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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 September 30, 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 November 8, 2022, the registrant had 101,388,673 shares of Class A common stock, $0.0001 par value per share, outstanding.

 

 


 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations

4

 

Condensed Consolidated Statements of Stockholders' Equity

5

 

Condensed Consolidated Statements of Cash Flows

6

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

30

Item 4.

Controls and Procedures

31

 

 

 

PART II.

OTHER INFORMATION

32

 

 

 

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

Item 5.

Other Information

32

Item 6.

Exhibits

32

Signatures

33

 

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 and the ongoing conflict in Ukraine (each of 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 are 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)

 

 

 

September 30,

 

 

December 31,

 

(in thousands, except share and per share data)

 

2022

 

 

2021

 

Assets:

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

99,127

 

 

$

286,487

 

Accounts receivable, net

 

 

17,426

 

 

 

17,149

 

Other receivables, net

 

 

1,377

 

 

 

3,836

 

Inventories, net

 

 

35,201

 

 

 

24,573

 

Prepaid expenses and other current assets

 

 

5,080

 

 

 

4,737

 

Contract assets, net

 

 

4,379

 

 

 

3,576

 

Total current assets

 

 

162,590

 

 

 

340,358

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

436,875

 

 

 

316,181

 

Intangible assets, net

 

 

81,491

 

 

 

84,659

 

Goodwill

 

 

-

 

 

 

62,649

 

Right-of-use assets

 

 

19,083

 

 

 

19,240

 

Leverage loans receivable

 

 

31,446

 

 

 

13,408

 

Restricted cash

 

 

1,663

 

 

 

481

 

Loan fees

 

 

-

 

 

 

1,397

 

Other assets

 

 

227

 

 

 

224

 

Total assets

 

$

733,375

 

 

$

838,597

 

 

 

 

 

 

 

 

Liabilities and Stockholders' equity:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,324

 

 

$

20,790

 

Accrued liabilities

 

 

20,407

 

 

 

18,777

 

Unearned revenue and contract liabilities

 

 

2,000

 

 

 

214

 

Current portion of lease liability

 

 

3,337

 

 

 

3,337

 

Current portion of long-term debt, net

 

 

1,501

 

 

 

357

 

Total current liabilities

 

 

31,569

 

 

 

43,475

 

 

 

 

 

 

 

 

Private warrants liability

 

 

964

 

 

 

9,578

 

Long-term lease liability, net

 

 

22,265

 

 

 

22,693

 

Long-term debt, net

 

 

285,969

 

 

 

260,934

 

Deferred income taxes

 

 

246

 

 

 

1,014

 

Other long-term liabilities

 

 

641

 

 

 

638

 

Total liabilities

 

$

341,654

 

 

$

338,332

 

 

 

 

 

 

 

 

Commitments and Contingencies (Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized: 101,388,673 and 100,687,820 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

$

10

 

 

$

10

 

Additional paid-in capital

 

 

662,308

 

 

 

619,145

 

Accumulated deficit

 

 

(270,597

)

 

 

(118,890

)

Total stockholders’ equity

 

 

391,721

 

 

 

500,265

 

Total liabilities and stockholders’ equity

 

$

733,375

 

 

$

838,597

 

 

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

 

3


 

 

 

DANIMER SCIENTIFIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands, except share and per share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Products

 

$

9,099

 

 

$

12,397

 

 

$

33,890

 

 

$

34,715

 

Services

 

 

1,349

 

 

 

972

 

 

 

4,004

 

 

 

6,306

 

Total revenue

 

 

10,448

 

 

 

13,369

 

 

 

37,894

 

 

 

41,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

14,503

 

 

 

13,601

 

 

 

45,606

 

 

 

37,786

 

Selling, general and administrative

 

 

19,413

 

 

 

26,592

 

 

 

62,042

 

 

 

55,791

 

Research and development

 

 

7,947

 

 

 

5,010

 

 

 

24,469

 

 

 

11,604

 

Loss on sale of assets

 

 

-

 

 

 

-

 

 

 

1

 

 

 

33

 

Impairment of long-lived assets

 

 

63,491

 

 

 

-

 

 

 

63,491

 

 

 

-

 

Total costs and expenses

 

 

105,354

 

 

 

45,203

 

 

 

195,609

 

 

 

105,214

 

Loss from operations

 

 

(94,906

)

 

 

(31,834

)

 

 

(157,715

)

 

 

(64,193

)

Nonoperating (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

Gain on remeasurement of private warrants

 

 

1,607

 

 

 

28,392

 

 

 

8,614

 

 

 

6,435

 

Interest, net

 

 

(553

)

 

 

(164

)

 

 

(2,197

)

 

 

(516

)

Gain on forgiveness of debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,776

 

Loss on loan extinguishment

 

 

(1,500

)

 

 

-

 

 

 

(1,500

)

 

 

(2,604

)

Other, net

 

 

240

 

 

 

8

 

 

 

324

 

 

 

18

 

Total nonoperating (expense) income:

 

 

(206

)

 

 

28,236

 

 

 

