zy-20210630
0001645842FALSE12/312021Q2http://www.zymergen.com/20210630#ResearchAndDevelopmentServiceAgreementsMemberhttp://www.zymergen.com/20210630#ResearchAndDevelopmentServiceAgreementsMemberhttp://www.zymergen.com/20210630#ResearchAndDevelopmentServiceAgreementsMemberhttp://www.zymergen.com/20210630#ResearchAndDevelopmentServiceAgreementsMember0.33330.3333P6Y0.507000P12M00016458422021-01-012021-06-30xbrli:shares00016458422021-07-30iso4217:USD00016458422021-06-3000016458422020-12-31iso4217:USDxbrli:shares00016458422020-04-012020-06-3000016458422020-01-012020-06-3000016458422021-04-012021-06-300001645842us-gaap:CommonStockMember2020-12-310001645842us-gaap:AdditionalPaidInCapitalMember2020-12-310001645842us-gaap:RetainedEarningsMember2020-12-310001645842us-gaap:CommonStockMember2021-01-012021-03-310001645842us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100016458422021-01-012021-03-310001645842us-gaap:RetainedEarningsMember2021-01-012021-03-3100016458422021-03-310001645842us-gaap:CommonStockMember2021-03-310001645842us-gaap:AdditionalPaidInCapitalMember2021-03-310001645842us-gaap:RetainedEarningsMember2021-03-310001645842us-gaap:CommonStockMember2021-04-012021-06-300001645842us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001645842us-gaap:RetainedEarningsMember2021-04-012021-06-300001645842us-gaap:CommonStockMember2021-06-300001645842us-gaap:AdditionalPaidInCapitalMember2021-06-300001645842us-gaap:RetainedEarningsMember2021-06-3000016458422019-12-310001645842us-gaap:CommonStockMember2019-12-310001645842us-gaap:AdditionalPaidInCapitalMember2019-12-310001645842us-gaap:RetainedEarningsMember2019-12-310001645842us-gaap:CommonStockMember2020-01-012020-03-310001645842us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-3100016458422020-01-012020-03-310001645842us-gaap:RetainedEarningsMember2020-01-012020-03-3100016458422020-03-310001645842us-gaap:CommonStockMember2020-03-310001645842us-gaap:AdditionalPaidInCapitalMember2020-03-310001645842us-gaap:RetainedEarningsMember2020-03-310001645842us-gaap:CommonStockMember2020-04-012020-06-300001645842us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001645842us-gaap:RetainedEarningsMember2020-04-012020-06-3000016458422020-06-300001645842us-gaap:CommonStockMember2020-06-300001645842us-gaap:AdditionalPaidInCapitalMember2020-06-300001645842us-gaap:RetainedEarningsMember2020-06-300001645842zy:InitialPublicOfferingIncludingOverAllotmentOptionMember2021-04-262021-04-260001645842us-gaap:OverAllotmentOptionMember2021-04-262021-04-260001645842zy:InitialPublicOfferingIncludingOverAllotmentOptionMember2021-04-260001645842us-gaap:IPOMember2021-04-262021-04-260001645842us-gaap:ConvertiblePreferredStockMember2021-04-262021-04-260001645842zy:WarrantsToPurchaseTemporaryEquityMember2021-04-262021-04-26xbrli:pure0001645842us-gaap:CommonStockMember2021-04-012021-04-300001645842us-gaap:ConvertiblePreferredStockMember2021-04-012021-04-30zy:segment0001645842zy:LodoTherapeuticsCorporationMember2021-05-160001645842zy:LodoTherapeuticsCorporationMember2021-05-162021-05-160001645842us-gaap:CommonStockMemberzy:LodoTherapeuticsCorporationMember2021-05-162021-05-160001645842us-gaap:DevelopedTechnologyRightsMemberzy:LodoTherapeuticsCorporationMember2021-05-16zy:installment0001645842us-gaap:RestrictedStockUnitsRSUMemberzy:LodoTherapeuticsCorporationMember2021-05-162021-05-160001645842zy:LodoTherapeuticsCorporationMemberus-gaap:CustomerRelationshipsMember2021-05-160001645842zy:EnEvolvIncMember2020-03-100001645842zy:EnEvolvIncMember2020-03-102020-03-100001645842us-gaap:DevelopedTechnologyRightsMemberzy:EnEvolvIncMember2020-03-100001645842zy:EnEvolvIncMemberus-gaap:CustomerRelationshipsMember2020-03-100001645842zy:EnEvolvIncMember2020-03-100001645842us-gaap:DevelopedTechnologyRightsMember2021-06-300001645842us-gaap:DevelopedTechnologyRightsMember2020-12-310001645842us-gaap:CustomerRelationshipsMember2021-06-300001645842us-gaap:CustomerRelationshipsMember2020-12-310001645842us-gaap:DevelopedTechnologyRightsMember2021-05-162021-05-160001645842us-gaap:CustomerRelationshipsMember2021-05-162021-05-160001645842us-gaap:DevelopedTechnologyRightsMemberzy:LodoTherapeuticsCorporationMember2021-05-162021-05-160001645842zy:LodoTherapeuticsCorporationMemberus-gaap:CustomerRelationshipsMember2021-05-162021-05-160001645842us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001645842us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001645842us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-06-300001645842us-gaap:FairValueMeasurementsRecurringMember2021-06-300001645842us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001645842us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001645842us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001645842us-gaap:FairValueMeasurementsRecurringMember2020-12-310001645842us-gaap:WarrantMember2020-12-310001645842us-gaap:WarrantMember2021-01-012021-06-300001645842us-gaap:WarrantMember2021-06-300001645842zy:SeriesCPreferredStockWarrantsMember2021-06-300001645842us-gaap:ValuationTechniqueOptionPricingModelMemberus-gaap:MeasurementInputSharePriceMemberus-gaap:FairValueInputsLevel3Member2020-12-310001645842us-gaap:ValuationTechniqueOptionPricingModelMemberus-gaap:MeasurementInputExercisePriceMemberus-gaap:FairValueInputsLevel3Member2020-12-310001645842us-gaap:ValuationTechniqueOptionPricingModelMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMember2020-12-310001645842us-gaap:ValuationTechniqueOptionPricingModelMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputRiskFreeInterestRateMember2020-12-310001645842us-gaap:ValuationTechniqueOptionPricingModelMemberus-gaap:FairValueInputsLevel3Member2020-12-310001645842us-gaap:MachineryAndEquipmentMember2021-06-300001645842us-gaap:MachineryAndEquipmentMember2020-12-310001645842us-gaap:LeaseholdImprovementsMember2021-06-300001645842us-gaap:LeaseholdImprovementsMember2020-12-310001645842us-gaap:FurnitureAndFixturesMember2021-06-300001645842us-gaap:FurnitureAndFixturesMember2020-12-310001645842zy:ComputerEquipmentAndSoftwareMember2021-06-300001645842zy:ComputerEquipmentAndSoftwareMember2020-12-310001645842zy:DepreciablePropertyPlantAndEquipmentMember2021-06-300001645842zy:DepreciablePropertyPlantAndEquipmentMember2020-12-310001645842us-gaap:ConstructionInProgressMember2021-06-300001645842us-gaap:ConstructionInProgressMember2020-12-310001645842zy:SeniorSecuredDelayedDrawTermLoanFacilityMemberus-gaap:SecuredDebtMember2019-12-190001645842zy:SeniorSecuredDelayedDrawTermLoanFacilityMemberus-gaap:SecuredDebtMember2019-12-192019-12-190001645842zy:SeniorSecuredDelayedDrawTermLoanFacilityMemberus-gaap:SecuredDebtMember2020-12-310001645842zy:SeniorSecuredDelayedDrawTermLoanFacilityMemberus-gaap:SecuredDebtMember2021-06-3000016458422021-04-282021-04-280001645842zy:CommonStockWarrantsMember2021-06-3000016458422021-04-012021-04-300001645842us-gaap:SeriesAPreferredStockMember2020-12-310001645842zy:SeriesA1PreferredStockMember2020-12-310001645842us-gaap:SeriesBPreferredStockMember2020-12-310001645842us-gaap:SeriesCPreferredStockMember2020-12-310001645842us-gaap:SeriesDPreferredStockMember2020-12-310001645842zy:A2021IncentiveAwardPlanMember2021-04-300001645842zy:A2021IncentiveAwardPlanMember2021-04-012021-04-300001645842zy:A2021IncentiveAwardPlanMemberzy:IndividualsWithVotingInterestAtThresholdOrLessMember2021-04-012021-04-300001645842zy:IndividualsWithVotingInterestOverThresholdMemberzy:A2021IncentiveAwardPlanMember2021-04-012021-04-300001645842zy:A2021IncentiveAwardPlanMember2021-06-300001645842zy:StockPlan2014And2021IncentiveAwardPlanMember2020-12-310001645842zy:StockPlan2014And2021IncentiveAwardPlanMember2020-01-012020-12-310001645842zy:StockPlan2014And2021IncentiveAwardPlanMember2021-01-012021-06-300001645842zy:StockPlan2014And2021IncentiveAwardPlanMember2021-06-300001645842zy:StockPlan2014And2021IncentiveAwardPlanMember2020-01-012020-06-300001645842us-gaap:EmployeeStockOptionMember2021-04-012021-06-300001645842us-gaap:EmployeeStockOptionMember2020-04-012020-06-300001645842us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001645842us-gaap:EmployeeStockOptionMember2020-01-012020-06-300001645842us-gaap:PerformanceSharesMemberzy:A2021IncentiveAwardPlanMember2021-04-012021-04-30zy:founderzy:tranche0001645842us-gaap:PerformanceSharesMemberzy:A2021IncentiveAwardPlanMember2021-04-300001645842us-gaap:RestrictedStockUnitsRSUMember2020-12-310001645842us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001645842us-gaap:RestrictedStockUnitsRSUMember2021-06-300001645842