o
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
( State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
|||
|
|
|
|
|
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
|
☐ |
|
Accelerated filer |
|
☐ |
|
☒ |
|
Smaller reporting company |
|
||
Emerging growth company |
|
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 8, 2024, the registrant had
Table of Contents
|
|
Page |
|
|
|
PART I. |
|
|
|
|
|
Item 1. |
3 |
|
|
3 |
|
|
4 |
|
|
5 |
|
|
6 |
|
|
7 |
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
Item 3. |
28 |
|
Item 4. |
28 |
|
|
|
|
PART II. |
29 |
|
|
|
|
Item 1. |
29 |
|
Item 1A. |
29 |
|
Item 2. |
29 |
|
Item 5. |
Other Information |
30 |
Item 6. |
30 |
|
31 |
||
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.
2
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 |
|
$ |
|
|
$ |
|
||
Accounts receivable, net |
|
|
|
|
|
|
||
Other receivables, net |
|
|
|
|
|
|
||
Inventories, net |
|
|
|
|
|
|
||
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Contract assets, net |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Property, plant and equipment, net |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Right-of-use assets |
|
|
|
|
|
|
||
Leverage loans receivable |
|
|
|
|
|
|
||
Restricted cash |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Liabilities and Stockholders’ equity: |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued liabilities |
|
|
|
|
|
|
||
Unearned revenue and contract liabilities |
|
|
|
|
|
|
||
Current portion of lease liability |
|
|
|
|
|
|
||
Current portion of long-term debt, net |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Long-term lease liability, net |
|
|
|
|
|
|
||
Long-term debt, net |
|
|
|
|
|
|
||
Warrant liability |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
||
Stockholders’ equity: |
|
|
|
|
|
|
||
Common stock, $ |
|
$ |
|
|
$ |
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Total stockholders’ equity |
|
|
|
|
|
|
||
Total liabilities and stockholders’ equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
DANIMER SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
(in thousands, except share and per share data) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Products |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss on sale of assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from operations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Nonoperating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain (loss) on remeasurement of warrants |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Interest, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss on loan extinguishment |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total nonoperating expense: |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Loss before income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Income taxes |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted net loss per share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
DANIMER SCIENTIFIC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
|
June 30, |
|
||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Common stock: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Issuance of common stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, end of period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Additional paid-in capital: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, beginning of period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Issuance of common stock, net of issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Shares retained for employee taxes |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Stock issued under stock compensation plans |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrants issued with Senior Secured Term Loan |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, end of period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accumulated deficit: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance, beginning of period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance, end of period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total stockholders' equity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
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 |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
(Gain) loss on remeasurement of warrants |
|
|
( |
) |
|
|
|
|
Amortization of debt issuance costs |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Warrant issuance costs |
|
|
|
|
|
|
||
Loss on disposal of assets |
|
|
|
|
|
|
||
Accounts receivable reserves |
|
|
|
|
|
( |
) |
|
Inventory reserves |
|
|
( |
) |
|
|
|
|
Amortization of right-of-use assets and lease liability |
|
|
( |
) |
|
|
( |
) |
Deferred income taxes |
|
|
|
|
|
( |
) |
|
Other |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Inventories, net |
|
|
( |
) |
|
|
|
|
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
|
|
Contract assets |
|
|
( |
) |
|
|
( |
) |
Other assets |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Accrued liabilities |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
( |
) |
|
|
|
|
Unearned revenue and contract liabilities |
|
|
( |
) |
|
|
|
|
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchases of property, plant and equipment and intangible assets |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Proceeds from issuance of common warrants, net of issuance costs |
|
|
|
|
|
|
||
Proceeds from issuance of common stock, net of issuance costs |
|
|
|
|
|
|
||
Proceeds from long-term debt |
|
|
|
|
|
|
||
Principal payments on long-term debt |
|
