Filed pursuant to Rule 424(b)(3)
Registration No. 333-252515
PROSPECTUS SUPPLEMENT NO. 45
(to Prospectus dated February 16, 2021)
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 August 8, 2024 (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 August 8, 2024, the closing price of our Common Stock was $0.46. 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 August 8, 2024.
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 June 30, 2024
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:
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Title of each class |
|
Trading Symbol(s) |
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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.
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Large accelerated filer |
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☐ |
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Accelerated filer |
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☐ |
Non-accelerated filer |
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☒ |
|
Smaller reporting company |
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☒ |
Emerging growth company |
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☐ |
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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 8, 2024, the registrant had 120,170,109 shares of common stock, $0.0001 par value per share, outstanding.
Table of Contents
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 ongoing conflicts in Ukraine and the Middle East (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 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 Part I, Item 2, 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)
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
(in thousands, except share and per share data) |
|
2024 |
|
|
2023 |
|
Assets: |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
40,254 |
|
|
$ |
59,170 |
|
Accounts receivable, net |
|
|
10,928 |
|
|
|
15,227 |
|
Other receivables, net |
|
|
580 |
|
|
|
652 |
|
Inventories, net |
|
|
26,277 |
|
|
|
25,270 |
|
Prepaid expenses and other current assets |
|
|
5,907 |
|
|
|
4,714 |
|
Contract assets, net |
|
|
2,928 |
|
|
|
3,005 |
|
Total current assets |
|
|
86,874 |
|
|
|
108,038 |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
434,257 |
|
|
|
445,153 |
|
Intangible assets, net |
|
|
76,415 |
|
|
|
77,790 |
|
Right-of-use assets |
|
|
19,163 |
|
|
|
19,160 |
|
Leverage loans receivable |
|
|
31,446 |
|
|
|
31,446 |
|
Restricted cash |
|
|
14,167 |
|
|
|
14,334 |
|
Other assets |
|
|
4,218 |
|
|
|
2,210 |
|
Total assets |
|
$ |
666,540 |
|
|
$ |
698,131 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ equity: |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
2,880 |
|
|
$ |
5,292 |
|
Accrued liabilities |
|
|
4,781 |
|
|
|
4,726 |
|
Unearned revenue and contract liabilities |
|
|
850 |
|
|
|
1,000 |
|
Current portion of lease liability |
|
|
3,723 |
|
|
|
3,337 |
|
Current portion of long-term debt, net |
|
|
6,976 |
|
|
|
1,368 |
|
Total current liabilities |
|
|
19,210 |
|
|
|
15,723 |
|
|
|
|
|
|
|
|
Long-term lease liability, net |
|
|
21,461 |
|
|
|
21,927 |
|
Long-term debt, net |
|
|
386,910 |
|
|
|
381,436 |
|
Warrant liability |
|
|
3,914 |
|
|
|
5 |
|
Other long-term liabilities |
|
|
1,017 |
|
|
|
1,020 |
|
Total liabilities |
|
$ |
432,512 |
|
|
$ |
420,111 |
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Common stock, $0.0001 par value; 200,000,000 shares authorized: 116,608,522 and 102,832,103 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively |
|
$ |
12 |
|
|
$ |
10 |
|
Additional paid-in capital |
|
|
738,061 |
|
|
|
732,131 |
|
Accumulated deficit |
|
|
(504,045 |
) |
|
|
(454,121 |
) |
Total stockholders’ equity |
|
|
234,028 |
|
|
|
278,020 |
|
Total liabilities and stockholders’ equity |
|
$ |
666,540 |
|
|
$ |
698,131 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
DANIMER SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(in thousands, except share and per share data) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
$ |
7,246 |
|
|
$ |
12,174 |
|
|
$ |
17,201 |
|
|
$ |
23,270 |
|
Services |
|
|
382 |
|
|
|
691 |
|
|
|
651 |
|
|
|
1,521 |
|
Total revenue |
|
|
7,628 |
|
|
|
12,865 |
|
|
|
17,852 |
|
|
|
24,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
14,531 |
|
|
|
19,433 |
|
|
|
31,066 |
|
|
|
37,642 |
|
Selling, general and administrative |
|
|
6,752 |
|
|
|
16,844 |
|
|
|
13,621 |
|
|
|
35,543 |
|
Research and development |
|
|
5,109 |
|
|
|
7,709 |
|
|
|
10,451 |
|
|
|
14,784 |
|
Loss on sale of assets |
|
|
565 |
|
|
|
- |
|
|
|
565 |
|
|
|
170 |
|
Total costs and expenses |
|
|
26,957 |
|
|
|
43,986 |
|
|
|
55,703 |
|
|
|
88,139 |
|
Loss from operations |
|
|
(19,329 |
) |
|
|
(31,121 |
) |
|
|
(37,851 |
) |
|
|
(63,348 |
) |
Nonoperating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on remeasurement of warrants |
|
|
5,742 |
|
|
|
1,083 |
|
|
|
5,841 |
|
|
|
(33 |
) |
Interest, net |
|
|
(9,072 |
) |
|
|
(9,162 |
) |
|
|
(17,910 |
) |
|
|
(12,548 |
) |
Loss on loan extinguishment |
|
|
- |
|
|
|
(102 |
) |
|
|
- |
|
|
|
(102 |
) |
Total nonoperating expense: |
|
|
(3,330 |
) |
|
|
(8,181 |
) |
|
|
(12,069 |
) |
|
|
(12,683 |
) |
Loss before income taxes |
|
|
(22,659 |
) |
|
|
(39,302 |
) |
|
|
(49,920 |
) |
|
|
(76,031 |
) |
Income taxes |
|
|
(2 |
) |
|
|
61 |
|
|
|
(4 |
) |
|
|
151 |
|
Net loss |
|
$ |
(22,661 |
) |
|
$ |
(39,241 |
) |
|
$ |
(49,924 |
) |
|
$ |
(75,880 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share |
|
$ |
(0.19 |
) |
|
$ |
(0.38 |
) |
|
$ |
(0.45 |
) |
|
$ |
(0.74 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
116,465,086 |
|
|
|
101,938,376 |
|
|
|
110,114,660 |
|
|
|
101,917,585 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
DANIMER SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
12 |
|
|
$ |
10 |
|
|
$ |
10 |
|
|
$ |
10 |
|
Issuance of common stock |
|
|
- |
|
|
|
- |
