Filed pursuant to Rule 424(b)(3)

Registration No. 333-252515

 

PROSPECTUS SUPPLEMENT NO. 22

(to Prospectus dated February 16, 2021)

 

 

img175785766_0.jpg  

 

Danimer Scientific, Inc.

 

Up to 32,435,961 Shares of Common Stock

Up to 16,279,253 Shares of Common Stock Issuable Upon Exercise of Warrants and Options

 

This prospectus supplement supplements the prospectus dated February 16, 2021 (as supplemented or amended from time to time, the “Prospectus”), which forms a part of our registration statement on Form S-1 (No. 333-252515). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on May 10, 2022 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement. The Prospectus and this prospectus supplement relate to the issuance by us of up to an aggregate of up to 16,279,253 shares of our Class A common stock, $0.0001 par value per share (“Common Stock”), which consists of (i) up to 6,000,000 shares of Common Stock that are issuable upon the exercise of 6,000,000 warrants (the “Private Warrants”) originally issued in a private placement in connection with the initial public offering of Live Oak Acquisition Corp., our predecessor company (“Live Oak”), (ii) up to 10,000,000 shares of Common Stock that are issuable upon the exercise of 10,000,000 warrants (the “Public Warrants” and, together with the Private Warrants, the “Warrants”) originally issued in the initial public offering of Live Oak and (iii) up to 279,253 shares of Common Stock issuable upon exercise of Non-Plan Legacy Danimer Options. We will receive the proceeds from any exercise of any Warrants for cash.

 

The Prospectus and this prospectus supplement also relate to the offer and sale from time to time by the selling securityholders named in the Prospectus (the “Selling Securityholders”), or their permitted transferees, of (i) up to 32,435,961 shares of Common Stock (including up to 6,000,000 shares of Common Stock that may be issued upon exercise of the Private Warrants) and (ii) up to 6,000,000 Private Warrants. We will not receive any proceeds from the sale of shares of Common Stock or the Private Warrants by the Selling Securityholders pursuant to the Prospectus and this prospectus supplement.

 

Our registration of the securities covered by the Prospectus and this prospectus supplement does not mean that the Selling Securityholders will offer or sell any of the shares. The Selling Securityholders may sell the shares of Common Stock covered by the Prospectus and this prospectus supplement in a number of different ways and at varying prices. We provide more information about how the Selling Securityholders may sell the shares in the section entitled “Plan of Distribution.”

 

Our Common Stock is listed on The New York Stock Exchange under the symbol “DNMR”. On May 10, 2022, the closing price of our Common Stock was $3.55. Our Public Warrants were previously traded on The New York Stock Exchange under the symbol “DNMR WS”; however, the Public Warrants ceased trading on the New York Stock Exchange and were delisted following their redemption.

 

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

 

See the section entitled “Risk Factors” beginning on page 4 of the Prospectus to read about factors you should consider before buying our securities.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

The date of this prospectus supplement is May 10, 2022.


 

o

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

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: 001-39280

 

DANIMER SCIENTIFIC, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

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)

Registrant’s telephone number, including area code: (229) 243-7075

 

Securities registered pursuant to Section 12(b) of the Act:

 

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

 

 

 

 

 

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.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

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 May 10, 2022, the registrant had 101,114,861 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

Table of Contents

 

 

 

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

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

25

 

 

 

PART II.

OTHER INFORMATION

26

 

 

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

Item 6.

Exhibits

26

Signatures

27

 

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.

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

DANIMER SCIENTIFIC, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

 

 

March 31,

 

 

December 31,

 

(in thousands, except share and per share data)

 

2022

 

 

2021

 

Assets:

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

210,045

 

 

$

286,487

 

Accounts receivable, net

 

 

18,825

 

 

 

17,149

 

Other receivables, net

 

 

1,378

 

 

 

3,836

 

Inventories, net

 

 

28,230

 

 

 

24,573

 

Prepaid expenses and other current assets

 

 

4,059

 

 

 

4,737

 

Contract assets

 

 

4,305

 

 

 

3,576

 

Total current assets

 

 

266,842

 

 

 

340,358

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

364,635

 

 

 

316,181

 

Intangible assets, net

 

 

83,578

 

 

 

84,659

 

Goodwill

 

