美国
证券交易委员会
华盛顿特区20549
形式
（马克 一）
截至本季度末
或
的过渡期 到
委托文件编号：
（注册人的确切名称 宪章）
| (述明或其他司法管辖权 成立或组织） | (税务局雇主 识别号） | |
| 市场街2261号，套房5541 | ||
| 加州旧金山 | 94114 | |
| (主要行政办公室地址) | (邮政编码) |
(注册人电话号码)
金箭并购公司
（原名、原地址、原财政 年份，如果自上次报告以来发生了变化）
根据第12（b）条登记的证券 该法案的：
| 每个班级的标题 | 交易符号 | 注册的交易所名称 | ||
| 这个 | ||||
| 的 |
通过检查注册人是否
(1)在过去12个月内已提交1934年证券交易法第13或15（d）条要求提交的所有报告
(or登记人被要求提交此类报告的较短期限），并且（2）已遵守此类提交要求
在过去的90天里。
用复选标记表示注册人是否
已经以电子方式提交了根据S-t法规(§232.405)第405条规则要求提交的每个交互数据文件
在过去12个月内(或在要求登记人提交此类档案的较短期限内)。
通过检查注册人是否 是大型加速文件夹、加速文件夹、非加速文件夹、小型报告公司或新兴成长型公司。 请参阅“大型加速文件夹”、“加速文件夹”、“小型报告公司”的定义 和《交易法》第120亿.2条中的“新兴成长型公司”。
| 大型加速文件服务器 | ☐ | 加速文件管理器 | ☐ | ||
| ☒ | 规模较小的报告公司 | 新兴成长型公司 |
如果是新兴成长型公司，请打勾表示
如果注册人已选择不使用延长的过渡期来遵守任何新的或修订的财务会计，请注明
根据《交易法》第13(A)条提供的标准。
通过检查注册人是否
是一家空壳公司（定义见《交易法》第120亿.2条）。是的 ☐编号：
截至2024年11月13日，登记人
有
目录
| 页面 | |
| 选定的定义 | ii |
| 前瞻性陈述 | iii |
| 风险因素摘要 | vi |
| 第一部分-财务信息 | 1 |
| 项目1.财务报表 | 1 |
| 简明综合资产负债表(未经审计) | 1 |
| 简明合并经营报表和全面收益（亏损）（未经审计） | 2 |
| 简明合并股东权益报表（未经审计） | 3 |
| 截至2024年9月30日和2023年9月30日的九个月简明合并现金流量报表（未经审计） | 5 |
| 未经审计的简明合并财务报表注释（未经审计） | 6 |
| 项目2.管理层对财务状况和经营结果的讨论和分析 | 36 |
| 项目3.关于市场风险的定量和定性披露 | 54 |
| 项目4.控制和程序。 | 54 |
| 第二部分-其他信息 | 56 |
| 项目1.法律诉讼 | 56 |
| 第1A项。风险因素 | 56 |
| 项目2.未登记的股票证券销售和收益的使用 | 78 |
| 项目3.高级证券违约 | 78 |
| 项目4.矿山安全信息披露 | 78 |
| 项目5.其他信息 | 78 |
| 项目6.展品 | 79 |
| 签名 | 80 |
i
精挑细选 定义
在本文档中：
“Bolt”指的是Bolt Projects Holdings， Inc.是特拉华州的一家公司，在收盘前的前身是Golden Arrow Merge Corp.。
“螺栓螺纹”的意思是螺栓螺纹， 公司，特拉华州的一家公司，如果上下文需要，还包括其合并的子公司。
“企业合并”是指交易 《企业合并协议》考虑的事项，包括合并事项。
“企业合并协议”是指 《企业合并协议》，日期为2023年10月4日，经日期为2024年6月10日的第1号修正案修订，由Golden和 Arrow Merge Corp、Merge Sub和Bolt Thads。
“普通股”是指普通股 博尔特，每股面值0.0001美元。
“GAMC”指的是金箭合并公司， 该公司因关闭而更名为Bolt Projects Holdings，Inc.。
“GAMC IPO”指的是首次公开 金箭合并公司的发行，于2021年3月19日圆满。
“合并子公司”是指Beam合并子公司， 公司，一家特拉华州公司，也是GAMC的全资子公司。
“纳斯达克”指纳斯达克股市 LLC.
“私募股权令”是指 在收盘时同时通过私募发行向发起人发行的5，000，000份普通股股票的认购权 GAMC IPO。
“公开令”是指逮捕令 包括在GAMC IPO中出售的单位中，根据其条款，每个单位可行使一股普通股。
“赞助商”是指金箭赞助商， LLC是特拉华州的一家有限责任公司。
“美国公认会计原则”指的是会计原则 在美利坚合众国被普遍接受。
“认股权证协议”是指现有的 作为认股权证代理人的大陆股票转让信托公司与博尔特公司于2021年3月16日签署的认股权证协议，根据 手令是向其发出的。
“认股权证”指公开认股权证 连同私募认股权证。
ii
前瞻性 报表
这份Form 10-Q季度报告包含前瞻性 声明，包括1995年《私人证券诉讼改革法》中安全港条款的含义。我们打算 这类前瞻性陈述应由第27A条所载的前瞻性陈述安全港规定涵盖 经修订的1933年证券法(“证券法”)和1934年证券交易法第21E条，作为 经修订(“交易法”)。在某些情况下，您可以通过诸如“可能”之类的术语来识别前瞻性陈述。 “将”、“应该”、“预期”、“计划”、“预期”、“可能”、“打算” “目标”、“项目”、“思考”、“相信”、“估计”、“预测” “潜在”或“继续”或这些术语的否定或其他类似表述，尽管不都是前瞻性的 声明中包含这些词语。本季度报告中表格10-Q中包含的除历史事实陈述外的所有陈述， 包括但不限于，有关公司战略、财务结果和目标的陈述是前瞻性陈述。
本季度的前瞻性陈述 Form 10-Q报告只是预测，主要基于我们当前对未来事件和财务的预期和预测 我们认为可能影响我们的业务、财务状况和运营结果的趋势。这些前瞻性陈述说明了 仅截至本季度报告（表格10-Q）之日，并且受到许多已知和未知风险、不确定性和其他 可能导致实际结果与前瞻性陈述中预测的结果存在重大差异的重要因素，包括， 但不限于本季度报告10-Q表格标题为“风险因素”和“管理层”的部分中描述的内容 财务状况和经营业绩的讨论和分析。”这些风险和不确定性包括但不限于 致：
| ● | 我们的亏损和运营负现金流历史以及大量融资的必要性 对我们继续经营的能力存在重大怀疑。 |
| ● | 我们有净亏损的历史，未来可能无法实现或维持盈利能力。 |
| ● | 我们未来可能会产生大量费用和资本支出来执行我们的业务计划 如果有的话，我们可能无法充分控制我们的费用或以优惠的条件筹集额外资本。 |
| ● | 我们的收入主要来自B-Silk产品的销售，因此我们高度依赖 关于该产品的成功。 |
| ● | b-丝和未来的生物材料候选产品可能无法取得市场成功，而且，如果我们的产品 如果没有取得市场成功，我们可能无法产生可观的收入。 |
| ● | 我们目前依赖单一制造合作伙伴和制造设施来生产b-silk 未来打算依赖美国和国际上的少数制造合作伙伴和制造设施。 |
| ● | 数量有限的客户、分销商和合作伙伴占重要部分 我们的收入，而且在可预见的未来他们可能会继续这样做。失去主要客户、分销商或合作 合作伙伴可能会损害我们的经营业绩。 |
| ● | 某些授予客户排他性权利的合同可能会限制我们在某些领域销售产品的能力 市场的 |
| ● | 我们可能会面临来自现有材料以及其他新进入者的激烈竞争，如果我们 无法继续开发创新产品和技术和/或扩大b-silk的生产规模，我们可能无法获得收益，或者 可能会将市场份额输给我们的竞争对手。 |
| ● | 我们已发现财务报告内部控制存在重大缺陷。 |
| ● | 我们可能无法充分保护我们的专利和其他知识产权资产，这可能会 对我们的竞争地位产生不利影响并降低我们产品的价值，以及保护我们专利和知识产权的诉讼 房地产资产可能很昂贵。 |
| ● | 我们部分依赖商业秘密来保护我们的技术，以及我们未能获得或维持贸易 秘密保护可能会限制我们的竞争能力。 |
| ● | 我们可能无法充分保护我们的专利和其他知识产权资产，这可能会 对我们的竞争地位产生不利影响并降低我们产品的价值，以及保护我们专利和知识产权的诉讼 房地产资产可能很昂贵。 |
| ● | 我们未能满足纳斯达克的持续上市要求可能导致我们的退市 普通股。 |
| ● | 可能影响这些声明中列出的事件结果的其他重要风险因素 这可能会影响我们第二部分第1A项中描述的经营业绩和财务状况。其中的“风险因素” 表格10-Q季度报告。 |
因为前瞻性陈述本质上是 由于存在风险和不确定性，其中一些无法预测或量化，其中一些超出了我们的控制范围，您应该 不要依赖这些前瞻性陈述作为对未来事件的预测。此外，我们在不断变化的环境中运营。新的风险 因素和不确定性可能会不时出现，管理层不可能预测所有风险因素和不确定性。 除适用法律要求外，我们不打算公开更新或修改本文包含的任何前瞻性陈述，无论 由于任何新信息、未来事件、情况变化或其他原因。
iii
风险 因素摘要
我们面临众多风险和不确定性， 包括下文第二部分第IA项中进一步描述的内容。本季度报告中的“风险因素”（Form 10-Q）代表 我们在成功实施战略和业务增长方面面临的挑战。特别是， 以下是可能抵消我们竞争优势或对我们的业务战略产生负面影响的主要因素，其中 可能对我们的业务、财务状况、运营业绩、未来增长前景产生重大不利影响，或导致下滑 在我们普通股的价格中：
| ● | 我们的亏损和运营负现金流历史 以及对大量资本的需求使人们对我们继续经营的能力产生了极大的怀疑。 |
| ● | 我们有净亏损的历史，可能无法实现 或者在未来保持盈利能力。 |
| ● | 我们的经营业绩可能会大幅波动，因为 多种因素，包括但不限于终端市场需求、监管行动的时机和制造业的变化 成本，其中许多超出了其控制范围。 |
| ● | 我们可能会产生大量费用和资本支出 未来执行我们的业务计划，我们可能无法充分控制我们的费用或筹集额外资本 条款，如果有的话。 |
| ● | 我们可能无法产生足够的现金来提供服务 我们所有的债务义务，并可能被迫采取其他行动来履行我们的债务义务，而这可能不会 取得成功。 |
| ● | 我们遵守多项限制性债务契约， 银杏纸币购买协议。 |
| ● | 我们的收入主要来自B-Silk的销售 产品，因此我们高度依赖该产品的成功。 |
