Origin Materials, Inc. [ORGNW] Filings

10-Q 1 orgn-20240930.htm 10-Q orgn-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________

FORM 10-Q

__________________________

(Mark One)


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

For the quarterly period ended September 30, 2024


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

For the transition period from to

Commission file number 001-39378

__________________________

ORIGIN MATERIALS, INC.

(Exact name of registrant as specified in its charter)

__________________________


Delaware			87-1388928
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

930 Riverside Parkway, Suite 10 West Sacramento, CA			95605
(Address of principal executive offices)			(Zip Code)

(916) 231-9329

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

__________________________

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

Title of each class:

Trading Symbol(s)

Name of each exchange on which registered:

Common Stock, $0.0001 par value per share

ORGN

The NASDAQ Capital Market

Warrants

ORGNW

The NASDAQ Capital Market

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 x No o

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 x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The number of shares of the registrant’s Common Stock, par value $0.0001 per share outstanding was 146,250,167, as of November 8, 2024.

ORIGIN MATERIALS, INC.

TABLE OF CONTENTS


		Page No.
PART I. — FINANCIAL INFORMATION
Item 1	Condensed Consolidated Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets (unaudited)	2
	Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (unaudited)	3
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	4
	Condensed Consolidated Statements of Cash Flows (unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4	Controls and Procedures	41
PART II. — OTHER INFORMATION		43
Item 1	Legal Proceedings	43
Item 1A	Risk Factors	43
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3	Defaults Upon Senior Securities	68
Item 4	Mine Safety Disclosures	68
Item 5	Other Information	68
Item 6	Exhibits	69
SIGNATURES		70

WHERE YOU CAN FIND MORE INFORMATION

Investors and others should note that we announce material financial information to our investors using our investor relations website, which can be found at https://investors.originmaterials.com/, as well as press releases, SEC filings, and public conference calls and webcasts. We also use the following social media channels as a means of disclosing information about the company, our products, our planned financial and other announcements and attendance at upcoming investor and industry conferences, and other matters and for complying with our disclosure obligations under Regulation FD:

Origin X (f/k/a Twitter) Account (https://twitter.com/OriginMaterials)

Origin LinkedIn Page (https://www.linkedin.com/company/origin-materials)

Origin Facebook Page (https://www.facebook.com/people/Origin-Materials/100057468488825)

These channels may be updated from time to time on our investor relations website. The information we post through these channels may be deemed material. Accordingly, investors should monitor them in addition to following our investor relations website, press releases, SEC filings, and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q.

Table of contents

PART I. — FINANCIAL INFORMATION

Item 1. Financial Statements

ORIGIN MATERIALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(In thousands, except share and per share data)	September 30, 2024 (Unaudited)		December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	56,396	$	75,502
Marketable securities	56,996		82,761
Accounts receivable and unbilled receivable, net of allowance for credit losses of $730 and $0, respectively	17,919		16,128
Other receivables	5,183		3,449
Inventory	990		912

Prepaid expenses and other current assets	3,909		8,360
Total current assets	141,393		187,112
Property, plant, and equipment, net	222,758		243,118
Operating lease right-of-use asset	3,829		4,468

Intangible assets, net	88		121
Deferred tax assets	860		1,261
Other long-term assets	30,627		25,754
Total assets	$	399,555	$	461,834

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,308	$	1,858
Accrued expenses	3,161		7,689
Operating lease liabilities, current	305		367

Notes payable, short-term	3,772		1,730
Other liabilities, current	93		918
Derivative liability	49		300
Total current liabilities	8,688		12,862
Earnout liability	4,184		1,783
Canadian Government Research and Development Program liability	15,309		7,348
Common stock warrants liability	4,254		1,341
Notes payable, long-term	1,730		3,459
Operating lease liabilities	3,944		4,207
Other liabilities, long-term	2,590		8,327
Total liabilities	40,699		39,327
Commitments and contingencies (See Note 15)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2024 and December 31, 2023	—		—
Common stock, $0.0001 par value, 1,000,000,000 shares authorized; 145,886,615 and 145,706,531, issued and outstanding as of September 30, 2024 and December 31, 2023, respectively (including 3,000,000 and 4,500,000, respectively, of Sponsor Vesting Shares)	15		15
Additional paid-in capital	390,875		382,854
(Accumulated deficit) retained earnings	(24,605)		45,570
Accumulated other comprehensive loss	(7,429)		(5,932)
Total stockholders’ equity	358,856		422,507
Total liabilities and stockholders’ equity	$	399,555	$	461,834

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

ORIGIN MATERIALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands, except share and per share data)	2024		2023		2024		2023
Revenues:
Products	$	8,202	$	6,358	$	22,057	$	14,229
Services	—		782		3		1,513
Total revenues	8,202		7,140		22,060		15,742
Cost of revenues (exclusive of depreciation and amortization shown separately below)	8,141		6,340		21,654		14,114
Operating expenses
Research and development	5,127		4,927		15,338		15,398
General and administrative	9,347		7,633		30,611		23,908
Depreciation and amortization	2,822		386		7,946		1,021
Impairment of assets	15,170		—		15,170		—
Total operating expenses	32,466		12,946		69,065		40,327
Loss from operations	(32,405)		(12,146)		(68,659)		(38,699)
Other income (expenses)
Investment income (expenses), net	1,745		(1,130)		5,447		4,308
Interest expenses	(86)		—		(313)		—
(Loss) gain in fair value of derivatives	(43)		126		237		620
(Loss) gain in fair value of common stock warrants liability	(2,285)		22,815		(2,913)		27,438
(Loss) gain in fair value of earnout liability	(2,941)		18,757		(2,401)		39,137
Other (expenses) income, net	(517)		2,603		(1,170)		1,655
Total other (expenses) income, net	(4,127)		43,171		(1,113)		73,158
(Loss) income before income tax expenses	(36,532)		31,025		(69,772)		34,459
Income tax expenses	(231)		(94)		(403)		(223)
Net (loss) income	$	(36,763)	$	30,931	$	(70,175)	$	34,236
Other comprehensive income (loss)
Unrealized gain on marketable securities	$	690	$	1,593	$	2,210	$	4,507
Foreign currency translation adjustment	1,828		(4,176)		(3,707)		(784)
Total other comprehensive income (loss)	2,518		(2,583)		(1,497)		3,723
Total comprehensive (loss) income	$	(34,245)	$	28,348	$	(71,672)	$	37,959
Net (loss) income per share, basic	$	(0.26)	$	0.22	$	(0.49)	$	0.25
Net (loss) income per share, diluted	$	(0.26)	$	0.22	$	(0.49)	$	0.24
Weighted-average common shares outstanding, basic	143,387,618		139,806,045		142,720,941		139,374,106
Weighted-average common shares outstanding, diluted	143,387,618		142,703,550		142,720,941		142,872,174

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

ORIGIN MATERIALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(In Thousands, Except Share Amounts)


								Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Common Stock			Additional Paid-in Capital		Retained Earnings
	Shares	Amount
Balance at December 31, 2022	143,034,225	$	14	$	371,072	$	21,772	$	(15,953)	$	376,905
Common stock issued upon exercise of stock options	163,096	—		23		—		—		23
Vested common stock awards	70,670	—		—		—		—		—
Stock-based compensation	—	—		2,915		—		—		2,915
Net income	—	—		—		9,769		—		9,769
Other comprehensive income	—	—		—		—		1,530		1,530
Balance at March 31, 2023	143,267,991	14		374,010		31,541		(14,423)		391,142
Common stock issued upon exercise of stock options	208,807	—		31		—		—		31
Vested common stock awards	21,926	—		—		—		—		—
Stock-based compensation	—	—		3,018		—		—		3,018
Net loss	—	—		—		(6,464)		—		(6,464)
Other comprehensive income	—	—		—		—		4,776		4,776
Balance at June 30, 2023	143,498,724	14		377,059		25,077		(9,647)		392,503
Common stock issued upon exercise of stock options	582,240	—		90		—		—		90
Vested common stock awards	117,565	—		—		—		—		—
Stock-based compensation	—	—		3,146		—		—		3,146
Net income	—	—		—		30,931		—		30,931
Other comprehensive loss	—	—		—		—		(2,583)		(2,583)
Balance at September 30, 2023	144,198,529	$	14	$	380,295	$	56,008	$	(12,230)	$	424,087


						Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Common Stock			Additional Paid-in Capital
	Shares	Amount
Balance at December 31, 2023	145,706,531	$	15	$	382,854	$	45,570	$	(5,932)	$	422,507
Common stock issued upon exercise of stock options	585,760	—		83		—		—		83
Vested common stock awards	212,633	—		—		—		—		—
Stock-based compensation	—	—		2,781		—		—		2,781
Net loss	—	—		—		(13,913)		—		(13,913)
Other comprehensive loss	—	—		—		—		(3,274)		(3,274)
Balance at March 31, 2024	146,504,924	15		385,718		31,657		(9,206)		408,184
Common stock issued upon exercise of stock options	499,365	—		158		—		—		158
Vested common stock awards	206,049	—		—		—		—		—
Stock-based compensation	—	—		2,536		—		—		2,536
Net loss	—	—		—		(19,499)		—		(19,499)
Other comprehensive loss	—	—		—		—		(741)		(741)
Balance at June 30, 2024	147,210,338	15		388,412		12,158		(9,947)		390,638
Common stock issued upon exercise of stock options	8,509	—		4		—		—		4
Vested common stock awards	167,768	—		—		—		—		—
Sponsor vesting shares forfeited	(1,500,000)	—		—		—		—		—
Stock-based compensation	—	—		2,459		—		—		2,459
Net loss	—	—		—		(36,763)		—		(36,763)
Other comprehensive income	—	—		—		—		2,518		2,518
Balance at September 30, 2024	145,886,615	$	15	$	390,875	$	(24,605)	$	(7,429)	$	358,856