 

62,663

 

 

 

62,649

 

Right-of-use assets

 

 

19,179

 

 

 

19,240

 

Leverage loans receivable

 

 

13,408

 

 

 

13,408

 

Restricted cash

 

 

480

 

 

 

481

 

Loan fees

 

 

1,452

 

 

 

1,397

 

Other assets

 

 

228

 

 

 

224

 

Total assets

 

$

812,465

 

 

$

838,597

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

17,076

 

 

$

20,790

 

Accrued liabilities

 

 

14,042

 

 

 

18,777

 

Unearned revenue and contract liabilities

 

 

-

 

 

 

214

 

Current portion of lease liability

 

 

3,337

 

 

 

3,337

 

Current portion of long-term debt, net

 

 

218

 

 

 

357

 

Total current liabilities

 

 

34,673

 

 

 

43,475

 

 

 

 

 

 

 

 

Private warrants liability

 

 

4,583

 

 

 

9,578

 

Long-term lease liability, net

 

 

22,554

 

 

 

22,693

 

Long-term debt, net

 

 

261,459

 

 

 

260,934

 

Deferred income taxes

 

 

723

 

 

 

1,014

 

Other long-term liabilities

 

 

526

 

 

 

638

 

Total liabilities

 

$

324,518

 

 

$

338,332

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 15)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized: 100,760,215 and 100,687,820 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

$

10

 

 

$

10

 

Additional paid-in capital

 

 

633,213

 

 

 

619,145

 

Accumulated deficit

 

 

(145,276

)

 

 

(118,890

)

Total stockholders’ equity

 

 

487,947

 

 

 

500,265

 

Total liabilities and stockholders’ equity

 

$

812,465

 

 

$

838,597

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

2


 

 

 

DANIMER SCIENTIFIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

Three Months Ended March 31,

 

(in thousands, except share and per share data)

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

Products

 

$

13,216

 

 

$

11,024

 

Services

 

 

1,527

 

 

 

2,157

 

Total revenue

 

 

14,743

 

 

 

13,181

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

Cost of revenue

 

 

16,065

 

 

 

11,725

 

Selling, general and administrative

 

 

22,236

 

 

 

10,120

 

Research and development

 

 

7,131

 

 

 

2,619

 

Total costs and expenses

 

 

45,432

 

 

 

24,464

 

Loss from operations

 

 

(30,689

)

 

 

(11,283

)

 

 

 

 

 

 

 

Nonoperating (expense) income:

 

 

 

 

 

 

Gain (loss) on remeasurement of private warrants

 

 

4,995

 

 

 

(80,697

)

Interest, net

 

 

(992

)

 

 

(148

)

Loss on loan extinguishment

 

 

-

 

 

 

(2,604

)

Other, net

 

 

9

 

 

 

(2

)

Total nonoperating income (expense):

 

 

4,012

 

 

 

(83,451

)

Loss before income taxes

 

 

(26,677

)

 

 

(94,734

)

Income taxes

 

 

291

 

 

 

-

 

Net loss

 

$

(26,386

)

 

$

(94,734

)

 

 

 

 

 

 

 

Basic and diluted net loss per share

 

$

(0.26

)

 

$

(1.12

)

 

 

 

 

 

 

 

Weighted average number of shares used to compute

 

 

 

 

 

 

Basic and diluted net loss per share

 

 

100,728,366

 

 

 

84,708,137

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

3


 

DANIMER SCIENTIFIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

 

 

 

Three Months Ended

 

 

 

March 31,

 

(in thousands)

 

2022

 

 

2021

 

Common stock:

 

 

 

 

 

 

Balance, beginning of period

 

$

10

 

 

$

8

 

Issuance of common stock

 

 

-

 

 

 

1

 

Balance, end of period

 

 

10

 

 

 

9

 

 

 

 

 

 

 

 

Additional paid-in capital:

 

 

 

 

 

 

Balance, beginning of period

 

 

619,145

 

 

 

414,819

 

Stock-based compensation expense

 

 

13,750

 

 

 

6,665

 

Fair value of private warrants converted to public warrants

 

 

-

 

 

 

13,922

 

Stock issued under stock compensation plans

 

 

373

 

 

 

1,191

 

Costs related to warrants

 