us-gaap:StockCompensationPlanMember2021-01-012021-06-300001645842us-gaap:StockCompensationPlanMember2020-12-310001645842us-gaap:StockCompensationPlanMember2020-01-012020-12-310001645842us-gaap:StockCompensationPlanMember2021-06-300001645842us-gaap:StockCompensationPlanMember2020-01-012020-06-300001645842zy:EmployeeStockPurchasePlan2021Member2021-04-300001645842zy:EmployeeStockPurchasePlan2021Member2021-04-012021-04-300001645842us-gaap:CostOfSalesMember2021-04-012021-06-300001645842us-gaap:CostOfSalesMember2020-04-012020-06-300001645842us-gaap:CostOfSalesMember2021-01-012021-06-300001645842us-gaap:CostOfSalesMember2020-01-012020-06-300001645842us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-300001645842us-gaap:ResearchAndDevelopmentExpenseMember2020-04-012020-06-300001645842us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-06-300001645842us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-06-300001645842us-gaap:SellingAndMarketingExpenseMember2021-04-012021-06-300001645842us-gaap:SellingAndMarketingExpenseMember2020-04-012020-06-300001645842us-gaap:SellingAndMarketingExpenseMember2021-01-012021-06-300001645842us-gaap:SellingAndMarketingExpenseMember2020-01-012020-06-300001645842us-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-300001645842us-gaap:GeneralAndAdministrativeExpenseMember2020-04-012020-06-300001645842us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-06-300001645842us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-06-300001645842us-gaap:PerformanceSharesMember2021-04-012021-06-300001645842us-gaap:PerformanceSharesMember2020-04-012020-06-300001645842us-gaap:PerformanceSharesMember2021-01-012021-06-300001645842us-gaap:PerformanceSharesMember2020-01-012020-06-300001645842us-gaap:RestrictedStockUnitsRSUMember2021-04-012021-06-300001645842us-gaap:RestrictedStockUnitsRSUMember2020-04-012020-06-300001645842us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-06-300001645842us-gaap:StockCompensationPlanMember2021-04-012021-06-300001645842us-gaap:StockCompensationPlanMember2020-04-012020-06-300001645842us-gaap:EmployeeStockMember2021-04-012021-06-300001645842us-gaap:EmployeeStockMember2020-04-012020-06-300001645842us-gaap:EmployeeStockMember2021-01-012021-06-300001645842us-gaap:EmployeeStockMember2020-01-012020-06-300001645842srt:AffiliatedEntityMember2017-10-050001645842srt:AffiliatedEntityMember2017-10-052017-10-050001645842srt:AffiliatedEntityMember2019-10-012019-10-310001645842srt:AffiliatedEntityMember2020-10-012020-10-310001645842srt:AffiliatedEntityMember2021-03-050001645842srt:AffiliatedEntityMember2021-03-052021-03-050001645842us-gaap:SeriesCPreferredStockMember2021-01-012021-06-300001645842us-gaap:SeriesCPreferredStockMember2020-01-012020-06-300001645842us-gaap:ConvertiblePreferredStockMemberus-gaap:WarrantMember2021-01-012021-06-300001645842us-gaap:ConvertiblePreferredStockMemberus-gaap:WarrantMember2020-01-012020-06-300001645842us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001645842us-gaap:EmployeeStockOptionMember2020-01-012020-06-300001645842us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-06-300001645842us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-06-300001645842us-gaap:StockCompensationPlanMember2021-01-012021-06-300001645842us-gaap:StockCompensationPlanMember2020-01-012020-06-300001645842us-gaap:CommonStockMemberus-gaap:WarrantMember2021-01-012021-06-300001645842us-gaap:CommonStockMemberus-gaap:WarrantMember2020-01-012020-06-300001645842zy:ResearchAndDevelopmentRevenuePerformanceBonusesMember2021-01-012021-06-300001645842zy:ResearchAndDevelopmentServiceRevenueCustomerAcceptanceClausesMember2021-04-012021-06-300001645842zy:ResearchAndDevelopmentServiceRevenueCustomerAcceptanceClausesMember2020-04-012020-06-300001645842zy:ResearchAndDevelopmentServiceRevenueCustomerAcceptanceClausesMember2021-01-012021-06-300001645842zy:ResearchAndDevelopmentServiceRevenueCustomerAcceptanceClausesMember2020-01-012020-06-300001645842zy:LodoTherapeuticsCorporationMember2021-01-012021-06-300001645842zy:EnEvolvIncMember2020-04-012020-06-3000016458422021-07-012021-06-3000016458422022-07-012021-06-3000016458422022-07-01srt:MinimumMember2021-06-3000016458422022-07-01srt:MaximumMember2021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerAMemberus-gaap:SalesRevenueNetMember2021-04-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerAMemberus-gaap:SalesRevenueNetMember2020-04-012020-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerAMemberus-gaap:SalesRevenueNetMember2021-01-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerAMemberus-gaap:SalesRevenueNetMember2020-01-012020-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerBMemberus-gaap:SalesRevenueNetMember2021-04-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerBMemberus-gaap:SalesRevenueNetMember2020-04-012020-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerBMemberus-gaap:SalesRevenueNetMember2021-01-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerBMemberus-gaap:SalesRevenueNetMember2020-01-012020-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerCMemberus-gaap:SalesRevenueNetMember2021-04-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerCMemberus-gaap:SalesRevenueNetMember2021-01-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerCMemberus-gaap:SalesRevenueNetMember2020-01-012020-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerDMemberus-gaap:SalesRevenueNetMember2020-01-012020-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerHMemberus-gaap:SalesRevenueNetMember2020-04-012020-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerHMemberus-gaap:SalesRevenueNetMember2021-01-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerAMemberus-gaap:AccountsReceivableMember2021-01-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerAMemberus-gaap:AccountsReceivableMember2020-01-012020-12-310001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerBMemberus-gaap:AccountsReceivableMember2021-01-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerBMemberus-gaap:AccountsReceivableMember2020-01-012020-12-310001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerDMemberus-gaap:AccountsReceivableMember2021-01-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerDMemberus-gaap:AccountsReceivableMember2020-01-012020-12-310001645842zy:CustomerEMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2021-01-012021-06-300001645842zy:CustomerEMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2020-01-012020-12-310001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerGMemberus-gaap:AccountsReceivableMember2021-01-012021-06-300001645842us-gaap:CustomerConcentrationRiskMemberzy:CustomerGMemberus-gaap:AccountsReceivableMember2020-01-012020-12-310001645842country:US2021-04-012021-06-300001645842country:US2020-04-012020-06-300001645842country:US2021-01-012021-06-300001645842country:US2020-01-012020-06-300001645842srt:AsiaMember2021-04-012021-06-300001645842srt:AsiaMember2020-04-012020-06-300001645842srt:AsiaMember2021-01-012021-06-300001645842srt:AsiaMember2020-01-012020-06-300001645842srt:EuropeMember2021-04-012021-06-300001645842srt:EuropeMember2020-04-012020-06-300001645842srt:EuropeMember2021-01-012021-06-300001645842srt:EuropeMember2020-01-012020-06-300001645842zy:ResearchAndDevelopmentRevenuePerformanceBonusesMember2021-04-012021-06-300001645842zy:ResearchAndDevelopmentRevenuePerformanceBonusesMember2020-04-012020-06-300001645842zy:ResearchAndDevelopmentRevenuePerformanceBonusesMember2020-01-012020-06-300001645842us-gaap:PerformanceSharesMemberzy:A2021IncentiveAwardPlanMemberus-gaap:SubsequentEventMember2021-08-022021-08-02
TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from         to
Commission File Number 001-40354
Zymergen Inc.
(Exact name of registrant as specified in its charter)
Delaware46-2942439
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
5980 Horton Street, Suite 105
Emeryville, California 94608
(415) 801-8073
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common stock, $0.001 par value per shareZYThe Nasdaq Global Select 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 ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 filerAccelerated filer
Non-accelerated filerSmaller 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 7(a)(2)(B) of the Securities Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No
As of July 30, 2021, there were approximately 102,389,838 shares of the registrant's common stock, par value $0.001 per share, outstanding.


