Filed pursuant to Rule 424(b)(3)
Registration No. 333-252515
PROSPECTUS SUPPLEMENT NO. 49
(to Prospectus dated February 16, 2021)
Danimer Scientific, Inc.
Up to 810,899 Shares of Common Stock
Up to 406,981 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 November 19, 2024 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement. All references to a number of shares of Common Stock in this prospectus supplement have been adjusted to reflect a 1-for-40 reverse stock split (the “Reverse Stock Split”) that was made effective as of 5:01 p.m. Eastern time on November 12, 2024. The Prospectus and this prospectus supplement relate to the issuance by us of up to an aggregate of up to 406,981 shares of our Class A common stock, $0.0001 par value per share (“Common Stock”), which consists of (i) up to 150,000 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 250,000 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 6,981 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 810,899 shares of Common Stock (including up to 150,000 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 November 18, 2024, the closing price of our Common Stock was $8.04. 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 November 19, 2024.
o
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2024
OR
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|
☐ |
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 |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Class A Common stock, $0.0001 par value per share |
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DNMR |
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New York Stock Exchange |
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|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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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☒ |
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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 November 12, 2024, the registrant had 120,795,476 shares of common stock, $0.0001 par value per share, outstanding.
Table of Contents
EXPLANATORY NOTE
On November 12, 2024, we effected a 1-for-40 reverse stock split. All share and per share information included in this Quarterly Report on Form 10-Q does not account for this reverse stock split. For more information, please see Note 15 - Subsequent Events.
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); our ability to maintain sufficient liquidity by realizing near-term revenue growth and related cash returns and preserving cash until such cash returns, if any are obtained; 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; access to available capital to meet our operating requirements and to service our debt instruments; the effect on our borrowing facilities of an event of default, including if an Annual Report on Form 10-K contains a Report of Independent Registered Public Accounting Firm that includes disclosure regarding going concern; 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; our ability to maintain our exchange listing; 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)
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|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
(in thousands, except share and per share data) |
|
2024 |
|
|
2023 |
|
Assets: |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
22,187 |
|
|
$ |
59,170 |
|
Accounts receivable, net |
|
|
11,745 |
|
|
|
15,227 |
|
Other receivables, net |
|
|
125 |
|
|
|
652 |
|
Inventories, net |
|
|
26,043 |
|
|
|
25,270 |
|
Prepaid expenses and other current assets |
|
|
5,395 |
|
|
|
4,714 |
|
Contract assets, net |
|
|
4,377 |
|
|
|
3,005 |
|
Total current assets |
|
|
69,872 |
|
|
|
108,038 |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
430,231 |
|
|
|
445,153 |
|
Intangible assets, net |
|
|
75,762 |
|
|
|
77,790 |
|
Right-of-use assets |
|
|
19,163 |
|
|
|
19,160 |
|
Leverage loans receivable |
|
|
31,446 |
|
|
|
31,446 |
|
Restricted cash |
|
|
14,116 |
|
|
|
14,334 |
|
Other assets |
|
|
3,180 |
|
|
|
2,210 |
|
Total assets |