 

(55

)

 

 

-

 

Issuance of common stock, net of issuance costs

 

 

-

 

 

 

(815

)

Balance, end of period

 

 

633,213

 

 

 

435,782

 

 

 

 

 

 

 

 

Accumulated deficit:

 

 

 

 

 

 

Balance, beginning of period

 

 

(118,890

)

 

 

(58,783

)

Net loss

 

 

(26,386

)

 

 

(94,734

)

Balance, end of period

 

 

(145,276

)

 

 

(153,517

)

Total stockholders' equity

 

$

487,947

 

 

$

282,274

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

DANIMER SCIENTIFIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Three Months Ended

 

 

March 31,

(in thousands)

 

2022

 

 

2021

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(26,386

)

 

$

(94,734

)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

(Gain) loss on remeasurement of private warrants

 

 

(4,995

)

 

 

80,697

 

 

Stock-based compensation

 

 

13,750

 

 

 

6,665

 

 

Depreciation and amortization

 

 

4,259

 

 

 

2,100

 

 

Inventory reserves

 

 

1,056

 

 

 

-

 

 

Deferred income taxes

 

 

(291

)

 

 

-

 

 

Loss on write-off of deferred loan costs

 

 

-

 

 

 

1,900

 

 

Amortization of debt issuance costs and debt discounts

 

 

572

 

 

 

82

 

 

Amortization of right-of-use assets and lease liability

 

 

(77

)

 

 

41

 

 

Other

 

 

612

 

 

 

38

 

 

Changes in operating assets and liabilities, net of effects of acquisition:

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(2,272

)

 

 

(3,529

)

 

Other receivables

 

 

2,458

 

 

 

20

 

 

Inventories, net

 

 

(4,713

)

 

 

(3,204

)

 

Prepaid expenses and other current assets

 

 

678

 

 

 

(1,498

)

 

Contract assets

 

 

(729

)

 

 

-

 

 

Other assets

 

 

(4

)

 

 

125

 

 

Accounts payable

 

 

725

 

 

 

(669

)

 

Accrued and other long-term liabilities

 

 

(2,034

)

 

 

(2,123

)

 

Unearned revenue and contract liabilities

 

 

(214

)

 

 

(119

)

 

Net cash used in operating activities

 

 

(17,605

)

 

 

(14,208

)

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(58,902

)

 

 

(23,893

)

 

Acquisition of Novomer, net of cash acquired

 

 

(14

)

 

 

-

 

 

Net cash used in investing activities

 

 

(58,916

)

 

 

(23,893

)

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from long-term debt

 

 

-

 

 

 

120

 

 

Cash paid for debt issuance costs

 

 

(196

)

 

 

(25

)

 

Proceeds from exercise of stock options

 

 

164

 

 

 

1,191

 

 

Proceeds from employee stock purchase plan

 

 

209

 

 

 

-

 

 

Principal payments on long-term debt

 

 

(44

)

 

 

(27,037

)

 

Cost related to warrants

 

 

(55

)

 

 

-

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

-

 

 

 

(815

)

 

Net cash provided by (used in) financing activities

 

 

78

 

 

 

(26,566

)

 

Net decrease in cash and cash equivalents and restricted cash

 

 

(76,443

)

 

 

(64,667

)

 

Cash and cash equivalents and restricted cash-beginning of period

 

 

286,968

 

 

 

379,897

 

 

Cash and cash equivalents and restricted cash-end of period

 

$

210,525

 

 

$

315,230

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash paid for interest

 

$

420

 

 

$

130

 

 

Cash paid for operating leases

 

$

885

 

 

$

798

 

 

Supplemental non-cash disclosure:

 

 

 

 

 

 

 

Changes in accounts payable and accrued liabilities related to purchase of property, plant and equipment

 

$

7,251

 

 

$

952

 

 

 

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

Danimer Scientific, Inc., together with its subsidiaries (“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”.

The Company (formerly Live Oak Acquisition Corp. (“Live Oak”)), was originally incorporated in the State of Delaware on May 24, 2019 as a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization, or similar 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”) pursuant to an Agreement and Plan of Merger, dated as of October 3, 2020 (as amended by Amendment No. 1, dated as of October 8, 2020, and Amendment No. 2, dated as of December 11, 2020 (collectively “Merger Agreement”), by and among Live Oak, Green Merger Corp. (“Merger Sub.”), and Meredian Holdings Group, Inc. (“Legacy Danimer”). Immediately upon consummation of the Business Combination, Merger Sub. merged with and into 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.