TABLE OF CONTENTS
 Page


TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risk and uncertainties. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “target,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.
These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our ability to successfully commercialize our products, including Hyaline;
our ability to generate revenues from our products (including Hyaline) and timelines for our products;
our plans for the development, launch and commercialization of the products in our current and future product pipeline;
our ability to successfully produce products (including Hyaline) through fermentation that we initially launch using non-fermentation monomers;
the implementation of our business model and our ability to transition from revenues that are substantially all derived from research and development ("R&D") service contracts and collaboration agreements to revenues primarily derived from the commercialization of our products;
our ability to find and qualify sources of manufacturing;
our ability to successfully complete the product qualification process with customers and generate revenue from the commercialization of qualified products;
the potential benefits of our existing and potential future R&D collaborations and other partner relationships;
our ability to accurately anticipate and address the market opportunity in the electronics, consumer care and agriculture sectors, as well as the total market opportunity across numerous sectors;
our ability to accurately anticipate the size and growth potential of the markets for our products and our ability to develop and commercialize products that gain customer acceptance in those markets;
our capital requirements and our needs for additional financing;
our expectations regarding our ability to obtain and maintain intellectual property protection for our biofacturing platform, products and related technologies;
our ability to obtain and maintain regulatory approval for certain of our products;
regulatory developments in the United States and foreign countries;
the ability of incumbent chemical companies and synthetic biology companies to address the needs of our existing and potential customers;
developments relating to our competitors and our industry;
the success of competing products that are or may become available;
our goals for producing bio-based products that contribute to a more sustainable future;
our ability to successfully enter new markets and manage our international expansion;
our financial performance;


TABLE OF CONTENTS
our ability to generate revenue and obtain funding for our operations, including funding necessary to complete further development of our current and future products;
our estimates regarding margins, future revenue, our ability to manage our expenses, capital requirements and needs for additional financing;
our preliminary allocation of the purchase price of acquisitions;
the success of our significant investments in our continued R&D of new products;
the impact of COVID-19 on our business; and
our ability to develop a new strategic plan and align costs to our delayed revenue ramp.
You should refer to the “Risk Factors” section of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.


TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ZYMERGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share data)
 As of June 30, 2021
As of December 31, 2020 (1)
ASSETS
Current assets:  
Cash and cash equivalents$577,731 $210,205 
Accounts receivable5,998 2,516 
Accounts receivable, unbilled446 1,659 
Prepaid expenses13,886 7,024 
Inventories5,951 4,969 
Restricted cash, current30  
Other current assets2,110 2,201 
Total current assets606,152 228,574 
Restricted cash10,777 9,605 
Property and equipment, net62,456 48,718 
Goodwill33,841 11,604 
Intangible assets, net9,778 4,790 
Other long-term assets2,444 1,630 
Total assets$725,448 $304,921 
LIABILITIES AND CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable$14,240 $12,097 
Accrued and other liabilities33,110 26,888 
Short-term debt, net 79,331 
Short-term deferred rent1,040 494 
Deferred revenue3,386 2,648 
Total current liabilities51,776 121,458 
Long-term debt, net79,911  
Long-term deferred rent21,467 9,916 
Warrant liabilities 14,231 
Other long-term liabilities2,949 2,254 
Total liabilities156,103 147,859 
Commitments and contingencies
Convertible preferred stock, $0.001 par value, 170,000,000 and 214,181,024 shares authorized as of June 30, 2021 and December 31, 2020, respectively; no shares issued and outstanding as of June 30, 2021 and 68,093,280 shares issued and outstanding as of December 31, 2020
 900,798 
Stockholders' equity (deficit)
Common stock, $0.001 par value, 1,500,000,000 and 286,477,669 shares authorized as of June 30, 2021 and December 31, 2020, respectively; 102,297,175 and 12,812,109 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
103 13 
Additional paid-in capital1,528,400 29,991 
Accumulated deficit(959,158)(773,740)
Total stockholders' equity (deficit)569,345 (743,736)
Total liabilities and convertible preferred stock and stockholders' equity (deficit)$725,448 $304,921 
(1) The balance sheet as of December 31, 2020 is derived from the audited financial statements as of that date.
1

TABLE OF CONTENTS
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
2

TABLE OF CONTENTS
ZYMERGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except share and per share data)
Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Revenues from research and development service agreements$4,879 $771 $7,493 $2,675 
Collaboration revenue1,008 445 2,129 1,495 
Total revenues5,887 1,216 9,622 4,170 
Cost and operating expenses:
Cost of service revenue21,829 18,098 42,959 42,674 
Research and development50,152 17,481 89,963 39,283 
Sales and marketing7,904 4,582 14,776 10,123 
General and administrative23,661 16,610 42,992 30,303 
Total cost and operating expenses103,546 56,771 190,690 122,383 
Operating loss(97,659)(55,555)(181,068)(118,213)
Other income (expense):
Interest income12 42 55 419 
Interest expense(2,767)(2,729)(5,494)(5,413)
Gain (loss) on change in fair value of warrant liabilities (430)(1,166)1,849 (1,616)
Other expense, net(5)(31)(768)(63)
Total other expense(3,190)(3,884)(4,358)(6,673)
Loss before income taxes(100,849)(59,439)(185,426)(124,886)
(Provision for) benefit from income taxes16 (1)8 106 
Net loss and comprehensive loss$(100,833)$(59,440)$(185,418)$(124,780)
Net loss per share attributable to common stockholders, basic$(1.30)$(4.84)$(4.07)$(10.57)
Net loss per share attributable to common stockholders, diluted$(1.30)$(4.84)$(4.10)$(10.57)
Weighted average shares used in computing net loss per share to common stockholders, basic77,671,643 12,288,520 45,512,654 11,805,573 
Weighted average shares used in computing net loss per share to common stockholders, diluted77,671,643 12,288,520 45,727,153 11,805,573 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
3

TABLE OF CONTENTS
ZYMERGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
(in thousands, except share data)
Convertible
Preferred Stock
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total Stockholders’
Equity (Deficit)
SharesAmountSharesAmount
Balance, December 31, 202068,093,280 $900,798 12,812,109 $13$29,991 $(773,740)$(743,736)
Vesting of restricted common stock— — 16,810 — — — 
Issuance of common stock upon exercise of options— — 711,963 3,189 — 3,189 
Stock-based compensation expense— — — 2,253 — 2,253 
Share settlement of non-recourse loan to employee— — (67,050)— — — 
Cash settlement of non-recourse loan to employee— — — 1,946 — 1,946 
Net loss— — — — (84,585)(84,585)
Balance, March 31, 202168,093,280 900,798 13,473,832 1337,379 (858,325)(820,933)
Issuance of common stock upon initial public offering, net of commission and issuance costs of $45,138
— — 18,549,500 19529,878 — 529,897 
Issuance of preferred stock upon exercise of Series C Preferred Stock warrants883,332 27,384 — — — — 
Conversion of preferred stock into common stock(68,976,612)(928,182)68,998,791 69928,113 — 928,182 
Issuance of common stock upon exercise of warrants— — 226,880 — — — 
Issuance of common stock in business acquisition— — 774,402 124,808 — 24,809 
Vesting of restricted common stock— — 16,810 — — — 
Issuance of common stock upon exercise of options— — 256,960 11,257 — 1,258 
Stock-based compensation expense— — — 6,965 — 6,965 
Net loss— — — — (100,833)(100,833)
Balance, June 30, 2021 $ 102,297,175 $103 $1,528,400 $(959,158)$569,345 
Convertible
Preferred Stock
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total Stockholders’
Equity (Deficit)
SharesAmountSharesAmount
Balance, December 31, 201954,834,169 $607,763 11,030,816 $11$11,957 $(511,546)$(499,578)
Issuance of common stock in business acquisition— — 1,082,747 110,394 — 10,395 
Vesting of restricted common stock— — 16,810 — — — 
Issuance of common stock upon exercise of options— — 40,868 172 — 172 
Stock-based compensation expense— — — 1,042 — 1,042 
Net loss— — — — (65,340)(65,340)
Balance, March 31, 202054,834,169 607,763 12,171,241 1223,565 (576,886)(553,309)
Vesting of restricted common stock— — 16,810 — — — 
Issuance of common stock upon exercise of options— — 327,979 11,627 — 1,628 
Stock-based compensation expense— — — 1,243 — 1,243 
Net loss— — — — (59,440)(59,440)
Balance, June 30, 202054,834,169 $607,763 12,516,030 $13 $26,435 $(636,326)$(609,878)
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4