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

ORIGIN MATERIALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
(in thousands)	2024		2023
Cash flows from operating activities
Net (loss) income	$	(70,175)	$	34,236
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	7,946		1,055
Provision for credit losses	730		—
Amortization on right-of-use asset	392		458
Stock-based compensation	7,776		7,031
Loss (gain), net on disposal of property, plant, and equipment	16		—
Loss on reserves	639		—
Impairment of assets	15,170		—
Realized loss (gain) on marketable securities	359		(1,706)
Amortization of premium and discount of marketable securities, net	(172)		3,701
Change in fair value of derivative	(237)		(620)
Change in fair value of common stock warrants liability	2,913		(27,438)
Change in fair value of earnout liability	2,401		(39,137)
Deferred tax benefit	375		—
Changes in operating assets and liabilities:
Accounts receivable and other receivables	(4,256)		(8,130)
Inventory	(78)		(821)
Prepaid expenses and other current assets	962		(2,703)
Other long-term assets	(4,873)		(17,954)
Accounts payable	(124)		2,819
Accrued expenses	(3,082)		1,707
Operating lease liability	(298)		(529)
Deferred income	—		1,374
Other liabilities, current	(1,507)		2,846
Other liabilities, long-term	—		(2,636)
Net cash used in operating activities	(45,123)		(46,447)
Cash flows from investing activities

Purchases of property, plant, and equipment	(5,117)		(90,113)
Purchases of marketable securities	(1,518,398)		(3,092,218)
Sales of marketable securities	1,456,532		3,057,700
Maturities of marketable securities	86,441		129,081

Net cash provided by investing activities	19,458		4,450
Cash flows from financing activities

Payment of notes payable	(4,793)		—
Proceeds from Canadian Government Research and Development Program	8,097		—
Proceeds from exercise of stock options	245		145
Net cash provided by financing activities	3,549		145
Effects of foreign exchange rate changes on the balance of cash and cash equivalents, and restricted cash held in foreign currencies	3,010		(390)
Net decrease in cash and cash equivalents, and restricted cash	(19,106)		(42,242)
Cash and cash equivalents, and restricted cash, beginning of the period	75,502		108,348
Cash and cash equivalents, and restricted cash, end of the period	$	56,396	$	66,106
Supplemental disclosure of cash flow information
Operating lease right-of-use assets obtained in exchange for lease obligations	$	—	$	2,302
Stock-based compensation capitalized into property, plant, and equipment	$	—	$	2,048
Purchases of fixed assets included in accounts payable and accrued expenses	$	66	$	6,182

Cash paid during the period:
Income taxes payment	$	23	$	129
Interest payment	$	1,708	$	—

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

ORIGIN MATERIALS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.Organization and Business

Unless the context otherwise requires, references in these notes to “Origin”, “the Company”, “we”, “us” and “our” and any related terms are intended to mean Origin Materials, Inc. and its consolidated subsidiaries.

In June 2021, Artius Acquisition Inc. (“Artius”), a special purpose acquisition company, completed a merger with Micromidas, Inc., a Delaware corporation (now known as Origin Materials Operating Inc., (“Legacy Origin”)), Pursuant to the terms of the Merger Agreement (a business combination between Artius and Legacy Origin, the “Merger Agreement”) under which Legacy Origin became a wholly-owned subsidiary of Artius (the “Merger”) and Artius changed its name to Origin Materials, Inc. (collectively with its subsidiaries, the “Company”). The Company is a leading technology company with a mission to enable the world's transition to sustainable materials. Origin has developed multiple sustainable and performance-enhanced solutions for improving recycling and circularity, including its all-PET caps and closures, as well as low-carbon material solutions for a wide variety of products and applications. The Company’s biomass conversion technology can transform sustainable feedstocks, such as sustainably harvested wood, agricultural waste, wood waste and corrugated cardboard, into materials and products that are currently made from fossil feedstocks, such as petroleum and natural gas.

Origin announced its PET caps and closures business in August 2023 after several years of application development related to its furanics technologies. Origin's announced products include the PCO 1881 compliant PET cap and a tethered PET cap designed to comply with European cap tethering mandates and keep caps connected to bottles. Origin has announced several manufacturing partnerships with machine subsystem suppliers, including slit and fold specialists and a provider of visual inspection systems. Mass production partnerships are in place in Europe and North America. Origin's first PET closure manufacturing system successfully completed its Factory Acceptance Test in September 2024.

Regarding its biomass conversion technology and furanics application development programs, the Company achieved the mechanical completion of its first furanics manufacturing plant in Ontario, Canada (“Origin 1”). The plant is currently operating on demand with reduced staffing, while preserving Origin's ability to generate product at small volumes sufficient to explore scale-up with strategic partners. This decision was made in alignment with Origin's near-term focus on PET caps as its path to profitability. Origin continues to engage customers as part of its asset light strategy for the Origin 2 project to further scale up biomass conversion technology, with timelines and economic forecasts to depend on the partner and deal structure, which can explore a range of scenarios including Asia brownfield locations. Origin is exploring a variety of plant designs, evaluating potential sites, and performing joint development work, including testing and optimizing various feedstocks to generate data that could influence scale-up strategy.

2.Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”).

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements as well as reported amounts of revenues, costs and expenses during the reporting periods. Estimates made by the Company include, but are not limited to, allowance for credit losses, valuation of the earnout liability, carrying amount and useful lives of property, plant and equipment and intangible assets, impairment assessments, stock-based compensation expense and probabilities of achievement of performance conditions on performance stock awards, among others. The Company bases these estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates.

Unaudited Condensed Consolidated Financial Statements

The December 31, 2023 unaudited condensed consolidated balance sheet was derived from the annual audited consolidated financial statements included in the Company's Form 10-K as filed with the SEC on March 4, 2024 (the “Form 10-K”). The accompanying unaudited condensed consolidated balance sheet as of September 30, 2024, the unaudited condensed consolidated statements of operations and comprehensive (loss) income, and stockholders’ equity for the three and nine months ended September 30, 2024 and 2023, and the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023, and the notes to such unaudited condensed consolidated financial statements are unaudited.

These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and the applicable rules and regulations of the SEC for interim financial information. As permitted under those rules, we condensed or omitted certain footnotes or other financial information that are normally required by GAAP for annual financial statements.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in management’s opinion, include all adjustments consisting of only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2024 and its results of operations for the three and nine months ended September 30, 2024 and 2023 and cash flows for the nine months ended September 30, 2024 and 2023. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full fiscal year or any other period.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited annual financial statements and notes thereto for the year ended December 31, 2023 included the Company’s Form 10-K.

Principles of Consolidation

The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and applicable rules and regulations of the SEC and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents, marketable securities and accounts receivable. The Company maintains its cash, cash equivalents, and marketable securities accounts with financial institutions where, at times, deposits exceed federal insurance limits. Management believes that the Company is not currently exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality. While the Company has not experienced losses of these deposits to date, future disruptions of financial institutions where we bank or have credit arrangements, or disruptions of the financial services industry in general, could adversely affect our ability to access our cash and cash equivalents. If we are unable to access our cash and cash equivalents as needed, our financial position and ability to operate our business could be adversely affected.

The Company maintains an allowance for credit losses for estimated credit losses. This allowance is based upon historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with the accounts. The Company records the allowance against bad debt expense within general and administrative expenses included on the unaudited condensed consolidated statements of operations and comprehensive (loss) income, up to the amount of revenues recognized to date. For accounts receivable, our top two customers from product sales, in the aggregate, accounted for approximately 92% and 67% as of September 30, 2024 and December 31, 2023, respectively, of total accounts receivable outstanding balances and accounted for approximately 100% and 94% of total revenue for the three and nine months ended September 30, 2024, respectively, and 87% and 86% of total revenue for the three and nine months ended September 30, 2023, respectively.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an initial maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains such funds in cash deposits and money market accounts with balances of $56.4 million and $75.5 million as of September 30, 2024 and December 31, 2023, respectively.

Marketable Securities

The Company’s investment policy requires the Company to purchase investments that are consistent with the classification of available-for-sale securities. The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Company’s policy is focused on the preservation of capital, liquidity, and return. The Company considers all of its marketable debt securities as available for use in current operations, including those with maturity dates beyond one year, and therefore classifies these securities within current assets on the unaudited condensed consolidated balance sheets. Securities are classified as available for sale and are carried at fair value, with the change in unrealized gains and losses reported as a separate component on the unaudited condensed consolidated statements of operations and comprehensive (loss) income until realized. Fair value is determined based on quoted market rates when observable or utilizing data points that are observable, such as quoted prices, interest rates and yield curves. Securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of the excess, if any, is caused by expected credit losses. Expected credit losses on securities are recognized in other (expenses) income, net on the unaudited condensed consolidated statements of operations and comprehensive (loss) income, and any remaining unrealized gains and losses are included in accumulated other comprehensive loss on the unaudited condensed consolidated statements of stockholders’ equity. For the purposes of computing realized and unrealized gains and losses, the cost of securities sold is based on the specific-identification method. Amortization of discounts and premiums, net, and interest on securities classified as available for sale are included as a component of investment income (expenses), net within other income (expenses).

The nature of these financial instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data, and instruments that are fair valued using other financial instruments, the parameters of which can be directly observed. Level 2 financial instruments include agency mortgage-backed securities, corporate fixed income securities infrequently traded, and other securities, which primarily consist of sovereign debt, U.S. government agency securities, loans, and state and municipal securities.