On August 11, 2021, we closed the acquisition of Novomer, Inc. (integrated into our business as “Danimer Catalytic Technologies”). Our consolidated results include those of Danimer Catalytic Technologies from the acquisition date forward. Refer to Note 2 for further discussion of the acquisition.

Financial Statements

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and consolidate all assets and liabilities of the Company and its wholly owned subsidiaries. GAAP requires us to make certain estimates and assumptions in recording assets, liabilities, sales and expenses as well as in the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. All intercompany transactions and balances have been eliminated. Certain reclassifications have been made to previously reported amounts to conform to the current presentation. In preparing these condensed consolidated financial statements, we have considered and, where appropriate, included the effects of the COVID-19 pandemic on our operations. The pandemic continues to provide significant challenges to the U.S. and global economies.

Since we do not have any items of other comprehensive income or loss, there is no difference between net loss and comprehensive (loss) income for the three month periods ended March 31, 2022 or 2021, so a separate Statement of Comprehensive Income (Loss) that would otherwise be required is not presented.

Recently Issued Accounting Pronouncements

There have been no new accounting pronouncements not yet effective that we believe will have a significant effect, or potential significant effect, on our condensed consolidated financial statements.

 

 

Note 2. Business Combination

Danimer Catalytic Technologies

On August 11, 2021, we acquired all of the outstanding shares of Novomer, Inc., 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 Inc. We have also recorded contingent purchase price payable that will be payable to the sellers upon our collection of an income tax refund receivable.

Danimer Catalytic Technologies 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.

 

6


 

 

The table below sets forth the preliminary fair values of assets acquired and liabilities assumed including the adjustments recorded in the three months ended March 31, 2022:

 

 

December 31,

 

 

 

 

 

March 31,

 

(in thousands)

 

2021

 

 

Adjustments

 

 

2022

 

Cash and restricted cash

 

$

2,741

 

 

$

-

 

 

$

2,741

 

Property, plant and equipment

 

 

18,622

 

 

 

-

 

 

 

18,622

 

Other assets acquired

 

 

2,302

 

 

 

-

 

 

 

2,302

 

Right-of-use asset

 

 

2,715

 

 

 

-

 

 

 

2,715

 

Acquired technology

 

 

84,400

 

 

 

-

 

 

 

84,400

 

Goodwill

 

 

62,649

 

 

 

14

 

 

 

62,663

 

Deferred tax liability

 

 

(14,246

)

 

 

-

 

 

 

(14,246

)

Lease liability

 

 

(2,759

)

 

 

-

 

 

 

(2,759

)

Liabilities assumed

 

 

(2,004

)

 

 

(14

)

 

 

(2,018

)

Contingent purchase price payable

 

 

(500

)

 

 

-

 

 

 

(500

)

Total preliminary purchase price

 

$

153,920

 

 

$

-

 

 

$

153,920

 

We have recognized the assets acquired and liabilities assumed at their estimated acquisition date fair values, with the excess of the purchase price over the estimated fair values of the identifiable net assets acquired recorded as goodwill.

The accounting for the business combination is based on currently available information and is considered preliminary. The final accounting for the business combination may differ materially from that presented above as future events may provide additional information about the realizability of other assets or the existence of other liabilities at the acquisition date. In addition, income tax returns for 2021 have yet to be filed, and we are validating certain state income tax allocations, which could result in changes to acquisition-date deferred tax liability.

The preliminary estimated goodwill is attributable to the strategic opportunities and synergies that we expect to arise from the acquisition and the value of its existing workforce. The goodwill is not deductible for federal income tax purposes.

The following table compares pro forma revenue and loss from operations for the combined entity for the three months ended March 31, 2021 as if the acquisition had taken place on January 1, 2021 to actual results for the three months ended March 31, 2022. These pro forma results do not necessarily reflect what the combined entity's results would have been had the acquisition taken place at that time, and this pro forma financial information may not be useful in predicting our future financial results. The actual results might have differed significantly from the pro forma amounts reflected herein due to a variety of factors. The following includes pro forma adjustments to reflect amortization of acquired technology intangible assets. We do not disclose pro forma impact related to income taxes or earnings-per-share as we do not believe those are useful to the reader in our situation.