| ● | b-丝和未来的生物材料候选产品可能不会 取得市场成功。如果我们的产品没有取得市场成功，我们可能无法产生可观的收入。 |
| ● | 我们目前依赖单一制造合作伙伴和制造业 生产b-silk的工厂，未来打算依靠少数制造合作伙伴和制造 在美国和国际上都设有设施。 |
| ● | b-silk和我们未来产品的定价和可用性 可能受到我们无法控制的因素的影响，包括但不限于终端市场需求、制造成本的变化，以及 供应商可用性。 |
| ● | 如果我们生产b-丝的成本大幅增加，我们 我们将不得不提高价格，这可能会对我们获得新客户和保留现有客户的能力产生负面影响。 |
| ● | 我们在营销和销售b-silk方面的经验有限， 如果我们无法获得消费品公司和其他公司的市场接受，我们的业务可能会受到不利影响。 |
| ● | 有限数量的客户、分销商和合作 合作伙伴占我们收入的很大一部分，而且在可预见的未来他们可能会继续这样做。失去少校 客户、分销商或合作伙伴可能会损害我们的经营业绩。 |
| ● | 我们可能面临销售b-丝和未来生物材料的挑战 以商业规模和商业上可行的成本生产产品，我们可能无法将b-丝或未来的生物材料产品商业化 达到盈利或维持和发展我们当前业务所需的程度。 |
| ● | 授予客户排他性权利的某些合同 可能会限制我们在某些市场销售产品的能力。 |
iv
| ● | 我们可能面临来自现有材料的激烈竞争 以及其他新进入者，如果我们无法继续开发创新产品和技术和/或扩大生产规模 对于b-silk，我们可能无法获得或可能失去竞争对手的市场份额。 |
| ● | 如果我们无法与当前的制造相协调 合作伙伴和任何未来的制造合作伙伴将按现有和计划成功开始、扩大或维持b-silk的生产 制造设施、我们的客户关系、业务和运营结果可能会受到不利影响。 |
| ● | 我们已经发现内部控制存在重大缺陷 关于财务报告。如果我们无法补救这些重大弱点，或者如果我们发现 未来或以其他方式未能保持有效的财务报告内部控制体系，我们可能无法准确地 或及时报告我们的财务状况或运营结果，这可能会对投资者对、 我们的普通股。 |
| ● | 作为一家远程优先的公司，我们的运营受到加强的影响 和网络安全风险。 |
| ● | 我们可能无法充分保护我们的专利， 其他知识产权资产，可能对我们的竞争地位产生不利影响并降低我们产品的价值，以及诉讼 保护我们的专利和知识产权资产可能代价高昂。 |
| ● | 第三方可能会声称我们侵犯了他们的专有权 权利，并可能阻止我们将我们的产品商业化和销售。 |
| ● | 我们部分依赖商业秘密来保护我们的技术， 我们未能获得或维持商业秘密保护可能会限制我们的竞争能力。 |
| ● | 如果我们的信息发生重大中断 技术系统，包括安全漏洞，或者如果我们未能成功实施新系统和软件，我们的业务运营 财务状况可能会受到不利影响。 |
| ● | 政府法规和私人行为 包括b-silk在内的化妆品或我们开发的其他产品的营销和广告可能会限制、抑制或延迟 我们销售此类产品的能力并损害我们的业务。 |
| ● | 如果我们的产品不符合适用的 法律要求，不符合质量和化妆品成分标准，或以其他方式对消费者健康造成不良影响， 它可能会导致声誉损害、补救成本或政府当局执法。 |
| ● | 如果我们的产品被发现有缺陷或不安全，我们可能会 受到各种产品责任索赔的影响，这可能会损害我们的声誉和业务。 |
| ● | 我们普通股的市场价格一直和 无论我们的经营业绩如何，未来可能会波动或可能会下降。您可能会失去部分或全部投资。 |
| ● | 我们未能满足继续上市的要求 纳斯达克可能会导致我们的普通股退市。 |
| ● | 未来的诉讼或类似的法律程序可能会 对我们的业务和经营业绩造成重大不利影响。 |
v
部分 一-财务信息
项目1.财务报表
博尔特项目控股公司。
CONDENSED CONSOLIDATED BALANCE SHEETS
(以千计， 除外股份和每股金额)
九月
30, | 12月31日， | |||||||
| （未经审计） | 2023 | |||||||
| 资产 | ||||||||
| 流动资产： | ||||||||
| 现金及现金等价物 | $ | $ | ||||||
| 流动受限现金 | ||||||||
| 库存 | ||||||||
| 预付费用和其他流动资产 | ||||||||
| 流动资产总额 | ||||||||
| 递延交易成本 | ||||||||
| 其他非流动资产 | ||||||||
| 总资产 | $ | $ | ||||||
| 负债、可转换优先股与股东亏损 | ||||||||
| 流动负债： | ||||||||
| 应付账款 | $ | $ | ||||||
| 应计费用和其他流动负债 | ||||||||
| 应缴消费税 | ||||||||
| 可转换票据，流通 | ||||||||
| 关联方可转换票据，当前 | ||||||||
| 经营租赁负债，流动 | ||||||||
| 基于股份的终止责任 | ||||||||
| 流动负债总额 | ||||||||
| 非流动经营租赁负债 | ||||||||
| 长期债务，非流动债务 | ||||||||
| 公募令责任 | ||||||||
| 关联方私募股权证责任 | ||||||||
| 可转换优先股证负债 | ||||||||
| 其他非流动负债 | ||||||||
| 总负债 | ||||||||
| 承付款和或有事项(附注14) | ||||||||
| 股东赤字： | ||||||||
| 优先股，$ | ||||||||
| 普通股：$ | ||||||||
| 额外实收资本 | ||||||||
| 累计其他综合收益(亏损) | ( | ) | ||||||
| 累计赤字 | ( | ) | ( | ) | ||||
| 股东总亏损额 | ( | ) | ( | ) | ||||
| 总负债、可转换优先股和股东赤字 | $ | $ | ||||||
随附注释是这些未经审计的浓缩文件的组成部分 综合财务报表
1
博尔特项目控股公司。
浓缩合并运营报表
和综合收益(亏损)
为 截至2024年9月30日和2023年9月30日的三个月和九个月（未经审计）
(以千计， 除外股份和每股金额)
| 止三个月 9月30日， | 止九个月 9月30日， | |||||||||||||||
| 2024 | 2023 | 2024 | 2023年（修订） | |||||||||||||
| 收入 | $ | $ | $ | $ | ||||||||||||
| 收入成本 | ||||||||||||||||
| 毛收入（损失） | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
| 运营费用： | ||||||||||||||||
| 研发 | ||||||||||||||||
| 销售和市场营销 | ||||||||||||||||
| 一般及行政 | ||||||||||||||||
| 重组成本 | ||||||||||||||||
| 总运营支出 | ||||||||||||||||
| 运营亏损 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收入（费用） | ||||||||||||||||
| 财产和设备减值 | ( | ) | ( | ) | ||||||||||||
| 租赁减值 | ( | ) | ( | ) | ||||||||||||
| 利息开支 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 租赁终止的收益（损失） | ( | ) | ( | ) | ||||||||||||
| 可转换票据清偿损失 | ( | ) | ||||||||||||||
| 可转换优先股认股权证负债的重新计量 | ( | ) | ||||||||||||||
| 重新确定公发行证责任 | ||||||||||||||||
| 重新确定关联方私募股权授权书责任 | ||||||||||||||||
| 重新衡量基于股份的终止责任 | ( | ) | ||||||||||||||
| 可转换票据的重新测量 | ( | ) | ( | ) | ||||||||||||
| 关联方可转换票据重新计量 | ( | ) | ||||||||||||||
| 其他收入，净额 | ||||||||||||||||
| 其他收入(费用)合计，净额 | ( | ) | ( | ) | ( | ) | ||||||||||
| 所得税前收入(亏损) | ( | ) | ( | ) | ( | ) | ||||||||||
| 所得税拨备 | ||||||||||||||||
| 净利润（亏损） | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| 其他全面收益(亏损)： | ||||||||||||||||
| 报告货币兑换 | ||||||||||||||||
| 综合收益（损失） | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| 加权平均已发行普通股： | ||||||||||||||||
| 基本 | ||||||||||||||||
| 稀释 | ||||||||||||||||
| 每股净收益(亏损)： | ||||||||||||||||
| 基本 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| 稀释 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
随附注释是这些未经审计的浓缩文件的组成部分 综合财务报表
2
博尔特项目控股公司。
可转换资产的浓缩合并报表 股票和股东的赤字
为 截至2023年9月30日的三个月和九个月（未经审计）
(单位：千，股份和每股金额除外)
| 敞篷车 | 积累 | |||||||||||||||||||||||||||||||
| 择优 股票 | 普通股 | 额外 实收 | 积累 | 其他 全面 | 总 股东 | |||||||||||||||||||||||||||
| 股份 | 量 | 股份 | 量 | 资本 | 赤字 | 收入(亏损) | 赤字 | |||||||||||||||||||||||||