Derivative Financial Instruments

The Company enters into foreign currency derivative contracts with financial institutions to reduce foreign exchange risk related to marketable securities. The Company uses forward currency derivative contracts to minimize the Company’s exposure to balances primarily denominated in the British Pound Sterling and Australian Dollar. The Company’s foreign currency derivative contracts, which are not designated as hedging instruments, are used to reduce the exchange rate risk associated primarily with marketable securities. The Company’s derivative financial instruments program is not designated for trading or speculative purposes. Outstanding foreign currency derivative contracts are recorded at fair value on the unaudited condensed consolidated balance sheets.

Foreign currency derivative contracts are marked-to-market at the end of each reporting period with gains and losses recognized in the change in fair value of derivatives within other income (expenses). While the contract or notional amount is often used to express the volume of foreign currency derivative contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed the obligations of the Company to the counterparties.

Fair Value of Financial Instruments

The Company applies the fair value measurement accounting standard whenever other accounting pronouncements require or permit fair value measurements. Fair value is defined in the accounting standard as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy under current accounting guidance prioritizes the inputs to valuation techniques used to measure fair value into three broad levels (Level 1, Level 2, and Level 3).

Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability and reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk) in a principal market.

The carrying amounts of working capital balances approximate their fair values due to the short maturity of these items. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest rate, currency, or credit risks arising from its financial instruments.

The fair values of cash equivalents and the Common Stock Warrants which are publicly traded are level 1 inputs. The fair value of the Common Stock Warrants which are not publicly traded, marketable securities, and foreign currency derivative contracts are level 2 inputs as the Company uses quoted market prices or alternative pricing sources and models utilizing observable market inputs. The earnout liability was estimated using Level 3 inputs.

Accounts Receivable and Unbilled Receivable, net

Accounts receivables are recorded at their estimated net realizable value, and we do not typically charge interest. The allowance for credit losses, known as the Current Expected Credit Losses model, is our best estimate of the amount of probable credit losses associated with our accounts receivable. We determine the allowance based on current conditions, and reasonable and supportable forecasts. Past-due balances are reviewed individually for collectability. We charge off account balances against the allowance after we have exhausted all means of collection and we consider the potential for recovery to be remote. Our accounts receivable generally have net 30 to net 90-day payment terms, and we usually receive consideration in accordance with the payment terms of the contract. Unbilled receivables arise when the timing of customers billing differs from the timing of revenue recognition for the obligations performed.


(in thousands)	September 30, 2024		December 31, 2023
Accounts receivable	$	18,649	$	15,204
Provision for credit losses	(730)		—
Unbilled receivable	—		924
Accounts receivable and unbilled receivable, net	$	17,919	$	16,128

Other Receivables

Other receivables consist of amounts due from foreign governmental entities related to the Canadian harmonized sales tax and goods and services tax for goods and services transacted in Canada, and amounts due from cash collateral held by others for foreign currency derivative contracts.

Inventory

Inventory is stated at the lower of cost or net realizable value. Cost is determined using a weighted-average cost approach, assuming full absorption of direct and indirect manufacturing costs, or based on cost of purchasing from our vendors. If inventory costs exceed expected net realizable value due to obsolescence or lack of demand, valuation adjustments are recorded for the difference between the cost and the expected net realizable value.


(in thousands)	September 30, 2024		December 31, 2023
Finished goods	$	—	$	24
Raw materials	949		888
Spare parts	41		—
Total	$	990	$	912

Property, Plant, and Equipment

Additions to property, plant, and equipment are recorded at cost and depreciated or amortized using the straight-line method over the estimated economic useful lives of the respective assets. The estimated useful lives of assets are as follows:


Computer equipment and software			3 years
Lab equipment			5 years
Furniture, fixtures, and machinery			5 years


Land improvements and infrastructure			20 years
Manufacturing equipment and pilot plant			25 years
Buildings			40 years

Land is non-amortizing. Computer equipment and software includes an immaterial amount of internal use software. Major additions and improvements are capitalized, while replacements, repairs, and maintenance that do not extend the life of an asset are charged to expenses.

Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is charged to income or loss from operations. Costs incurred to acquire, construct or install property, plant, and equipment during the construction stage of a capital project and costs capitalized in conjunction with major improvements that have not yet been placed in service are recorded as construction in progress, and accordingly are not currently being depreciated. The Company capitalizes stock-based compensation expenses and interest cost incurred on funds used to construct property, plant and equipment.

Intangible Assets

Intangible assets are recorded at cost and are amortized using the straight-line method over the estimated useful lives of the respective assets, ranging from 7 to 15 years. The cost of servicing the Company’s patents is expensed as incurred. Upon retirement or sale, the cost of intangible assets is disposed of and the related accumulated amortization is removed from the accounts.


(in thousands)	September 30, 2024		December 31, 2023
Patents	$	405	$	413
Less accumulated amortization	(317)		(292)
Total intangible assets	$	88	$	121

The weighted average remaining useful life of the patents was 2.66 years. For the three and nine months ended September 30, 2024 and 2023, amortization expense was immaterial and annual amortization expense over the remaining useful life is not expected to be material.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets, including property, equipment, software and intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If indicators of impairment exist, management identifies the asset group which includes the potentially impaired long-lived asset, at the lowest level at which there are separate, identifiable cash flows. If the total of the expected undiscounted future net cash flows for the asset group is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. As of September 30, 2024, the Company evaluated the costs capitalized for Origin 2 as it concluded it will not construct a plant on the land owned in Geismar, Louisiana. The capitalized costs specific to the Louisiana site, excluding the land, were deemed not recoverable. These costs totaled $12.3 million and the loss was recorded in impairment of assets on the unaudited condensed consolidated statements of operations and comprehensive (loss) income during the three and nine months ended September 30, 2024. (See Note 6 “Property, Plant, and Equipment” for additional details). Management believes the remaining Origin 2 capitalized costs of $31.8 million approximate the fair value as of September 30, 2024.

Common Stock Warrants Liability

The Company assumed 24,149,960 public warrants (the “Public Warrants”) and 11,326,667 private placement warrants (the “Private Placement Warrants”, and the Public Warrants together with the Private Placement Warrants, the “Common Stock Warrants” or “Warrants”) upon the Merger, all of which were issued in connection with Artius’ initial public offering and entitle each holder to purchase one share of Class A common stock at an exercise price of at $11.50 per share. As of September 30, 2024, 24,149,960 Public Warrants and 11,326,667 Private Placement Warrants are outstanding. The Public Warrants are publicly traded and are exercisable for cash unless certain conditions occur, such as the failure to have an effective registration statement related to the shares issuable upon exercise or redemption by the Company under certain conditions, at which time the Public Warrants may be cashless exercised. The Private Placement Warrants are transferable, assignable or salable in certain limited exceptions. The Private Placement Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will cease to be Private Placement Warrants, and become Public Warrants and be redeemable by the Company and exercisable by such holders on the same basis as the other Public Warrants. There were no Private Placement Warrants that became Public Warrants as of September 30, 2024.

The Company evaluated the Common Stock Warrants under ASC 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity (“ASC 815-40”), and concluded they do not meet the criteria to be classified in stockholders’ equity. Specifically, the exercise of the Common Stock Warrants may be settled in cash upon the occurrence of a tender offer or exchange that involves 50% or more of our Class A stockholders. Because not all of the voting stockholders need to participate in such tender offer or exchange to trigger the potential cash settlement and the Company does not control the occurrence of such an event, the Company concluded that the Common Stock Warrants do not meet the conditions to be classified in equity. Since the Common Stock Warrants meet the definition of a derivative under ASC 815, the Company recorded these Warrants as liabilities on the unaudited condensed consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in the change in fair value of common stock warrant liabilities within the unaudited condensed consolidated statements of operations and comprehensive (loss) income at each reporting date. The Public Warrants were publicly traded and thus had an observable market price to estimate fair value, and the Private Placement Warrants were effectively valued similar to the Public Warrants, as described in Note 5 “Fair Value Measurement”.

Earnout Liability

The Company has recorded an earnout liability related to future contingent equity shares related to the Merger (Note 9 “Earnout Liability”). The Company recorded these instruments as liabilities on the unaudited condensed consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in earnings at each reporting date.

Leases

We determine if an arrangement is a lease at inception. Where an arrangement is a lease, we determine if it is an operating lease or a finance lease. The Company has leases for office space and equipment, some of which have escalating rentals during the initial lease term and during subsequent optional renewal periods. The Company accounts for its leases under ASC 842, Leases. The Company recognizes a right-of-use (“ROU”) asset and lease liability for leases based on the net present value of future minimum lease payments. Lease expense is recognized on a straight-line basis over the non-cancelable lease term and renewal periods that are considered reasonably certain to be exercised.

Revenue Recognition

Our revenues are from product sales and service agreements. The majority of our contracts with customers typically contain multiple products and services. We account for individual products and services separately if they are distinct—that is, if a product or service is separately identifiable from other items in the contract and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or service to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our product revenue and service agreements, we perform the following steps:

1.Identifying the contract with a customer;

2.Identifying the performance obligations in the contract;

3.Determining the transaction price;

4.Allocating the transaction price to the performance obligations; and

5.Recognizing revenue when, or as, the performance obligations are satisfied.

We account for a contract with a customer when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Non-cancellable purchase orders received from customers to deliver a specific quantity of product, when combined with our order confirmation, in exchange for future consideration, create enforceable rights and obligations on both parties and constitute a contract with a customer.

