whom are located outside of the U.S. |
| ● | Our patent applications may not result in issued patents or our patent rights may be challenged, invalidated or limited in scope, any of which could have a material adverse effect on our ability to prevent others from competing or interfering with the commercialization of our products. |
| ● | We rely heavily on our intellectual property portfolio, including unpatented proprietary technology. If we are unable to protect our intellectual property rights from unauthorized use, our business and competitive position would be harmed. |
| ● | The international nature of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. |
| ● | The price of our Class A common stock has been and may continue to be volatile. |
| ● | Our public warrants may never be in the money, and they may expire worthless. |
| ● | We are controlled or substantially influenced by Dr. Qichao Hu and certain entities affiliated with Dr. Hu, whose interests may conflict with other stockholders. The concentrated ownership of our dual class common stock could prevent stockholders from influencing significant decisions. |
| ● | We have a history of material weaknesses in our internal control over financial reporting, and a failure to remediate any such weakness and/or our identification of new ones could have an adverse impact on the value of our Class A common stock. |
The forward-looking statements contained in this Annual Report on Form 10-K are based on information available as of the date of this Annual Report on Form 10-K and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements speak only as of the date of this Annual Report on Form 10-K and should not be relied upon as representing the Company’s views as of any subsequent date. The Company expressly disclaims any obligation or undertaking
to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