|
|
|
2 |
|
|
|
- |
|
Balance, end of period |
|
|
12 |
|
|
|
10 |
|
|
|
12 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
737,465 |
|
|
|
690,893 |
|
|
|
732,131 |
|
|
|
676,250 |
|
Stock-based compensation expense |
|
|
595 |
|
|
|
13,909 |
|
|
|
1,169 |
|
|
|
27,974 |
|
Issuance of common stock, net of issuance costs |
|
|
8 |
|
|
|
- |
|
|
|
4,658 |
|
|
|
- |
|
Shares retained for employee taxes |
|
|
(7 |
) |
|
|
- |
|
|
|
(15 |
) |
|
|
(61 |
) |
Stock issued under stock compensation plans |
|
|
- |
|
|
|
- |
|
|
|
118 |
|
|
|
129 |
|
Warrants issued with Senior Secured Term Loan |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
510 |
|
Balance, end of period |
|
|
738,061 |
|
|
|
704,802 |
|
|
|
738,061 |
|
|
|
704,802 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
(481,384 |
) |
|
|
(335,287 |
) |
|
|
(454,121 |
) |
|
|
(298,648 |
) |
Net loss |
|
|
(22,661 |
) |
|
|
(39,241 |
) |
|
|
(49,924 |
) |
|
|
(75,880 |
) |
Balance, end of period |
|
|
(504,045 |
) |
|
|
(374,528 |
) |
|
|
(504,045 |
) |
|
|
(374,528 |
) |
Total stockholders' equity |
|
$ |
234,028 |
|
|
$ |
330,284 |
|
|
$ |
234,028 |
|
|
$ |
330,284 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
DANIMER SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(49,924 |
) |
|
$ |
(75,880 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
14,969 |
|
|
|
14,752 |
|
(Gain) loss on remeasurement of warrants |
|
|
(5,841 |
) |
|
|
33 |
|
Amortization of debt issuance costs |
|
|
5,821 |
|
|
|
3,485 |
|
Stock-based compensation |
|
|
1,169 |
|
|
|
27,974 |
|
Warrant issuance costs |
|
|
867 |
|
|
|
- |
|
Loss on disposal of assets |
|
|
565 |
|
|
|
170 |
|
Accounts receivable reserves |
|
|
437 |
|
|
|
(948 |
) |
Inventory reserves |
|
|
(313 |
) |
|
|
464 |
|
Amortization of right-of-use assets and lease liability |
|
|
(83 |
) |
|
|
(237 |
) |
Deferred income taxes |
|
|
- |
|
|
|
(155 |
) |
Other |
|
|
- |
|
|
|
1,046 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
3,863 |
|
|
|
5,939 |
|
Other receivables |
|
|
74 |
|
|
|
38 |
|
Inventories, net |
|
|
(694 |
) |
|
|
2,383 |
|
Prepaid expenses and other current assets |
|
|
(751 |
) |
|
|
1,130 |
|
Contract assets |
|
|
(185 |
) |
|
|
(959 |
) |
Other assets |
|
|
70 |
|
|
|
(120 |
) |
Accounts payable |
|
|
(2,078 |
) |
|
|
(2,377 |
) |
Accrued liabilities |
|
|
227 |
|
|
|
600 |
|
Other long-term liabilities |
|
|
(4 |
) |
|
|
636 |
|
Unearned revenue and contract liabilities |
|
|
(150 |
) |
|
|
875 |
|
Net cash used in operating activities |
|
|
(31,961 |
) |
|
|
(21,151 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
Purchases of property, plant and equipment and intangible assets |
|
|
(3,770 |
) |
|
|
(23,041 |
) |
Net cash used in investing activities |
|
|
(3,770 |
) |
|
|
(23,041 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from issuance of common warrants, net of issuance costs |
|
|
8,883 |
|
|
|
- |
|
Proceeds from issuance of common stock, net of issuance costs |
|
|
4,658 |
|
|
|
- |
|
Proceeds from long-term debt |
|
|
11,326 |
|
|
|
130,000 |
|
Principal payments on long-term debt |
|
|
(7,227 |
) |
|
|
(11,744 |
) |
Cash paid for debt issuance costs |
|
|
(1,095 |
) |
|
|
(33,295 |
) |
Proceeds from employee stock purchase plan |
|
|
118 |
|
|
|
129 |
|
Employee taxes related to stock-based compensation |
|
|
(15 |
) |
|
|
(61 |
) |
Net cash provided by financing activities |
|
|
16,648 |
|
|
|
85,029 |
|
Net (decrease) increase in cash and cash equivalents and restricted cash |
|
|
(19,083 |
) |
|
|
40,837 |
|
Cash and cash equivalents and restricted cash-beginning of period |
|
|
73,504 |
|
|
|
64,401 |
|
Cash and cash equivalents and restricted cash-end of period |
|
$ |
54,421 |
|
|
$ |
105,238 |
|
Supplemental cash flow information: |
|
|
|
|
|
|
Cash paid for interest, net of interest capitalized |
|
$ |
13,698 |
|
|
$ |
9,530 |
|
Cash paid for operating leases |
|
$ |
1,860 |
|
|
$ |
1,858 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
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 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 (“Closing Date”), Live Oak consummated a business combination (“Business Combination”) with Meredian Holdings Group, Inc. (“MHG” or “Legacy Danimer”), with Legacy Danimer surviving the merger as a wholly owned subsidiary of Live Oak. The Business Combination was accounted for as a reverse recapitalization, meaning that Legacy Danimer was treated as the accounting acquirer and Live Oak was treated as the accounting acquiree. 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. 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”).
Financial Statements
The accompanying condensed consolidated financial statements (“financial statements”) have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. The financial statements consolidate all assets and liabilities of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. We have made certain reclassifications to previously reported amounts to conform to the current presentation. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”).
We do not have any material items of other comprehensive income (loss); accordingly, there is no difference between net loss and comprehensive loss and we have not presented a separate Statement of Comprehensive Income (Loss) that would otherwise be required.
There were no significant changes to our critical accounting estimates or our significant accounting policies as disclosed in our 2023 Form 10-K.
Strategic Reorganization and Other Charges
During the three months ended June 30, 2024, we announced the pending retirement of our Chief Executive Officer which resulted in $0.3 million in expense related to the related transition and retirement agreement. Additionally, we launched a reduction in force and curtailed certain non-core product development activities and recorded $0.4 million in strategic reorganization and other related charges, primarily related to severance costs.
