Danimer Scientific(DNMR) - 2020 Q3 - Quarterly Report

PART 1 – FINANCIAL INFORMATION Financial Statements The financial statements for the period ended September 30, 2020, reflect the company's post-IPO SPAC status, detailing trust account assets, net losses, and the subsequent merger agreement Condensed Consolidated Balance Sheets As of September 30, 2020, the balance sheet shows $200.1 million in trust account assets, $201.6 million in total assets, and $189.8 million in Class A common stock subject to redemption Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,398,497 | $20,000 | | Cash and marketable securities held in Trust Account | $200,072,132 | $0 | | Total Assets | $201,602,733 | $77,950 | | Liabilities & Equity | | | | Deferred underwriting fee payable | $6,737,500 | $0 | | Total Liabilities | $6,840,917 | $56,930 | | Class A Common stock subject to possible redemption | $189,761,810 | $0 | | Total Stockholders' Equity | $5,000,006 | $21,020 | Condensed Consolidated Statements of Operations For the three and nine months ended September 30, 2020, the company reported net losses of $152,025 and $237,960, respectively, primarily due to administrative expenses offset by trust account interest income Statement of Operations Summary (Unaudited) | Description | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Formation and general and administrative expenses | $197,698 | $310,092 | | Loss from operations | ($197,698) | ($310,092) | | Interest earned on marketable securities held in Trust Account | $45,673 | $72,132 | | Net loss | ($152,025) | ($237,960) | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased to $5.0 million as of September 30, 2020, driven by IPO unit sales and private placement warrants, offset by offering costs and reclassification of redeemable stock - The company sold 20,000,000 units, net of underwriting discounts and offering costs, resulting in an increase to equity of $188,978,756[14] - The sale of 6,000,000 Private Placement Warrants contributed $6,000,000 to additional paid-in capital[14] - A total of $189,913,840 was reclassified from equity to temporary equity, representing the value of common stock subject to possible redemption[14] Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2020, net cash from financing activities totaled $201.7 million, largely offset by a $200 million investment into the Trust Account, resulting in $1.4 million cash at period-end Cash Flow Summary for the Nine Months Ended September 30, 2020 (Unaudited) | Cash Flow Category | Amount | | :--- | :--- | | Net cash used in operating activities | ($342,759) | | Net cash used in investing activities | ($200,000,000) | | Net cash provided by financing activities | $201,721,256 | | Net Change in Cash and Cash Equivalents | $1,378,497 | | Cash and Cash Equivalents – End of period | $1,398,497 | Notes to Condensed Consolidated Financial Statements The notes detail the company's SPAC formation, May 2020 IPO, related party transactions, and the subsequent definitive merger agreement with Danimer Scientific, supported by a $210 million PIPE financing - The company was formed to effect a business combination and consummated its Initial Public Offering of 20,000,000 units at $10.00 per unit on May 8, 2020, generating gross proceeds of $200,000,000[23][26] - On October 3, 2020, the Company entered into a definitive merger agreement with Meredian Holdings Group, Inc. (d.b.a. Danimer Scientific), a manufacturer of biodegradable bio-plastics[44][104] - In connection with the merger, the Company secured $210,000,000 in a Private Investment in Public Equity (PIPE) financing from various subscribers at $10.00 per share[114] - The company has until May 8, 2022 (24 months from IPO) to complete a business combination, or it will be required to cease operations and liquidate the Trust Account[38] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank-check status, the merger agreement with Danimer Scientific, a net loss of $237,960, and liquidity comprising $1.4 million cash for operations and $200.1 million in the Trust Account - The company is a blank check company formed for the purpose of effecting a business combination and has not generated any revenue to date[121][129] - On October 3, 2020, the company entered into a merger agreement with Meredian Holdings Group, Inc. (d.b.a. Danimer Scientific)[128] Operating Results Summary | Period | Net Loss | Key Drivers | | :--- | :--- | :--- | | Three months ended Sep 30, 2020 | ($152,025) | Operating costs of $197,698 offset by interest income of $45,673 | | Nine months ended Sep 30, 2020 | ($237,960) | Operating costs of $310,092 offset by interest income of $72,132 | - As of September 30, 2020, the company had $1,398,497 in cash and cash equivalents outside the Trust Account for working capital and $200,072,132 in cash and marketable securities held in the Trust Account[137][138] Quantitative and Qualitative Disclosures about Market Risk The company is not subject to material market or interest rate risk, as Trust Account funds are invested in short-term U.S. government securities - The company's funds in the Trust Account are invested in short-term U.S. government securities, leading to the belief that there is no material exposure to interest rate risk[148] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2020, with no material changes to internal control over financial reporting during the quarter - An evaluation of disclosure controls and procedures as of September 30, 2020, led by the CEO and CFO, concluded that they were effective[150] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that would have a material effect[151] PART II – OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - The company has no legal proceedings to report[155] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's IPO prospectus and preliminary proxy statement - No material changes have occurred to the risk factors disclosed in the company's IPO prospectus filed May 6, 2020, and the Preliminary Proxy Statement filed October 28, 2020[156] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds for the period - None reported[158] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported[160] Other Information The company reports no other information - None reported[164] Exhibits The report lists several exhibits filed, including the Merger Agreement with Meredian Holdings Group, Inc., officer certifications, and XBRL data files - Key exhibits filed include the Merger Agreement with Meredian Holdings Group, Inc. and its amendment, officer certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906), and XBRL data files[167]