5,241

 

 

 

5,109

 

Loss before income taxes

 

 

(95,112

)

 

 

(3,598

)

 

 

(152,474

)

 

 

(59,084

)

Income taxes

 

 

236

 

 

 

11,423

 

 

 

767

 

 

 

11,423

 

Net (loss) income

 

$

(94,876

)

 

$

7,825

 

 

$

(151,707

)

 

$

(47,661

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net (loss) income per share

 

$

(0.94

)

 

$

0.08

 

 

$

(1.50

)

 

$

(0.53

)

Diluted net (loss) income per share

 

$

(0.94

)

 

$

0.08

 

 

$

(1.50

)

 

$

(0.53

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used to compute:

 

 

 

 

 

 

 

 

 

 

 

 

Basic net (loss) income per share

 

 

101,199,195

 

 

 

98,160,626

 

 

 

100,993,068

 

 

 

90,614,910

 

 Effect of dilutive instruments

 

 

-

 

 

 

5,360,126

 

 

 

-

 

 

 

-

 

Diluted net (loss) income per share

 

 

101,199,195

 

 

 

103,520,752

 

 

 

100,993,068

 

 

 

90,614,910

 

 

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

 

 

4


 

DANIMER SCIENTIFIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Common stock:

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

$

10

 

 

$

9

 

 

$

10

 

 

$

8

 

Issuance of common stock

 

 

-

 

 

 

1

 

 

 

-

 

 

 

2

 

Balance, end of period

 

 

10

 

 

 

10

 

 

 

10

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional paid-in capital:

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

 

647,566

 

 

 

620,808

 

 

 

619,145

 

 

 

414,819

 

Stock-based compensation expense

 

 

14,415

 

 

 

14,397

 

 

 

42,398

 

 

 

35,093

 

Fair value of private warrants converted to public warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

45,515

 

Stock issued under stock compensation plans

 

 

248

 

 

 

316

 

 

 

741

 

 

 

2,782

 

Exercise of warrants, net of issuance costs

 

 

-

 

 

 

(6

)

 

 

-

 

 

 

138,196

 

Issuance of common stock, net of issuance costs

 

 

79

 

 

 

(2

)

 

 

79

 

 

 

(892

)

Costs related to warrants

 

 

-

 

 

 

-

 

 

 

(55

)

 

 

-

 

Balance, end of period

 

 

662,308

 

 

 

635,513

 

 

 

662,308

 

 

 

635,513

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated deficit:

 

 

 

 

 

 

 

 

 

 

 

 

Balance, beginning of period

 

 

(175,721

)

 

 

(114,269

)

 

 

(118,890

)

 

 

(58,783

)

Net (loss) income

 

 

(94,876

)

 

 

7,825

 

 

 

(151,707

)

 

 

(47,661

)

Balance, end of period

 

 

(270,597

)

 

 

(106,444

)

 

 

(270,597

)

 

 

(106,444

)

Total stockholders' equity

 

$

391,721

 

 

$

529,079

 

 

$

391,721

 

 

$

529,079

 

 

 

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

5


 

DANIMER SCIENTIFIC, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

Nine Months Ended

 

 

September 30,

(in thousands)

 

2022

 

 

2021

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

 

$

(151,707

)

 

$

(47,661

)

 

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

 

 

 

 

 

 

 

Gain on remeasurement of private warrants

 

 

(8,614

)

 

 

(6,435

)

 

Stock-based compensation

 

 

42,398

 

 

 

35,093

 

 

Depreciation and amortization

 

 

13,172

 

 

 

7,489

 

 

Inventory reserves

 

 

609

 

 

 

-

 

 

Deferred income taxes

 

 

(767

)

 

 

(11,423

)

 

Amortization of debt issuance costs and debt discounts

 

 

1,601

 

 

 

337

 

 

Gain on forgiveness of debt

 

 

-

 

 

 

(1,776

)

 

Amortization of right-of-use assets and lease liability

 

 

(270

)

 

 

(942

)

 

Contract asset reserve

 

 

1,216

 

 

 

-

 

 

Loss on extinguishment of debt

 

 

1,500

 

 

 

1,900

 

 

Impairment of long-lived assets

 

 

63,491

 

 

 

-

 

 

Other

 

 

1,249

 

 

 

186

 

 

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

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(1,747

)

 

 

(6,331

)

 

Other receivables

 

 

2,724

 

 

 

(3

)

 

Inventories, net

 

 

(14,271

)

 

 

(9,471

)

 

Prepaid expenses and other current assets

 

 

1,749

 

 

 

(1,194

)

 

Contract assets

 

 

(2,019

)

 

 

(1,578

)

 

Other assets

 

 

(5

)

 

 

40

 

 

Accounts payable

 

 

(4,642

)

 

 

887

 

 

Accrued and other long-term liabilities

 

 

(5,035

)

 

 

(4,338

)

 

Unearned revenue and contract liabilities

 

 

1,786

 

 

 

(2,221

)

 

Net cash used in operating activities

 

 

(57,582

)

 

 

(47,441

)