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

 

2021

 

Revenue

 

$

14,743

 

 

$

13,195

 

Loss from operations

 

 

(30,689

)

 

 

(13,672

)

During the three months ended March 31, 2022, Danimer Catalytic Technologies incurred $2.9 million in expenses, including amortization expense.

Note 3. Fair Value Considerations

Fair value is defined as the price we would receive to sell an asset in a timely transaction or pay to transfer a liability in a timely transaction with an independent buyer in the principal market, or in the absence of a principal market, the most advantageous market for the investment or liability. A framework is used for measuring fair value utilizing a three-tier hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

The three levels of the fair value hierarchy are as follows:

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities;

Level 2 - Observable inputs other than quoted prices in active markets, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data;

Level 3 - Unobservable inputs reflecting management’s assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

 

7


 

 

Level 1

The carrying amounts of our cash and cash equivalents and restricted cash were measured using quoted market prices in active markets and represent Level 1 investments. Our other financial instruments such as accounts receivable, accounts payable and accrued expenses, approximate their fair values due to their short maturities. The carrying value of our long-term debt instruments also approximates fair value due to their recent issuance and/or near-term maturities.

We value our restricted stock that does not include market or performance factors at the closing price of a share of our common stock on the grant date, or $5.86 for such restricted stock granted during the three months ended March 31, 2022.

We value our restricted stock with performance factors at the closing price of a share of our common stock on each period end date, or $5.86 at March 31, 2022, since such grants include a cash settlement feature.

Level 2

We value our restricted stock that contain a market-based vesting provision using a Monte Carlo simulation, which takes into account a large number of potential stock price scenarios over time and incorporates varied assumptions about volatility and exercise behavior for those various scenarios. These assumptions are based on market data but cannot be directly observed. A fair value is determined for each potential outcome. There were no restricted stock units that contained a market-based vesting condition issued during the three months ended March 31, 2022.

Level 3

We use the Black-Scholes option pricing model to value stock options, including ESPP awards, and our outstanding warrants to purchase shares of our common stock at an exercise price of $11.50 per share, subject to adjustments, that had been privately placed prior to the Business Combination (“Private Warrants”). The Private Warrants and stock options with a cash-settlement feature are re-valued each period end, and all other stock options are valued on the date of grant only. Other than this mark to market factor, we recognize this expense on a straight-line basis over the respective vesting periods. Since our stock price history as a publicly traded company is shorter in duration than the expected lives of our options (other than ESPP awards), we use a peer group to assess volatility. We have not paid and do not currently anticipate paying a cash dividend on our common stock, so we have set the expected annual dividend yield to zero for all calculations. We used risk-free rates equal to the U.S. Treasury yield curves in effect as of the valuation dates for durations equal to the expected lives of each option. We use the simplified method under Staff Accounting Bulletin Topic 14, defined as the mid-point between the vesting period and the contractual term for each grant, to determine the expected lives of stock options and we use the remaining contractual life of the warrants as their expected life.

The following table sets forth the fair values we calculated and the ranges of values used in our Black Scholes calculations for stock options, other than ESPP awards.

 

 

March 31,

 

Three Months Ended March 31,

 

 

2022

 

2022

 

2021

Share prices of our common stock

 

$5.86

 

$3.88 - $5.86

 

$22.41 - $64.29

Expected volatilities

 

44.74%

 

44.42% - 48.51%

 

41.50% - 41.50%

Risk-free rates of return

 

2.38%

 

1.66% - 2.39%

 

1.05% - 1.05%

Expected option terms (years)

 

5.31

 

5.31 - 6.00

 

6.00 - 6.00

Calculated option values

 

$2.68

 

$0.69 - $3.44

 

$18.52 - $18.52

The table below sets forth the inputs we used in our Black Scholes models for Private Warrants valuations and the fair values determined.