|
$ |
643,770 |
|
|
$ |
698,131 |
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ equity: |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
4,542 |
|
|
$ |
5,292 |
|
Accrued liabilities |
|
|
6,131 |
|
|
|
4,726 |
|
Unearned revenue and contract liabilities |
|
|
914 |
|
|
|
1,000 |
|
Current portion of lease liability |
|
|
3,724 |
|
|
|
3,337 |
|
Current portion of long-term debt, net |
|
|
6,021 |
|
|
|
1,368 |
|
Total current liabilities |
|
|
21,332 |
|
|
|
15,723 |
|
|
|
|
|
|
|
|
Long-term lease liability, net |
|
|
21,418 |
|
|
|
21,927 |
|
Long-term debt, net |
|
|
381,874 |
|
|
|
381,436 |
|
Warrant liability |
|
|
6,315 |
|
|
|
5 |
|
Other long-term liabilities |
|
|
1,238 |
|
|
|
1,020 |
|
Total liabilities |
|
$ |
432,177 |
|
|
$ |
420,111 |
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Common stock, $0.0001 par value; 600,000,000 shares authorized: 120,771,640 and 102,832,103 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively |
|
$ |
13 |
|
|
$ |
10 |
|
Additional paid-in capital |
|
|
737,464 |
|
|
|
732,131 |
|
Accumulated deficit |
|
|
(525,884 |
) |
|
|
(454,121 |
) |
Total stockholders’ equity |
|
|
211,593 |
|
|
|
278,020 |
|
Total liabilities and stockholders’ equity |
|
$ |
643,770 |
|
|
$ |
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 September 30, |
|
|
Nine Months Ended September 30, |
|
(in thousands, except share and per share data) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Products |
|
$ |
7,972 |
|
|
$ |
10,454 |
|
|
$ |
25,173 |
|
|
$ |
33,724 |
|
Services |
|
|
658 |
|
|
|
494 |
|
|
|
1,309 |
|
|
|
2,015 |
|
Total revenue |
|
|
8,630 |
|
|
|
10,948 |
|
|
|
26,482 |
|
|
|
35,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
15,945 |
|
|
|
18,685 |
|
|
|
47,011 |
|
|
|
56,327 |
|
Selling, general and administrative |
|
|
6,861 |
|
|
|
16,555 |
|
|
|
20,482 |
|
|
|
52,098 |
|
Research and development |
|
|
4,580 |
|
|
|
6,883 |
|
|
|
15,031 |
|
|
|
21,667 |
|
Loss on sale of assets |
|
|
65 |
|
|
|
64 |
|
|
|
630 |
|
|
|
234 |
|
Total costs and expenses |
|
|
27,451 |
|
|
|
42,187 |
|
|
|
83,154 |
|
|
|
130,326 |
|
Loss from operations |
|
|
(18,821 |
) |
|
|
(31,239 |
) |
|
|
(56,672 |
) |
|
|
(94,587 |
) |
Nonoperating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) gain on remeasurement of warrants |
|
|
(206 |
) |
|
|
132 |
|
|
|
5,635 |
|
|
|
99 |
|
Interest, net |
|
|
(9,631 |
) |
|
|
(8,584 |
) |
|
|
(27,541 |
) |
|
|
(21,132 |
) |
Gain (loss) on loan extinguishment |
|
|
6,821 |
|
|
|
- |
|
|
|
6,821 |
|
|
|
(102 |
) |
Total nonoperating expense: |
|
|
(3,016 |
) |
|
|
(8,452 |
) |
|
|
(15,085 |
) |
|
|
(21,135 |
) |
Loss before income taxes |
|
|
(21,837 |
) |
|
|
(39,691 |
) |
|
|
(71,757 |
) |
|
|
(115,722 |
) |
Income taxes |
|
|
(2 |
) |
|
|
(468 |
) |
|
|
(6 |
) |
|
|
(317 |
) |
Net loss |
|
$ |
(21,839 |
) |
|
$ |
(40,159 |
) |
|
$ |
(71,763 |
) |
|
$ |
(116,039 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share |
|
$ |
(0.18 |
) |
|
$ |
(0.39 |
) |
|
$ |
(0.63 |
) |
|
$ |
(1.14 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
119,713,087 |
|
|
|
102,025,684 |
|
|
|
113,337,922 |
|
|
|
101,953,827 |
|
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 |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
$ |
12 |
|
|
$ |
10 |
|
|
$ |
10 |
|
|
$ |
10 |
|
Issuance of common stock |
|
|
1 |
|
|
|
- |
|
|
|
3 |
|
|
|
- |
|
Balance, end of period |
|
|
13 |
|
|
|
10 |
|
|
|
13 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
738,061 |
|
|
|
704,802 |
|
|
|
732,131 |
|
|
|
676,250 |
|
Stock-based compensation expense |
|
|
524 |
|
|
|
14,253 |
|
|
|
1,693 |
|
|
|
42,227 |
|
Issuance of common stock, net of issuance costs |
|
|
1,172 |
|
|
|
(250 |
) |
|
|
5,830 |
|
|
|
(250 |
) |
Shares retained for employee taxes |
|
|
(13 |
) |
|
|
- |
|
|
|
(28 |
) |
|
|
(61 |
) |
Stock issued under stock compensation plans |
|
|
58 |
|
|
|
153 |
|
|
|
176 |
|
|
|
282 |
|
Issuance of dividend warrants |
|
|
(2,338 |
) |
|
|
- |
|
|
|
(2,338 |
) |
|
|
- |
|
Warrants issued with Senior Secured Term Loan |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
