Good afternoon. Welcome to Amprius Technologies presentation of its third quarter 2022 earnings call. My name is Ryan and I will be your operator this afternoon. Joining us for today's presentation are the company's CEO, Dr. Kang Sun, and CFO, Sandra Wallach. Following management remarks, we will open the call for questions. Please note that this presentation contains forward-looking statements. These statements are based on Amprius Technologies' business and expected market opportunities, and are subject to uncertainty and changes in circumstance, many of which are beyond Amprius' control, which may cause actual results to differ materially for those expressed or implied in such forward-looking statements.
For a more complete discussion on forward-looking statements and the uncertainties related to Amprius Technologies' business, and expected market opportunities, please refer to its filing with the Securities and Exchange Commission, including the discussion of Amprius risk factors in its 8-K filed on September 16, 2022. I will now turn the call over to CEO Dr. Kang Sun for his comments. Sir, please proceed.
Good afternoon, everyone, and thank you for joining us today for Amprius' inaugural earnings call. Today is an important milestone for Amprius, and we are so glad that you could join us for our first quarterly earnings call as a public company. Today, we will discuss our third quarter financial results, key business drivers, and the steps we are taking to advance our strategic plan for high volume production of our silicon anode batteries. For those new to the Amprius story, I'd like to begin today's call by providing some background on who we are. Amprius was founded in 2008 to commercialize the silicon anode concept that was originally developed at Stanford University. In 2014, we finalized our silicon anode structure design and its manufacturing process. In 2016, we built our first kilowatt-hour scale manufacturing line in California.
Two years later, Amprius received its first purchase order from Airbus and began its journey towards commercialization. Last year, we initiated our gigawatt-hour scale manufacturing project to build a high volume facility in the United States to meet the strong customer demand for our silicon anode battery technology. In September of this year, we closed our business combination with Kensington Capital, a critical step on our roadmap to build scale that can help fulfill market demand. We could not have found a better partner than Kensington's team. This transaction provide Amprius with access to the capital markets in addition to the proceeds raised to date. That accelerate the development timeline of our gigawatt-hour scale manufacturing facility. Following the close, Kensington's chairman and CEO, Justin Mirro, joined our board.
We are fortunate to continue working with Justin and be able to leverage the entire Kensington team's deeper expertise in automotive industry, as our long-term goal is to see our silicon anode technology become a mainstream technology with applications across all segments of electrical mobility, including the EV industry. Amprius is in the business of developing and manufacturing ultra-high energy density lithium-ion batteries based on our proprietary silicon anode technology. Our business has four distinct advantages. Unmatched technical and product performance, proven manufacturability, years of product and commercialization experience, and a team of experienced business operators with a solid track record. Today, Amprius delivers commercial batteries with the highest known energy density and power density. Our batteries have 450 watt-hour per kilo specific energy density and 1,150 watt-hour per liter volumetric energy density with up to 10C high power capability.
few weeks ago, we hosted a demonstration of our extremely fast charge capability, in which we charged one of our batteries from 0% to 80% in six minutes. In addition, Amprius batteries offer a wide operating temperature range from minus 30 degrees Celsius to 55 degrees Celsius, which is particularly important for the aviation market that we are currently targeting. Amprius stands apart, and we currently do not have any competition in the commercial market at this performance level. Amprius is currently focusing on addressing the aviation market, which we expect will grow to $50 billion TAM by 2025. We have a group of blue-chip aviation industry customers that are currently using our batteries in real-world situations. Among them, Airbus, which is Zephyr HAPS programs, AeroVironment, and Teledyne FLIR. Most recently, we announced a three-year cooperation agreement with the defense industry leader BAE Systems.
This agreement further validates the significant potential of our silicon anode technology in rigorous aero and military applications. As BAE intends to investigate the business opportunities enabled by the use and supply of Amprius batteries in their electrical aviation product portfolio. In addition to commercial customers, the U.S. government has also consistently shown its support for Amprius and our silicon anode technology. In total, we have received four grants from the U.S. Department of Energy. We have also been awarded funding for a second multi-year development program with the United States Advanced Battery Consortium to advance the development of high-energy density and low-cost EV batteries. After a decade of the development, Amprius has developed the most advanced lithium-ion battery commercially available today to tier one customers in the aviation industry, demonstrated the battery manufacturability, and build a strong technology roadmap.