 

 

March 31,
2022

 

 

December 31, 2021

 

Share price of our common stock

 

$

5.86

 

 

$

8.52

 

Expected volatility

 

 

49.4

%

 

 

47.6

%

Risk-free rate of return

 

 

2.41

%

 

 

1.11

%

Expected warrant term (years)

 

 

3.75

 

 

 

3.99

 

Fair value determined per warrant

 

$

1.17

 

 

$

2.45

 

 

 

8


 

 

Note 4. Inventories, net

Inventories, net consisted of the following:

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2022

 

 

2021

 

Raw materials

 

$

13,428

 

 

$

11,555

 

Work in process

 

 

989

 

 

 

928

 

Finished goods and related items

 

 

13,813

 

 

 

12,090

 

Total inventories, net

 

$

28,230

 

 

$

24,573

 

At March 31, 2022 and December 31, 2021, finished goods and related items included $6.5 million and $5.6 million of finished neat PHA. Inventory at March 31, 2022 is stated net of reserves of $1.1 million related to interim assessments to reduce the carrying value of inventory to its fair value.

Note 5. Property, Plant and Equipment, net

Property, plant and equipment, net, consisted of the following:

(in thousands)

 

Estimated Useful Life (Years)

 

March 31, 2022

 

 

December 31, 2021

 

Land and improvements

 

20

 

$

92

 

 

$

92

 

Leasehold improvements

 

Shorter of useful life or lease term

 

 

27,893

 

 

 

27,845

 

Buildings

 

15-40

 

 

2,156

 

 

 

2,156

 

Machinery and equipment

 

5-20

 

 

99,716

 

 

 

97,923

 

Motor vehicles

 

7-10

 

 

912

 

 

 

912

 

Furniture and fixtures

 

7-10

 

 

433

 

 

 

420

 

Office equipment

 

3-10

 

 

3,467

 

 

 

3,368

 

Construction in progress

 

N/A

 

 

262,226

 

 

 

212,647

 

 

 

 

 

 

396,895

 

 

 

345,363

 

Accumulated depreciation and amortization

 

 

 

 

(32,260

)

 

 

(29,182

)

Property, plant and equipment, net

 

 

 

$

364,635

 

 

$

316,181

 

We reported depreciation and amortization expense (which included amortization of intangible assets) as follows:

 

 

Three Months Ended March 31,

 

 

(in thousands)

 

2022

 

 

2021

 

 

Cost of revenue

 

$

2,227

 

 

$

1,839

 

 

Selling, general and administrative

 

 

161

 

 

 

96

 

 

Research and development

 

 

1,871

 

 

 

165

 

 

Total depreciation and amortization expense

 

$

4,259

 

 

$

2,100

 

 

Construction in progress consists primarily of the build-out of our facility in Winchester, Kentucky and early phases of construction of our new plant in Bainbridge, Georgia. Property, plant and equipment includes gross capitalized interest of $7.3 million and $5.7 million as of March 31, 2022 and December 31, 2021, respectively. For the three months ended March 31, 2022 and 2021, interest costs of $1.6 million and $0.2 million, respectively, were capitalized to property, plant and equipment.

Note 6. Intangible Assets and Goodwill

Intangible Assets

Our recognized intangible assets consist of patents and the unpatented technological know-how of Danimer Catalytic Technologies. Our legacy patents were initially recorded at cost. The values of Danimer Catalytic Technologies' patents and unpatented know-how are inseparable and represent their acquisition-date fair value, less subsequent amortization.

We capitalize patent defense and application costs. Patent costs are amortized on a straight-line basis over their estimated useful lives, which range from 13 to 16 years. The Danimer Catalytic Technologies patents are amortized over its estimated 20 year life. Our intangible portfolio has an estimated weighted average useful life of 19.8 years.

 

9


 

 

Intangible assets, net, consisted of the following:

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2022

 

 

2021

 

Intangible assets, gross

 

$

93,344

 

 

$

93,244

 

Capitalized patent costs not yet subject to amortization

 

 

971

 

 

 

869

 

Intangible assets subject to amortization, gross

 

 

92,373

 

 

 

92,375

 

Accumulated amortization

 

 

(9,766

)

 

 

(8,585

)

Intangible assets subject to amortization, net

 

 

82,607

 

 

 

83,790

 

Total intangible assets, net

 

$

83,578

 

 

$

84,659

 

Amortization expense of $1.2 million and $0.1 million, respectively, during the three months ended March 31, 2022 and 2021 was included in research and development costs.