510 |
|
Balance, end of period |
|
|
737,464 |
|
|
|
718,958 |
|
|
|
737,464 |
|
|
|
718,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
(504,045 |
) |
|
|
(374,528 |
) |
|
|
(454,121 |
) |
|
|
(298,648 |
) |
Net loss |
|
|
(21,839 |
) |
|
|
(40,159 |
) |
|
|
(71,763 |
) |
|
|
(116,039 |
) |
Balance, end of period |
|
|
(525,884 |
) |
|
|
(414,687 |
) |
|
|
(525,884 |
) |
|
|
(414,687 |
) |
Total stockholders' equity |
|
$ |
211,593 |
|
|
$ |
304,281 |
|
|
$ |
211,593 |
|
|
$ |
304,281 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
DANIMER SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
September 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(71,763 |
) |
|
$ |
(116,039 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
22,345 |
|
|
|
22,005 |
|
Gain on remeasurement of warrants |
|
|
(5,635 |
) |
|
|
(99 |
) |
Amortization of debt issuance costs |
|
|
8,951 |
|
|
|
6,209 |
|
Stock-based compensation |
|
|
1,693 |
|
|
|
42,227 |
|
Warrant issuance costs |
|
|
867 |
|
|
|
- |
|
Loss on disposal of assets |
|
|
630 |
|
|
|
234 |
|
Accounts receivable reserves |
|
|
610 |
|
|
|
(1,462 |
) |
Inventory reserves |
|
|
513 |
|
|
|
540 |
|
Amortization of right-of-use assets and lease liability |
|
|
(124 |
) |
|
|
(278 |
) |
(Gain) loss on loan extinguishment |
|
|
(6,821 |
) |
|
|
102 |
|
Deferred income taxes |
|
|
- |
|
|
|
(199 |
) |
Other |
|
|
- |
|
|
|
941 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
2,873 |
|
|
|
7,029 |
|
Other receivables |
|
|
528 |
|
|
|
555 |
|
Inventories, net |
|
|
(1,287 |
) |
|
|
5,475 |
|
Prepaid expenses and other current assets |
|
|
(239 |
) |
|
|
1,816 |
|
Contract assets |
|
|
(759 |
) |
|
|
(1,244 |
) |
Other assets |
|
|
76 |
|
|
|
(119 |
) |
Accounts payable |
|
|
(638 |
) |
|
|
(2,061 |
) |
Accrued liabilities |
|
|
1,588 |
|
|
|
1,893 |
|
Other long-term liabilities |
|
|
217 |
|
|
|
706 |
|
Unearned revenue and contract liabilities |
|
|
(85 |
) |
|
|
438 |
|
Net cash used in operating activities |
|
|
(46,460 |
) |
|
|
(31,331 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
Purchases of property, plant and equipment and intangible assets |
|
|
(7,486 |
) |
|
|
(25,722 |
) |
Proceeds from disposals of property, plant and equipment |
|
|
1,167 |
|
|
|
18 |
|
Net cash used in investing activities |
|
|
(6,319 |
) |
|
|
(25,704 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from issuance of warrants, net of issuance costs |
|
|
8,888 |
|
|
|
- |
|
Proceeds from issuance of common stock, net of issuance costs |
|
|
4,517 |
|
|
|
- |
|
Proceeds from long-term debt |
|
|
20,716 |
|
|
|
130,000 |
|
Principal payments on long-term debt |
|
|
(17,594 |
) |
|
|
(12,437 |
) |
Cash paid for debt issuance costs |
|
|
(1,097 |
) |
|
|
(33,296 |
) |
Proceeds from employee stock purchase plan |
|
|
176 |
|
|
|
282 |
|
Employee taxes related to stock-based compensation |
|
|
(28 |
) |
|
|
(61 |
) |
Net cash provided by financing activities |
|
|
15,578 |
|
|
|
84,488 |
|
Net (decrease) increase in cash and cash equivalents and restricted cash |
|
|
(37,201 |
) |
|
|
27,453 |
|
Cash and cash equivalents and restricted cash-beginning of period |
|
|
73,504 |
|
|
|
64,401 |
|
Cash and cash equivalents and restricted cash-end of period |
|
$ |
36,303 |
|
|
$ |
91,854 |
|
Supplemental cash flow information: |
|
|
|
|
|
|
Cash paid for interest, net of interest capitalized |
|
$ |
18,912 |
|
|
$ |
16,349 |
|
Cash paid for operating leases |
|
$ |
2,791 |
|
|
$ |
2,787 |
|
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. This has resulted in approximately $0.2 million and $0.5 million in expense related to the associated transition and retirement agreement for the three and nine months ended September 30, 2024, respectively. Additionally, we launched a reduction in force and curtailed certain non-core product development activities and recorded $0.3 million and $0.7 million in strategic reorganization and other related charges, primarily related to severance costs for the three and nine months ended September 30, 2024, respectively.