| 2023年1月1日的余额 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| 基于股票的补偿费用 | — | — | ||||||||||||||||||||||||||||||
| 报告货币兑换调整 | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| 净亏损 | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||
| 2023年3月31日的余额 | $ | $ | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| 基于股票的补偿费用 | — | — | ||||||||||||||||||||||||||||||
| 报告货币兑换调整 | — | — | ||||||||||||||||||||||||||||||
| 净亏损 | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||
| 2023年6月30日的余额 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| 基于股票的补偿费用 | — | — | ||||||||||||||||||||||||||||||
| 报告货币兑换调整 | — | — | ||||||||||||||||||||||||||||||
| 净亏损 | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||
| 2023年9月30日余额 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
随附注释是这些未经审计的浓缩文件的组成部分 综合财务报表
3
博尔特项目控股公司。
可转换资产的浓缩合并报表 股票和股东的赤字
为 截至2024年9月30日的三个月和九个月（未经审计）
(单位：千，股份和每股金额除外)
| 可换股 | 积累 | |||||||||||||||||||||||||||||||
| 择优 股票 | 共同 股票 | 额外 实收 | 积累 | 其他 全面 | 总
股东 | |||||||||||||||||||||||||||
| 股份 | 量 | 股份 | 量 | 资本 | 赤字 | 收入 （损失） | 赤字 | |||||||||||||||||||||||||
| 2024年1月1日余额 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| 股票补偿 费用 | — | — | ||||||||||||||||||||||||||||||
| 报告货币兑换 调整 | — | — | ||||||||||||||||||||||||||||||
| 净 损失 | — | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||
| 3月31日的余额， 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| 股票补偿 费用 | — | — | ||||||||||||||||||||||||||||||
| 报告货币兑换 调整 | — | — | ||||||||||||||||||||||||||||||
| 净 损失 | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||
| 6月30日的余额， 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
| 发行普通股 转换可转换优先股后 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| 过桥证净行使 | — | |||||||||||||||||||||||||||||||
| 发行普通股 于转换可换股票据后 | — | |||||||||||||||||||||||||||||||
| 发行普通股 通过合并和PIPE融资，扣除赎回和交易成本 | — | ( | ) | ( | ) | |||||||||||||||||||||||||||
| 转换可换股 优先股认购证到私人认购证 | — | — | ||||||||||||||||||||||||||||||
| 发行普通股 因合同终止而向供应商支付费用 | — | |||||||||||||||||||||||||||||||
| 股票补偿 费用 | — | |||||||||||||||||||||||||||||||
| 报告货币兑换 调整 | — | — | ||||||||||||||||||||||||||||||
| 净 收入 | — | — | — | |||||||||||||||||||||||||||||
| 九月余额 2024年30日 | — | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
随附注释是这些未经审计的浓缩文件的组成部分 综合财务报表
4
博尔特项目控股公司。
现金浓缩合并报表 流动
为 截至2024年9月30日和2023年9月30日的九个月（未经审计）
(以千计)
| 止九个月 9月30日， | ||||||||
| 2024 | 2023 | |||||||
| 经营活动： | ||||||||
| 净亏损 | $ | ( | ) | $ | ( | ) | ||
| 对净亏损与经营活动中使用的现金净额进行的调整： | ||||||||
| 折旧费用 | ||||||||
| 股票补偿 | ||||||||
| 使用权资产摊销 | ||||||||
| 财产和设备减值 | ||||||||
| 租赁减值 | ||||||||
| 租赁终止的（收益）损失 | ( | ) | ||||||
| 非现金利息费用 | ||||||||
| 非现金债务发行成本 | ||||||||
| 非现金非资本化交易成本 | ||||||||
| 可转换票据清偿损失 | ||||||||
| 出售财产和设备的收益 | ( | ) | ||||||
| 可转换优先股认股权证负债的重新计量 | ( | ) | ( | ) | ||||
| 重新确定公发行证责任 | ( | ) | — | |||||
| 重新确定关联方私募股权授权书责任 | ( | ) | — | |||||
| 重新衡量基于股份的终止责任 | ||||||||
| 可转换票据的重新测量 | ||||||||
| 关联方可转换票据重新计量 | ||||||||
| 经营资产和负债变化： | ||||||||
| 库存 | ( | ) | ||||||
| 预付费用和其他流动资产 | ( | ) | ||||||
| 其他非流动资产 | ( | ) | ||||||
| 应付账款 | ( | ) | ||||||
| 应计费用和其他流动负债 | ( | ) | ||||||
| 经营租赁负债 | ( | ) | ( | ) | ||||
| 以股份为基础的终止负债 | ||||||||
| 其他非流动负债 | ||||||||
| 用于经营活动的现金净额 | ( | ) | ( | ) | ||||
| 投资活动： | ||||||||
| 出售财产和设备的现金收益 | ||||||||
| 购置财产和设备 | ( | ) | ( | ) | ||||
| 投资活动所用现金净额 | ( | ) | ( | ) | ||||
| 融资活动： | ||||||||
| 与GAMC合并的收益 | ||||||||
| 递延交易费用的支付 | ( | ) | ||||||
| 桥梁融资票据收益 | ||||||||
| 修订优先票据的付款 | ( | ) | ||||||
| 关联方票据现金收益 | ||||||||
| 关联方票据付款 | ( | ) | ||||||
| 关联方本票支付 | ( | ) | ||||||
| 关联方可转换期票的支付 | ( | ) | ||||||
| 融资活动提供的现金净额 | ||||||||
| 汇率对现金、现金等价物和限制性现金的影响 | ( | ) | ||||||
| 现金、现金等价物和限制性现金净变化 | ( | ) | ||||||
| 期初现金、现金等价物和限制性现金 | ||||||||
| 期末现金、现金等价物和限制性现金 | $ | $ | ||||||
| 现金、现金等值物和受限制现金信息： | ||||||||
| 期初现金及现金等价物 | $ | $ | ||||||
| 受限现金，期初 | ||||||||
| 期初现金、现金等价物和限制性现金 | $ | $ | ||||||
| 期末现金和现金等价物 | $ | $ | ||||||
| 受限现金，期末 | ||||||||
| 现金、现金等价物和受限现金，期末 | $ | $ | ||||||
| 补充现金流披露： | ||||||||
| 支付利息的现金 | $ | $ | ||||||
| 非现金投资和融资活动的补充披露： | ||||||||
| 应付账款和应计费用中的递延交易成本 | $ | $ | ||||||
| 合并和PIPE融资导致递延交易成本下降 | $ | $ | ||||||
| 发行普通股以结算承销佣金 | $ | $ | ||||||
| 转换可转换优先股后发行普通股 | $ | $ | ||||||
| 转换可转换过桥票据后发行普通股 | $ | $ | ||||||
| 在清算股份终止责任后发行普通股 | $ | $ | ||||||
| 可转换优先股证转换为私募证 | $ | $ | ||||||
| 由于与租赁修订相关的重新计量，经营租赁使用权资产和负债减少 | $ | $ | ||||||
| 因租赁终止而减少的经营租赁负债 | $ | $ | ||||||
| 因租赁终止而减少的经营性租赁使用权资产 | $ | $ | ||||||
随附注释是这些未经审计的浓缩文件的组成部分 综合财务报表
5
博尔特项目持有， Inc.