Today, the company's top priority is to quickly scale its production capacity to meet the customer demands and accelerate growth. We have made progress on this goal in several ways. In October, we received the first high-volume silicon anode production machine from Centrotherm at our California facility. This machine provides us with approximately 10 times more production capacity to serve critical customers sampling and qualification exiting 2023. Furthermore, it allows us to accelerate the development of our process for building batteries at a gigawatt-hour scale, since we have been limited to the kilowatt-hour scale until this point. This expertise is necessary as we prepare to begin construction of our high-volume manufacturing facility. Next, our Vice President of Infrastructure, Andrew Huie, recently came on board to spearhead our expansion efforts.
Andrew Huie brings over 30 years of facility development and management experience to Amprius, and was most recently at Panasonic Energy of North America working at the Tesla first Gigafactory. He will lead the development of our high-volume manufacturing facility as we begin to scale our production capacity, focusing on factory planning, facility development, and regulatory compliance. Last month, Amprius was awarded a $50 million cost-sharing grant as a part of President Biden's Bipartisan Infrastructure Law, which reflects our position as a pioneer in electrical mobility and exhibits the government's confidence in our technology. We believe this will be a catalyst to our production capacity expansion as this funding is focused on growing the domestic manufacturing of next-generation lithium-ion battery. With all this hard work and effort, our silicon anode battery technology is a business poised to scale into high-volume production.
We believe our technology and the products are well-positioned to enable the future of electrical mobility. Our production capability is in the progress of expanding. Our battery performance is unmatched in current market, and we have several blue-chip customers, including many others, who are interested in working with us. Now, I will turn the call over to our CFO, Sandra Wallach, who will review our financial results for the third quarter. Sandra?
Thank you, Kang. I'd also like to thank our analysts and investors for joining us on this first earnings call. Our detailed financials can be found in our shareholder letter. I will spend a few minutes covering a few key topics. As Kang mentioned, we have the proprietary technology, proven manufacturability, and commercial success. We are focusing on scaling our production capacity to meet the growing demand in these fast-moving markets. In our financials, particularly in our revenue results, you will see data points that reinforce the strength of our customer development efforts as we scale. Those results, when paired with the investments in our Fremont capacity and gigawatt scale capabilities, we believe position the company well to achieve its growth and profitability potential. We closed out the third quarter of 2022 with $0.8 million in revenue.
Product revenue was $0.5 million, including 9 customers sampled in total, including 2 leading EVTOL manufacturers. We delivered commercial quantity shipments to AeroVironment and Teledyne FLIR, and we shipped the 9th flight set to Airbus for their high-altitude pseudo-satellite program with a backlog of 6 more sets for future deliveries. Development services revenue was $0.3 million based on the delivery of cells and reports under contract with the U.S. Army for development of cells with gel electrolytes. For the third quarter of 2022, our GAAP gross profit margin was negative 180%. Variation in gross margin period-over-period is based on the mix of products and services. Moving now to our operating expense management. Our GAAP operating expense for the third quarter of 2022 was $2.9 million.
Our Q3 GAAP net loss was $4.2 million or a loss of $0.06 per share. As of September 30, 2022, there were 54 full-time employees based in our Fremont, California location. Share-based compensation for the third quarter was $0.7 million. Turning to the balance sheet, we exited Q3 2022 with $73.8 million in cash and no debt, a net increase of $68.6 million from Q2 2022. The key drivers of our cash activity for the quarter were $2.7 million used in operating activities, $0.5 million in capital expenditures invested in our current manufacturing facility as we are investing into opportunities to expand our footprint and accelerate our capacity to support customer qualifications and scale-up.