TABLE OF CONTENTS
ZYMERGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
 20212020
Operating activities
Net loss$(185,418)$(124,780)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense9,330 9,586 
Stock-based compensation expense9,218 2,285 
Non-cash interest expense580 471 
(Gain) loss on change in fair value of warrant liabilities(1,849)1,616 
Unrealized foreign exchange loss573  
Benefit from income tax(26)(107)
Other(9)(77)
Changes in operating assets and liabilities:
Accounts receivable(3,482)746 
Accounts receivable, unbilled192 (1,230)
Prepaid expenses(6,718)725 
Inventories(982)(452)
Other current assets430 (1,581)
Other long-term assets3 4 
Accounts payable(2,821)(7,795)
Accrued and other liabilities1,879 (738)
Deferred revenue(120)998 
Deferred rent11,943 996 
Other long-term liabilities173 1,581 
Net cash used in operating activities(167,104)(117,752)
Investing activities
Purchases of property and equipment(19,563)(13,194)
Proceeds from sale of property and equipment 13 
Business acquisition, net of cash acquired1,238 80 
Net cash used in investing activities(18,325)(13,101)
Financing activities
Proceeds from initial public offering, net of commission and issuance cost533,293  
Proceeds from exercise of Series C warrants15,002  
Proceeds from repayment of non-recourse loan to employee1,946  
Payment of deferred offering costs (37)
Proceeds from exercise of common stock options, net of repurchases4,448 1,800 
Net cash provided by financing activities554,689 1,763 
Effect of exchange rate changes on cash(532) 
Change in cash and cash equivalents368,728 (129,090)
Cash, cash equivalents, and restricted cash at beginning of the period219,810 163,042 
Cash, cash equivalents, and restricted cash at end of the period$588,538 $33,952 
Cash and cash equivalents$577,731 $24,584 
Restricted cash, current30  
Restricted cash, non-current10,777 9,368 
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$588,538 $33,952 
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5

TABLE OF CONTENTS
ZYMERGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
20212020
Supplemental disclosure of cash flow information:
Cash paid during the period for interest, net of interest capitalized$4,942 $2,009
Supplemental disclosure of non-cash investing and financing activities:
Conversion of preferred shares to common stock$900,798 $
Exercise of warrant liability into preferred stock$12,382 $
Issuance of common stock in business combination$24,809 $10,395
Acquisitions of property and equipment under accounts payable and accrued and other liabilities$5,675 $1,342
Offering costs related to initial public offering under accounts payable and accrued and other liabilities$2,948 $ 
Deferred offering costs related to Series D preferred stock under accounts payable and accrued and other liabilities$ $351
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.    Nature of Operations
Zymergen (the “Company”) integrates computational and manufacturing technologies to design, develop, and commercialize bio-based breakthrough products in a broad range of industries, including electronics, consumer care and agriculture. The Company has developed a platform designed to treat the genome as a search space that utilizes proprietary machine learning algorithms and advanced automation to identify genetic changes for the development of bio-based products. In addition, Zymergen's platform is used to discover novel molecules used to enable unique material properties. The Company was incorporated in Delaware on April 24, 2013.
Initial Public Offering
In April 2021, the Company completed the initial public offering ("IPO") of its common stock. The Company sold an aggregate of 18,549,500 shares of its common stock (inclusive of 2,419,500 shares pursuant to the underwriters’ option to purchase additional shares) at a price of $31.00 per share for aggregate cash proceeds of approximately $529.9 million, net of underwriting discounts, commissions, and estimated offering costs. The sale of 16,130,000 shares in the IPO and the sale of 2,419,500 shares pursuant to the underwriters’ option closed on April 26, 2021. On April 26, 2021, immediately prior to the closing of the IPO, all outstanding shares of convertible preferred stock converted into 68,115,459 shares of common stock. On April 26, 2021, immediately prior to the closing of the IPO, all warrants to purchase preferred stock were exercised and converted into 883,332 shares of common stock.
Need for Additional Capital
The Company has sustained operating losses and expects to continue to generate operating losses for the foreseeable future. The Company had unrestricted cash and cash equivalents of $577.7 million as of June 30, 2021. Since inception through June 30, 2021, the Company has incurred cumulative net losses of $959.2 million.
While the Company has signed a number of initial customer R&D services and collaboration contracts, revenues have been insufficient to fund operations. Accordingly, the Company has funded the portion of operating costs exceeding revenues through a combination of proceeds raised from equity and debt issuances (including from its recent IPO). The Company’s operating costs include the cost of developing and commercializing products as well as providing research and development services. As a consequence, the Company may need to raise additional equity and debt financing that may not be available, if at all, at terms acceptable to the Company to fund future operations. The Company expects that its cash and cash equivalents will be sufficient to fund its operations for a period of at least one year from the date the accompanying unaudited Condensed Consolidated Financial Statements are filed with the Securities and Exchange Commission ("SEC").
The Company cannot at this time predict the specific extent, duration, or full impact that the ongoing COVID-19 pandemic will have on its financial condition and operations. The impact of the COVID-19 pandemic on the financial performance of the Company will depend on future developments, including the duration and spread of the pandemic and related governmental advisories and restrictions. These developments and the continuing impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain. If business conditions, financial markets and/or the overall economy continue to be impacted, the Company’s results may be adversely affected.
Reverse Split
In April 2021, the Company's Board of Directors approved a 3-for-1 reverse split (“Reverse Split”) of its common stock and convertible preferred stock. This became effective on April 13, 2021 with the filing of the Company’s amended and restated certificate of incorporation. The par value of the common stock and convertible preferred stock was not adjusted as the result of the Reverse Split. All share and per share information has been retroactively adjusted to reflect the Reverse Split for all periods presented.
2.    Summary of Significant Accounting Policies
There were no significant changes to the accounting policies during the six months ended June 30, 2021, from the significant accounting policies described in Note 2 of the “Notes to Consolidated Financial Statements” in the Prospectus dated April 21, 2021, filed with the SEC on April 23, 2021 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended (the "Prospectus"), except as described below.
7

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Preparation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2020 has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. These unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of the financial information. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other interim period or for any other future year.
The accompanying unaudited Condensed Consolidated Financial Statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2020 included in the Prospectus.
Principles of Consolidation
These Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.
Fiscal Year
The Company’s fiscal year ends on December 31. References to fiscal 2021, for example, refer to the fiscal year ended December 31, 2021. The period end for the Company covered by this report is June 30, 2021.
Use of Estimates
The presentation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates include, but are not limited to, standalone selling price ("SSP") of performance obligations for contracts with multiple performance obligations, estimate of variable consideration from revenue contracts, useful life of property and equipment, allowance for doubtful accounts, net realizable value of inventories, the valuation of goodwill and intangible assets, and the valuation of common and preferred stock used in the valuation of options to purchase common stock and warrants to purchase common stock or preferred stock. Actual results could differ from those estimates.
Segment Information
Operating segments are identified as components of an enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding resource allocation and assessing performance. The Company’s Acting Chief Executive Officer is its CODM. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making operating decisions, allocating resources and evaluating financial performance. Consequently, the Company has determined it operates and manages its business in one operating and one reportable segment.
Foreign Currency
For the Company and its subsidiaries, the functional currency has been determined to be the U.S. Dollar (USD). Assets and liabilities denominated in foreign currency are remeasured at period-end exchange rates for monetary assets. Non-monetary assets and liabilities denominated in foreign currencies are remeasured at historical rates. Foreign currency transaction gains and losses resulting from remeasurement are recognized in Other expense, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
Stock-Based Compensation
The Company’s stock-based compensation for employees and non-employees is accounted for in accordance with the provisions issued by the Accounting Standard Codification principles for stock compensation and share-based arrangements. Under the fair value recognition provisions of this statement, stock-based compensation expense is estimated at the grant date based on the fair value of the award and is recognized as an expense ratably over the requisite service period of the award, taking into consideration actual forfeitures. Determining the appropriate fair value and calculating the fair value of stock-based
8