冷凝注意事项 合并财务报表（未经审计）
| 1. | 业务的组织和描述 |
博尔特项目控股公司(the“公司”） 开发和生产生物材料产品。其Vegan Silk技术平台亿.silk上的旗舰产品是可生物降解的， 纯素蛋白聚合物以及美容和个人护理领域硅树脂弹性体的替代品。该公司拥有其他材料组合， 包括Mylo，一种由蘑菇根结构菌丝体制成的皮革替代品。博尔特项目控股公司并入 特拉华州，总部位于加利福尼亚州。
基础 合并和呈现
2023年10月4日，博尔特丝线公司(Legacy Bolt) 与位于特拉华州的Golden Arrow Merge Corp.(以下简称GAMC)签订了商业合并协议(以下简称合并 协议“)与GAMC的全资子公司、特拉华州的一家公司Beam Merge Sub，Inc.(以下简称”合并子公司“)达成协议。 2024年8月13日(“截止日期”)，Legacy Bolt和GAMC之间的合并交易完成(见注4- 反向兼并)。根据合并协议，(I)于完成日期，合并附属公司与Legacy Bolt合并并并入Legacy Bolt(一起 与合并协议预期的其他交易(“合并”或“SPAC交易”)，以及 合并子公司不复存在，Legacy Bolt作为GAMC的全资子公司继续存在和(Ii)GAMC更名为Bolt Projects Holdings，Inc.除文意另有所指外，在本季度报告中以表格10-Q引用“公司”， “博尔特”、“我们”、“我们”或“我们”指的是博尔特螺纹公司的业务，该公司后来成为 Bolt Projects Holdings，Inc.及其子公司在截止日期后的业务。
合并前，GAMC A类普通股和公开募股 令（参见注释9 --授权令）在纳斯达克全球市场（“纳斯达克”）上市，代码为“GAMC” 和“GAMCW”分别。2024年8月14日，公司普通股和公开招股说明书（见注9 - 权证）开始在纳斯达克交易，代码分别为“BSL K”和“BSL KW”（见注4 - 反向并购 有关合并交易的更多信息）。
的 根据对会计中概述的标准的分析，公司确定Legacy Bolt是合并中的会计收购人 标准法典（“ASC”）805，业务合并。
的 确定主要基于以下事实：
| ● | 前 Legacy Bolt股东拥有该公司的控股投票权。 |
| ● | 遗产 Bolt管理层继续担任公司的行政管理职务，并负责日常运营;和 |
| ● | 的 Legacy Bolt的创始人拥有两个非独立董事会席位中的两个，并在独立席位的选择方面获得最终批准。 |
因此， 出于会计目的，此次合并被视为相当于Legacy Bolt为GAMC的净资产发行股票，并附有 通过资本重组。没有因合并而记录任何善意或其他无形资产。
因为 Legacy Bolt被视为会计收购人，Legacy Bolt的历史财务报表成为历史财务报表 合并完成后，合并后公司的所有权。因此，本文包含的财务报表反映了（i）历史iCal 合并前Legacy Bolt的经营业绩;（ii）合并后Legacy Bolt和GAMC的合并业绩 合并;（iii）Legacy Bolt按历史成本计算的资产和负债;和（iv）公司所有人的股权结构 呈现的时期。
股权结构已追溯重述
在截至收盘日期的所有比较期间，以反映公司普通股的股数，$
6
随附的未经审计中期简明综合报告 公司及其子公司的财务报表按照公认的会计原则编制 在美国（“美国GAAP”）以及美国证券交易委员会（“SEC”）的适用规则和法规。 未经审计的中期简明综合财务报表包括公司及其全资子公司的账目。 所有公司间交易和余额均已在合并中消除。表格中的所有美元金额，份额和每股除外 除非另有规定，未经审核中期简明综合财务报表附注中的金额均以千计呈列 知道了
| 2. | 流动资金和持续经营 |
公司
历史上从未盈利，自成立以来运营现金流一直为负。 止九个月
2024年9月30日，公司净亏损为美元
公司 将需要额外的资本来支持其计划中的产品开发和运营。根据公司目前的经营情况 该计划预计，截至未经审计的中期简明合并财务报告发布日，其现金和现金等值物 本报告中包含的报表不足以让公司为运营、投资和融资现金流需求提供资金 该等未经审核中期简明综合财务报表发布日期后十二个月。为了获得资本 为运营提供资金所需，公司可能会寻求通过公开或私募股权发行、债务融资交易， 对其当前债务进行再融资或重组，或任何其他方式。
这些不确定因素 对该公司是否有能力继续作为一家持续经营的企业提出重大质疑 包括未经审计的中期简明综合财务报表印发之日起十二个月期间 在这份报告中。行动计划的某些内容，以缓解引起重大怀疑的条件，包括但不限于 都不在公司的控制范围之内。因此，公司不能得出结论，管理层的计划将有效 自未经审计的中期简明合并财务报表发布之日起一年内实施。这些因素 对公司在未经审计的中期日期起一年内继续经营的能力提出极大的怀疑 发布简明合并财务报表。未经审计的中期简明综合财务报表不包含 这种不确定性的结果可能导致的任何调整。
| 3. | 主要会计政策 |
未经审核 中期简明综合财务报表
随之而来的中期浓缩合并 截至2024年9月30日的资产负债表、中期简明综合经营报表和综合亏损表三项 截至2024年9月30日及2023年9月30日止9个月及9个月，中期简明综合可换股优先报表 截至2024年9月30日和2023年9月30日的9个月的股票和股东赤字，以及中期浓缩合并 截至2024年9月30日和2023年9月30日的9个月的现金流量表以及与中期有关的数额包括 在中期附注中，简明综合财务报表未经审计。未经审核的中期简明综合 财务报表的编制与经审计的年度合并财务报表和管理层的财务报表相同。 意见，包括所有调整，只包括正常的经常性调整，以公平地列报公司的 合并余额。列报的中期经营业绩不一定代表预期的业绩。 截至2024年12月31日或任何其他过渡期的年度。
该等未经审核中期简明综合 财务报表应与公司经审计的合并财务报表及其附注一起阅读 截至2023年和2022年12月31日止年度。
校正 错误
7
新兴 成长型公司
该公司是一家“新兴成长型公司”， 根据《证券法》第2（a）条的定义，并经2012年《快速启动我们的商业初创公司法案》（“JOBS法案”）修订， 并且它可能会利用适用于其他上市公司的各种报告要求的某些豁免， 不是新兴成长型公司，包括但不限于不被要求遵守独立注册公共会计准则 《萨班斯-奥克斯利法案》第404条的公司认证要求减少了有关高管薪酬的披露义务 在其定期报告和委托书中，并豁免对高管进行无约束力咨询投票的要求 补偿和股东批准之前未批准的任何金降落伞付款。
此外，《就业法案》第102(B)(1)条 豁免新兴成长型公司遵守新的或修订后的财务会计准则，直至非上市公司 (即，尚未宣布生效的证券法注册声明或没有注册的证券类别 根据《交易法》，)必须遵守新的或修订的财务会计准则。就业法案规定，一家公司 可以选择退出延长的过渡期，并遵守适用于非新兴成长型公司的要求，但 任何这样的选择退出的选举都是不可撤销的。该公司已选择不选择退出延长的过渡期，这意味着 当一项标准发布或修订时，它对上市公司或私营公司的适用日期不同，本公司作为一种新兴的 成长型公司，可以在私人公司采用新的或修订的准则时采用新的或修订的准则。这可以做个比较 本公司与另一家既非新兴成长型公司亦非新兴成长型上市公司的财务报表 由于会计上的潜在差异而选择不使用延长过渡期的公司很难或不可能 使用的标准。
使用 的估计
未经审计的中期简明报告的编制 符合GAAP的合并财务报表要求管理层做出影响金额的估计和假设 在未经审计的中期简明综合财务报表和随附附注中报告。做的估计和假设 管理层包括但不限于，（i）可转换票据、可转换优先股、以股份为基础的估计公允价值 终止责任、可转换优先股证责任、公开募股证责任、关联方 私人 放置 担保负债和股权奖励，以及，（ii）估计固定资产的使用寿命，以及（iii）确定增量 借款利率和所得税会计。实际结果可能与这些估计存在重大差异。
风险 和不确定性
公司未来的经营业绩 涉及风险和不确定性。可能影响公司未来经营业绩并导致实际业绩变化的因素 重大偏离预期包括但不限于快速的技术变革、对公司服务的持续需求， 重要客户的获取和保留、全球金融市场的稳定、网络安全漏洞和其他破坏 可能损害公司的信息或业绩、自然灾害或流行病造成的业务中断 事件、替代产品和大公司的竞争、政府法规和监督、专利和其他类型的诉讼， 保护专有技术的能力以及对关键个人的依赖。
浓度 信用风险
可能受到影响的金融工具 公司信用集中风险包括现金、现金等值物、限制性现金和应收账款。公司 现金和现金等值物存放在账户余额有时可能超过联邦保险限额的金融机构。管理 相信由于存款机构的财务实力，公司不会面临重大信用风险 现金被持有。公司不存在表外亏损风险的金融工具。
2023年3月，硅谷银行，现为部门 第一公民银行（“SVB”）倒闭，联邦存款保险公司（“FDIC”）控制了SVb。 该公司以SVb形式保存大量现金、现金等值物和限制性现金，以及公司的存款 该机构超出了保险限额。美联储随后宣布账户持有人将完整化，而 公司能够获取SVb持有的所有现金。无法保证美联储、美国财政部 未来，如果任何其他银行或金融机构及时或完全关闭，FDIC将提供未保险资金的访问权限。无法访问 或延迟获取这些资金可能会对公司的业务、财务状况和流动性产生不利影响。
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该公司依赖唯一供应商 B-Silk的某些制造活动。这些材料的供应中断可能会影响公司的能力 将库存商业化和制造。
美国以外的总资产为
截至9月份的三个月和九个月内
2024年30日，代表单独的单一客户
库存
库存由成品b-丝粉组成。 库存使用基于的特定识别方法以加权平均成本和可变现净值中的较低者记录 关于合同售价。b-silk库存的减记确认为收入成本的扣除。未确认任何损害 截至2024年9月30日和2023年9月30日的九个月内。
员工 保留积分
公司已核算员工保留情况 学分（ERC）是一种政府拨款，类似于国际 会计核算 标准 (IAS)20，政府补助金会计和政府援助的披露。国际会计准则20表明收入在 被认为有合理的保证将收到赠款以及所有必要的资格条件，如 ERC计划，均已满足。根据IAS 20，收入在实体确认为费用的期间系统性地确认 补助金旨在补偿的相关成本。公司已选择在以下时间内按毛额计算积分 中期简明综合经营报表和全面亏损。
递延 交易成本
递延交易成本包括直接法律成本、
直接归因于公司合并的会计、备案和其他费用和成本（请参阅 注4 -反向
合并).公司在合并结束前将递延交易成本资本化并纳入中期简明
合并资产负债表。2024年8月，公司将所有与合并相关的递延交易成本重新分类为减少
额外的实缴资本以抵消合并结束时收到的收益。递延交易成本为美元
长寿 资产和减损评估
公司审查其可折旧长期 每当事件或情况变化表明资产的公允价值时，财产和设备等资产就会出现损失 资产可能无法收回。当预期长期存在的未贴现现金流产生时，可以确认损失 资产（或资产组）低于其公允价值。任何所需的减损损失将按资产的金额来衡量 (or资产组）的公允价值超过其公允价值，并将记录为相关资产的公允价值的减少 资产并反映在中期简明综合经营报表和全面亏损中。没有任何减损费用 截至2024年9月30日的三个月和九个月内记录的任何长期资产。
2023年4月，公司停产
由于多项融资计划失败，米洛被解雇。由于公司没有Mylo相关资产的替代用途，预计
没有转售价值，公司对这些资产进行了充分的减损。因此，公司记录了 和$
2023年5月，公司暂时
由于预计现金流持续为负且缺乏
替代融资来源。公司的整体资产不再被视为提供未来现金流（除
对于打算转售的使用权（“ROU”）资产），并且公司资产的转售价值并未
被认为是材料。因此，公司对其固定资产进行了全额减损。该公司录得美元
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敞篷车 备注
敞篷车 票据被视为混合工具，由负债部分和权益部分组成。该公司决定，它 是否符合与桥下可换股票据(“可换股票据”)有关的公允价值期权选择资格 2023年10月、2024年2月、2024年6月和2024年7月发布的《银杏自然保护区修正案》，以及2023年12月发布的《银杏自然保护区修正案》(见 附注：8-月借款)因为每项文书都符合“公认金融负债”的定义，即 是否符合ASC第825-10-15-4号公允价值选项的可接受金融工具，且不符合 ASC编号825-10-15-5内发现的任何不符合公允价值期权条件的金融工具。因此， 本公司选择于可换股票据发行时采用公允价值选择权入账。因此，没有任何功能 可转换票据分为两部分，并单独核算。在年月日 发行时，每种工具的公允价值是从该工具初始时的隐含贴现率得出的。。敞篷车 票据随后将在每个报告期重新计量，直至到期、提前还款或转换。这个 可换股票据的公允价值变动于中期简明综合经营报表及综合财务报表确认 作为可转换票据的重新计量的损失。此外，与可转换债券相关的所有发行成本 票据在购入债务期间已支出，并在此期间计入一般和行政费用 简明合并经营报表和全面亏损.