Our service agreements are customized, specified, and often include various stages at which transaction prices are agreed to. These service agreements often include multiple performance obligations within each stage. We identify each performance obligation at contract inception and allocate the consideration to each distinct performance obligation based on the stand-alone selling price of each performance obligation. Our services are tailored to each individual customer and

the stand-alone selling prices are not directly observable. As our service agreements include customers that are not in similar geographic markets and for different services, therefore the Company uses the expected cost plus margin approach to estimate the stand-alone selling price for each of our performance obligations. We recognize revenue from the service agreements over the period during which the services are performed and recognize the associated costs as they are incurred.

In general, we recognize revenue when, or as, our performance obligations under the terms of a contract with our customer are satisfied. For product sales, this happens when we transfer control of our products and risk of loss to the customer or when title passes upon shipment. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring our products. Taxes collected from customers and remitted to governmental authorities are excluded from revenues. The Company recognizes its revenue from direct product sales which is recognized at a point in time when the performance obligation is satisfied upon delivery of the product.

For service agreements, the timing of satisfying performance obligations may differ from the timing of the invoicing of customers and the receipt of customer payments. The Company records a receivable prior to payment if there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records contract liability (deferred income) until the performance obligations are satisfied.

Revenue is recorded in an amount that reflects that consideration we expect to be entitled to in exchange for those goods or services. We have elected to treat shipping and handling activities as fulfillment costs.

Cost of revenues

Cost of revenues for product sales consists primarily of cost associated with the purchase of finished goods. Cost of revenues for service agreements is based on the actual cost incurred, which mainly consists of the direct cost from vendors and overhead costs such as payroll and benefit related to our employees who provide the services to customers.

Research and Development Cost

Costs related to research and development are expensed as incurred.

Stock-Based Compensation

The Company has issued common stock awards under three equity incentive plans. Origin measures stock options and other stock-based awards granted to employees, directors and other service providers based on their fair value on the date of grant and recognizes compensation expenses of those awards over the requisite service period, which is generally the vesting period of the respective award. In addition, the Company capitalizes stock-based compensation related to employees whose costs are necessary to bring the asset to its intended use. For awards with performance conditions, compensation is recorded once there is sufficient objective evidence the performance conditions are considered probable of being met. Origin applies the straight-line method of expense recognition to all awards with only service-based vesting conditions. Origin estimates the fair value of each stock option grant on the date of grant using the Black-Scholes option-pricing model and the grant date closing stock price for RSU awards and performance awards. The Black-Scholes option-pricing model requires the use of highly subjective assumptions including:

•Expected term – The expected term of the options is based on the simplified method, which takes into consideration the grant’s contractual life and vesting period and assumes that all options will be exercised between the vesting date and the contractual term of the option which averages an award’s vesting term and its contractual term.

•Expected volatility – The Company uses the trading history of various companies in its industry sector in determining an estimated volatility factor.

•Expected dividend – The Company has not declared common stock dividends and does not anticipate declaring any common stock dividends in the foreseeable future.

•Forfeiture – The Company estimates forfeitures based on historical activity and considers voluntary and involuntary termination behavior as well as analysis of actual historical option forfeitures, netting the estimated expense by the derived forfeiture rate.

•Risk-free interest rate – The Company bases the risk-free interest rate on the implied yield currently available on U.S. Treasury zero-coupon issues with the same or substantially equivalent remaining term.

Workforce Reduction Costs

In September 2024, we announced a workforce reduction of approximately 28% of our total workforce to realign and optimize our workforce requirements in alignment with our refined corporate strategy. The Company aims to focus on an increasing near-term demand for our PET caps and affected an organizational realignment to redirect, and in some cases reduce, existing resources from non-PET cap research programs with potential longer-term economic benefits to accelerate near-term, higher-margin revenue opportunities from PET caps. Workforce reduction costs primarily consisted of severance and benefits costs associated with the workforce reduction in September 2024 (see Note 12 “Stockholders’ Equity”). As of September 30, 2024, we do not expect to record any significant future charges related to the workforce reduction plan.

Income Taxes

Deferred income taxes are determined using the asset and liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is recorded when the expected recognition of a deferred income tax asset is considered to be unlikely.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes interest and penalties related to income tax matters as a component of income tax expense.

Functional Currency Translation

The functional currency of the Company’s wholly-owned Canadian subsidiaries is the Canadian dollar, whereby their assets and liabilities are translated at period-end exchange rates except for non-monetary capital transactions and balances, which are translated at historical rates. All income and expense amounts of the Company are translated at average exchange rates for the respective period. Translation gains and losses are not included in determining net (loss) income but are accumulated in a separate component of stockholders’ equity. Foreign currency transaction gains and losses are included in the determination of net (loss) income in the period in which they occur. These amounts are included in other (expenses) income, net, on the unaudited condensed consolidated statements of operations and comprehensive (loss) income.

Comprehensive (Loss) Income

The Company’s comprehensive (loss) income consists of net (loss) income and other comprehensive income (loss). Foreign currency translation gains or losses and unrealized gains or losses on available-for-sale marketable debt securities are included in the Company’s other comprehensive income (loss).

Basic and Diluted Net (Loss) Income Per Share

Basic net (loss) income per common share is calculated by dividing the net (loss) income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of potentially dilutive securities. Diluted net (loss) income per share is computed by dividing the net (loss) income attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities outstanding for the period. For the purposes of the diluted net (loss) income per share calculation, common stock options, RSU awards, performance stock awards, warrants, earnout shares, and Sponsor Vesting Shares (as defined in Note 9 “Earnout Liability”) are considered to be potentially dilutive securities. For the periods presented that the Company has reported a net loss, diluted net loss per common share is the same as basic net loss per common share for those periods.

Segment Reporting

The Company operates in a single segment. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company has determined that its Co-Chief Executive Officers are the CODM. As of September 30, 2024, the Company’s CODM has made such decisions and assessed performance at the Company level.

As of September 30, 2024 and December 31, 2023, the Company had $216.4 million and $206.1 million, respectively, of assets located outside of the United States.

3.Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (“Topic 280”) - Improvements to Reportable Segment Disclosures, which updates disclosures about a public entity’s reportable segments, including more detailed information about a reportable segment’s expenses. The amendments in this update require that we disclose (i) on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”), (ii) on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss, (iii) annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, (iv) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, we may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements, (v) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (vi) requires that a public entity that has a single reportable segment provide all the disclosures required by the amendments in this update and all existing segment disclosures in Topic 280. This guidance is required to be applied retrospectively to all prior periods presented in the financial statements. This guidance is effective for the Company for its annual consolidated financial statements for the fiscal year ending December 31, 2024, and interim periods within its fiscal year beginning January 1, 2025. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements, other than additional disclosures in the notes to our annual and unaudited condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (“Topic 740”) - Improvements to Income Tax Disclosures, to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The amendments in this update require that on an annual basis we (i) disclose specific categories in the rate reconciliation, (ii) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate), (iii) disclose additional information about income taxes paid and expensed disaggregated by federal, state, and foreign taxes, and (iv) disclose income (loss) from continuing operations before income tax expense disaggregated between domestic and foreign. The guidance should be applied on a prospective basis however a retrospective application is permitted. The guidance is effective for the Company for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements, other than additional disclosures in our notes to the consolidated financial statements.

4.Revenues

We recognize revenues when, or as, our performance obligations under the terms of a contract with our customer are satisfied. We generally procure, will produce, and sell product to be utilized in the manufacturing of finished products, for which we recognize revenue upon shipment. Currently, the majority of our revenue is generated from the supply chain activation program in which the Company purchases materials from various vendors and sells them to our customers for a moderate margin as we establish the logistics and invoicing capabilities for our own products. Our service contracts 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. We recognize revenue from the service agreements over the period during which the services are performed.

The Company did not receive payment before the provision of services during the three and nine months ended September 30, 2024 and 2023. Therefore, deferred income was zero.

5.Fair Value Measurement

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows:


	Fair Value as of September 30, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents	$	40,083	$	—	$	—	$	40,083
Marketable securities	—		56,996		—		56,996
Derivative asset	—		11		—		11
Total fair value	$	40,083	$	57,007	$	—	$	97,090
Liabilities:
Common stock warrants (Public)	$	2,896	$	—	$	—	$	2,896
Common stock warrants (Private Placement)	—		1,358		—		1,358
Earnout liability	—		—		4,184		4,184
Derivative liability	—		49		—		49
Total fair value	$	2,896	$	1,407	$	4,184	$	8,487


	Fair Value as of December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	75,502	$	—	$	—	$	75,502
Marketable securities	—		82,761		—		82,761

Total fair value	$	75,502	$	82,761	$	—	$	158,263
Liabilities:
Common stock warrants (Public)	$	913	$	—	$	—	$	913
Common stock warrants (Private Placement)	—		428		—		428
Earnout liability	—		—		1,783		1,783
Derivative liability	—		300		—		300
Total fair value	$	913	$	728	$	1,783	$	3,424

The Company performs routine procedures such as comparing prices obtained from independent sources to ensure that appropriate fair values are recorded. The cash, cash equivalents and Public Warrants are categorized as Level 1 instruments as the fair value was determined based on the unadjusted quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The marketable securities, derivative asset and derivative liability are categorized as Level 2 instruments as the estimated fair value was determined based on the estimated or actual bids and offers of the marketable securities in an over-the-counter market on the last business day of the period. The Warrants are classified within Level 1 or Level 2 because the transfer of Private Placement Warrants to anyone outside of certain permitted transferees of Artius Acquisition Partners LLC (the “Sponsor”) would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of each Private Placement Warrant is consistent with that of a Public Warrant. Accordingly, the Private Placement Warrants are classified as Level 2 financial instruments.