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 December 31, 2024 that will reduce the immediate cost savings realized.
Risk, Uncertainties and Going Concern
We have prepared the financial statements on a going concern basis, 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. However, we believe that, with our history of negative cash flows and our current lack of financial resources, substantial doubt exists regarding our ability to continue as a going concern for a period of one year after the date of filing of this Quarterly Report on Form 10-Q. The financial statements do not reflect any adjustments that would be necessary if we became unable to continue as a going concern.
Historically, we have funded working capital, capital expenditures, and our day-to-day operations through issuance of equity (see Note 10) and debt financings (see Note 9). We do not have a history of generating cash flow from operations.
Our ability to generate revenues is highly dependent on the successful commercialization of our biopolymer products, which is subject to certain risks and uncertainties. Even if the market for our products expands, we anticipate that it will take time for our PHA sales and production to reach an economic scale sufficient to fund our operations. In the meantime, 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, as well as significant costs to make interest payments on our debt. As a result, we have experienced significant losses and negative cash flows from operations in recent years and this may continue in the near term.
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. We believe these customers will order in sufficient volumes in the next year to allow our per-unit cost of production to decrease significantly, resulting in increased cash flow generation.
However, these volumes may not materialize or we may not be able to produce sufficient inventory profitably. In order to preserve cash until these expected sales reach their full potential, 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. We have also temporarily suspended operations at our Danimer Catalytic Technologies business to further capital conservation. We also expect to take further actions, which could include securing alternative funding sources or restructuring existing debt facilities, to preserve our liquidity as we work towards achieving a sustainable capital structure for our operations, but there can be no assurance that these actions will be successful.
In addition, if substantial doubt continues to exist as of December 31, 2024 and our filing of the Annual Report on Form 10-K contains a Report of Independent Registered Public Accounting Firm that includes disclosure regarding going concern, that would constitute an event of default under our Senior Secured Term Loan, which would cause cross-default of substantially all of our debt. (See Note 9).
Note 2. Inventories, net
Inventories, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Raw materials |
|
$ |
10,719 |
|
|
$ |
10,867 |
|
Work in process |
|
|
1,187 |
|
|
|
546 |
|
Finished goods and related items |
|
|
14,137 |
|
|
|
13,857 |
|
Total inventories, net |
|
$ |
26,043 |
|
|
$ |
25,270 |
|
At September 30, 2024 and December 31, 2023, finished goods and related items included $9.9 million and $7.6 million, respectively, of finished neat PHA. Inventory at September 30, 2024 and at December 31, 2023 is stated net of slow moving inventory reserves of $1.5 million and $0.9 million, respectively.