In July 2024, we temporarily suspended our Danimer Catalytic Technologies business, including additional reduction in force, to further capital conservation. There were no asset impairments associated with this suspension, but we do expect to record additional strategic reorganization and other related charges in the quarter ending September 30, 2024 that will reduce the immediate cost savings realized.
Risks and Uncertainties
Preparation of the financial statements is on a going concern basis of presentation according to GAAP, which assumes that we will continue our operations for the foreseeable future and be able to realize our assets and discharge our liabilities and commitments in the normal course of business.
Historically, we have financed our operations through issuance of equity and debt financings, such as our senior secured term loan, convertible notes, new market tax credit transactions and our asset-based lending arrangement as described in Note 9. These financings have been used to fund working capital, capital expenditures, and our day-to-day operations.
Based on our current plans and projections, we believe our unrestricted cash resources of $40.3 million and $27.4 million in working capital at June 30, 2024, will be sufficient to satisfy our liquidity requirements for more than one year from when these financial statements were issued.
Our ability to generate revenues in the near-term is highly dependent on the successful commercialization of our biopolymer products, which is subject to certain risks and uncertainties. As the market for our products expands, we anticipate that it will take time for our PHA sales and production to ramp-up to an economical scale sufficient to fund our operations. As a result, we have experienced significant losses and negative cash flows in recent years and this may continue in the near-term, as we incur costs and expenses for the continued development and expansion of our business, including the costs of enhancing manufacturing capacity and ongoing product research and development. The amounts we spend will impact our ability to become profitable and this spending will depend, in part, on the number of new products that we attempt to develop.
Our long-term success is largely based on our PHA-based resin go-to-market strategy and the effective development of alternative biodegradable resin products to support a variety of end-use cases. We are in discussions with, and in certain instances have begun production for, large restaurant chains and consumer goods companies and their converters to expand the use of our PHA-based resins in cutlery, straws, single-use food packaging and films. Customer trends and government regulations are moving toward non-petroleum-based plastics; however, due to recent economic conditions, including the COVID-19 pandemic and supplemental supply chain disruptions, decreased Eastern European demand due to the conflict in Ukraine, and rising inflation, our projected sales growth has shifted into later periods. As a result of these developments, we have taken actions to reduce our operating costs across all areas of the business and to more closely monitor our liquidity position. For example, we have reduced discretionary spending, reduced labor costs through employee headcount rationalization, increased senior management focus on collections of accounts receivable, postponed certain capital expenditures, and launched an initiative to reduce on-hand inventory levels to respond to the business environment. We have also temporarily suspended operations at our Danimer Catalytic Technologies business to further capital conservation. If these plans are insufficient to sustain our liquidity, we expect to take further actions, which could include identifying alternative funding sources, to preserve sufficient liquidity.
Note 2. Inventories, net
Inventories, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Raw materials |
|
$ |
11,762 |
|
|
$ |
10,867 |
|
Work in process |
|
|
1,436 |
|
|
|
546 |
|
Finished goods and related items |
|
|
13,079 |
|
|
|
13,857 |
|
Total inventories, net |
|
$ |
26,277 |
|
|
$ |
25,270 |
|
At June 30, 2024 and December 31, 2023, finished goods and related items included $9.0 million and $7.6 million, respectively, of finished neat PHA. Inventory at June 30, 2024 and at December 31, 2023 is stated net of reserves of $0.6 million and $0.9 million, respectively, related to interim assessments to reduce the carrying value of inventory to its net realizable value.
Note 3. Property, Plant and Equipment, net
Property, plant and equipment, net, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
(in thousands) |
|
Estimated Useful Life (Years) |
|
2024 |
|
|
2023 |
|
Land and improvements |
|
20 |
|
$ |
92 |
|
|
$ |
92 |
|
Leasehold improvements |
|
Shorter of useful life or lease term |
|
|
110,543 |
|
|
|
110,531 |
|
Buildings |
|
20-40 |
|
|
2,191 |
|
|
|
2,191 |
|
Machinery and equipment |
|
3-20 |
|
|
190,254 |
|
|
|
190,111 |
|
Motor vehicles |
|
7-10 |
|
|
903 |
|
|
|
903 |
|
Furniture and fixtures |
|
3-10 |
|
|
474 |
|
|
|
474 |
|
Office equipment |
|
3-10 |
|
|
7,434 |
|
|
|
7,415 |
|
Construction in progress |
|
N/A |
|
|
204,500 |
|
|
|
202,998 |
|
|
|
|
|
|
516,391 |
|
|
|
514,715 |
|
Accumulated depreciation and amortization |
|
|
|
|
(82,134 |
) |
|
|
(69,562 |
) |
Property, plant and equipment, net |
|
|
|
$ |
434,257 |
|
|
$ |
445,153 |
|
We reported depreciation and amortization expense (which included amortization of intangible assets) as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Cost of revenue |
|
$ |
5,105 |
|
|
$ |
4,934 |
|
|
$ |
10,252 |
|
|
$ |
10,147 |
|
Research and development |
|
|
1,973 |
|
|
|
1,956 |
|
|
|
4,004 |
|
|
|
4,038 |
|
Selling, general and administrative |
|
|
360 |
|
|
|
283 |
|
|
|
713 |
|
|
|
567 |
|
Total depreciation and amortization expense |
|
$ |
7,438 |
|
|
$ |
7,173 |
|
|
$ |
14,969 |
|
|
$ |
14,752 |
|
Construction in progress consists primarily of the early phases of construction of our PHA plant in Bainbridge, Georgia (“Greenfield Facility”) as noted in the table below. We do not have expected in-service dates for our Greenfield Facility, since we have paused major construction. We will need to obtain additional financing to complete our Greenfield Facility. In 2022, the engineering cost estimate ranged from $515 million to $665 million, which does not consider any effect of subsequent inflation, and if we do not obtain financing, our investment could be impaired.
|
|
|
|
|
|
|
|
|
(in thousands) |
|
June 30, 2024 |
|
|
December 31, 2023 |
|
Georgia |
|
$ |
200,482 |
|
|
$ |
199,342 |
|
Kentucky |
|
|
2,193 |
|
|
|
1,696 |
|
New York |
|
|
1,825 |
|
|
|
1,960 |
|
|
|
$ |
204,500 |
|
|
$ |
202,998 |
|
Property, plant and equipment includes gross capitalized interest of $15.0 million as of both June 30, 2024 and December 31, 2023. For the three and six months ended June 30, 2024 and 2023, capitalized interest costs were immaterial.