股份 终止责任
以股份为基础的终止责任被记录 当公司终止合同或停止使用合同涵盖的产品或服务时，合同终止费用 交换发行新的上市公司股票。新的上市公司股票不被认为与公司的股票挂钩 终止时拥有股份。因此，基于股份的终止被归类为负债，因为它不符合资格 ASC 815-10下衍生品会计的范围例外。以股份为基础的终止负债最初记录在 终止日的公允价值，并在每个资产负债表日按公允价值重新计量，并在重新计量中记录抵消调整 中期简明综合经营报表和全面亏损中的股份终止负债（见 附注5 - 公平值计量).
共同 股票权证
该公司将普通股凭证核算为 如果合同要求实物结算或净实物结算，或者如果公司可以选择实物结算，则为股权 或净实物结算，且该认购证符合分类为股权的要求。被归类为股权的普通股期权 最初使用Black-Scholes-Merton（“Black-Scholes”）期权定价模型使用各种输入数据按公允价值计量， 包括公司对发行日预期股价波动率、期限、无风险利率和未来股息的估计 随后没有重新测量。
的 公司将普通股凭证视为负债 如果认购证不符合标准，则根据ASC 815-40-15 进行股权处理，并且必须记录为负债。因此，该公司根据其将该等认购证归类为负债 发行时的公允价值。该负债须在每个资产负债表日重新计量，直至行使，以及公允价值的任何变化 价值在中期简明综合经营报表和全面亏损中确认。该认购令的估值使用 蒙特卡洛模拟模型。
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公平 金融工具
公司根据以下因素确定公允价值 在市场参与者之间的有序交易中出售资产所收到的退出价格或转让负债所支付的退出价格， 由主要市场或最有利市场决定。公司使用可用的市场信息和其他信息 评估金融工具公允价值的估值方法。解读市场数据需要判断才能发展 公允价值估计以及相应的假设或估计方法的变化可能会影响公允价值估计。 估值技术中用于得出公允价值的输入数据根据三级分层结构进行分类。这些级别是：
| 1级 — | 相同资产或负债在计量日期可获得的活跃市场报价(未经调整)。 |
| 2级 — | 第1级中包括的报价以外的可观察投入，包括活跃市场中类似资产或负债的报价；非活跃市场中相同或类似资产或负债的报价；以及可观察到的、主要来源于可观察市场数据或通过相关或其他手段得到或证实的报价以外的投入。 | |
| 第三级 — | 当市场数据很少或没有市场数据时，就会使用看不到的输入。 |
内公允价值层级的级别 公允价值计量的整体归属是基于对公允价值计量重要的最低层输入 其全部
持有的金融资产和负债 2024年9月30日和2023年12月31日按经常性公允价值计量的公司包括 股份 终止责任、可转换票据、可转换优先股认购证责任、 公共安置 令 责任、关联方 私募 令状责任 （见 注5 -公允价值衡量).
这个 公司的长期非流动债务，即经修订的优先票据(看见注8 -借款)， 被归类于公允价值层次结构的第二级。长期债务、非流动债务的账面价值接近公允价值 价值，因为经修订的优先票据的利率是以反映与本公司现时可能的条款相若的利率为基础的。 在公开市场中获得安全(见注8 -借款).
对于某些其他金融资产和负债， 包括现金、现金等值物、受限制现金、预付和其他流动资产、应付账款、应计费用和其他流动资产 负债，由于这些余额的到期期相对较短，其公允价值接近公允价值。
收入 识别
公司营收 合同代表向客户销售产品的单一履行义务。销售额在产品控制时间记录 转移给客户，金额反映公司预计有权获得的换取货物的对价 卖控制权是客户“指导使用”并“获得”公司利益的能力 产品.在评估将产品控制权转移给客户的时机时，公司考虑了几项控制指标， 包括产品的重大风险和回报、公司的付款权以及产品的法定所有权。基于 控制指标的评估，一般在产品运送给客户时确认销售额。
在另一个安排中 一方参与向客户提供产品，公司评估其是否在交易中担任委托人或代理人。 如果公司作为委托人，则按总额报告收入。在公司作为代理人的情况下，收入 按净值报告。在本次评估中，公司考虑公司是否获得指定商品或服务的控制权 在转移给客户之前，以及其他指标，例如主要负责履行的一方、库存 风险以及制定价格的自由裁量权。截至2024年9月30日和2023年9月30日的三个月和九个月，公司已确定 由于公司主要负责履行该安排，因此它在其收入安排中担任委托人 并有权确定价格。
收入确认时间 向客户开具发票的时间可能不同，这些时间差异会导致应收账款（已开票或未开票）、合同 公司中期简明合并资产负债表上的资产或合同负债（递延收入）。公司记录 当收入在发票权之前确认时，为合同资产，或当收入在发票权之后确认时，为递延收入 发票。本公司 2024年9月30日和2023年12月31日的合同资产和递延收入。
最近 会计声明
尚未采用的会计公告
2023年11月，FASb发布了ASO 2023-07， 分部报告（主题280）：改进可报告分部披露，引入了关键修订以加强披露 公共实体的可报告部门。该等修订要求披露定期提供的重大分部开支 向首席运营决策者（“CODM”）提供并包含在每个报告的分部损益计量中的金额 以及与分部损益对账的其他分部项目的组成描述，以及实体的所有权和地位 COD。该等修订还扩大了中期分部披露要求。ASO 2023-07在此后开始的财年有效 2023年12月15日，以及2024年12月15日之后开始的财年内的过渡期，允许并要求提前采用 追溯应用于财务报表中列出的所有前期。
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的 公司 目前正在审查该指南，预计其不会对其中期精简产生重大影响 合并财务报表。
2023年12月，FASb发布了ASO 2023-09， 所得税（主题740）：所得税披露的改进，为利率调节提供定性和定量更新 和已缴所得税披露等，以提高所得税披露的透明度，包括一致的类别 以及按缴纳所得税管辖区分类的利率调节和分类中的信息更大程度地细分。该等修订 亚利桑那州立大学2023-09在2024年12月15日之后开始的财年有效，允许提前采用。该等修订应 可前瞻性应用;但是，也允许追溯应用。公司目前正在审查 指导并评估其对其中期简明合并财务报表的影响。
| 4. | 反向并购 |
并发
随着合并协议的签署，某些投资者(“管道认购人”)，包括保荐人(哪个
指的是金箭赞助商，LLC)，已输入原始管道订阅
与GAMC的协议，据此，PIPE订户最初承诺以私募方式购买最多
2024年2月，与执行同时
二桥可转换票据（参见注释8 -借款）、PIPE订阅者（包括赞助商）签订了
与GAMC签订的原始PIPE认购协议的第一修正案。根据修正案，第二次的总收益
美元的桥梁可转换票据
2024年6月，同时执行
三桥可转换票据（参见注释8 -借款），PIPE订阅者（包括赞助商）进行了修订
与GAMC签订的PIPE认购协议。根据该修订，第三桥可转换票据的总收益
$
截止日期之后，某些PIPE订阅者
未购买与PIPE融资相关的PIPE股份，总计美元
如注1所述，合并已完成
2024年8月13日。根据该公司于2024年8月13日修订的重述和修订的公司注册证书，
公司有权发布
合并的结果包括：
(1)每股当时已发行和发行的GAMC A类普通股，面值为美元
就在生效时间之前 合并、每股Legacy Bolt可转换优先股和每股Legacy Bolt可转换票据 (看到 注8 -借款) 根据合并自动转换为Legacy Bolt普通股股份 协议和桥梁NPA（参见注释8 -借款).此外，每份Legacy Bolt Bridge令（参见注释9 --授权令) 根据令状协议，自动净行使为Legacy Bolt的普通股股份。
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作为合并的结果，以及其他事情
(1)在紧接交易结束前所有已发行及已发行的博尔特普通股(包括博尔特普通股)
遗留博尔特可转换优先股产生的股票，遗留博尔特可转换票据产生的股票，
和由Legacy Bolt Bridge认股权证净额行使产生)，按交换比率交换
如注1所述，合并已计入 根据美国公认会计原则进行反向资本重组。根据这种会计方法，GAMC被视为被收购公司 出于会计目的，Legacy Bolt被视为会计收购人。因此，呈现的所有历史财务信息 未经审计的中期简明综合财务报表中的账目代表Legacy Bolt及其全资子公司的账目。 净资产按历史成本列报，与合并作为Legacy Bolt反向资本重组的处理方式一致。
| Amount | ||||
| Cash – GAMC trust and cash (net of redemption) | $ | |||
| Cash – PIPE Financing | ||||
| Balance at September 30, 2024 | $ | |||
Transaction costs consist of direct legal, accounting
and other fees relating to the consummation of the Merger. Legacy Bolt transaction costs specific and directly attributable to the Merger
totaled $
| Common stock - GAMC Class A common stock, outstanding prior to the Merger | ||||
| Common stock - GAMC Class B common stock, outstanding prior to the Merger | ||||
| Common stock - GAMC Class A redeemable common stock, outstanding prior to the Merger | ||||
| Less: redemption of GAMC common stock | ( | ) | ||
| Common stock - GAMC common stock | ||||
| Common stock - upon of settlement of GAMC liability for underwriting commission | ||||
| Common stock - upon issuance to vendor for services rendered related to the Merger | ||||
| Shares issued in PIPE Financing | ||||
| The Merger and PIPE shares | ||||
| Common stock - Legacy Bolt | ||||
| Common stock - net exercise of Legacy Bolt Bridge Warrants | ||||
| Common stock - upon conversion of Legacy Bolt Preferred Stock | ||||
| Common stock - upon conversion of Legacy Bolt Convertible Notes | ||||
| Common stock - upon of settlement of Legacy Bolt liability for contract termination | ||||
| Total shares of the Company’s Common stock outstanding immediately after the Merger |
13
| 5. | FAIR VALUE MEASUREMENTS |
Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Public placement warrant liability | $ | $ | $ | $ | ||||||||||||
| Related party private placement warrant liability | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Convertible notes, current | $ | $ | $ | $ | ||||||||||||
| Related party convertible notes, current | ||||||||||||||||
| Share-based termination liability | ||||||||||||||||
| Convertible preferred stock warrant liability | ||||||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
The convertible notes, current, related party convertible notes, current, share-based termination liability, public placement warrant liability, related party private placement liability, and convertible preferred stock warrant liabilities are classified as Level 3 in the fair value hierarchy as the valuations are based on unobservable inputs, which reflect the Company’s own assumptions incorporated in valuation techniques used to determine fair value; further discussion of these assumptions is set forth below. There were no transfers into or out of Level 3 of the fair value hierarchy during the periods presented.
Changes in the fair value measurement of Level 3 liabilities are related mainly to unrealized gains (losses) resulting from remeasurement each period and are reflected in the interim condensed consolidated statements of operations and comprehensive loss.
Public Placement Warrant Liability
In connection with the Merger, the Company assumed the Public Placement Warrants (see Note 9 – Warrants) to purchase the Company’s Common stock. The Company accounts for the Public Placement Warrants as a liability in accordance with ASC 815-40-15 since the Public Placement Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. This liability is subject to remeasurement at each balance sheet date until exercised. The fair value of the public placement liability at September 30, 2024 was determined using the Monte Carlo simulation model. The public placement warrant liability represents a Level 3 measurement within the fair value hierarchy as it has been valued using some unobservable inputs.
