10-Q

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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.

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 November 10, 2021, the registrant had 100,344,315 shares of common stock, $0.0001 par value per share, outstanding.

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.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Note 1. Basis of Presentation

Description of Business

Danimer Scientific, Inc., together with its subsidiaries (the “Company,” “Danimer”, “we”, “us”, or “our”), is a performance polymer company specializing in bioplastic replacements for traditional petroleum-based plastics. Our common stock is listed on the New York Stock Exchange under the symbol “DNMR”.

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. The 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 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 the 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.

Note 2. Business Combinations

Novomer

On August 11, 2021, we acquired all of the outstanding shares of Novomer, Inc. (“Novomer”), a privately held company, in exchange for $153.9 million in cash, gross of cash acquired, subject to certain customary adjustments as set forth in the merger agreement. We also entered into employment or consulting agreements with, and granted stock options to, certain key employees and consultants of Novomer. Novomer uses its proprietary thermal catalytic conversion process to produce a unique type of PHA, referred to under its brand name as Rinnovo, that can be incorporated into some of our products as a complement to our existing PHA polymer at reduced cost. We have included Novomer's results in the Financial Statements since August 11, 2021. For the period ended September 30, 2021, Novomer recorded a net loss of $1.5 million.

As a private company, Novomer had not yet adopted the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 842, Leases (“ASC 842”). We applied ASC 842 to the operating lease for Novomer's primary operating facility and recorded a right-of-use asset of $2.0 million and a lease liability of $2.0 million. At September 30, 2021, we have recorded contingent purchase price payable, which is payable to the sellers upon our collection of an income tax refund receivable arising from a prior period. All of these amounts are included in the table below that sets forth the preliminary fair values of assets acquired and liabilities assumed:


(in thousands)
Cash and restricted cash	$	2,741
Property, plant and equipment		15,591
Other assets acquired		4,285
Acquired technology		85,400
Goodwill		66,581
Deferred tax liability		(16,159	)
Liabilities assumed		(4,019	)
Contingent purchase price payable		(500	)


Delaware	84-1924518
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
140 Industrial Boulevard Bainbridge, GA	39817
(Address of principal executive offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common stock, $0.0001 par value per share	DNMR	New York Stock Exchange


		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

PART II.	OTHER INFORMATION	29

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6.	Exhibits	30
Signatures		31


	September 30,			December 31,
(in thousands, except share data)	2021			2020
Assets:
Current assets:
Cash and cash equivalents	$	194,226		$	377,581
Accounts receivable, net		12,832			6,605
Income tax receivable, net		1,073			-
Inventories		24,146			13,642
Prepaid expenses and other current assets		3,553			3,089
Contract assets		3,043			1,466
Total current assets		238,873			402,383

Property, plant and equipment, net		222,533			106,795
Intangible assets, net		86,663			1,801
Goodwill		66,581			-
Right-of-use assets		18,541			19,387
Leverage loans receivable		13,408			13,408
Restricted cash		2,071			2,316
Loan fees		1,427			-
Other assets		146			111
Total assets	$	650,243		$	546,201

Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable	$	20,379		$	10,610
Accrued liabilities		8,561			9,220
Unearned revenue and contract liabilities		233			2,455
Current portion of lease liability		2,947			3,000
Current portion of long-term debt, net		334			25,201
Total current liabilities		32,454			50,486

Private warrants liability		30,910			82,860
Long-term lease liability, net		22,459			24,175
Long-term debt, net		29,536			31,386
Deferred income taxes		4,733			-
Other long-term liabilities		1,072			1,250
Total liabilities	$	121,164		$	190,157

Commitments and Contingencies (Note 14)

Stockholders' equity:
Common stock, $0.0001 par value; 200,000,000 shares authorized: 100,324,315 and 84,535,640 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	$	10		$	8
Additional paid-in capital		635,513			414,819
Accumulated deficit		(106,444	)		(58,783	)
Total stockholders’ equity		529,079			356,044
Total liabilities and stockholders’ equity	$	650,243		$	546,201


	Three Months Ended September 30,						Nine months ended September 30,
(in thousands, except share and per share data)	2021			2020			2021			2020
Revenue:
Products	$	12,397		$	11,249		$	34,715		$	31,004
Services		972			1,586			6,306			4,302
Total revenue		13,369			12,835			41,021			35,306

Costs and expenses:
Cost of revenue		13,601			9,188			37,786			25,058
Selling, general and administrative		26,592			3,370			55,791			9,178
Research and development		5,010			2,190			11,604			5,565
(Gain) loss on sale of assets		-			-			33			(9	)
Total costs and expenses		45,203			14,748			105,214			39,792
Loss from operations		(31,834	)		(1,913	)		(64,193	)		(4,486	)

Nonoperating income (expense):
Gain on remeasurement of private warrants		28,392			-			6,435			-
Interest expense, net		(246	)		(334	)		(668	)		(1,431	)
Gain on forgiveness of debt		-			-			1,776			-
Loss on loan extinguishment		-			-			(2,604	)		-
Other income (expense), net		90			108			170			297
Total nonoperating income (expense)		28,236			(226	)		5,109			(1,134	)
Loss before income taxes		(3,598	)		(2,139	)		(59,084	)		(5,620	)
Income taxes		11,423			-			11,423			-
Net income (loss)	$	7,825		$	(2,139	)	$	(47,661	)	$	(5,620	)

Net income (loss) per share:
Basic net income (loss) per share	$	0.08		$	(0.07	)	$	(0.53	)	$	(0.20	)
Diluted net income (loss) per share	$	0.08		$	(0.07	)	$	(0.53	)	$	(0.20	)

Weighted average number of shares used to compute (1)
Basic net income (loss) per share		98,160,626			29,317,058			90,614,910			28,699,250
Dilutive effect of warrants and stock options		5,360,126			-			-			-
Diluted net income (loss) per share		103,520,752			29,317,058			90,614,910			28,699,250

(1) 2020 Amounts retroactively restated for Business Combination


☒	QUARTERLY 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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒


	Three Months Ended								Nine Months Ended
	September 30,							September 30,
(in thousands)	2021			2020				2021				2020
Common stock: (1)
Balance, beginning of period	$	9			$	3			$	8			$	3
Issuance of common stock		1				1				2				1
Balance, end of period		10				4				10				4

Additional paid-in capital: (1)
Balance, beginning of period		620,808				91,905				414,819				66,503
Exercise of warrants, net of issuance costs		(6	)			-				138,196				-
Fair value of private warrants converted to public warrants		-				-				45,515				-
Stock-based compensation expense		14,397				221				35,093				523
Stock issued under stock compensation plans		316				331				2,782				331
Beneficial conversion feature on convertible notes		-				-				-				93
Conversion of debt to common stock		-				655				-				655
Issuance of common stock, net of issuance costs		(2	)			3,995				(892	)			29,002
Balance, end of period		635,513				97,107				635,513				97,107

Accumulated deficit:
Balance, beginning of period		(114,269	)			(53,411	)			(58,783	)			(49,930	)
Net income (loss)		7,825				(2,139	)			(47,661	)			(5,620	)
Balance, end of period		(106,444	)			(55,550	)			(106,444	)			(55,550	)
Total stockholders' equity	$	529,079			$	41,561			$	529,079			$	41,561


(1) 2020 Amounts retroactively restated for Business Combination