Note 4. 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 and amortize these costs on a straight-line basis over their estimated useful lives, which range from 10 to 20 years. Our intangible portfolio has an estimated weighted average useful life of 17.0 years.
Intangible assets, net, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Intangible assets, gross |
|
$ |
96,605 |
|
|
$ |
95,765 |
|
Less capitalized patent costs not yet subject to amortization |
|
|
(3,102 |
) |
|
|
(2,838 |
) |
Intangible assets subject to amortization, gross |
|
|
93,503 |
|
|
|
92,927 |
|
Accumulated amortization |
|
|
(20,190 |
) |
|
|
(17,975 |
) |
Intangible assets subject to amortization, net |
|
|
73,313 |
|
|
|
74,952 |
|
Total intangible assets, net |
|
$ |
76,415 |
|
|
$ |
77,790 |
|
Amortization expense was $1.1 million and $1.2 million for the three months ended June 30, 2024 and 2023, respectively, and $2.2 million and $2.4 million for the six months ended June 30, 2024 and 2023, respectively. This expense was included in research and development costs.
Note 5. Accrued Liabilities
The components of accrued liabilities were as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Compensation and related expenses |
|
$ |
1,773 |
|
|
$ |
1,692 |
|
Accrued taxes |
|
|
1,223 |
|
|
|
552 |
|
Accrued principal and interest |
|
|
629 |
|
|
|
440 |
|
Accrued legal, consulting and professional fees |
|
|
406 |
|
|
|
839 |
|
Accrued utilities |
|
|
261 |
|
|
|
350 |
|
Accrued rebates |
|
|
38 |
|
|
|
233 |
|
Construction in progress accruals |
|
|
25 |
|
|
|
191 |
|
Purchase accrual |
|
|
- |
|
|
|
8 |
|
Other |
|
|
426 |
|
|
|
421 |
|
Total accrued liabilities |
|
$ |
4,781 |
|
|
$ |
4,726 |
|
Note 6. Income Taxes
We reported immaterial income tax expense for the three and six months ended June 30, 2024, which resulted in an effective income tax rate of zero percent. We reported an income tax benefits for the three and six months ended June 30, 2023 of $0.1 million and $0.2 million, respectively, which resulted in effective income tax rates of 0.16% and 0.20%, respectively. Our effective tax rates differed from the federal statutory rate of 21% due to our valuation allowances against substantially all of our net deferred income 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 income 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 June 30, 2024, we maintained a full valuation allowance against our net deferred income tax assets due to the uncertainty surrounding realization of such assets.
Note 7. Leases
The following table sets forth the allocation of our operating lease costs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Cost of revenue |
|
$ |
754 |
|
|
$ |
673 |
|
|
$ |
1,508 |
|
|
$ |
1,254 |
|
Research and development |
|
|
247 |
|
|
|
135 |
|
|
|
495 |
|
|
|
211 |
|
Selling, general and administrative |
|
|
28 |
|
|
|
143 |
|
|
|
61 |
|
|
|
280 |
|
Total operating lease cost |
|
$ |
1,029 |
|
|
$ |
951 |
|
|
$ |
2,064 |
|
|
$ |
1,745 |
|
Note 8. Warrant Liability
Private Warrants
At June 30, 2024 and December 31, 2023, there were 3,914,525 outstanding 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 (“Private Warrants”). The Private Warrants have been exercisable since 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 loss or gain. A rollforward of the Private Warrants liability is below.
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
Balance at December 31, 2023 |
|
|
|
$ |
(5 |
) |
Loss on remeasurement of private warrants |
|
|
|
|
(201 |
) |
Balance at March 31, 2024 |
|
|
|
|
(206 |
) |
Gain on remeasurement of private warrants |
|
|
|
|
192 |
|
Balance at June 30, 2024 |
|
|
|
$ |
(14 |
) |
Common Warrants
On March 25, 2024, we closed a registered direct offering of our common stock that included accompanying warrants to purchase up to an aggregate of 15,000,000 shares of Common Stock (“Common Warrants”).
The Common Warrants have an exercise price of $1.33 per share, are exercisable beginning on September 25, 2024, and expire on September 25, 2029. The Common 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 Common Warrants recorded as a non-cash loss or gain. A rollforward of the Common Warrants liability is below.
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
Balance at March 25, 2024 |
|
|
|
$ |
(9,750 |
) |
Gain on remeasurement of common warrants |
|
|
|
|
300 |
|
Balance at March 31, 2024 |
|
|
|
|
(9,450 |
) |
Gain on remeasurement of common warrants |
|
|
|
|
5,550 |
|
Balamce at June 30, 2024 |
|
|
|
$ |
(3,900 |
) |
Note 9. Debt
The components of debt were as follows:
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
3.25% Convertible Senior Notes |
|
$ |
240,000 |
|
|
$ |
240,000 |
|
Senior Secured Term Loan |
|
|
130,000 |
|
|
|
130,000 |
|
New Market Tax Credit Transactions |
|
|
45,700 |
|
|
|
45,700 |
|
Asset-based Lending Arrangement |
|
|
5,177 |
|
|
|
- |
|
Insurance Premium Finance Notes |
|
|
1,517 |
|
|
|
1,243 |
|
Vehicle and Equipment Notes |
|
|
267 |
|
|
|
327 |
|
Mortgage Notes |
|
|
186 |
|
|
|
192 |
|
Total |
|
$ |
422,847 |
|
|
$ |
417,462 |
|
Less: Total unamortized debt issuance costs |
|
|
(28,961 |
) |
|
|
(34,658 |
) |
Less: Current maturities of long-term debt |
|
|
(6,976 |
) |
|
|
(1,368 |
) |
Total long-term debt |
|
$ |
386,910 |
|
|
$ |
381,436 |
|
3.25% Convertible Senior Notes
On December 21, 2021, we issued $240 million principal amount of our 3.25% Convertible Senior Notes due 2026 (“Convertible Notes”), subject to an indenture.
The Convertible Notes are our senior, unsecured obligations and accrue interest at a rate of 3.25% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2022. We will settle conversions by paying or delivering, as applicable, cash, shares of common stock or a combination of cash and shares, at our election. The initial conversion rate, which is subject to change, is approximately $10.79 per share of common stock. If certain liquidity conditions are met, we may redeem the Convertible Notes between December 19, 2024 and October 20, 2026. The Convertible Notes mature on December 15, 2026.