Related Party Private Placement Warrant Liability
In connection with the Merger, the Company assumed the Private Placement Warrants (see Note 9 – Warrants) to purchase the Company’s Common stock, which were issued to the Sponsor, a related party. The Company accounts for the Private Placement Warrants as a liability in accordance with ASC 815-40-15 since the Private Placement Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. This liability is subject to remeasurement at each balance sheet date until exercised. The fair value of the related party private placement warrant liability at September 30, 2024 was determined using the Monte Carlo simulation model. The related party private placement warrant liability represents a Level 3 measurement within the fair value hierarchy as it has been valued using unobservable inputs.
14
Convertible Notes
The Company concluded that the Convertible Notes and its related features are within the scope of ASC 825, Financial Instruments, as a combined financial instrument, and the Company elected the fair value option where changes in fair value of the convertible notes are measured through the accompanying interim condensed consolidated statement of operations and comprehensive loss until settlement. The Convertible Notes liability represents a Level 3 measurement within the fair value hierarchy as it has been valued using certain unobservable inputs. These inputs include the underlying fair value of the equity instrument into which the Convertible Notes are convertible. The fair value is based on significant inputs not observable in the market, namely potential financing scenarios, the likelihood of such scenarios, the expected time for each scenario to occur, and the required market rates of return utilized in modeling these scenarios.
Share-Based Termination Liability
The fair value of the share-based termination liability at December 31, 2023 was determined based on the expected exchange fair value of the Company’s Common stock using the probability weighted expected return method (“PWERM”). The PWERM method is a scenario-based methodology that estimates the fair value of equity securities based upon an analysis of future values of the Company, assuming various outcomes. The significant inputs to the PWERM methodology included rights and preferences of each class of Company’s shares, the Company’s assumptions related to the expected timing of a liquidation event, lack of marketability and the Company’s estimated equity value and volatility on the valuation date, which are based on management’s analysis of comparable publicly traded peer companies.
Convertible Preferred Stock Warrant Liability
The fair value of the convertible preferred stock warrant liability at December 31, 2023 was determined using the PWERM. The fair value of the convertible preferred stock warrant liability at September 30, 2023 was determined using a hybrid method, which combines elements of the option pricing model (“OPM”) and the PWERM. Weighting allocations are assigned to the OPM and PWERM methods factoring in a possible future dissolution event. The aggregate value of the Company was then used to allocate the total equity value of the Company to different classes of equity according to their rights and preferences.
Change in Fair Value of Level 3 Liabilities
| Public placement warrant liability | ||||
| Balance at June 30, 2024 | $ | |||
| Warrants assumed from the Merger | ||||
| Change in estimated fair value | ( | ) | ||
| Balance at September 30, 2024 | $ | |||
| Related party private placement warrant liability | ||||
| Balance at June 30, 2024 | $ | |||
| Warrants assumed from the Merger | ||||
| Change in estimated fair value | ( | ) | ||
| Balance at September 30, 2024 | $ | |||
15
| Convertible notes | ||||
| Balance at January 1, 2024 | $ | |||
| Note issuance during the period | ||||
| Change in estimated fair value | ||||
| Balance at March 31, 2024 | $ | |||
| Note issuance during the period | ||||
| Loss on extinguishment | ||||
| Change in estimated fair value | ||||
| Balance at June 30, 2024 | $ | |||
| Note issuance during the period | ||||
| Change in estimated fair value | ||||
| Conversion into Common stock | ( | ) | ||
| Balance at September 30, 2024 | $ | |||
The change in fair value of the convertible notes
is recognized in the interim condensed consolidated statements of operations and comprehensive loss as the remeasurement of the convertible
notes.
| Related party convertible notes | ||||
| Balance at January 1, 2024 | $ | |||
| Note issuance during the period | ||||
| Change in estimated fair value | ||||
| Balance at March 31, 2024 | $ | |||
| Note issuance during the period | ||||
| Loss on extinguishment | ||||
| Change in estimated fair value | ||||
| Balance at June 30, 2024 | $ | |||
| Change in estimated fair value | ( | ) | ||
| Conversion into Common stock | ( | ) | ||
| Balance at September 30, 2024 | $ | |||
16
The change in fair value of the related party
convertible notes is recognized in the interim condensed consolidated statements of operations and comprehensive loss as the remeasurement
of related party convertible notes.
| Share-based termination liability | ||||
| Balance at January 1, 2024 | $ | |||
| Change in estimated fair value | ( | ) | ||
| Balance at March 31, 2024 | $ | |||
| Change in estimated fair value | ||||
| Balance at June 30, 2024 | $ | |||
| Change in estimated fair value | ( | ) | ||
| Liability settlement due to issuance of Common stock | ( | ) | ||
| Balance at September 30, 2024 | $ | |||
| Convertible preferred stock warrants liability | ||||
| Balance at January 1, 2023 | $ | |||
| Change in estimated fair value | ||||
| Balance at March 31, 2023 | $ | |||
| Change in estimated fair value | ||||
| Balance at June 30, 2023 | $ | |||
| Change in estimated fair value | ( | ) | ||
| Balance at September 30, 2023 | $ | |||
| Convertible preferred stock warrants liability | ||||
| Balance at January 1, 2024 | $ | |||
| Change in estimated fair value | ( | ) | ||
| Balance at March 31, 2024 | $ | |||
| Change in estimated fair value | ( | ) | ||
| Balance at June 30, 2024 | $ | |||
| Change in estimated fair value | ||||
| Conversion into Private Warrants | ( | ) | ||
| Balance at September 30, 2024 | $ | |||
The change in fair value of the convertible preferred stock warrants is recognized in the interim condensed consolidated statements of operations and comprehensive loss as the remeasurement of the convertible preferred stock warrant liability.
