UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the 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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of August 12, 2021, the registrant had
Table of Contents
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PART I. |
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Item 1. |
2 |
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3 |
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4 |
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5 |
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6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 |
Item 3. |
26 |
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Item 4. |
26 |
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PART II. |
26 |
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Item 1. |
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Item 1A. |
Risk Factors |
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Item 2. |
27 |
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Item 5. |
Other Information |
27 |
Item 6. |
28 |
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29 |
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FORWARD-LOOKING STATEMENTS
Certain statements contained herein, as well as in other filings we make with the United States Securities and Exchange Commission (“SEC”) and other written and oral information we release, regarding our future performance constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may relate to, among other things, the impact on our business, operations and financial results of the COVID-19 pandemic (which, among other things, may affect many of the items listed below); the demand for our products and services; revenue growth; effects of competition; supply chain and technology initiatives; inventory and in-stock positions; state of the economy; state of the credit markets, including mortgages, home equity loans, and consumer credit; impact of tariffs; demand for credit offerings; management of relationships with our employees, suppliers and vendors, and customers; international trade disputes, natural disasters, public health issues (including pandemics and related quarantines, shelter-in-place orders, and similar restrictions), and other business interruptions that could disrupt supply or delivery of, or demand for, our products or services; continuation of equity programs; net earnings performance; earnings per share; capital allocation and expenditures; liquidity; return on invested capital; expense leverage; stock-based compensation expense; commodity price inflation and deflation; the ability to issue debt on terms and at rates acceptable to us; the impact and expected outcome of investigations, inquiries, claims, and litigation; the effect of accounting charges; the effect of adopting certain accounting standards; the impact of regulatory changes; financial outlook; and the integration of acquired companies into our organization and the ability to recognize the anticipated synergies and benefits of those acquisitions.
Forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. You should not rely on our forward-looking statements. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties – many of which are beyond our control, dependent on the actions of third parties, or currently unknown to us – as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those described in Part II, Item 1A, "Risk Factors" and elsewhere in this report and as also may be described from time to time in future reports we file with the SEC. You should read such information in conjunction with our Condensed Consolidated Financial Statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this report. There also may be other factors that we cannot anticipate or that are not described in this report, generally because we do not currently perceive them to be material. Such factors could cause results to differ materially from our expectations.
Forward-looking statements speak only as of the date they are made, and we do not undertake to update these statements other than as required by law. You are advised, however, to review any further disclosures we make on related subjects in our periodic filings with the SEC.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Danimer Scientific, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
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June 30, |
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December 31, |
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(in thousands, except share data) |
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2021 |
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2020 |
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Assets: |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventories |
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Prepaid expenses and other current assets |
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Contract assets |
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Total current assets |
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Property, plant and equipment, net |
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Patents, net |
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Right-of-use assets |
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Leverage loans receivable |
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Restricted cash |
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Loan fees |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity: |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Unearned revenue and contract liabilities |
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Current portion of lease liability |
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Current portion of long-term debt, net |
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Total current liabilities |
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Private warrants liability |
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Long-term lease liability, net |
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Long-term debt, net |
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Other long-term liabilities |
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Total liabilities |
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$ |
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$ |
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Stockholders' equity: |
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Common stock, $ |
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$ |
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$ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
2
Danimer Scientific, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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(in thousands, except share and per share data) |
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2021 |
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2020 |
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2021 |
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2020 |
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Revenue: |
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Products |
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$ |
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$ |
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$ |
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$ |
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Services |
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Total revenue |
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Costs and expenses: |
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Cost of revenue |
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Selling, general and administrative |
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Research and development |
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(Gain) loss on sale of assets |
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( |
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( |
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Total costs and expenses |
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Loss from operations |
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( |
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( |
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( |
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Nonoperating income (expense): |
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Gain (loss) on remeasurement of private warrants |
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( |
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Interest expense, net |
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( |
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( |
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( |
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Gain on forgiveness of debt |
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Loss on loan extinguishment |
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( |
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Other income (expense), net |
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Total nonoperating income (expense) |
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( |
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( |
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( |
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Income (loss) before income taxes |
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( |
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( |
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( |
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Income tax expense |
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Net income (loss) |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Net income (loss) per share: |
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Basic net income (loss) per share |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Diluted net income (loss) per share |
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$ |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted average number of shares used to compute: (1) |
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Basic net income (loss) per share |
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Dilutive effect of warrants and stock options |
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Diluted net income (loss) per share |
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(1) 2020 Amounts retroactively restated for Business Combination |
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
3
Danimer Scientific, Inc.