On July 12, 2024, we completed the distribution of Dividend Warrants as described in Note 15. In addition to Dividend Warrants being exercisable for cash, beginning on July 26, 2024 and subject to the terms and conditions of the warrant agreement governing the Dividend Warrants, holders of Dividend Warrants could also exercise their Dividend Warrants with Convertible Notes at face value, meaning that one Convertible Note having a principal amount of $1,000 may be surrendered as consideration to exercise 200 Dividend Warrants. Convertible Notes surrendered to pay the exercise price for Dividend Warrants will be retired.
Capped Calls
Also in December 2021, in connection with the Convertible Notes, we purchased call options (“Capped Calls”) from certain well-capitalized financial institutions for $35 million. The Capped Calls permit us to require the counterparties to deliver to us shares of our common stock, subject to a capped number of shares. We may also net-settle the Capped Calls and receive cash instead of shares. We have not exercised any of the Capped Calls at June 30, 2024, and the Capped Calls expire on April 12, 2027.
Senior Secured Term Loan
On March 17, 2023, we closed a $130 million principal amount senior secured term loan (“Senior Secured Term Loan”). The Senior Secured Term Loan is secured by substantially all of our assets, other than the assets of Danimer Catalytic Technologies and assets associated with the Greenfield Facility. The Senior Secured Term Loan matures on the earlier of March 17, 2027 or September 15, 2026 if more than $100 million of the existing Convertible Notes remain outstanding on that date. After payment of the lender’s expenses, including the first three years of premiums for a collateral protection insurance policy for the benefit of the lender, we received net proceeds of $98.6 million. The Senior Secured Term Loan accrues interest at a stated annual rate of 14.4%, payable monthly. As part of the Senior Secured Term Loan agreement, we are required to hold $12.5 million in an interest-payment reserve account, which we have reported as restricted cash.
The Senior Secured Term Loan contains various customary covenants, which we do not expect to have a material impact on our liquidity or capital resources.
In connection with the Senior Secured Term Loan, we also issued warrants with a five-year maturity to the lender to purchase 1.5 million shares of our common stock at an exercise price of $7.50 per share. We determined the fair value of these warrants as of the closing date was $0.5 million using the Black-Scholes model and included this amount in additional paid-in capital.
New Markets Tax Credit Transactions
We entered into financing arrangements under the New Markets Tax Credit (“NMTC”) program with various unrelated third-party financial institutions (individually and collectively referred to as “Investors”), which then invest in certain “Investment Funds”.
In each of the financing arrangements, we loaned money to the Investment Funds. These loans of $31.4 million are recorded as leveraged loan receivables as of June 30, 2024 and December 31, 2023, respectively. Each Investment Fund then contributed the funds from our loan and the Investor’s investment to a special purpose entity, which then in turn loaned the contributed funds to a wholly owned subsidiary of the Company.
We believe these borrowings, and our related loans to the Investment Funds, will be forgiven in 2026 and 2029.
Asset-based Lending Agreement
On April 19, 2024, we entered into an asset-based lending agreement (“Revolving Credit Agreement”).
The Revolving Credit Agreement provides for borrowings under a revolving commitment of $20.0 million (“Revolving Commitment”). Subject to the terms and conditions of the Revolving Credit Agreement, we may request an increase in the Revolving Commitment by an amount not to exceed $5.0 million, provided that any such request for an increase be in a minimum amount of $2.5 million. The amount of the Revolving Commitment available for borrowing at any given time is $18.5 million, subject to a borrowing base formula that is based upon our accounts receivable and inventory, as more fully described in the Revolving Credit Agreement. We are required to borrow a minimum of 50% of the calculated weekly borrowing base formula at all times. As of June 30, 2024, the remaining availability under the Revolving Credit Agreement is $5.2 million.
Amounts borrowed under the Revolving Credit Agreement accrue interest at an annual rate equal to the Secured Overnight Financing Rate plus 7%, and any unused Revolving Commitment accrues an unused facility fee at an annual rate of 0.5%, each payable monthly. The Revolving Credit Agreement matures on April 19, 2027; however, certain provisions exist that can accelerate the maturity date. The Revolving Credit Agreement also contains other customary representations, warranties, and affirmative and negative covenants, which we do not expect to have any material effect. The Revolving Credit Agreement is secured by a lien on all of our accounts receivable and inventory and the proceeds thereof and certain other assets as set forth in the Revolving Credit Agreement.
Insurance Premium Finance Notes
In December 2023 and June 2024, we entered into financing agreements related to the premiums of certain insurance policies. Each of these notes have a one-year term and bear interest at 8.24% and 8.49%, respectively.
Vehicle and Equipment Notes
We have twelve vehicle and equipment notes outstanding at June 30, 2024, primarily relating to motor vehicles and warehouse equipment. We make monthly payments on these notes at interest rates ranging from 3.75% to 6.99%.
Mortgage Notes
We have a mortgage note secured by a residential property. This note bears interest at 5.25% with a maturity date in May 2025.
Note 10. Equity
Common Stock
The following table summarizes the common stock activity for the three and six months ended June 30, 2024 and 2023, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Balance, beginning of period |
|
|
114,240,921 |
|
|
|
101,938,376 |
|
|
|
102,832,103 |
|
|
|
101,804,454 |
|
Issuance of common stock |
|
|
2,367,601 |
|
|
|
- |
|
|
|
13,776,419 |
|
|
|
133,922 |
|
Balance, end of period |
|
|
116,608,522 |
|
|
|
101,938,376 |
|
|
|
116,608,522 |
|
|
|
101,938,376 |
|
Preferred Stock
We are authorized to issue up to 10,000,000 shares of preferred stock, each with a par value of $0.0001 per share. As of June 30, 2024 and December 31, 2023, no shares of preferred stock were issued or outstanding.
Non-Plan Legacy Danimer Options
Prior to 2017, Legacy Danimer had issued 208,183 stock options that were not a part of either the 2016 Executive Plan or the 2016 Omnibus Plan. These options had a weighted average exercise price of $30 per share. On December 29, 2020, the then-remaining 30,493 of these options were converted to options to purchase 279,255 shares of our common stock with a weighted average exercise price of $3.28 per share. During 2021, 153,763 of these options were exercised. There were 125,492 of these options remaining outstanding at June 30, 2024 and December 31, 2023.