17
| 6. | SIGNIFICANT BALANCE SHEET COMPONENTS |
Prepaid Expenses and Other Current Assets
| September 30, 2024 |
December 31, 2023 |
|||||||
| Prepaid expenses | $ | $ | ||||||
| Deposits | ||||||||
| Other current assets | ||||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||
The Company has recorded $
Other Non-Current Assets
| September 30, 2024 | December 31, 2023 | |||||||
| Prepaid expenses, non-current | $ | $ | ||||||
| Property and equipment, net | ||||||||
| Total other non-current assets | $ | $ | ||||||
The prepaid expenses, non-current balance at
September 30, 2024 and December 31, 2023 includes $
Accrued Expenses and Other Current Liabilities
| September 30, 2024 | December 31, 2023 | |||||||
| Accrued professional services | $ | $ | ||||||
| Accrued payroll and benefits | ||||||||
| Accrued interest expense | ||||||||
| Other accrued expenses | ||||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
18
| 7. | SHARE-BASED TERMINATION LIABILITY |
In September 2023, the Company negotiated a contingent
lease termination agreement with its landlord for the Berkeley facility lease (see Note 13 — Leases). As a result of the
Company issuing
In October 2023, the Company entered into a settlement
agreement with a supplier (see Note 14 — Commitment and Contingencies). As a result of the Company paying the supplier $
After the Merger consummation in August 2024,
the Company issued the
| December 31, 2023 | ||||
| Fair value of Legacy Bolt common stock(1) | $ | |||
| Discount rate(2) | % | |||
| Probability(3) | % | |||
| Exchange ratio(4) | ||||
| (1) |
| (2) |
| (3) |
| (4) |
| 8. | BORROWINGS |
Senior Secured Notes
In October 2022, the Company and Ginkgo executed several concurrent agreements including a Senior Secured Note Purchase Agreement (the “Ginkgo Note Purchase Agreement”), an amendment to the 2021 Technical Development Agreement (“2021 TDA”), a 2022 Technical Development Agreement (“2022 TDA”), a Pledge and Security Agreement, and Trademark and Patent Security Agreements (see Note 14 – Commitments and Contingencies).
Under the terms of the Ginkgo Note Purchase Agreement,
the Company issued and sold to Ginkgo and Ginkgo agreed to purchase senior secured notes (the “Senior Secured Notes”) on October
14, 2022 (the “Notes Issuance Date”), in the aggregate original stated principal amount of $
The Ginkgo Note Purchase Agreement initially
required quarterly interest payments on the outstanding principal amount of the Notes, from the Notes Issuance Date until and including
the Maturity Date, at a rate equal to the three-month United States Treasury Security Rate on the date three business days prior to
the applicable quarterly payment date (defined as (i) the last business day of each fiscal quarter beginning on the first such date prior
to issuance of the Senior Secured Notes and (ii) the maturity date), plus
19
Principal payments were initially due quarterly,
starting in the first quarter subsequent to a qualified equity issuance, as defined in the Ginkgo Note Purchase Agreement, for cash proceeds
greater than or equal to $
The Senior Secured Notes are collateralized by substantially all of the Company’s assets, and each of its legal subsidiaries’ tangible and intangible assets. The Senior Secured Notes contain customary covenants and events of default. Additionally, the Senior Secured Notes contains subjective acceleration clauses to accelerate the maturity date of the Senior Secured Notes in the event that a material adverse change has occurred within the business, operations, or financial condition of the Company. At September 30, 2024, the Company believes that the likelihood of the acceleration of the maturity date due to the subjective acceleration clauses is remote.
In December 2023, the Company entered into
an amendment to modify the Ginkgo Note Purchase Agreement (“Ginkgo NPA Amendment”). Under the terms of the modification,
$
On March 10, 2023, the Company entered into a Limited Waiver to Senior Secured Note Purchase Agreement (the “Initial Waiver”) to: (i) provide a waiver for the violation in which the Company failed to deliver the audited financial statements of the Company and its subsidiaries for the year ended December 31, 2022, and (ii) provide a waiver for the violation in which the Company failed to deliver the compliance certificate for the year ended December 31, 2022 during the period commencing as of June 30, 2023 and ending September 30, 2023. On November 2, 2023, the Company entered into a Limited Waiver to Senior Secured Note Purchase Agreement (the “Second Waiver”) to extend the waiver period of the Initial Waiver through December 31, 2023. On January 30, 2024, the Company entered into a Limited Waiver to Senior Secured Note Purchase Agreement (the “Third Waiver”) to extend the waiver period of the Second Waiver through February 29, 2024. At September 30, 2024 and December 31, 2023, the Company was not aware of any other violations of the covenants.
In April 2024, the Company and Ginkgo entered into
the second amendment to the Ginkgo Note Purchase Agreement (the “Ginkgo Note Purchase Agreement Amendment No. 2”). Pursuant
to the Ginkgo Note Purchase Agreement Amendment No. 2, the interest from the Ginkgo NPA Amendment effective date until the occurrence
of the SPAC transaction (see Note 4 — Reverse Merger) shall be paid either entirely in cash or in kind by capitalizing and
adding such accrued interest to the principal of the Amended Senior Notes at the option of the Company. In addition, upon the occurrence
of the SPAC transaction, the Company shall prepay an aggregate principal amount of the Amended Senior Notes equal to the sum of (i) the
product of (x) $
20
At December 31, 2023, the total outstanding principal
balance under the Amended Senior Note was $
At September 30, 2024, the total outstanding
balance under the Amended Senior Notes was $
For the three months ended September 30, 2024
and 2023, interest expense recognized on the Senior Secured Notes and Amended Senior Note was $
| For the remainder of the year ending December 31, | Amount | |||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Total debt principal payments | $ | |||
| Add: unamortized debt premium | ||||
| Total Amended Senior Notes | $ | |||
Bridge Financing Notes
In October 2023, the Company entered into
a Merger Agreement with GAMC and Beam Merger Sub, Inc., a wholly owned subsidiary of GAMC (see Note 4 — Reverse Merger).
Concurrently with the execution of the Merger Agreement, certain investors (the “PIPE Subscribers”), including the Sponsor,
entered into subscription agreements (the “Original PIPE Subscription Agreements”) with GAMC (see Note 4 — Reverse
Merger). In addition, each of the PIPE Subscribers also entered into a Note Purchase Agreement (“Bridge NPA”) with
the Company. Pursuant to the Bridge NPA, the Company issued PIPE Subscribers convertible promissory notes (each, a “Bridge Convertible
Note”) in the aggregate original stated principal amount of $
Upon the closing of a non-qualified financing, the outstanding principal and unpaid accrued interest of each Bridge Convertible Note shall, at the election of the majority Bridge Convertible Note holders, be converted into conversion shares. Upon the closing or series of related closings of a qualified financing, the outstanding principal and unpaid accrued interest of each Bridge Convertible Note shall be automatically and without requiring any PIPE Subscriber’s prior consent or approval converted into conversion shares. Immediately prior to the consummation of the Merger the outstanding principal and unpaid accrued interest of each Bridge Convertible Note automatically and without requiring any PIPE Subscriber’s prior consent or approval converted into conversion shares. In connection with the Merger transaction, all interest on the Bridge Convertible Notes ceased to accrue as of a date selected by the Company that is no more than 30 days prior to the consummation of the Merger, which was July 30, 2024.
The conversion price under the non-qualified
financing conversion or qualified financing conversion is
21
In connection with the Bridge NPA, the Company
also issued to certain PIPE Subscribers whose commitment is more than the Pro Rata Share with respect to such PIPE Subscribers a total
of
As the proceeds received from this
transaction are not representative of the aggregate fair value of the Bridge Convertible Notes and Bridge Warrants, the Company
recorded the Bridge Convertible Notes at fair value of $
In
February 2024, the Company issued to certain PIPE Subscribers convertible promissory notes (each, a “Second Bridge Convertible
Note”) in the aggregate original stated principal amount of $
In
June 2024, the Company agreed to issue and sell to certain PIPE Subscribers convertible promissory notes (each, a “Third Bridge
Convertible Note”) in the aggregate original stated principal amount of $
In June 2024, the Company entered into the Second
Amendment to the Note Purchase Agreement (“Second Bridge NPA”). Pursuant to the Second Bridge NPA, the conversion price for
the First Bridge Notes, the Gingko Bridge Note, and the Second Bridge Notes under the SPAC conversion was automatically adjusted from
As
discussed in Note 4, immediately prior to the effective time of the Merger, each
Convertible Note automatically converted into shares of Common stock in accordance with the Merger Agreement and the Bridge NPA.
Prior to this conversion, the Company remeasured the fair value of the Convertible
Notes resulting in a final fair value of $
22
At December 31, 2023, the fair value of the convertible
notes and the related party convertible notes was $
| Scenario 1 | Scenario 2 | |||||||
| Probability of each scenario(1) | % | % | ||||||
| Expected remaining term (years)(2) | ||||||||
| Implied discount rate(3) | % | % | ||||||
| (1) |
| (2) |
| (3) |
Promissory Note — Related Party
In
connection with the Merger, the Company assumed an unsecured promissory note (“Promissory Note”) issued to the Sponsor,
a related party, in the aggregate amount of $
Convertible Promissory Note — Related Party
In
connection with the Merger, the Company assumed a convertible promissory note (“Convertible Promissory Note”) issued
to the Sponsor, a related party, in the aggregate amount of $
| 9. | WARRANTS |
Bridge Warrants
In connection with the Bridge Convertible Notes
issued in October 2023 (see Note 8 — Borrowings), the Company issued warrants to purchase
All issued Bridge Warrants were outstanding at December 31, 2023. As discussed in Note 4, immediately prior to the closing of the Merger in August 2024, all issued and outstanding Bridge Warrants were net exercised into shares of the Company’s Common stock.
Private Warrants
In connection with the Company’s various historical debt and equity financing arrangements, the Company issued convertible preferred stock warrants to purchase shares of its various Series of convertible preferred stock.