The value of the earnout liability is classified as Level 3 measurements under the fair value hierarchy, as these liabilities have been valued based on significant inputs not observable in the market (see Note 9 “Earnout Liability”). A loss of $2.9 million and $2.4 million during the three and nine months ended September 30, 2024, respectively, and a gain of $18.8 million and $39.1 million during the three and nine months ended September 30, 2023, respectively, was recorded on the unaudited condensed consolidated statements of operations and comprehensive (loss) income in the (loss) gain in fair value of earnout liability.

The following table summarizes the activities for the earnout liability:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Balance at beginning of period	$	1,243	$	22,386	$	1,783	$	42,533
Loss (gain) in fair value of earnout liability	2,941		(18,757)		2,401		(39,137)
Other	—		—		—		233
Balance at end of period	$	4,184	$	3,629	$	4,184	$	3,629

As of September 30, 2024 and December 31, 2023, the carrying values of accounts receivable and unbilled receivable, other receivables, accounts payable, and accrued expenses approximate their respective fair values due to their short-term nature. We have determined the fair value of notes payable approximates the carrying value due to the standard terms of the arrangement including but not limited to the amount borrowed, the term, and the interest rate.

Marketable Securities

The Company’s marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Amortized cost net of unrealized gain (loss) is equal to fair value. The following table summarized the marketable securities by major security type as follows:


	As of September 30, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper	$	1,097	$	—	$	—	$	1,097
Corporate bonds	7,781		42		(20)		7,803
Asset-backed securities	38,935		78		(1,262)		37,751
U.S. government and agency securities	9,996		23		(21)		9,998
Foreign government and agency securities	372		—		(25)		347



Total marketable securities	$	58,181	$	143	$	(1,328)	$	56,996


	As of December 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value

Corporate bonds	$	21,869	$	26	$	(847)	$	21,048
Asset-backed securities	52,199		26		(2,289)		49,936
U.S. government and agency securities	11,706		—		(270)		11,436
Foreign government and agency securities	372		—		(31)		341



Total marketable securities	$	86,146	$	52	$	(3,437)	$	82,761

The realized gains and losses are included in other (expenses) income, net on the unaudited condensed consolidated statements of operations and comprehensive (loss) income.

We sold marketable securities for proceeds of $1,456.5 million and $3,057.7 million during the nine months ended September 30, 2024 and 2023, respectively. As a result of those sales, we realized a loss of $0.4 million and $0.4 million during the three and nine months ended September 30, 2024, respectively, and a gain of $2.4 million and $1.7 million during the three and nine months ended September 30, 2023, respectively. We regularly review our available-for-sale marketable securities in an unrealized loss position and evaluate the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. The aggregate fair value of the marketable securities in an unrealized loss position was $39.7 million and $73.2 million as of September 30, 2024 and December 31, 2023, respectively. The unrealized losses were attributable to changes in interest rates that impacted the value of the investments, and not related to increased credit risk. Accordingly, we have not recorded an allowance for credit losses associated with these investments.

The contractual maturities of the investments classified as marketable securities are as follows:


	As of September 30, 2024
(in thousands)	Mature within one year		Mature after one year through two years		Mature over two years		Fair Value
Commercial paper	$	1,097	$	—	$	—	$	1,097
Corporate bonds	2,654		3,979		1,170		7,803
Asset-backed securities	243		—		37,508		37,751
U.S. government and agency securities	7,968		—		2,030		9,998
Foreign government and agency securities	347		—		—		347



Total marketable securities	$	12,309	$	3,979	$	40,708	$	56,996


	As of December 31, 2023
(in thousands)	Mature within one year		Mature after one year through two years		Mature over two years		Fair Value

Corporate bonds	$	20,756	$	292	$	—	$	21,048
Asset-backed securities	238		1,806		47,892		49,936
U.S. government and agency securities	8,929		—		2,507		11,436
Foreign government and agency securities	341		—		—		341



Total marketable securities	$	30,264	$	2,098	$	50,399	$	82,761

Derivative Asset and Liabilities

The Company entered into foreign currency derivative contracts with financial institutions to reduce foreign exchange risk related to certain marketable securities denominated in foreign currency. Foreign currency derivative contracts are marked-to-market at the end of each reporting period with gains and losses recognized as other income (expenses). The Company recognized a loss of less than $0.1 million and a net gain of $0.2 million during the three and nine months ended September 30, 2024, respectively, and a net gain of $0.1 million and $0.6 million during the three and nine months ended September 30, 2023, respectively, on the fair value adjustment of the foreign currency derivative contracts. The notional amount of foreign currency derivative contracts as of September 30, 2024 and December 31, 2023 was $5.5 million and $14.7 million, respectively.

6.Property, Plant and Equipment

Property, plant, and equipment consisted of the following:


(in thousands)	September 30, 2024		December 31, 2023
Land	$	11,341	$	11,356
Land improvements and infrastructure	62,145		62,930
Manufacturing equipment and pilot plant	117,652		116,754
Computer equipment and software	2,759		1,629
Lab equipment	3,649		3,468
Furniture, fixtures, and machinery	5,160		1,094



Total	202,706		197,231
Less accumulated depreciation and amortization	(15,288)		(8,136)
Construction in process	35,340		54,023
Total property, plant, and equipment, net	$	222,758	$	243,118

The depreciation and amortization expense totaled $2.8 million and $7.9 million during the three and nine months ended September 30, 2024, respectively, and $0.4 million and $1.0 million during the three and nine months ended September 30, 2023, respectively.

There were no interest or stock-based compensation costs capitalized during the three and nine months ended September 30, 2024. Interest and stock-based compensation capitalization ceased during the fourth quarter of 2023 as Origin 1 was completed. During the three and nine months ended September 30, 2023, the Company capitalized $0.1 million and $0.4 million, respectively, of interest cost into property, plant and equipment related to Origin 1, and capitalized $0.7 million and $2.0 million, respectively, of stock-based compensation related to employees whose costs are necessarily incurred to bring the asset to its intended used.

As discussed in Note 2, the Company identified an impairment loss of $12.3 million related to the capitalized costs specific to the Louisiana site for Origin 2 that were included in construction in process prior to September 30, 2024. The impairment loss was recorded in impairment of assets in the unaudited condensed consolidated statements of operations and comprehensive (loss) income during the three and nine months ended September 30, 2024. See Note 17 regarding the classification of the land as held for sale subsequent to September 30, 2024.

7.Notes Payable

The Company maintains eight separate offtake supply agreements (the “Offtake Agreements”). Two of the eight Offtake Agreements are with the same customer and pertain to supply of product from Origin 1 and Origin 2, respectively. Legacy Origin received a $5.0 million prepayment from a customer for product from Origin 1 pursuant to one of these Offtake Agreements, which Legacy Origin entered into in November 2016. The prepayment was to be credited against the purchase of products over the term of the Offtake Agreement. The prepayment was secured by a promissory note (the “Promissory Note”) to be repaid in cash in the event that the prepayment could not be credited against the purchase of product, for example, if Origin 1 was never constructed. The Promissory Note was collateralized substantially by Origin 1 and other assets of Origin Materials Canada Pioneer Limited. In May 2019, Legacy Origin and the customer amended the Offtake Agreement and Promissory Note. The amendment added accrued interest of $0.2 million to the principal balance of the prepayment and provided for the prepayment amount to be repaid in three annual installments rather than being applied against the purchase of product from Origin 1. On August 1, 2022, the Company and the customer further amended and restated the Promissory Note with an aggregate principal amount of $5.2 million, which is the sum of the original principal with accrued interest prior to the amendment. As a result of the amendment, the repayment dates were revised and to allow the customer to offset amounts owed for the purchase of product from the Company’s Origin 1 facility against amounts due under the Promissory Note. The repayment in the amount of $2.7 million is due on September 1, 2024, $1.9 million is due on September 1, 2025, and $1.8 million is due on September 1, 2026 (inclusive of accrued but unpaid interest of 3.5% per annum). At September 30, 2024, the total note principal outstanding was $3.5 million, of which $1.7 million was included in notes payable, long-term, and $1.7 million in notes payable, short-term, and unpaid accrued interest of less than $0.1 million was recorded in other liabilities, current. At December 31, 2023, the total note principal outstanding was $5.2 million, of which $3.5 million was included in notes payable, long-term, and $1.7 million in notes payable, short-term, and unpaid accrued interest of $0.8 million was recorded in other liabilities, current. In addition, the amendment reflected the customer’s exercise of its option to enter into a new Offtake Agreement to buy a specified annual amount of product from Origin 2 for an initial term of up to 10 years.

Legacy Origin received a $5.0 million prepayment from a customer for product from Origin 1 pursuant to an Offtake Agreement entered into in November 2016. The agreement was amended in 2019 and added the accrued interest of $0.1 million to the principal balance. As a result, the aggregate principal amount became $5.1 million. The prepayment was to be credited against the purchase of products from Origin 1 over the term of the Offtake Agreement, specifically, by applying a credit to product purchases each month over the first five years of operation of Origin 1 up to $7.5 million, which is equal to 150% of the prepayment amount. If product purchases are not sufficient to recover the advances, the application of the credit to purchases as payment of the advances would continue until fully repaid. The prepayment is secured by an agreement that was to be repaid in cash in the event the prepayment cannot be credited against the purchase of product, for example, if Origin 1 were never constructed. The agreement is collateralized substantially by Origin 1 and other assets of Origin Material Canada Pioneer Limited. If repaid in cash, the agreement bears an annual interest rate of the three-month Secured Overnight Financing Rate (“SOFR”) plus 0.25% (5.56% at September 30, 2024) and matures five years from the commercial operation date of Origin 1, which is defined by the plant's actual production of a certain volume of product as well as its capacity to produce a certain annual volume of product. In February 2024, Legacy Origin and the customer amended the agreement to provide for repayment with interest accrual in three installments consisting of approximately $2.2 million on March 1, 2024, $1.6 million on September 1, 2024, and $2.1 million on March 1, 2025 instead of applying a credit to product purchases under the Offtake Agreement. As a result, the principal amounts outstanding under the agreement were reclassified from other liabilities, long-term to notes payable, short-term and the accrued interest was reclassified from other liabilities, long-term to other liabilities, current. The outstanding principal of $2.0 million at September 30, 2024 was recorded in notes payable, short-term and less than $0.1 million accrued interest outstanding was recorded in other liabilities, current. At December 31, 2023, the total amount outstanding of $5.1 million and accrued interest outstanding of $0.6 million was recorded in other liabilities, long-term.