Goodwill

Changes in the carrying amount of goodwill were as follows:

 

 

March 31,

 

(in thousands)

 

2022

 

Balance at beginning of year

 

$

62,649

 

Adjustment of estimate of fair value of liabilities assumed related to Danimer Catalytic Technologies acquisition

 

 

14

 

Balance at end of year

 

$

62,663

 

 

Note 7. Accrued Liabilities

The components of accrued liabilities were as follows:

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2022

 

 

2021

 

Construction in progress accruals

 

$

4,751

 

 

$

8,896

 

Accrued interest

 

 

2,234

 

 

 

274

 

Compensation and related expenses

 

 

1,702

 

 

 

4,572

 

Accrued loss on supply contract

 

 

1,423

 

 

 

1,423

 

Legal settlement

 

 

938

 

 

 

1,250

 

Accrued taxes

 

 

824

 

 

 

500

 

Transaction costs and other legal fees

 

 

500

 

 

 

850

 

Other

 

 

1,670

 

 

 

1,012

 

Total accrued liabilities

 

$

14,042

 

 

$

18,777

 

 

Note 8. Income Taxes

Income tax expense for the three months ended March 31, 2022 was a benefit of $0.3 million. Our effective income tax rates were 1.09% and zero for the three months ended March 31, 2022 and 2021, respectively. Our effective tax rate differed from the federal statutory rate of 21% due to our valuation allowance against substantially all of our net deferred tax assets.

In assessing the realizability of deferred income tax assets, we consider whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods at which time those temporary differences become deductible.

In making valuation allowance determinations, we consider all available evidence, positive and negative, affecting specific deferred tax assets, including the scheduled reversal of deferred income tax liabilities, projected future taxable income, the length of carry-back and carry-forward periods, and tax planning strategies in making this assessment. At March 31, 2022 we continued to maintain a partial valuation allowance against our net deferred tax assets due to the uncertainty surrounding realization of such assets.

 

10


 

 

Note 9. Leases

The following table sets forth the allocation of our operating lease costs.

 

 

Three Months Ended March 31,

 

(in thousands)

 

2022

 

 

2021

 

Cost of revenue

 

$

628

 

 

$

530

 

Selling, general and administrative

 

 

127

 

 

 

51

 

Research and development

 

 

132

 

 

 

144

 

Total operating lease cost

 

$

887

 

 

$

725

 

 

Note 10. Private Warrants

At March 31, 2022 and December 31, 2021, there were 3,914,525 outstanding Private Warrants to purchase shares of our common stock at an exercise price of $11.50 per share, subject to adjustments, which were privately placed prior to the Business Combination. The Private Warrants are exercisable at any time after May 7, 2021. On December 28, 2025, any then outstanding Private Warrants will expire.

The Private Warrants meet the definition of derivative instruments and are reported as liabilities at their fair values at each period end, with changes in the fair value of the Private Warrants recorded as a non-cash charge or gain. A rollforward of the Private Warrants liability is below.

(in thousands)

 

 

 

 

 

Balance at December 31, 2021

 

 

 

$

(9,578

)

Gain on remeasurement of private warrants

 

 

 

 

4,995

 

Balance at March 31, 2022

 

 

 

$

(4,583

)

 

 

Note 11. Debt

The components of long-term debt were as follows:

 

 

March 31,

 

 

December 31,

 

(in thousands)

 

2022

 

 

2021

 

3.25% Convertible Senior Notes

 

$

240,000

 

 

$

240,000

 

New Market Tax Credit Transactions

 

 

21,000

 

 

 

21,000

 

Subordinated Term Loan

 

 

10,205

 

 

 

10,205

 

Vehicle and Equipment Notes

 

 

368

 

 

 

407

 

Mortgage Notes

 

 

236

 

 

 

242

 

Asset-based Lending Arrangement

 

 

-

 

 

 

-

 

Total

 

$

271,809

 

 

$

271,854

 

Less: Total unamortized debt issuance costs

 

 

(10,132

)

 

 

(10,563

)

Less: Current maturities of long-term debt

 

 

(218

)

 

 

(357

)

Total long-term debt