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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(in thousands) |
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2021 |
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2020 |
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2021 |
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2020 |
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Common stock: (1) |
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Balance, beginning of period |
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$ |
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$ |
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$ |
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$ |
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Issuance of common stock |
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Balance, end of period |
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Additional paid-in capital: (1) |
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Balance, beginning of period |
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Fair value of private warrants converted to public warrants |
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Exercise of warrants, net of issuance costs |
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Stock-based compensation |
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Stock issued under stock compensation plans |
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Beneficial conversion feature on convertible notes |
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Issuance of common stock, net of issuance costs |
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( |
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( |
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Balance, end of period |
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Accumulated deficit: |
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Balance, beginning of period |
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( |
) |
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( |
) |
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( |
) |
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( |
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Net income (loss) |
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( |
) |
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( |
) |
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( |
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Balance, end of period |
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( |
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( |
) |
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( |
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( |
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Total stockholders' equity |
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$ |
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$ |
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$ |
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$ |
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(1) 2020 Amounts retroactively restated for Business Combination |
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4
Danimer Scientific, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
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Six Months Ended |
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June 30, |
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(in thousands) |
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2021 |
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2020 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Loss on remeasurement of private warrants |
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Stock-based compensation |
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Depreciation and amortization |
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Loss on write-off of deferred loan costs |
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Amortization of debt issuance costs and debt discounts |
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Single lease cost (benefit) |
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( |
) |
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Gain on forgiveness of debt |
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( |
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Other |
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Changes in operating assets and liabilities: |
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Accounts payable |
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( |
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Contract assets |
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( |
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Unearned revenue and contract liabilities |
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( |
) |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts receivable, net |
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( |
) |
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( |
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Accrued and other long-term liabilities |
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( |
) |
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Inventories |
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( |
) |
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( |
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Other assets |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities: |
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Purchases of property, plant and equipment |
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( |
) |
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( |
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Proceeds from sales of property, plant and equipment |
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Net cash used in investing activities |
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( |
) |
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( |
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Cash flows from financing activities: |
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Proceeds from exercise of warrants, net of issuance costs |
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Proceeds from exercise of stock options |
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Proceeds from long-term debt |
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Proceeds from employee stock purchase plan |
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Proceeds from issuance of common stock, net of issuance costs |
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( |
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Cash paid for debt issuance costs |
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( |
) |
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( |
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Principal payments on long-term debt |
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( |
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( |
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Net cash provided by financing activities |
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Net increase (decrease) in cash and cash equivalents and restricted cash |
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( |
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Cash and cash equivalents and restricted cash-beginning of period |
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Cash and cash equivalents and restricted cash-end of period |
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$ |
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$ |
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Supplemental cash flow information |
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Cash paid for interest, net of interest capitalized |
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$ |
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$ |
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Cash paid for operating leases |
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$ |
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$ |
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Supplemental non-cash disclosure |
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Changes in accounts payable and accrued liabilities related to purchase of property, plant and equipment |
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$ |
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$ |
( |
) |
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The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5
Danimer Scientific, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1. Basis of Presentation
Description of Business
Financial Statements
We have prepared these condensed consolidated financial statements (“Financial Statements”) in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the rules and regulations of the SEC. In the opinion of management, our Financial Statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly our financial position, results of operations, stockholders’ equity, and cash flows at the dates and for the periods presented. Our Financial Statements should be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Amended Annual Report on Form 10-K/A for the year ended December 31, 2020. Results for interim periods are not necessarily indicative of the results for the year.
We have made certain reclassifications to the prior period presentation in order to conform to the current presentation.
We cannot predict the ongoing impact of the COVID-19 pandemic on the increased volatility in global economic and political environments, market demand for our products, supply chain disruptions, possible workforce availability, exchange rate and commodity price volatility and availability of financing, and their impact to our total revenue, production volumes, costs and overall financial condition and available funding. In preparing our Financial Statements in conformity with U.S. GAAP, we have considered and, where appropriate, reflected the effects of the COVID-19 pandemic on our operations. The pandemic continues to provide significant challenges to the U.S. and global economies.
Recently Issued or Adopted Accounting Pronouncements
There have been no new accounting pronouncements not yet effective or adopted in the current period that we believe have a significant effect, or potential significant effect, on our Financial Statements.
Note 2. Business Combination
Live Oak Acquisition Corp. (“Live Oak”) was incorporated in the State of Delaware on May 24, 2019 as a special purpose acquisition company formed for the purpose of effecting a business combination with one or more businesses. Live Oak completed its initial public offering in May 2020. On December 29, 2020, Live Oak consummated a business combination (“Business Combination”) with Meredian Holdings Group, Inc. (“Legacy Danimer”) with Legacy Danimer surviving the merger as a wholly owned subsidiary of Live Oak. In connection with the Business Combination, Live Oak changed its name to Danimer Scientific, Inc.
For financial accounting and reporting purposes, Legacy Danimer was deemed the accounting acquirer, Live Oak was treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization. Effectively, the Business Combination was treated as the equivalent of Legacy Danimer issuing stock for the net assets of Live Oak, accompanied by a recapitalization. Under this method of accounting, the historical financial statements of Legacy Danimer are our historical financial statements. The net assets of Live Oak are stated at historical costs, with no goodwill or other intangible assets recorded, and were consolidated with Legacy Danimer’s financial statements on December 29, 2020.
Note 3. Inventories
Inventories consisted of the following:
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June 30, |
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December 31, |
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(in thousands) |
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2021 |
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2020 |
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Raw materials |
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$ |
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$ |
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Work in progress |
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Finished goods and related items |
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Total inventories |
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$ |
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$ |
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||
6
Note 4. Property, Plant and Equipment
Property, plant and equipment, net, consisted of the following:
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Estimated |
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Useful Life |
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June 30, |
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December 31, |
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(in thousands) |
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(Years) |
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2021 |
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2020 |
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Land and improvements |
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|
$ |
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|
$ |
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|||
Leasehold improvements |
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Buildings |
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Machinery and equipment |
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Motor vehicles |
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Furniture and fixtures |
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Office equipment |
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Construction in progress |
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N/A |
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Accumulated depreciation and amortization |
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( |
) |
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( |
) |
Property, plant and equipment, net |
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$ |
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|
$ |
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||
We reported depreciation and amortization expense (which included amortization of patents) as follows:
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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(in thousands) |
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2021 |
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2020 |
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2021 |
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2020 |
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||||
Cost of revenue |
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$ |
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|
$ |
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|
$ |
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$ |
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||||
Selling, general and administrative |
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Research and development |
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Total depreciation and amortization expense |
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$ |
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|
$ |
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|
$ |
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$ |
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Construction in progress consists primarily of the conversion and build-out of our new facility in Winchester, Kentucky. Property, plant and equipment includes capitalized interest of $