Note 3. Property, Plant and Equipment, net
Property, plant and equipment, net, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
(in thousands) |
|
Estimated Useful Life (Years) |
|
2024 |
|
|
2023 |
|
Land and improvements |
|
20 |
|
$ |
95 |
|
|
$ |
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 |
|
|
190,359 |
|
|
|
190,111 |
|
Motor vehicles |
|
7-10 |
|
|
903 |
|
|
|
903 |
|
Furniture and fixtures |
|
3-10 |
|
|
474 |
|
|
|
474 |
|
Office equipment |
|
3-10 |
|
|
7,447 |
|
|
|
7,415 |
|
Construction in progress |
|
N/A |
|
|
206,624 |
|
|
|
202,998 |
|
|
|
|
|
|
518,636 |
|
|
|
514,715 |
|
Accumulated depreciation and amortization |
|
|
|
|
(88,405 |
) |
|
|
(69,562 |
) |
Property, plant and equipment, net |
|
|
|
$ |
430,231 |
|
|
$ |
445,153 |
|
We reported depreciation and amortization expense (which included amortization of intangible assets) as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Cost of revenue |
|
$ |
5,049 |
|
|
$ |
5,086 |
|
|
$ |
15,301 |
|
|
$ |
15,233 |
|
Research and development |
|
|
1,958 |
|
|
|
1,865 |
|
|
|
5,962 |
|
|
|
5,903 |
|
Selling, general and administrative |
|
|
369 |
|
|
|
302 |
|
|
|
1,082 |
|
|
|
869 |
|
Total depreciation and amortization expense |
|
$ |
7,376 |
|
|
$ |
7,253 |
|
|
$ |
22,345 |
|
|
$ |
22,005 |
|
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) |
|
September 30,
2024 |
|
|
December 31,
2023 |
|
Georgia |
|
$ |
201,951 |
|
|
$ |
199,342 |
|
Kentucky |
|
|
2,842 |
|
|
|
1,696 |
|
New York |
|
|
1,831 |
|
|
|
1,960 |
|
|
|
$ |
206,624 |
|
|
$ |
202,998 |
|
Property, plant and equipment includes gross capitalized interest of $15.0 million as of both September 30, 2024 and December 31, 2023. For the three and nine months ended September 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 16.8 years.
Intangible assets, net, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Intangible assets, gross |
|
$ |
97,020 |
|
|
$ |
95,765 |
|
Less capitalized patent costs not yet subject to amortization |
|
|
(3,741 |
) |
|
|
(2,838 |
) |
Intangible assets subject to amortization, gross |
|
|
93,279 |
|
|
|
92,927 |
|
Accumulated amortization |
|
|
(21,258 |
) |
|
|
(17,975 |
) |
Intangible assets subject to amortization, net |
|
|
72,021 |
|
|
|
74,952 |
|
Total intangible assets, net |
|
$ |
75,762 |
|
|
$ |
77,790 |
|
Amortization expense was $1.1 million and $1.2 million for the three months ended September 30, 2024 and 2023, respectively, and $3.3 million and $3.5 million for the nine months ended September 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:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
Accrued interest |
|
$ |
2,480 |
|
|
$ |
440 |
|
Compensation and related expenses |
|
|
1,111 |
|
|
|
1,692 |
|
Accrued taxes |
|
|
1,076 |
|
|
|
552 |
|
Accrued utilities |
|
|
346 |
|
|
|
350 |
|
Construction in progress accruals |
|
|
183 |
|
|
|
191 |
|
Accrued legal, consulting and professional fees |
|
|
456 |
|
|
|
839 |
|
Accrued rebates |
|
|
24 |
|
|
|
233 |
|
Purchase accrual |
|
|
- |
|
|
|
8 |
|
Other |
|
|
455 |
|
|
|
421 |
|
Total accrued liabilities |
|
$ |
6,131 |
|
|
$ |
4,726 |
|
Note 6. Income Taxes
We reported immaterial income tax expense for the three and nine months ended September 30, 2024, which resulted in an effective income tax rate of zero percent. We reported an income tax expense for the three and nine months ended September 30, 2023 of $0.5 million and $0.3 million, respectively, which resulted in effective income tax rates of -1.18% and -0.27%, 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 September 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 September 30, |
|
|
Nine Months Ended September 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Cost of revenue |
|
$ |
755 |
|
|
$ |
673 |
|
|
$ |
2,263 |
|
|
$ |
1,927 |
|
Research and development |
|
|
246 |
|
|
|
457 |
|
|
|
741 |
|
|
|
668 |
|
Selling, general and administrative |
|
|
28 |
|
|
|
(179 |
) |
|
|
89 |
|
|
|
101 |
|
Total operating lease cost |
|
$ |
1,029 |
|
|
$ |
951 |
|
|
$ |
3,093 |
|
|
$ |
2,696 |
|
Note 8. Warrant Liability
Private Warrants
At September 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 |
) |
Gain on remeasurement of Private Warrants |
|
|
|
|
9 |
|
Balance at September 30, 2024 |
|
|
|
$ |
(5 |
) |
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 |
|
Balance at June 30, 2024 |
|
|
|
|
(3,900 |
) |
Gain on remeasurement of Common Warrants |
|
|
|
|
1,200 |
|
Balance at September 30, 2024 |
|
|
|
$ |
(2,700 |
) |
Dividend Warrants
On July 12, 2024, we distributed 46,756,215 warrants to purchase shares of common stock (“Dividend Warrants”) to stockholders, holders of Pre-Funded Warrants and holders of Convertible Notes, in each case as of the record date of May 13, 2024. Each Dividend Warrant entitles the holder to purchase one share of our common stock plus, if applicable, a bonus share fraction of one-half of one share of our common stock, at an initial exercise price of $5.00 per Dividend Warrant. Any remaining unexercised Dividend Warrants expire on July 15, 2025.