Under financing activities, we had $71.8 million net cash provided, driven by proceeds received in connection with the business combination and the PIPE investment net of issuance cost. For projections, we expect higher capital expenditures going forward as we continue to invest in our Fremont facility and fully build out the 2-megawatt capacity in Fremont, California, while in parallel, starting design, site selection and construction of our gigawatt-scale facility. With the strength of our balance sheet and multiple vehicles to generate additional funding through both equity via warrants and committed equity facility and non-dilutive sources via grants, we believe we have enough cash to execute our strategic plan. With that, I will conclude the financial discussion and pass the call back to Kang.
Thanks, Sandra. In September, Amprius entered public market so we could better capitalize on the significant market growth for batteries in the aviation and the EV spaces. As a result of our demonstrated success with Airbus and other tier one customers, we are becoming a market pioneer in providing high-performance batteries to the aviation industry through customer validation, design wins, and the recurring orders. We believe our strong market position will enable us to expand our presence in the rapidly growing aviation markets, while also serving other mobility-related markets, including electric vehicles that require improvements in their electrification solutions. To take advantage of the tremendous opportunity in these markets, we must first build a high-volume manufacturing facility.
Today, we have more customer inquiries than our capacity can serve, which is why we are diligently working towards expanding production at our current facility in Fremont, California, and finalizing the location for our gigawatt hour scale manufacturing facility, which we have narrowed down to Texas or Georgia. We are in discussion with the landlord and expect to announce a site by the end of 2022. In anticipation of our high production capacity, we are making significant progress in technology and product development as well as customer acquisitions. We have enhanced our battery specific energy density from 450 watt-hour per kilo to 500 watt-hour per kilo. While this optimized design is still in its final development and testing phase in our labs, we are excited to be developing the next generation of a superior battery performance for our current and future customers.
Furthermore, we are pleased to announce that our 390 watt-hour per kilo polymer electrolyte cell has successfully passed the military performance specification nail penetration test, which was conducted and verified by an independent third party lab. This is another significant step in the development of our technology and product portfolio. The marked increase in energy density performance, combined with a lower overall weight of the battery, has the potential to be used in many applications, including wearable devices. We'll be providing additional details on this achievement in a upcoming press release, as well as a video of the nail penetration test. Finally, on the commercial side, we are rapidly building the customer pipeline as our customers' product approaching commercial launch, and our batteries are validated by more commercial applications.
To summarize, Amprius continues to execute on its strategic growth plan of commercializing its proprietary silicon nanowire anode technology and capitalize on the robust market demand for next-generation batteries. Backed by our innovative products, strong balance sheet and grants, supportive base of customers and a team of technology innovators and experienced business operators, we believe Amprius is uniquely positioned to advance the future of electrical mobility today. The team at Amprius appreciates your continued support, and we look forward to what is ahead for our company and the battery industry. With that, we are ready to open the call for questions. Operator?
Thank you. We will now take your questions. Ladies and gentlemen, if you wish to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * key. One moment please while we poll for questions. Our first question comes from the line of Colin Rusch from Oppenheimer. Please go ahead.
Thanks so much, guys. As you look at installing this new large-scale tool and going through the evaluation of the process, can you talk about just the cadence of activity that you're expecting to go through and some of the key milestones that we should be anticipating over the next several quarters?
We have this, Colin, we just received this tool from Centrotherm. This is a small scale of a large scale manufacturing tool that give us approximately 2 megawatt capacity here. Why we need to have this first module in Fremont, California, because we need like to test out the entire manufacturing process with this tool. We already have done some tests at Centrotherm last year, this year. These two not only test the silicon nanowire growth, this enable us to test the entire volume manufacturing protocol.
Fantastic. I'll follow up off the line for some more detail. Then, you know, I guess that dovetails into my second question around customer qualification of both the product and the process. Obviously you've been, you know, you're shipping revenue units to a number of companies or a number of customers, you know. As folks wanna scale up with you guys, you know, can you talk a little bit about the concurrent activity around qualification of the factory so that as you get the equipment installed on the new site and begin ramping, you know, how prepared are those folks gonna be to be taking product and having that product designed into their offerings out into the market?