8.Other Liabilities, Long-term

In September 2019, Legacy Origin entered into a $5.0 million prepayment agreement with a counterparty for the purchase of products from Origin 1. The prepayment is to be made in two equal installments: the first $2.5 million was paid in October 2019 and the remaining $2.5 million is due within 30 days of the customer confirming that a sample from Origin 1 meets the customer’s specifications. The Company and customer agreed to work in good faith to execute an Offtake Agreement, the agreed terms of which are set forth in the prepayment agreement, whereby 100% of the prepayment will be applied against future purchases. The prepayment agreement provides the customer a capacity reservation of up to a specified annual volume of product from Origin 1 for a term of ten years, pursuant to the terms of an Offtake Agreement. At September 30, 2024 and December 31, 2023, the total amount outstanding on this agreement was $2.5 million. On February 5, 2024, the parties entered into a memorandum of understanding by which they agreed that the counterparty would be released from its obligation to pay the remaining $2.5 million of the prepayment and that Legacy Origin would refund the first $2.5 million within a certain period after reporting in its Quarterly Report on Form 10-Q that its cash and cash equivalents has fallen below a specified threshold.

9.Earnout Liability

As additional consideration for the Merger, within ten business days after the occurrence of a “Triggering Event,” as defined below, the Company shall issue or cause to be issued to each Legacy Origin stockholder a certain number of shares of the Company Class A Common Stock. The number of such shares is equal to the product of (i) the number of shares of Company Common Stock, Company Series A Preferred Stock, Company Series B Preferred Stock, Company Series C Preferred Stock, and the net number of shares of Company Capital Stock that would be issuable in respect of “Vested Company Options” in the event such options were exercised (on a net exercise basis with respect to only the applicable exercise price, immediately prior to the “Closing” and settled in the applicable number of shares of Company Common Stock, rounded down to the nearest whole share) held by such Legacy Origin stockholder as of immediately prior to the “Effective Time”; and (ii) the “Earnout Exchange Ratio” (such issued shares of Artius Class A Common Stock, collectively, the “Earnout Shares”), where “Vested Company Options,” “Closing,” “Effective Time,” and “Earnout Exchange Ratio” have the meanings set forth in the Merger Agreement. The Company cannot be required to issue more than 25,000,000 Earnout Shares in the aggregate. Additionally, such Earnout Shares will also become issuable in the event the Company enters into a definitive agreement with respect to an Artius Sale (as defined in the Merger Agreement) on or before the fifth anniversary of the Closing Date. A Triggering Event is defined as the following:

(a)the volume weighted average price of Common Stock (“VWAP”) equaling on exceeding $15.00 for ten consecutive trading days during the three year period following the Closing date of June 25, 2021, ending June 25, 2024;

(b)the VWAP equaling or exceeding $20.00 for ten consecutive trading days during the four year period following the Closing date, ending June 25, 2025; or

(c)the VWAP equaling or exceeding $25.00 for ten consecutive trading days during the five year period following the Closing date, ending June 25, 2026.

A Sponsor Letter Agreement was delivered in connection with the Merger such that 4.5 million of the shares held by Sponsor (“Sponsor Vesting Shares”) shall be subject to forfeiture based on the same vesting requirements as the Earnout Shares. The first Triggering Event was not met by its June 25, 2024 deadline and 1.5 million shares were cancelled. As a result, there were 3.0 million Sponsor Vesting Shares remaining and the value of Sponsor Vesting Shares in the earnout liability balance was reduced accordingly. These shares shall not be transferred prior to the date in which they vest. Dividends and other distributions with respect to Sponsor Vesting Shares shall be set aside by the Company and shall be paid to the Sponsor upon the vesting of such Sponsor Vesting Shares.

The Company evaluated the earnout liability under ASC 815-40, Derivatives and Hedging-Contracts in Entity’s Own Equity (“ASC 815-40”), and concluded they do not meet the criteria to be classified in stockholders’ equity. Specifically, there are contingent exercise provisions and settlement provisions that exist. Holders may receive differing amounts of shares depending on the company’s stock price or the price paid in a change of control. All remaining shares would be issuable (or the forfeiture provisions would lapse) upon any change of control involving the Company and all remaining shares would be issuable (or the forfeiture provisions would lapse) upon a bankruptcy or insolvency of the company. This means that settlement is not solely impacted by the share price of the Company (that is, the share price observed in or implied by a qualifying change-in-control event), but also by the occurrence of a qualifying change-in-control event. This causes the arrangement to not be indexed to the Company’s own shares and liability classification is appropriate. The Company records these instruments as liabilities on the unaudited condensed consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in earnings at each reporting date. The earnout liability was

fair valued using a Monte Carlo open-ended model. The inputs used for the model were a dividend yield of 0% and 0%, volatility of 126% and 108%, and interest rate of 3.68% and 4.04% at September 30, 2024 and December 31, 2023, respectively.

10.Canadian Government Research and Development Program Liability

In April 2019, the Company entered into a contribution agreement related to the research and development and construction associated with the operation of Origin 1 in which the Company will participate in a Canadian government research and development program (the “R&D Agreement”). Pursuant to the R&D Agreement, the Company will receive funding for eligible expenditures incurred through March 31, 2023 up to the lesser of approximately 18.48% of eligible costs and $23.0 million (in Canadian dollars).

The funding will be repaid over 15 years after completion of Origin 1, commencing no sooner than the third fiscal year of consecutive revenues from a commercial plant, but no later than March 2028. The maximum amount to be repaid by the Company under the R&D Agreement is 1.25 times the actual funding received, subject to the following repayment ceiling formula. Repayment of the funding will be reduced by 50% if the Company begins construction before December 31, 2024 of one or more commercial plants that operate in Canada, with costs exceeding $500.0 million (in Canadian dollars), and the plants being constructed and operational within 30 months of the final investment decision, as defined in the R&D Agreement. Once begun, repayments will be paid annually by April of each year through March 31, 2037. Payments will be determined by a formula of the funded amount based on the fiscal year gross business revenue, as defined in the R&D Agreement. The Company received $0.0 million and $8.1 million during the three and nine months ended September 30, 2024, respectively, and zero during the three and nine months ended September 30, 2023 related to the eligible expenditures incurred before March 31, 2023. The Company recorded a liability for the amount received of $15.3 million and $7.3 million at September 30, 2024 and December 31, 2023, respectively, on the unaudited condensed consolidated balance sheets in Canadian government research and development program liability.

11.Common Stock Warrants

As of September 30, 2024 and December 31, 2023 there are 35,476,627 warrants outstanding.

As part of Artius’s initial public offering, 24,149,960 Public Warrants were sold. The Public Warrants entitle the holder thereof to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustments. The Public Warrants may be exercised only for a whole number of shares of Common Stock. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will expire on June 25, 2026 at 5:00p.m., New York City time, or earlier upon redemption or liquidation. The Public Warrants are listed on the Nasdaq under the symbol “ORGNW.”

The Company may redeem the Public Warrants when exercisable, in whole and not in part, at a price of $0.01 per warrant, so long as the Company provides not less than 30 days’ prior written notice of redemption to each warrant holder, and if, and only if, the reported last sale price of the Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders.

Simultaneously with Artius’s initial public offering, Artius consummated a private placement of 11,326,667 Private Placement Warrants with the Sponsor. The Private Placement Warrant is exercisable for one share of Class A Common Stock at a price of $11.50 per share, subject to adjustment. The Private Placement Warrant expires on June 25, 2026 or earlier upon redemption or liquidation. The Private Placement Warrants are identical to the Public Warrants, except that: (1) the Private Placement Warrants and the shares of Class A Common Stock issuable upon exercise of the Private Placement Warrants are not transferable, assignable or salable until the earliest to occur of: (i) 365 days after the date of the Closing; (ii) the first day after the date on which the closing price of the Public Shares (or any successor securities thereto) equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the date of the Closing; or (iii) the date on which Artius completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of Artius’s Public Shareholders having the right to exchange their Public Shares (or any successor securities thereto) for cash, securities or other property, subject to certain limited exceptions, (2) the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable, except if the reference value equals or exceeds $10.00 and is less than $18.00 (as described above), so long as they are held by the initial purchasers or their permitted transferees, and (3) the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will be entitled to registration rights. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable under all redemption scenarios by the Company and exercisable by such holders on the same basis as the Public Warrants.