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
awards requires judgment, including estimating stock price volatility, risk free interest rates, expected dividends, and expected life.
The Company estimates the fair value of stock options with a service-based vesting condition and employee stock purchase plan purchases on the date of grant using the Black-Scholes-Merton option-valuation model. The Company estimates the fair value of stock options with a market-based vesting condition on the date of grant using a Monte Carlo simulation model. The grant-date fair value of option awards is based upon the fair value of our common stock as of the date of grant, as well as estimates of the expected term of the awards, expected common stock price volatility over the expected term of the option awards, risk-free interest rates and expected dividend yield. Restricted Stock Units ("RSUs") granted are valued at the market price of our common stock on the date of grant.
Contingencies
The Company is subject to various litigation and arbitration claims that arise in the ordinary course of business, including but not limited to those related to employee matters. Some of these proceedings involve claims that are subject to substantial uncertainties and unascertainable damages. The Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company has determined that no provision for liability nor disclosure is required related to any claim against the Company when: (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial.
CARES Act
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security (CARES) Act which, among other things, permits the deferral of the employer’s portion of social security tax payments between March 27, 2020 and December 31, 2020. As of June 30, 2021 and December 31, 2020, respectively, approximately $3.7 million of employer payroll tax payments were deferred with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022.
Accounting Pronouncements Adopted
In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, an amendment to the accounting guidance on cloud computing service arrangements that changes the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance also requires an entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. This guidance is effective for the Company for fiscal years beginning after December 15, 2020, and interim periods within annual periods beginning after December 14, 2021. The Company adopted the new standard effective January 1, 2021 using a prospective transition method. The adoption did not have a material impact on the Condensed Consolidated Financial Statements.
In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), which discusses the interaction between Topic 808, Collaborative Arrangements and Topic 606, Revenue from Contracts with Customers, including clarification around certain transactions between collaborative arrangement participants, adding unit-of-account guidance to Topic 808 and require that transactions in a collaborative arrangement where the participant is not a customer not be presented together with revenue recognized under Topic 606. This standard is effective for the Company for annual periods beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early adoption is permitted but an entity may not adopt the amendments earlier than its adoption date of Topic 606. The Company adopted the new standard effective January 1, 2021 using a retrospective transition method. The adoption did not have a material impact on the Condensed Consolidated Financial Statements.
Recent Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), (“ASU 2016-02”). Under ASU 2016-02, a lessee will be required to recognize assets and liabilities for leases with lease terms of more than 12 months. Recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. ASU 2016-02 will require both types of leases to be recognized on the balance sheet. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional
9

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
information about the amounts recorded in the financial statements. The Company is required to adopt the new standard for 2022 and is currently evaluating the effect that Topic 842 will have on its financial statements and related disclosures.
In June 2016, the FASB issued ASU 2016-13, Credit losses (Topic 326), subsequently amended by ASU 2019-10, which sets forth a “current expected credit loss” model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. The standard will become effective for the Company for fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its financial statements and related disclosures.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. This pronouncement is effective for the Company for fiscal years beginning after December 15, 2021, and for interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on its financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments of ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022 and do not apply to contract modifications made after December 31, 2022. The Company is evaluating the effect of this guidance and has not yet determined the impact to its financial statements and related disclosures.
3.    Business Combinations
Lodo Therapeutics Corporation
On May 16, 2021, the Company completed a nontaxable acquisition of 100% of the equity interests of Lodo Therapeutics Corporation ("Lodo"), a privately-held company which uses its proprietary bacterial metagenomics discovery platform to develop novel therapeutics from nature. The acquisition was accounted for as a business combination. The purchase price for the acquisition was $25.3 million, substantially all of which was non-cash consideration. The non-cash consideration consisted of 774,402 shares of the Company’s common stock. The intangible assets acquired consisted primarily of $22.2 million of goodwill and Lodo’s developed technology of $5.4 million. Goodwill recognized is primarily a measure of the expected synergies from combining the operations of Lodo and the Company’s developed technologies.
The Company granted RSUs to certain employees and consultants of Lodo in connection with the acquisition that generally vest in three installments over a period of up to two years, subject to their continued service with the Company.
10

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table represents the allocation of the purchase consideration, including the non-cash consideration, based on fair value (in thousands):
Cash and cash equivalents$1,778 
Other current assets464 
Property, plant and equipment948 
Other non-current assets305 
Developed technology5,400 
Customer relationship intangible asset420 
Total identifiable assets acquired$9,315 
Accounts payable and accrued expenses$4,643 
Other liabilities1,534 
Deferred tax liability26 
Total liabilities assumed$6,203 
Net identifiable assets acquired$3,112 
Goodwill22,237 
Net assets acquired$25,349 
The Company's purchase price allocation for the acquisition is preliminary and subject to revision as additional information about the fair value of the assets and liabilities becomes available. The fair values assigned to tangible and intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions and may be subject to change as additional information is received. Primary areas that are not yet finalized are related to acquired intangible assets including goodwill. Additional information that existed as of the closing date but not known at the time of this filing may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the closing date.
As a result of the business combination the Company incurred $0.9 million of acquisition related costs for its benefit which are not accounted for as part of consideration transferred. Acquisition related costs related primarily to legal services, accounting, tax, valuation, and due diligence and are recognized in General and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss. Pro forma results of operations will not be presented because the effects of this acquisition were not material to the Company’s Condensed Consolidated Financial Statements under applicable SEC rules.
enEvolv, Inc.
On March 10, 2020, the Company completed a nontaxable acquisition of 100% of the equity of enEvolv, Inc., which has developed an enzyme and strain development platform that is built on diverse strain libraries and ultra-high throughput screening that utilizes molecular sensor systems. The acquisition was accounted for as a business combination. The purchase price for the acquisition was $10.7 million, of which $10.6 million was non-cash consideration. The non-cash consideration primarily consisted of 1,082,747 shares of the Company’s common stock. The intangible assets acquired consisted primarily of $7.9 million of goodwill and enEvolv’s developed technology of $2.6 million. Goodwill recognized is primarily a measure of the expected synergies from combining the operations of enEvolv and the Company’s developed technologies.
11