Colin, as you know, we're already in manufacturing activities since 2016. W e started supplying customer commercial products since 2018, and the first customer was Airbus. We have a robust manufacturing process already, but at a small scale, at a kilowatt hour scale. This new tool will be available to start supplying customer prototypes and for the battery made on this new tool, sometimes in the third quarter next year.
Fantastic. Then the final one is for Sandra. You know, as you evaluate, you know, the sources of capital that you have out there, it seems like you may have a couple of other potential grants that you could get or other elements that may be non-dilutive. Can you talk a little bit about your ability to, you know, finalize the total capital structure with non-dilutive financing?
There are many programs out there. We were incredibly pleased, thank you for the Department of Energy grant to receive that $50 million. There's a DOE loan program. There are many other options that we're continuing to look at as we continually assess our capital needs in the longer term.
Okay. Thanks so much, you guys.
Thank you. Our next question comes from the line of Chip Moore from EF Hutton. Please go ahead.
Hey, Kang and Sandra. I guess first, congratulations to you and the team just for making it to your first public call. Wanted to ask, in Fremont back to the Centrotherm equipment that you've got in now. Just getting to, I think you said Kang prototypes sort of Q3 next year. Just help us, I guess, with that ramp, you know, what you need to do in terms of tweaks, and I think it was automation around handling the foil. Just kinda remind us what you need to get done, you know, once you get the equipment installed.
Chip, we have all the building blocks ready for this volume manufacturing process. What we need to do is to test and verify each technical building blocks. That means the silicon growth and the back-end assembly activities, and then integrate them together. That will require two or three quarters to finish that . Since we have been in manufacturing mode for over four years, this basically is integration job, okay, instead innovation. We already have, as I said, you know, we have all the technical building blocks. We just need to put it together. Based on current plan, we should have this line running for prototyping sometime in Q3 last year and start supplying small volume.
Small volume means, you know, we have nameplate capacity to megawatt end of the 2023 or Q1 2024.
Got it. That's helpful. Just in terms of the pace of capital expenditures, obviously, you know, you talked about higher CapEx, Sandra, moving forward. You know, can you help us with that pace, particularly given the cost sharing grant from the DOE, just how to think about at a high level CapEx?
For the Fremont facility build-out, we think it'll be, you know, $2 million a quarter for the next couple quarters. For the large scale facility, we hope to be able to announce the site and lock it in by the end of the year, as Kang mentioned. We would start the design and planning phase in Q1 and likely construction in Q2, to keep us on the aggressive timeline to try to have the production line qualified and running within 18-24 months.
Got it. Okay. More significant CapEx in the back half of next year. Okay.
Right.
And just-
We're, as we've said.
Go ahead.
No, go ahead.
Oh, the cost-sharing arrangement with the Department of Energy is still to be negotiated as far as the final allocation of cost against which part of the demonstration facility that we've committed to. It's hard to know what'll go to CapEx versus OpEx, but we expect that to cover a chunk of that including design and resources as we move forward.
Understood. Okay. That's helpful. Maybe just the last one. Any updates on EV program, Advanced Battery Consortium, you know, just how those efforts are coming in terms of cycle life and some of those important metrics? We are making progress here, Chip. This is a two years program. We just start in March. We are making progress here. Hopefully, at our last call, we are going to report to you the progress of the program.
Got it. Okay. Well, congratulations again, and thanks for the time. Appreciate it.
Thank you. At this time, this concludes the company's question-a nd-a nswer session. If your question was not taken, you may contact Amprius investor relations team at ir@amprius.com. Now we'd like to turn call back over to Dr. Sun for his closing remarks.
Thank you for joining us on today's call. I would like to thank our employees, partners, and the shareholders for their continued support. As a reminder, you may learn more about our strategy in the investor presentation available in the Investor Relations section of our website. We look forward to updating you on Amprius' progress on our next earnings call.
Thank you. Ladies and gentlemen, thank you for joining us today. You may now disconnect your lines.