The Company concluded the Public Warrants and Private Placement Warrants, or Common Stock Warrants, meet the definition of a derivative under ASC 815 and are recorded as liabilities. Upon consummation of the Merger, the fair value of the Common Stock Warrants was recorded on the unaudited condensed consolidated balance sheets. The fair value of the Common Stock Warrants was remeasured on the September 30, 2024 and December 31, 2023 on the unaudited condensed consolidated balance sheets at $4.3 million and $1.3 million, respectively. A loss of $2.3 million and $2.9 million during the three and nine months ended September 30, 2024, respectively, and a gain of $22.8 million and $27.4 million during the three and nine months ended September 30, 2023, respectively, was recorded on the unaudited condensed consolidated statements of operations and comprehensive (loss) income.

12.Stockholders’ Equity

Common Stock

Holders of the Common Stock are entitled to dividends when, as, and if, declared by the Board, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. As of September 30, 2024, the Company had not declared any dividends. The holder of each share of Common Stock is entitled to one vote.

Employee Stock Purchase Plan

The Company maintains an Employee Stock Purchase Plan (“ESPP”). The ESPP permits participants to purchase shares of our Common Stock with the purchase price of the shares at a price determined by our Board, which shall not be less than 85% of the lower of the fair market value of our Common Stock on the first day of an offering or on the date of purchase.

Initially, following adoption of the ESPP, the maximum number of shares of our Common Stock that may be issued under the ESPP was 1,846,710. The ESPP contains an “evergreen” share reserve feature that automatically increases the number of shares of Common Stock reserved for issuance under the plan on January 1 of each year for a period of ten years commencing on January 1, 2022 and ending on (and including) January 1, 2031 in an amount equal to the lesser of (1) one percent (1%) of the fully-diluted shares of our Common Stock on December 31st of the preceding calendar year, (2) 3,693,420 of Common Stock, or (3) such lesser number of shares as determined by our Board. As of December 31, 2023, the number of shares available for issuance under the ESPP was 5,639,944. Our Board made the decision not to increase the number of shares of Common Stock reserved for issuance under the ESPP as of January 1, 2024 as no stock has been offered or issued to employees under the ESPP to date. Shares subject to purchase rights granted under the ESPP that terminate without having been exercised in full will not reduce the number of shares available for issuance under the ESPP.

Equity Incentive Plans

The Company maintains the following equity incentive plans: the 2010 Stock Incentive Plan, the 2020 Equity Incentive Plan, and the 2021 Equity Incentive Plan, each as amended (together, the “Stock Plans”). Upon closing of the Merger, awards under the 2010 Stock Incentive Plan and 2020 Equity Incentive Plan were converted at the Exchange Ratio, which has the meaning set forth in the Merger Agreement, and the 2021 Equity Incentive Plan was adopted and approved.

Origin may grant a wide variety of equity securities under the Stock Plans, including incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, RSU awards, performance-based stock awards, and other awards. The Company has granted incentive stock options, RSU awards, and performance awards under the Stock Plans. Under the Stock Plans, options must be issued at exercise prices no less than the estimated fair value of the stock on the date of grant and are exercisable for a period not exceeding 10 years from the date of grant. Options granted to employees under the Stock Plans generally vest 25% one year from the vesting commencement date and 1/36th per month thereafter, although certain arrangements call for vesting over other periods. Options granted to non-employees under the Stock Plan vest over periods determined by the Board (generally immediate to four years). RSU awards granted to employees under the 2021 Equity Incentive Plan require a service period of three years and generally vest 33.3% annually over the three-year service period. Under the Stock Plans, the fair value of RSU awards and performance-based stock awards are determined to be the grant date closing stock price. For awards with performance-based conditions, compensation is recorded once there is sufficient objective evidence the performance conditions are considered probable of being met. The performance-based stock awards are subject to vesting based on a performance-based condition and a service-based condition. The performance-based stock awards will vest in a percentage of the target number of shares between 0% and 300%, depending on the extent the performance conditions are achieved.

Initially, following adoption of the 2021 Equity Incentive Plan, there were 18,467,109 shares of Common Stock reserved for issuance under the Stock Plans. The 2021 Equity Incentive Plan contains an “evergreen” share reserve feature that automatically increases the number of shares of Common Stock reserved for issuance under the plan on January 1 of each year for a period of ten years commencing on January 1, 2022 and ending on (and including) January 1, 2031 in an amount equal to five percent (5%) of the fully-diluted Common Stock on December 31 of the preceding year unless our Board acts prior to January 1 to increase the share reserve by a lesser amount. The number of shares added to the share reserve on January 1 of a given year is reduced automatically to the extent necessary to avoid causing the share reserve to exceed fifteen percent (15%) of the fully-diluted Common Stock on December 31 of the preceding year. As of December 31, 2023, the number of shares available for issuance under the 2021 Equity Incentive Plan was 28,761,816. On January 1, 2024, the number of shares of Common Stock reserved for issuance under the 2021 Equity Incentive Plan was automatically increased by 1,278,395 shares pursuant to the 2021 Equity Incentive Plan’s “evergreen” provision to a total of 30,040,211 shares. As of September 30, 2024, there were 10,468,774 shares available for grant.

The following tables summarize stock option activity under the Stock Plans:


(In thousands, except for share and per share amounts)	Outstanding Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate intrinsic value
Balance as of December 31, 2023	5,478,010	$	0.17	6.05

Exercised	(585,760)	0.14
Forfeited / canceled	(22,224)	0.14
Expired	(7,363)	0.29
Balance as of March 31, 2024	4,862,663	$	0.18	5.74

Exercised	(499,365)	0.32

Balance as of June 30, 2024	4,363,298	$	0.16	6.05
Exercised	(8,509)	0.42


Balance as of September 30, 2024	4,354,789	$	0.16	5.80
Vested and expected to vest at September 30, 2024	4,354,789	$	0.16	5.80	$	6,044
Vested and exercisable at September 30, 2024	2,835,204	$	0.17	5.65	$	3,871

The total intrinsic value of the options exercised was less than $0.1 million and $0.4 million during the three and nine months ended September 30, 2024, respectively, and $0.7 million and $2.5 million during the three and nine months ended September 30, 2023, respectively. The intrinsic value of options exercised during each fiscal year is calculated as the difference between the market value of the stock at the time of exercise and the exercise price of the stock option. As of September 30, 2024, the Company had stock-based compensation of $0.2 million, related to unvested stock options not yet recognized that is expected to be recognized over an estimated weighted average period of 0.7 years.

The following table summarizes the RSU award activity:


(In thousands, except for share and per share amounts)	Outstanding	Weighted-average grant date fair value
Unvested balance at December 31, 2023	10,927,261	$	1.94
Granted - RSU awards	1,286,831	0.65
RSU awards vested and converted to shares	(212,633)	3.60
Forfeited - RSU awards	(948,255)	2.50
Unvested balance March 31, 2024	11,053,204	$	1.72
Granted - RSU awards	781,581	0.99
RSU awards vested and converted to shares	(206,049)	3.71
Forfeited - RSU awards	(316,952)	1.88
Unvested balance June 30, 2024	11,311,784	$	1.59
Granted - RSU awards	30,842	1.54
RSU awards vested and converted to shares	(167,768)	2.11
Forfeited - RSU awards	(701,013)	1.33
Unvested balance September 30, 2024	10,473,845	$	1.60

The following table summarizes the performance-based stock (“PSU”) award activity:


	Outstanding	Weighted-average grant date fair value
Unvested balance at December 31, 2023	2,118,843	$	5.77


Forfeited - PSU awards	(323,950)	7.07
Unvested balance March 31, 2024	1,794,893	$	5.52


Forfeited - PSU awards	(14,725)	7.07
Unvested balance June 30, 2024	1,780,168	$	5.51


Forfeited - PSU awards	(85,252)	6.46
Unvested balance September 30, 2024	1,694,916	$	5.46

The RSU awards entitle the holder upon vesting to be issued on a future date the number of shares of Common Stock that is equal to the number of restricted stock units subject to the RSU awards. The total fair value of shares vested was $1.0 million and $2.4 million during the three and nine months ended September 30, 2024, respectively, and $0.7 million and $1.3 million during the three and nine months ended September 30, 2023, respectively. The number of RSU awards vested during the nine months ended September 30, 2024 totaled 720,514, of which the issuance of 134,064 common shares has been deferred at the election of the participant. The common shares for the deferred RSUs will be released sixty days following the participant's departure from the Company.

The Company issued 455,368 performance-based stock awards during 2023. The performance conditions for the performance-based stock awards from 2023 were probable of being met, therefore $25.2 thousand and $79.2 thousand of performance award stock compensation has been recorded during the three and nine months ended September 30, 2024, respectively. The maximum amount of stock-based compensation expense for the unvested performance-based stock awards, assuming maximum performance, is $9.2 million. Total remaining compensation expense for performance-based stock awards will be recognized over the requisite service periods once the performance-based conditions are deemed to be probable.

The vesting period for RSU awards is generally three years. Total remaining compensation expense for RSU awards to be recognized under the 2021 Equity Incentive Plan is $10.6 million as of September 30, 2024, and will be amortized on a straight-line basis over an estimated weighted average period of 1.3 years.

As discussed in Note 2, the Company effected a workforce reduction in September 2024. The Board authorized certain changes to the stock-based awards in connection with the workforce reduction plan to allow accelerated vesting of a portion of affected employees’ unvested equity awards. The Company recorded a total workforce reduction charge of $0.6 million. The charge consists of severance and benefits costs, inclusive of cash expenditures for employee separation costs of $0.5 million and non-cash charges of $0.1 million for stock based compensation expense. The cash expenditures and non-cash stock based compensation expense for employee separation costs were recorded in general and administrative and research and development expenses during the three and nine months ended September 30, 2024 on the unaudited condensed consolidated statements of operations and comprehensive (loss) income.