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, holders of Dividend Warrants can 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. We plan to retire any Convertible Notes surrendered to pay the exercise price for Dividend Warrants. As of September 30, 2024, we had retired $8.1 million of our 3.25% Convertible Notes, resulting in a $6.8 million gain on early extinguishment of debt. At September 30, 2024, 45,128,594 Dividend Warrants remain outstanding.
The Dividend 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 Dividend Warrants recorded as a non-cash loss or gain. A rollforward of the Dividend Warrants liability is below.
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
Balance at July 12, 2024 |
|
|
|
$ |
(2,338 |
) |
Fair value of Dividend Warrants exercised |
|
|
|
|
143 |
|
Loss on remeasurement of Dividend Warrants |
|
|
|
|
(1,415 |
) |
Balance at September 30, 2024 |
|
|
|
$ |
(3,610 |
) |
Note 9. Debt
The components of debt were as follows:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
3.25% Convertible Senior Notes |
|
$ |
231,867 |
|
|
$ |
240,000 |
|
Senior Secured Term Loan |
|
|
130,000 |
|
|
|
130,000 |
|
New Market Tax Credit Transactions |
|
|
45,700 |
|
|
|
45,700 |
|
Revolving Credit Agreement |
|
|
4,780 |
|
|
|
- |
|
Insurance Premium Finance Notes |
|
|
969 |
|
|
|
1,243 |
|
Vehicle and Equipment Notes |
|
|
238 |
|
|
|
327 |
|
Mortgage Notes |
|
|
183 |
|
|
|
192 |
|
Total |
|
$ |
413,737 |
|
|
$ |
417,462 |
|
Less: Total unamortized debt issuance costs |
|
|
(25,842 |
) |
|
|
(34,658 |
) |
Less: Current maturities of long-term debt |
|
|
(6,021 |
) |
|
|
(1,368 |
) |
Total long-term debt |
|
$ |
381,874 |
|
|
$ |
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 (“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.
The Indenture requires us to offer to repurchase the Convertible Notes upon the occurrence of certain “Fundamental Change” events, including specified change of control transactions and any delisting of our Common Stock. In addition, upon the occurrence of certain events, including the acceleration of the Senior Secured Term Loan, the holders of 25% of the Convertible Notes may accelerate the principal balance of the Convertible Notes. If such acceleration occurs, it would cause an event of default under the Senior Secured Term Loan and the Revolving Credit Agreement, which could result in the principal and interest on our Senior Secured Term Loan and Revolving Credit Agreement becoming immediately due and payable.
On July 12, 2024, we completed the distribution of Dividend Warrants as described in Note 8. 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. As of September 30, 2024, we have retired $8.1 million of previously outstanding convertible notes resulting in a gain on extinguishment of $6.8 million.
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 September 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.
Upon the occurrence of certain events, including a Fundamental Change, the acceleration of the Convertible Notes, Revolving Credit Agreement or certain other debt or outstanding obligations, or our filing of an Annual Report on Form 10-K containing a Report of Independent Registered Public Accounting Firm that includes disclosure regarding going concern, the principal balance under the Senior Secured Term Loan may accelerate and become due immediately. If such acceleration were to occur, that would cause a cross-default of substantially all of our other debt.