|
( |
) |
|
|
( |
) |
Cash paid for debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Proceeds from employee stock purchase plan |
|
|
|
|
|
|
||
Employee taxes related to stock-based compensation |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net (decrease) increase in cash and cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents and restricted cash-beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents and restricted cash-end of period |
|
$ |
|
|
$ |
|
||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest, net of interest capitalized |
|
$ |
|
|
$ |
|
||
Cash paid for operating leases |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
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
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 $
7
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 |
|
$ |
|
|
$ |
|
||
Work in process |
|
|
|
|
|
|
||
Finished goods and related items |
|
|
|
|
|
|
||
Total inventories, net |
|
$ |
|
|
$ |
|
||
At June 30, 2024 and December 31, 2023, finished goods and related items included $
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 |
|
|
$ |
|
|
$ |
|
|||
Leasehold improvements |
|
Shorter of useful life or lease term |
|
|
|
|
|
|
||
Buildings |
|
|
|
|
|
|
|
|||
Machinery and equipment |
|
|
|
|
|
|
|
|||
Motor vehicles |
|
|
|
|
|
|
|
|||
Furniture and fixtures |
|
|
|
|
|
|
|
|||
Office equipment |
|
|
|
|
|
|
|
|||
Construction in progress |
|
N/A |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Accumulated depreciation and amortization |
|
|
|
|
( |
) |
|
|
( |
) |
Property, plant and equipment, net |
|
|
|
$ |
|
|
$ |
|
||
8
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 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total depreciation and amortization expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(in thousands) |
|
June 30, |
|
|
December 31, |
|
||
Georgia |
|
$ |
|
|
$ |
|
||
Kentucky |
|
|
|
|
|
|
||
New York |
|
|
|
|
|
|
||
|
|
$ |
|
|
$ |
|
||
Property, plant and equipment includes gross capitalized interest of $
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
Intangible assets, net, consisted of the following:
|
|
June 30, |
|
|
December 31, |
|
||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Intangible assets, gross |
|
$ |
|
|
$ |
|
||
Less capitalized patent costs not yet subject to amortization |
|
|
( |
) |
|
|
( |
) |
Intangible assets subject to amortization, gross |
|
|
|
|
|
|
||
Accumulated amortization |
|
|
( |
) |
|
|
( |
) |
Intangible assets subject to amortization, net |
|
|
|
|
|
|
||
Total intangible assets, net |
|
$ |
|
|
$ |
|
||
9
Amortization expense was $
Note 5. Accrued Liabilities
The components of accrued liabilities were as follows:
|
|
June 30, |
|
|
December 31, |
|
||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Compensation and related expenses |
|
$ |
|
|
$ |
|
||
Accrued taxes |
|
|
|
|
|
|
||
Accrued principal and interest |
|
|
|
|
|
|
||
Accrued legal, consulting and professional fees |
|
|
|
|
|
|
||
Accrued utilities |
|
|
|
|
|
|
||
Accrued rebates |
|
|
|
|
|
|
||
Construction in progress accruals |
|
|
|
|
|
|
||
Purchase accrual |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued liabilities |
|
$ |
|
|
$ |
|
||
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
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 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 8. Warrant Liability
Private Warrants
At June 30, 2024 and December 31, 2023, there were
10
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.
(in thousands) |
|
|
|
|
|
|
at December 31, 2023 |
|
|
|
$ |
( |
) |
Loss on remeasurement of private warrants |
|
|
|
|
( |
) |
Balance at March 31, 2024 |
|
|
|
|
( |
) |
Gain on remeasurement of private warrants |
|
|
|
|
|
|
Balance at June 30, 2024 |
|
|
|
$ |
( |
) |
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
The Common Warrants have an exercise price of $
(in thousands) |
|
|
|
|
|
|
Balance at March 25, 2024 |
|
|
|
$ |
( |
) |
Gain on remeasurement of common warrants |
|
|
|
|
|
|
Balance at March 31, 2024 |
|
|
|
|
( |
) |
Gain on remeasurement of common warrants |
|
|
|
|
|
|
Balamce at June 30, 2024 |
|
|
|
$ |
( |
) |
Note 9. Debt
The components of debt were as follows:
|
|
June 30, |
|
|
December 31, |
|
||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
|
$ |
|
|
$ |
|
|||
Senior Secured Term Loan |
|
|
|
|
|
|
||
New Market Tax Credit Transactions |
|
|
|
|
|
|
||
Asset-based Lending Arrangement |
|
|
|
|
|
|
||
Insurance Premium Finance Notes |
|
|
|
|
|
|
||
Vehicle and Equipment Notes |
|
|
|
|
|
|
||
Mortgage Notes |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Less: Total unamortized debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Less: Current maturities of long-term debt |
|
|
( |
) |
|
|
( |
) |
Total long-term debt |
|
$ |
|
|
$ |
|
||
3.25% Convertible Senior Notes
On December 21, 2021, we issued $
The Convertible Notes are our senior, unsecured obligations and accrue interest at a rate of
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
11
one Convertible Note having a principal amount of $
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 $
Senior Secured Term Loan
On March 17, 2023, we closed a $
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
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 $
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 $
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
12
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
Mortgage Notes
We have a mortgage note secured by a residential property.
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 |
| ||||||||||