Equity Distribution Agreement
On September 7, 2022, we entered into an equity distribution agreement with Citigroup Global Markets Inc. (“Manager”), under which we may issue and sell shares of our common stock “at the market” from time-to-time with an aggregate offering price of up to $100.0 million (“ATM Offering”). Under the ATM Offering, the Manager may sell small volumes of our common stock at the prevailing market price, during such times and on such terms as we have predesignated. We have no obligation to sell any shares and may at any time suspend offers and sales that are part of the ATM Offering and may terminate the ATM Offering without penalty. On a life-to-date basis, we have issued 590,661 shares at an average price of $2.72 resulting in proceeds of $1.4 million. We incurred life-to-date issuance costs of $1.4 million, which were primarily one-time costs, but which also included less than $0.1 million in commissions to the Manager. On March 20, 2024, we amended the prospectus supplement relating to the ATM Offering to reduce the amount available for sale pursuant to the agreement from $100.0 million to $50.0 million. As of June 30, 2024, $48.6 million remains available for distribution under the ATM Offering.
Anti-dilutive Instruments
The following table summarizes the instruments excluded from the calculations of diluted shares outstanding because the effect of including them would have been anti-dilutive.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Convertible Notes |
|
22,250,040 |
|
|
|
22,250,040 |
|
|
|
22,250,040 |
|
|
|
22,250,040 |
|
Common Warrants |
|
15,000,000 |
|
|
|
- |
|
|
|
15,000,000 |
|
|
|
- |
|
Employee stock options |
|
9,230,171 |
|
|
|
11,950,598 |
|
|
|
9,230,171 |
|
|
|
11,950,598 |
|
Private Warrants |
|
3,914,525 |
|
|
|
3,914,525 |
|
|
|
3,914,525 |
|
|
|
3,914,525 |
|
Restricted stock and RSUs |
|
1,849,322 |
|
|
|
2,295,337 |
|
|
|
1,849,322 |
|
|
|
2,295,337 |
|
Stock appreciation rights |
|
1,732,854 |
|
|
|
- |
|
|
|
1,732,854 |
|
|
|
- |
|
Pre-Funded Warrants |
|
1,576,000 |
|
|
|
- |
|
|
|
1,576,000 |
|
|
|
- |
|
Senior Secured Term Loan Warrants |
|
1,500,000 |
|
|
|
1,500,000 |
|
|
|
1,500,000 |
|
|
|
1,500,000 |
|
Performance stock |
|
1,124,978 |
|
|
|
127,770 |
|
|
|
1,124,978 |
|
|
|
127,770 |
|
Legacy Danimer options |
|
125,492 |
|
|
|
125,492 |
|
|
|
125,492 |
|
|
|
125,492 |
|
Total excluded instruments |
|
58,303,382 |
|
|
|
42,163,762 |
|
|
|
58,303,382 |
|
|
|
42,163,762 |
|
Senior Secured Term Loan Warrants
On March 17, 2023, we issued warrants to purchase 1.5 million shares of our common stock for $7.50 per share in connection with the closing of the Senior Secured Term Loan. These warrants were accounted for as an equity arrangement and were included in additional paid-in-capital at June 30, 2024 and 2023.
Pre-Funded Warrants
On March 25, 2024, we completed a registered direct offering for the purchase and sale of an aggregate of 11,250,000 shares of our common stock, as well as pre-funded warrants to purchase up to an aggregate of 3,750,000 shares of our common stock (“Pre-Funded Warrants”) resulting in gross proceeds of approximately $15.0 million less customary closing fees.
The Pre-Funded Warrants have an exercise price of $0.0001 per share and expire on March 26, 2029. The Pre-Funded Warrants were accounted for as an equity arrangement and were included in additional paid-in-capital at June 30, 2024. We also determined that the Pre-Funded Warrants should be included in the determination of basic earnings per share in accordance with ASC 260, Earnings per Share.
During the three months ended June 30, 2024, 2,174,000 pre-funded warrants were exercised resulting in an immaterial cash receipt. There were 1,576,000 pre-funded warrants outstanding as of June 30, 2024 and they were subsequently exercised on July 10, 2024.
Note 11. Revenue
We evaluate financial performance and make resource allocation decisions based upon the results of our single operating and reportable segment; however, we believe presenting revenue split between our primary revenue streams of products and services best depicts how the nature, amount, timing and certainty of our net sales and cash flows are affected by economic factors.
We generally produce and sell finished products, for which we recognize revenue upon shipment. We provide for expected returns based on historical experience and future outlook. Variable consideration such as discounts, rebates, or volume discounts that we estimate to reduce our transaction price are not material.
We defer certain contract fulfillment costs and amortize these costs to cost of revenue on a per-pound basis as we sell the related product or when the related contracts expire. During the three and six months ended June 30, 2024 and 2023, amortization of these contract fulfillment costs was immaterial. At each of June 30, 2024 and December 31, 2023, we had gross contract fulfillment costs of $1.3 million and net contract fulfillment costs of $1.1 million, which were included in other assets.
Our research and development (“R&D”) services contract customers generally pay us at the commencement of the agreement and then at additional intervals as outlined in each contract. We recognize contract liabilities for such payments and then recognize revenue as we satisfy the related performance obligations. To the extent collectible revenue recognized under this method exceeds the consideration received, we recognize contract assets for such unbilled consideration.
R&D contract assets, net were $3.9 million and $3.7 million at June 30, 2024 and December 31, 2023, respectively. The long-term portion of these assets were $1.0 million and $0.7 million at June 30, 2024 and December 31, 2023, respectively, and are included in other assets. Revenue recognized that was included in contract liabilities at the beginning of the period was not material for any period presented.
Disaggregated Revenues
Revenue by geographic area is based on the location of the customer. The following table summarizes revenue information by major geographic area.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Domestic |
|
$ |
7,403 |
|
|
$ |
12,520 |
|
|
$ |
17,141 |
|
|
$ |
22,794 |
|
Foreign |
|
|
225 |
|
|
|
345 |
|
|
|
711 |
|
|
|
1,997 |
|
Total revenues |
|
$ |
7,628 |
|
|
$ |
12,865 |
|
|
$ |
17,852 |
|
|
$ |
24,791 |
|
Note 12. Stock-Based Compensation
We grant various forms of stock-based compensation, including restricted stock, restricted stock units, stock options, stock appreciation rights, and performance-based restricted stock units under our Danimer Scientific, Inc. 2020 Long-Term Equity Incentive Plan (“2020 Incentive Plan”) and employee stock purchase plan instruments under our 2020 Employee Stock Purchase Plan (“2020 ESPP Plan”).