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table represents the allocation of the purchase consideration, including the non-cash consideration, based on fair value (in thousands):
Cash and cash equivalents$141 
Accounts receivable589 
Other current assets195 
Property, plant and equipment292 
Other non-current assets150 
Developed technology2,600 
Customer relationship intangible asset600 
Total identifiable assets acquired$4,567 
Accounts payable and accrued expenses$1,021 
Other current liabilities653 
Deferred tax liability107 
Total liabilities assumed$1,781 
Net identifiable assets acquired$2,786 
Goodwill7,871 
Net assets acquired$10,657 
As a result of the business combination the Company incurred $0.4 million of acquisition related costs for its benefit and were not accounted for as part of consideration transferred. Acquisition related costs related primarily to legal services, accounting, tax, valuation, due diligence, and escrow fees and are recognized in General and administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Loss. Prior to the close of the transaction, the Company and enEvolv were unrelated parties that entered into a Research Agreement, whereby enEvolv provided services to the Company. As of the transaction date, the Company had $0.2 million prepaid services which were effectively settled through the business combination. Pro forma results of operations have not been presented because the effects of this acquisition were not material to the Company's Condensed Consolidated Financial Statements under applicable SEC rules.
4.    Goodwill and Intangible Assets
The following table summarizes goodwill as of June 30, 2021 and December 31, 2020 (in thousands):
June 30,
2021
December 31,
2020
Goodwill$33,841 $11,604 
The $22.2 million increase in goodwill from December 31, 2020 to June 30, 2021 is due to the acquisition of Lodo on May 16, 2021 (Note 3).
The following table summarizes the net book value of the finite-lived intangible assets as of June 30, 2021 and December 31, 2020 (in thousands):
 CostAccumulated
Amortization
Intangible Assets, Net
 June 30,
2021
December 31,
2020
June 30,
2021
December 31,
2020
June 30,
2021
December 31,
2020
Developed technology$12,300 $6,900 $(3,116)$(2,460)$9,184 $4,440 
Customer relationships1,400 980 (806)(630)594 350 
Net carrying value$13,700 $7,880 $(3,922)$(3,090)$9,778 $4,790 
As a result of the acquisition of Lodo, the Company acquired intangible assets consisting of $5.4 million in developed technology and $0.4 million in customer relationships, which are amortized over an estimated useful life of six and two years, respectively. The Company recognized $0.5 million and $0.3 million in amortization expense for the three months ended June 30, 2021 and 2020, and $0.8 million and $0.6 million for the six months ended June 30, 2021 and 2020, respectively.
12

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Future amortization of intangible assets is as follows (in thousands):
Remainder of 2021$1,249 
20222,248 
20232,067 
20241,271 
20251,271 
Thereafter1,672 
$9,778 
5.    Fair Value Measurements of Financial Instruments
GAAP defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. GAAP permits an entity to choose to measure many financial instruments and certain other items at fair value and contains financial statement presentation and disclosure requirements for assets and liabilities for which the fair value option is elected.
The hierarchy of fair value valuation techniques under GAAP provides for three levels: Level 1 provides the most reliable measure of fair value, whereas Level 3, if applicable, generally would require significant management judgment. The three levels for categorizing assets and liabilities under GAAP’s fair value measurement requirements are as follows:
Level 1 – Fair value of the asset or liability is determined using unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Fair value of the asset or liability is determined using inputs other than quoted prices that are observable for the applicable asset or liability, either directly or indirectly, such as quoted prices for similar (as opposed to identical) assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 – Fair value of the asset or liability is determined using unobservable inputs that are significant to the fair value measurement and reflect management’s own assumptions regarding the applicable asset or liability.
There were no transfers between the levels during the periods presented. As of June 30, 2021 and December 31, 2020, the Company’s financial assets and financial liabilities measured at fair value on a recurring basis were classified within the fair value hierarchy as follows (in thousands):
Level 1Level 2Level 3Balance as of June 30, 2021
Financial Assets    
Cash equivalents$565,581 $ $ $565,581 
Total financial assets$565,581 $ $ $565,581 
Level 1Level 2Level 3Balance as of December 31, 2020
Financial Assets    
Cash equivalents$205,873 $ $ $205,873 
Total financial assets$205,873 $ $ $205,873 
Financial Liabilities
Warrant derivative liability$ $ $14,231 $14,231 
Total financial liabilities$ $ $14,231 $14,231 
Financial instruments consist principally of cash equivalents, accounts receivables, accounts payable, accrued liabilities, debt, and warrant derivative liability.
13

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table provides a reconciliation of the beginning and ending balances for the warrant derivative liability measured at fair value using significant unobservable inputs (Level 3) (in thousands):
Balance at January 1, 2021$14,231 
Change in fair value(1,849)
Fair value of warrants exercised(12,382)
Balance at June 30, 2021$ 
The warrant derivative liability represented the fair value of the warrants issued in conjunction with the term loan agreement entered into in 2019. In April 2021 all warrants were exercised effective with the Company's IPO. No warrants were outstanding at June 30, 2021 (Note 7).
The following methods and assumptions were used by the Company in estimating the fair value of financial instruments:
Accounts receivable, accounts payable, and accrued liabilities: The amounts reported in the accompanying balance sheets approximate fair value due to the short maturity of these instruments.
Debt: The gross amounts reported approximate fair value due to the debt being a variable interest rate debt and its relatively short-term maturity.
Warrant derivative liability: In April 2021 all warrants were exercised effective with the Company's IPO. At exercise, the warrants were remeasured to intrinsic value, with the resulting change in fair value recognized in Other income (expense) in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Prior to the exercise of the warrants, the Company estimated the fair value of outstanding warrants using a weighted average between the value derived from a Black-Scholes (BSM) option model for a fully diluted scenario and the price of the warrant by applying the probability-weighted expected return method. The BSM model's inputs reflect assumptions that a market participant would use in pricing the instrument in a current period transaction and included the following as of December 31, 2020:
 December 31,
2020
Value per Series C Preferred share (fully-diluted)$35.46 
Exercise price$16.98 
Expected volatility77.0 %
Risk-free rate0.79 %
Time to liquidity (years)8.97
6.    Balance Sheet Components
Property and equipment consist of the following as of June 30, 2021 and December 31, 2020 (in thousands):
 June 30,
2021
December 31,
2020
Machinery and equipment$62,676 $54,999 
Leasehold improvements28,983 24,192 
Furniture and office equipment3,290 2,743 
Computers and software2,588 2,677 
97,537 84,611 
Less accumulated depreciation and amortization(56,433)(47,977)
41,104 36,634 
Construction in progress21,352 12,084 
Total property and equipment, net$62,456 $48,718 
Depreciation and amortization expense was $4.4 million and $4.7 million for the three months ended June 30, 2021 and 2020, and $8.5 million and $9.0 million for the six months ended June 30, 2021 and 2020, respectively.
14