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 at September 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.
Revolving Credit 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. Subject to the terms and conditions of the Revolving Credit Agreement, we may request an increase in the Revolving Commitment by an amount between $2.5 million and $5.0 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. At September 30, 2024, the remaining availability under the Revolving Credit Agreement is $4.8 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. As of September 30, 2024, the interest rate in effect on the Revolving Credit Agreement was 12.2%. 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. Upon the occurrence of certain events, including a Fundamental Change, the acceleration of the Convertible Notes and the Senior Secured Term Loan or certain of our other debt and any other outstanding obligations, the principal balance of the Revolving Credit Agreement may accelerate and become due immediately.
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 eleven vehicle and equipment notes outstanding at September 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 nine months ended September 30, 2024 and 2023, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Balance, beginning of period |
|
|
116,608,522 |
|
|
|
101,938,376 |
|
|
|
102,832,103 |
|
|
|
101,804,454 |
|
Issuance of common stock |
|
|
4,163,118 |
|
|
|
96,891 |
|
|
|
17,939,537 |
|
|
|
230,813 |
|
Balance, end of period |
|
|
120,771,640 |
|
|
|
102,035,267 |
|
|
|
120,771,640 |
|
|
|
102,035,267 |
|
On July 9, 2024, at the Annual Meeting of Stockholders, our stockholders approved an amendment and restatement of our certificate of incorporation to increase the number of authorized shares of our common stock from 200,000,000 shares to 600,000,000 shares, which remains unchanged after the reverse stock split. Please see Note 15 - Subsequent Events for further detail regarding the reverse stock split.
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. At September 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 September 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. At September 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 September 30, |
|
|
Nine Months Ended September 30, |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Dividend Warrants |
|
45,128,594 |
|
|
|
- |
|
|
|
45,128,594 |
|
|
|
- |
|
Convertible Notes |
|
21,496,042 |
|
|
|
22,250,040 |
|
|
|
21,496,042 |
|
|
|
22,250,040 |
|
Common Warrants |
|
15,000,000 |
|
|
|
- |
|
|
|
15,000,000 |
|
|
|
- |
|
Employee stock options |
|
9,219,006 |
|
|
|
11,900,448 |
|
|
|
9,219,006 |
|
|
|
11,900,448 |
|
Private Warrants |
|
3,914,525 |
|
|
|
3,914,525 |
|
|
|
3,914,525 |
|
|
|
3,914,525 |
|
Restricted stock and RSUs |
|
2,655,281 |
|
|
|
2,295,337 |
|
|
|
2,655,281 |
|
|
|
2,295,337 |
|
Stock appreciation rights |
|
1,732,854 |
|
|
|
- |
|
|
|
1,732,854 |
|
|
|
- |
|
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 |
|
101,896,772 |
|
|
|
42,113,612 |
|
|
|
101,896,772 |
|
|
|
42,113,612 |
|
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 September 30, 2024 and 2023. These warrants expire on March 17, 2028.
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 September 30, 2024. The Pre-Funded Warrants are included in the determination of basic earnings per share.
At September 30, 2024, all Pre-Funded Warrants had been exercised, resulting in an immaterial cash receipt.
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 nine months ended September 30, 2024 and 2023, amortization of these contract fulfillment costs was immaterial. At each of September 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 $4.5 million and $3.7 million at September 30, 2024 and December 31, 2023, respectively. The long-term portion of these assets were $0.1 million and $0.7 million at September 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 September 30, |
|
|
Nine Months Ended September 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Domestic |
|
$ |
7,995 |
|
|
$ |
10,771 |
|
|
$ |
25,136 |
|
|
$ |
33,565 |
|
Foreign |
|
|
635 |
|
|
|
177 |
|
|
|
1,346 |
|
|
|
2,174 |
|
Total revenues |
|
$ |
8,630 |
|
|
$ |
10,948 |
|
|
$ |
26,482 |
|
|
$ |
35,739 |
|
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 September 30, 2024 and December 31, 2023, 8,005,154 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 250,549 shares during the nine months ended September 30, 2024 resulting in 515,767 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 September 30, |
|
|
Nine Months Ended September 30, |
|
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Cost of revenue |
|
$ |
3 |
|