We also have outstanding employee and director stock options that were issued prior to the Business Combination under legacy stock plans.
The 2020 Incentive Plan provides for the grant of stock options, stock appreciation rights, and full value awards. Full value awards include restricted stock, restricted stock units, deferred stock units, performance stock and performance stock units.
On June 30, 2024 and December 31, 2023, 1,831,616 shares and 4,823,519 shares, respectively, of our common stock remained authorized for issuance with respect to awards under the 2020 Incentive Plan.
The 2020 ESPP Plan provides for the sale of our common stock to our employees through payroll withholding at a discount of 15% from the lower of the closing price of our common stock on the first or last day of each biannual offering period. Up to 2,571,737 shares of our common stock were authorized to be issued under this plan, and we issued 136,530 shares during the six months ended June 30, 2024 resulting in 401,748 shares issued since the inception of the plan.
These share pool limits are subject to adjustment in the event of a stock split, stock dividend or other changes in our capitalization.
The following table sets forth the allocation of our stock-based compensation expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Cost of revenue |
|
$ |
4 |
|
|
$ |
2 |
|
|
$ |
7 |
|
|
$ |
4 |
|
Selling, general and administrative |
|
|
64 |
|
|
|
11,832 |
|
|
|
882 |
|
|
|
25,150 |
|
Research and development |
|
|
131 |
|
|
|
1,832 |
|
|
|
276 |
|
|
|
3,455 |
|
Total stock-based compensation |
|
$ |
199 |
|
|
$ |
13,666 |
|
|
$ |
1,165 |
|
|
$ |
28,609 |
|
Service-based Restricted Stock and RSUs
The following table summarizes our service-based restricted stock and RSU activity under our equity plan.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares |
|
|
Weighted Average Grant-Date Fair Value |
|
Balance, December 31, 2023 |
|
|
271,550 |
|
|
$ |
4.40 |
|
Granted |
|
|
315,876 |
|
|
$ |
1.49 |
|
Vested |
|
|
(34,364 |
) |
|
$ |
5.86 |
|
Balance, March 31, 2024 |
|
|
553,062 |
|
|
$ |
1.82 |
|
Granted |
|
|
8,242 |
|
|
$ |
0.78 |
|
Vested |
|
|
(202,822 |
) |
|
$ |
0.77 |
|
Forfeited |
|
|
(27,000 |
) |
|
|
|
Balance, June 30, 2024 |
|
|
331,482 |
|
|
$ |
1.19 |
|
We recognize the compensation expense for these shares on a straight-line basis from the grant date through the relevant vesting dates, which range from one to three years. We recognized $0.2 million and $4.7 million of expense related to these awards during the three months ended June 30, 2024 and 2023, respectively. We recognized $0.5 million and $9.2 million of expense related to these awards during the six months ended June 30, 2024 and 2023, respectively.
Market-based Restricted Stock
During 2021, we granted 1,517,840 shares of restricted stock for which the restrictions lapse on successive thirds of the award on the first date the volume-weighted average price per share of our common stock equals or exceeds $24.20 for any 20 trading dates within 30-day trading periods beginning on December 29, 2021, 2022, and 2023, respectively. These awards were fully amortized at December 31, 2023. We recognized $4.6 million and $9.3 million of related expense during the three and six months ended June 30, 2023. During 2023, we instituted a cash settlement feature for certain of these awards if the 2020 Incentive Plan does not have enough shares remaining to fulfill these awards at the time of vesting. As such, 754,818 of the 1,517,840 shares of market-based restricted stock are accounted for as liabilities that are marked to market each period. We maintained a liability of $0.3 million as a result of this feature as of June 30, 2024 and December 31, 2023. All of these shares remained outstanding at June 30, 2024.
Performance-based Restricted Stock Units
During 2021, we initiated a Performance-based RSU program. Under this program, each participant is awarded a number of units (“PRSU”s) that may vest based on our performance against one or more specified metrics, with 50% to 100% of these PRSUs vesting proportionally with achieved threshold and target attainment levels. We previously had certain PRSUs that contained a cash settlement feature and we accounted for these PRSUs as liabilities that are marked to market using the price of our common stock at the end of each reporting period with a life-to-date expense adjustment. These 824,698 outstanding cash-settleable PRSUs were forfeited during the six months ending June 30, 2024 in association with the transition and retirement agreement of the Chief Executive Officer. As such, we relieved the previously-maintained $0.1 million long-term liability associated with these awards.
For the three months ended June 30, 2024 and 2023, respectively, we recognized related compensation expense of zero and $0.3 million. For the six months ended June 30, 2024 and 2023, respectively, we recognized related compensation expense of zero and less than $0.1 million. These expenses are included in selling, general and administrative expenses. We recognize expense on a straight-line basis between the dates of grant and the vesting dates, which we anticipate will be in March 2025, February 2026 and April 2027, for awards granted in 2022, 2023 and 2024, respectively. Our performance did not meet the required conditions for vesting for the PRSUs that were
scheduled to vest in February 2024 and accordingly they expired unvested during the six months ended June 30, 2024. We are currently assuming 100% attainment of our 2026 and 2025 metrics and 0% attainment of our 2024 metrics. All of the PRSUs granted in 2022, 2023 and 2024 remained outstanding at June 30, 2024.