During the three and nine months ended September 30, 2024, stock compensation expense of $1.8 million and $5.9 million, respectively, was recognized in general and administrative expenses, and $0.7 million and $1.8 million, respectively, was recognized in research and development expenses on the unaudited condensed consolidated statements of operations and comprehensive (loss) income. During the three and nine months ended September 30, 2023, stock compensation expense of $1.7 million and $4.7 million, respectively, was recognized in general and administrative expenses, and $0.7 million and $2.2 million, respectively, was recognized in research and development expenses on the unaudited condensed consolidated statements of operations and comprehensive (loss) income.

13.Income Taxes

The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year, adjusted for any discrete items during the quarter. The Company has recorded an income tax provision of $0.2 million and $0.4 million during the three and nine months ended September 30, 2024, respectively, and $0.1 million and $0.2 million during the three and nine months ended September 30, 2023, respectively. The 2024 provision relates to foreign income taxes in Canada and the 2023 provision relates to foreign withholding taxes. Other than Canadian income taxes and foreign withholding taxes, there is no provision for income taxes because the U.S. Company has incurred operating losses since inception. The Company’s effective income tax rate was (0.63)% and (0.58)% for the three and nine months ended September 30, 2024, respectively and 0.30% and 0.65% for the three and nine months ended September 30, 2023, respectively. The Company continues to maintain a full valuation allowance on its net deferred tax assets in the U.S.

14.Leases

The Company leases office space and research and development space in Sacramento, California and Sarnia, Ontario under non-cancelable lease agreements and leases various office equipment, and warehouse space. Certain operating leases contain options to extend the lease. The Company included the periods covered by these options as we are reasonably certain to exercise the options for all leases. For leases with the option to extend on a month-to-month basis after the defined extension periods, the Company is reasonably certain to extend for the same term as related leases. As such, lease terms for all leased assets located at the same locations have the same end dates. Rent deposits relating to leases are included within other long-term assets on the unaudited condensed consolidated balance sheets. Variable lease costs include operating expenses for the shared common area, and the amount is based on an annual estimate of the actual common area expenses from the preceding year and are payable monthly. Certain leases were extended during the period ended September 30, 2023. The lease modifications were not accounted for as a separate contract and we remeasured our lease liabilities and ROU assets on the modification date. Our operating leases have remaining lease terms of one to nine years.

15. Commitments and Contingencies

Commitments

During the third quarter 2024, the Company entered into multiple purchase agreements with various vendors to purchase equipment to fulfill a near-term demand for our PET caps and closures. Pursuant to the agreements, the Company committed to purchase the equipment with installment payments. The Company made payments totaling of $2.8 million as of September 30, 2024 and recorded the amount in property, plant, and equipment, net on the unaudited condensed consolidated balance sheets. The Company is obligated to make additional payments toward the remaining balances of up to approximately $9.1 million subject to the achievement of certain milestones.

In April 2023, the Company entered into an agreement for conversion of materials produced by Origin 1 into certain derivatives. Pursuant to the agreement, the Company agreed to purchase conversion services for a certain minimum quantity of product on a take-or-pay basis for a term of 5 years beginning in 2025 for an aggregate total cost of $33.0 million. Accordingly the Company is obligated to purchase not less than $5.0 million during 2025 and a minimum of $7.0 million each of 2026 through 2029. The Company made advance payments totaling $16.6 million to the counterparty through September 30, 2024, which is included in the foregoing aggregate total, and the agreement provides for the Company to be fully reimbursed for the advance payments in the form of a discount on conversion services over the term. The agreement gives the Company the right, but not the obligation, to purchase conversion services for an additional quantity of product in 2024 and stipulates a reduction in the take-or-pay commitment under certain circumstances including the counterparty’s inability to meet the required product specification. The agreement automatically renews for an additional year unless either party gives advance notice of an intention not to renew. In addition, either party may terminate the agreement in the event of the other party’s insolvency or breach of a material term. The Company recorded the advance payments in other long-term assets on the unaudited condensed consolidated balance sheets.

In February 2023, the Company entered into a nonexclusive patent license agreement for use in connection with production at a specific licensed facility. The license expires upon cessation of production at that facility. The Company made a nonrefundable $5.0 million deposit in 2022 toward securing the license and, as a result of signing the license agreement, made an additional nonrefundable payment of $7.9 million during 2023 and may make additional payments depending on the achievement of certain milestones. The total payment is included in other long-term assets on the unaudited condensed consolidated balance sheets. In connection with this license, the Company entered into a conditional offtake agreement under which the licensor will supply the Company with a certain amount of the same type of products to be produced at the licensed facility in order to accelerate market development for these products and related applications.

In July 2017, the Company entered into a nonexclusive patent license agreement for $0.1 million, which expires upon expiration of the last to expire of the licensed patents. Under this agreement, the Company will pay less than $0.1 million minimum royalty payments per year and, if the Company develops and sells certain products based on the licensed patents. Certain products that Origin is currently developing and anticipates selling are expected to utilize these patents.

In December 2016, the Company entered into a patent license agreement for $0.5 million, which expires upon expiration of the last to expire of the licensed patents. Under this agreement, if the Company develops and sells specific products based on the patents, the Company would pay a royalty up to a cumulative $0.5 million from Origin 1, whereby no further payments will be due for any production at Origin 1. If production of those products occurs at subsequent facilities, the Company will pay an upfront license fee royalty and a variable royalty based on production at that subsequent facility, capped at an aggregate $10.0 million per facility. Certain products that the Company is currently developing and anticipates selling are expected to utilize these patents. No payments have been made under this agreement through September 30, 2024.

In November 2016, the Company entered into a nonexclusive patent license agreement, which expires upon expiration of the patent. Under this agreement, if the Company produces products based on the patent, the Company will pay an annual royalty upon commencement of operations on Origin 1 which will not exceed $1.0 million cumulatively. The pipeline of Company products and sales are not currently expected to be subject to this patent. The annual royalty payments are less than $0.1 million. The Company terminated the license effective April 26, 2024.

In September 2011, the Company entered into a nonexclusive patent license agreement, which expires upon expiration of the patent. Under this agreement, if the Company develops and sells specific products based on the patent, the Company would pay a royalty up to $2.0 million per year and $10.0 million in the aggregate. Certain products that the Company is currently developing and anticipates selling are expected to utilize these patents. There were zero and $0.1 million payments made during the three and nine months ended September 30, 2024, respectively, and no payments made during 2023.

In June 2011, the Company entered into a nonexclusive patent license agreement, which expires upon expiration of the licensed patent. Under this agreement, the Company pays less than $0.1 million royalty fee annually and if the Company develops and sells specific products based on the patent, 0.4% of net sales. The pipeline of Company products and sales are not currently expected to be subject to this patent.

We enter into supply and service arrangements in the normal course of business. Supply arrangements are primarily for fixed-price manufacture and supply. Service agreements are primarily for the development of manufacturing processes and certain studies. Commitments under service agreements are subject to cancellation at our discretion which may require payment of certain cancellation fees. The timing of completion of service arrangements is subject to variability in estimates of the time required to complete the work.

Contingencies

At times there may be claims and legal proceedings generally incidental to the normal course of business that are pending or threatened against the Company. For instance, on August 25, 2023, a shareholder filed a putative securities class action complaint in the Eastern District of California against the Company and certain of its officers, alleging violations of the federal securities laws in connection with the Company’s announcement on August 9, 2023, that it expected the timeline for construction of its Origin 2 plant to be delayed. A different shareholder filed a separate complaint on October 4, 2023, alleging the same claims against the same defendants. The two cases were consolidated into In re Origin Materials, Inc. Sec. Litig., No. 2:23-cv-01816-WBS-JDP (E.D. Cal.). A lead plaintiff was appointed for the consolidated case on December 14, 2023 and filed an amended complaint on March 1, 2024. The complaint alleges a class period of February 23, 2023 to August 9, 2023, and seeks as relief, among other things, unspecified damages and fees and costs. On October 29, 2024, the court granted the Company's motion to dismiss the amended complaint, giving the plaintiff 20 days to file an amended complaint. At this preliminary stage in the litigation, the Company cannot predict any particular outcome or financial impact thereof, if any.

16. Basic and Diluted Net (Loss) Income Per Share

The following table sets forth the computation of basic and diluted net (loss) income per share attributable to common stockholders, Basic net (loss) income per share is computed by dividing net (loss) income for the period by the weighted-average number of common shares outstanding during the period, which excludes Sponsor Vesting Shares which are legally outstanding, but subject to return to the Company. Diluted net (loss) income per share is computed by dividing net (loss) income for the period by the weighted-average common shares outstanding during the period, plus the dilutive effect of the stock options and RSU awards, as applicable pursuant to the treasury stock method. The following table sets forth the computation of basic and diluted net (loss) income per share:

Origin Materials, Inc. [ORGNW] Filings
Origin Materials, Inc. [ORGN] Filings
10-Q	[2024-11-14]
10-Q	[2024-08-14]
10-Q	[2024-05-14]
10-K	[2024-03-05]
10-Q	[2023-11-09]
10-Q	[2023-08-09]
10-Q	[2023-05-10]
10-K	[2023-02-23]
10-Q	[2022-11-03]
10-Q	[2022-08-03]
10-Q	[2022-05-09]
10-K	[2022-03-01]
10-Q	[2021-11-12]
10-Q	[2021-08-16]
S-1	[2021-07-15]
10-Q	[2021-05-18]
10-K	[2021-03-05]
10-Q	[2020-10-28]
10-Q	[2020-08-19]
S-1	[2020-06-25]

Origin Materials, Inc. [ORGNW] Filings

Origin Materials, Inc. [ORGN] Filings