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accrued and other current liabilities consist of the following as of June 30, 2021 and December 31, 2020 (in thousands):
June 30,
2021
December 31,
2020
Accrued compensation cost$15,023 $15,211 
Other accrued operating expenses15,920 9,616 
Accrued offering costs218  
Accrued legal service fees1,038 1,105 
Accrued interest815 842 
Accrued tax liabilities96 114 
Accrued and other current liabilities$33,110 $26,888 
7.    Term Loans
In December 2019, the Company entered into and in February 2021, the Company amended and restated a credit and guaranty agreement in relation to the Company's senior secured delayed draw term loan facility, with Perceptive Credit Holdings II, LP and PCOF EQ AIV II, LP (the “Perceptive Credit Agreement”), in an aggregate principal amount of $100.0 million. On closing on December 19, 2019, the Company received $85.0 million which was available on the closing date, net of fees and repayment of the previous term loan. An additional $15.0 million is available prior to September 30, 2021 subject to satisfaction of certain milestones.
The Company's Perceptive Credit Agreement provides that a material adverse change constitutes an event of default. The lender has not invoked the material adverse change clause to date. In the event the material adverse change clause is invoked, the outstanding principal, interest, including any applicable default interest and any prepayment premium will become payable on demand of the lender.
The Company was in compliance with all covenants of the senior secured delayed draw term loan facility as of June 30, 2021.
The amounts outstanding as of December 31, 2020 were classified as current due to the substantial doubt about the Company's ability to continue operating as a going concern as of the date of issuance of the Company's audited annual financial statements, and the potential impact of the material adverse change clause.
Debt consists of the following as of June 30, 2021 and December 31, 2020 (in thousands):
 June 30,
2021
December 31,
2020
Senior secured delayed draw term loan facility bearing interest equal to 11.5% as of June 30, 2021 and December 31, 2020; final maturity December 19, 2024
$85,000 $85,000 
Unamortized discount and offering costs(5,089)(5,669)
Senior secured delayed draw term loan facility, net79,911 79,331 
Less current portion 79,331 
Long-term debt, net$79,911 $ 
Interest expense on the Company’s term loan consisted of the following (in thousands):
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Coupon interest$2,471 $2,471 $4,914 $4,942 
Amortization of debt discount and offering costs296 258 580 471 
Total interest expense on term loan$2,767 $2,729 $5,494 $5,413 
Warrants Related to Prior Loan Agreement
In November 2014, the Company entered into a loan and security agreement for a term note which was subsequently amended and extinguished. In connection with the loan and security agreement and its amendments, the Company issued warrants to purchase the Company's common stock. On April 28, 2021, all warrants to purchase the Company's common stock, issued in connection with the Company's prior loan agreement, were exercised at the option of the holder. An aggregate of 226,880 shares were issued in connection with the cashless exercise. As of June 30, 2021, no common stock warrants were outstanding.
15

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Warrants Related to Current Loan Facility
In connection with the Perceptive Credit Agreement, the Company issued a warrant to purchase the Company’s Series C Preferred Stock (the “2019 Warrants”). On April 1, 2021, the holders of the Company's Series C Preferred Stock Warrants elected to exercise their warrants. The exercise was conditioned upon the consummation of a public offering of the Company's common stock on or prior to June 30, 2021. The exercise became effective with the Company's IPO in April 2021, with aggregate exercise proceeds of $15.0 million. As of June 30, 2021, no 2019 Warrants were outstanding.
8.    Convertible Preferred Stock
Except as described below, the Company’s convertible preferred stock is described in Note 10 of the “Notes to Consolidated Financial Statements” in the Prospectus.
As of December 31, 2020, the Company's convertible preferred stock consisted of the following:
Authorized and DesignatedOutstandingLiquidation Preference (per share)Liquidation Preference
(in thousands)
Series A redeemable convertible preferred stock21,998,2507,332,750$4.9893 $36,585 
Series A-1 redeemable convertible preferred stock26,158,8338,719,611$0.7599 6,626 
Series B redeemable convertible preferred stock42,244,58814,081,522$10.1091 142,352 
Series C redeemable convertible preferred stock76,750,88124,700,286$16.9836 419,500 
Series D redeemable convertible preferred stock47,028,47213,259,111$22.3269 296,035 
214,181,02468,093,280$901,098 
On April 26, 2021, immediately prior to the closing of the IPO, all outstanding shares of convertible preferred stock converted into 68,115,459 shares of common stock. As of June 30, 2021, no convertible preferred stock was outstanding.
9.    Equity
Equity Incentive Plans
In April 2021, the 2021 Incentive Award Plan (the "2021 Plan") became effective. The 2021 Plan serves as a successor to the 2014 Stock Plan (the "2014 Plan"). The 2021 Plan permits the award of stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards, cash awards and stock bonuses. The Company reserved an initial 10,770,034 shares of common stock for issuance under the 2021 Plan, which includes the remaining reserved and unissued shares under the 2014 plan on the effective date of the 2021 Plan. The number of shares reserved for issuance under the 2021 Plan will increase automatically on January 1 of each calendar year continuing through the tenth calendar year during the term of the 2021 Plan by the number of shares equal to 5.0% of the total outstanding shares of the Company's common stock as of the immediately preceding December 31 or such lesser number as determined by the Board of Directors. Awards granted under the 2021 Plan expire no later than ten years from the date of grant. For incentive stock options and non-statutory stock options, the option price shall not be less than 100% of the fair market value on the day of grant. If at the time the Company grants an option and the optionee directly or by attribution owns stock possessing more than 10% of the total combined voting power of all the Company's classes of stock, the option price is required to be at least 110% of the fair market value on the day of grant. Options and RSUs granted typically vest over a four-year period but may be granted with different vesting terms. As of June 30, 2021, there were 8,266,390 shares available for us to grant under the 2021 Plan.
In July 2014, the Company adopted the 2014 Plan for employees and non-employees pursuant to which the Board of Directors granted share-based awards, including stock options, to officers, employees, and non-employees. As of the effective date of the 2021 Plan, no further awards are issued from the 2014 Plan.
16

TABLE OF CONTENTS
ZYMERGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Stock Options with Service-based Vesting Conditions
The following table summarizes option activity under the 2021 Plan and the 2014 Plan:
 Number of
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual Life
Aggregate
Intrinsic Value
    (in thousands)
Outstanding - December 31, 20205,498,490 $6.657.75$79,756
Options granted2,049,489 $28.41
Options exercised(968,923