The following table summarizes pertinent facts related to PRSU grants, with threshold and target dollar and production capacity figures given in millions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date |
|
Grant-Date Fair Value |
|
|
# Share-Settleable PRSUs |
|
|
Metric |
|
Threshold |
|
|
Target |
|
4/3/2024 |
|
$ |
1.06 |
|
|
|
498,604 |
|
|
2026 PHA Revenue |
|
$ |
135.0 |
|
|
$ |
157.0 |
|
4/3/2024 |
|
$ |
1.06 |
|
|
|
498,604 |
|
|
2026 Adjusted EBITDA |
|
$ |
17.2 |
|
|
$ |
22.3 |
|
2/28/2023 |
|
$ |
2.58 |
|
|
|
38,759 |
|
|
2025 PHA Revenue |
|
$ |
177.0 |
|
|
$ |
202.0 |
|
2/28/2023 |
|
$ |
2.58 |
|
|
|
38,760 |
|
|
2025 Adjusted EBITDA |
|
$ |
36.0 |
|
|
$ |
44.0 |
|
3/31/2022 |
|
$ |
5.86 |
|
|
|
15,075 |
|
|
2024 PHA Revenue |
|
$ |
151.0 |
|
|
$ |
189.0 |
|
3/31/2022 |
|
$ |
5.86 |
|
|
|
15,075 |
|
|
2024 Adjusted EBITDA |
|
$ |
9.2 |
|
|
$ |
13.8 |
|
3/31/2022 |
|
$ |
5.86 |
|
|
|
20,101 |
|
|
2024 Neat PHA capacity (lbs.) |
|
|
68.0 |
|
|
|
81.0 |
|
|
|
|
|
|
|
1,124,978 |
|
|
|
|
|
|
|
|
|
Stock Appreciation Rights
On April 3, 2024, we awarded 1,732,854 stock appreciation rights or SARs. The weighted average grant price of these awards was $1.06 and the weighted average grant date fair value of these awards was $0.61. These SARs vest ratably on April 3, 2025, April 3, 2026 and April 3, 2027. We recognized $0.1 million in expense for these awards during the three and six months ended June 30, 2024.
Stock Options
The following table summarizes share-settled stock option activity under our equity plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Options |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Term (Years) |
|
|
Aggregate Intrinsic Value |
|
Balance, December 31, 2023 |
|
|
9,257,704 |
|
|
$ |
11.27 |
|
|
|
5.38 |
|
|
$ |
- |
|
Forfeited |
|
|
(4,334 |
) |
|
|
|
|
|
|
|
|
|
Balance, March 31, 2024 |
|
|
9,253,370 |
|
|
$ |
11.27 |
|
|
|
5.13 |
|
|
$ |
- |
|
Forfeited |
|
|
(23,199 |
) |
|
|
|
|
|
|
|
|
|
Balance, June 30, 2024 |
|
|
9,230,171 |
|
|
$ |
11.28 |
|
|
|
4.87 |
|
|
|
|
Exercisable |
|
|
8,118,263 |
|
|
$ |
12.10 |
|
|
|
4.52 |
|
|
$ |
- |
|
Vested and expected to vest |
|
|
9,230,171 |
|
|
$ |
11.28 |
|
|
|
4.87 |
|
|
$ |
- |
|
The aggregate intrinsic values are calculated as the difference between the exercise price of the indicated stock options and the fair value of our common stock on June 30, 2024.
There were no stock options granted during the three or six months ended June 30, 2024.
We granted 204,254 share-settled options with a weighted average grant date fair value of $1.17 during the three months ended March 31, 2023.
We also granted 1,050,000 stock options with a weighted average grant date fair value of $1.17 that contained a cash-settlement feature if adequate shares were not available to settle the award by the vesting dates. For the three and six months ended June 30, 2024, we recognized a benefit of $0.2 million and expense of $0.1 million, respectively for all outstanding cash-settleable stock options. For the three and six months ended June 30, 2023, we recognized a benefit of $0.2 million and expense of $0.4 million, respectively for all cash-settleable stock options. We maintained long-term liabilities of $0.7 million and $0.1 million at June 30, 2024 and December 31, 2023, respectively, related to our outstanding cash-settleable stock options.
As of June 30, 2024, there was $3.6 million of unrecognized compensation cost related to unvested stock options and restricted shares granted under the 2020 Incentive Plan. That cost is expected to be recognized over a weighted-average period of 1.1 years.
Note 13. Fair Value Considerations
GAAP defines “fair value” as the price we would receive to sell an asset or pay to transfer a liability in a timely transaction with an independent buyer. GAAP also sets forth a framework for measuring fair value utilizing a three-tier hierarchy based on 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; and
Level 3 - Unobservable inputs reflecting management’s assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
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 June 30, 2024 fair value of our Convertible Notes, based on trades made around that date, was approximately $35.7 million.
We set the values of our restricted stock unit and restricted stock awards without market-based vesting provisions on their respective grant dates at the closing price of a share of our common stock on each grant date.
We re-value our restricted stock unit awards that include a cash settlement feature each month at the closing price of a share of our common stock on the last trading day of the month, or $0.60 at June 30, 2024.
Level 2
We valued our restricted stock awards that contain a market-based vesting provision on the grant date 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.
We estimated the fair value of our Senior Secured Term Loan based on an analysis of market activity since loan inception at June 30, 2024 and determined it was approximately $51.9 million.
Level 3
We value our stock options, ESPP instruments, Private Warrants and Common Warrants using the Black-Scholes option pricing model on the respective grant dates. We re-value the Private Warrants, Common Warrants and any stock options with a cash-settlement feature at the end of each period. Since our stock price history as a publicly traded company is shorter in duration than the expected lives of our options (other than ESPP instruments), we use the historical volatility of a group of peer companies in combination with our own historical volatility to assess expected 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 each valuation date for durations equal to the expected lives of each instrument. 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 option, to determine the expected lives of stock-settled stock options and we use the remaining contractual lives of ESPP instruments, Private Warrants, Common Warrants, and stock options with a cash-settlement feature as their expected lives.
The following table sets forth the calculated fair values and the associated ranges of values we used for period remeasurement and for new grants in our Black-Scholes calculations for stock options, other than ESPP.
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
Three Months Ended June 30, |
|
|
2024 |
|
|
2024 |
|
2023 |
Share prices of our common stock |
|
$0.60 |
|
|
$0.60 |
|
$2.38 |
Expected volatilities |
|
79.04% |
|
|
68.2% - 92.9% |
|
50.3% - 54.8% |
Risk-free rates of return |
|
4.35% |
|
|
4.27% - 4.42% |
|
4.00% - 4.21% |
Expected option terms (years) |
|
3.83 |
|
|
3.06-4.66 |
|
4.06-5.67 |
Calculated option values |
|
$ |
0.07 |
|
|
$0.02 - $0.17 |
|
$0.07 - $1.17 |
The following table sets forth the fair values we calculated and the inputs used in our Black-Scholes model for stock appreciation right (SARs) awards.
|
|
|
|
|
|
|
April 3, |
|
|
|
2024 |
|
Fair value at grant date |
|
$ |
0.61 |
|
Number of units |
|
1,732,854 |
|
Variables used in determining fair value: |
|
|
|
Volatility |
|
|
57.80 |
% |
|