The convertible preferred stock warrants are classified as liabilities, with changes in fair value recorded through earnings, as the underlying convertible preferred shares can be redeemed by the holders of these shares upon the occurrence of certain events that are outside of the control of the Company.
23
As discussed in Note 4, immediately prior to the consummation of the Merger in August 2024, each issued and outstanding convertible preferred stock warrant to purchase Legacy Bolt Convertible Preferred Stock converted into a warrant to purchase shares of the Company’s Common stock, with each warrant subject to the same terms and conditions as were applicable to the original warrant and having an exercise price and number of shares of Common stock purchasable based on the Exchange Ratio and other terms contained in the Merger Agreement (the “Private Warrants Conversion”).
After the Private Warrants Conversion, Private
Warrants are indexed to the Company’s own stock, and they were therefore reclassed into equity classified instruments. Prior to
the Private Warrants Conversion, the Company remeasured the convertible preferred stock warrant liability resulting in a final warrant
value of $
The following assumptions were used to calculate the fair value of the convertible preferred stock warrant liability at December 31, 2023 under PWERM:
| December 31, 2023 | ||||
| Fair value of Legacy Bolt common stock(1) | $ | |||
| Discount rate(2) | % | |||
| Probability(3) | % | |||
| Exercise Price(4) | $ | |||
| Expected term (in years)(5) | ||||
| (1) |
| (2) |
| (3) |
| (4) |
| (5) |
| Issued Date | Exercise Price | Number of shares | Expiration Date | |||||||||
| Series A | $ | |||||||||||
| Series B | ||||||||||||
| Series E | ||||||||||||
| Total | ||||||||||||
| Issued Date | Exercise Price | Number of shares | Expiration Date | |||||||||
| Series A | $ | |||||||||||
| Series B | ||||||||||||
| Series C | ||||||||||||
| Series D | ||||||||||||
| Series E | ||||||||||||
| Total | ||||||||||||
24
Public Warrants
Private Placement Warrants – Related Party
In connection with the Company’s Merger in
August 2024 (see Note 4 – Reverse Merger), the Company assumed
The Private Placement Warrants are identical to
the Public Placement Warrants discussed in the next section, except that if held by the Sponsor or its permitted transferees, they (i)
may be exercised on a cashless basis and (ii) are not subject to redemption. If the Private Placement Warrants are held by holders other
than the Sponsor or its permitted transferees, then the Private Placement Warrants will be redeemable by the Company and exercisable by
the holders on the same basis as Public Placement Warrants, if price per share is less than $
Public Placement Warrants
In connection with the Company’s Merger in
August 2024 (see Note 4 – Reverse Merger), the Company assumed
The Public Warrants would become exercisable on
the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public
Offering. The Public Warrants would expire
In addition, the Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a Merger, the Company would use its commercially reasonable efforts to file with the SEC, and within 60 business days following a Merger to have declared effective, a registration statement covering the issuance of the shares of Common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Common stock until the warrants expire or are redeemed. Following the Merger consummation, the Company filed such registration statement on September 19, 2024 with the SEC to cover the issuance of the shares of Common stock issuable upon exercise of the Public Warrants.
Notwithstanding the above, if the Common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
25
Redemption
Redemption of Public Warrants when the price
per share of Common stock equals or exceeds $
| ● | in whole and not in part. |
| ● | at a price of $ |
| ● | upon a minimum of 30 days’ prior written notice of redemption, or 30-day redemption period, to each warrant holder; and |
| ● | if, and only if, the last reported sale price of the Common stock equals or exceeds $ |
When the Public Warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption
of Public Warrants when the price per share of Common stock equals or exceeds $
| ● | in whole and not in part. |
| ● | at a price of $ |
| ● | upon a minimum of 30 days’ prior written notice of redemption. |
| ● | if, and only if, the last reported sale price of the Common stock equals or exceeds $ |
| ● | if, and only if, the Private Placement Warrants are also concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above; and |
| ● | if, and only if, there is an effective registration statement covering the issuance of the shares of Common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given. |
If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of Common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of Common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants.
The Public Placement Warrants and Private Placement Warrants are classified as public placement warrant liability and related party private placement warrant liability, respectively, in accordance with ASC 815-40-15 since the Public Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. These liabilities are subject to remeasurement at each balance sheet date until exercised with changes in fair value recorded through earnings (see Note 5 – Fair Value Measurements).
26
All
issued Public Warrants of
| September 30, 2024 | ||||
| Stock price | $ | |||
| Exercise price | $ | |||
| Redemption Threshold | $ | |||
| Effective expiration date | August 13, 2029 | |||
| Term (years) | ||||
| Volatility | % | |||
| Risk-free rate | % | |||
| 10. | CONVERTIBLE PREFERRED STOCK |
In
October 2023, the Company amended and restated the articles of incorporation to add a conversion feature to the convertible preferred
stock. Pursuant to the amendment, all outstanding convertible preferred stock automatically converts into the same number of shares of
Common stock upon the consummation of the Merger with GAMC. In addition, if any holder of shares of convertible preferred stock did not
participate in a financing event within the time specified by the Company by (i) purchasing the Bridge Convertible Notes (see Note
8 — Borrowings) equal to at least
This
amendment of the conversion feature was determined to be significant using the qualitative approach. As such, the Company accounted
for the amendment as an extinguishment of the outstanding convertible preferred stock and recorded a gain on extinguishment of
$
In
November 2023, the time for convertible preferred stockholders to participate in a financing event elapsed, which resulted in
As
discussed in Note 4, immediately prior to the consummation of the Merger in August 2024, each share of Legacy Bolt Convertible Preferred
Stock automatically converted into shares of Common stock of Legacy Bolt in accordance with the Merger Agreement. In addition, the Company
filed its restated amended certificate of incorporation, which authorized the issuance of up to
27
| Shares authorized | Shares issued and outstanding | Original Issue Price | Net proceeds | Aggregate liquidation preference | ||||||||||||||||
| Series A(1) | $ | $ | $ | |||||||||||||||||
| Series B | ||||||||||||||||||||
| Series C | ||||||||||||||||||||
| Series D | ||||||||||||||||||||
| Series E(2) | ||||||||||||||||||||
| $ | $ | |||||||||||||||||||
| (1) |
| (2) |
| 11. | STOCK-BASED COMPENSATION |
Common Stock
As
discussed in Note 4, in connection with the Merger consummation, the Company filed its restated amended certificate of incorporation,
which authorized the issuance of up to
At
September 30, 2024 and December 31, 2023, there were
| September 30, 2024 | December 31, 2023 | |||||||
| Series A convertible preferred stock | ||||||||
| Series B convertible preferred stock | ||||||||
| Series C convertible preferred stock | ||||||||
| Series D convertible preferred stock | ||||||||
| Series E convertible preferred stock | ||||||||
| Warrants outstanding for future issuance of convertible preferred stock | ||||||||
| Warrants outstanding for future issuance of Common stock | ||||||||
| Stock options and restricted stock units | ||||||||
| Stock options and restricted stock units available for future issuance | ||||||||
| Total shares of Common stock reserved | ||||||||
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Equity Incentive Plan
Under
the 2009 Equity Incentive Plan (the “2009 Plan”), the 2019 Equity Incentive Plan (the “2019 Plan”), and the
2024 Equity Incentive Plan (the “2024 Plan” and together with the 2009 Plan and 2019 Plan, “the Plans”), the
Company may grant stock options (both service-based and performance milestone-based) to employees and non-statutory stock
options, restricted share awards (“RSAs”) and restricted stock units (“RSUs”) to employees, officers, and
non-employee directors and consultants of the Company. Under the Plans, stock options may be immediately exercisable subject to
repurchase or may be exercisable as determined by the Board of Directors. The Company has not allowed for early exercises of options
under the Plans. Additionally, to date, the Company has not issued RSAs under the Plans. At September
30, 2024 and December 31, 2023, there were options outstanding to purchase a total of
Service-based Stock Options
| Number of options outstanding | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value (in thousand) | |||||||||||||
| Balances at January 1, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Exercised | — | |||||||||||||||
| Expired | — | |||||||||||||||
| Forfeited | — | |||||||||||||||
| Balances at September 30, 2024 | $ | $ | ||||||||||||||
| Vested and exercisable at September 30, 2024 | $ | $ | ||||||||||||||
Stock
options that vested during the nine months ended September 30, 2024, had a weighted-average grant date fair value of $
Performance Milestone-based Stock Options
| Number of options outstanding | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
| Balances at January 1, 2024 | $ | $ | ||||||||||||||
| Granted | — | |||||||||||||||
| Exercised | — | |||||||||||||||
| Expired | — | |||||||||||||||
| Forfeited | — | |||||||||||||||
| Balances at September 30, 2024 | $ | $ | ||||||||||||||
| Vested and exercisable at September 30, 2024 | $ | $ | ||||||||||||||
As
reflected in the table above, no performance milestone-based options were granted or exercised during the nine months ended
September 30, 2024. The total grant date fair value of performance milestone-based options that vested during the nine months
ended September 30, 2024 was immaterial. There were
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Restricted Stock Units
| Number of RSUs Outstanding | Weighted-Average Grant Date Fair Value Per Share | |||||||
| Balances at January 1, 2024 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Balances at September 30, 2024 | $ | |||||||
The
RSUs have both a service-based condition or a performance milestone-based condition(s) and a liquidity event condition. The total
RSU vesting expense was $
Stock-Based Compensation
| Three Months Ended September, | Nine Months Ended September, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
| 12. | INCOME TAXES |
The Company’s provision from income taxes for interim periods is determined using its effective tax rate that arise during the period. The Company’s quarterly tax provision is subject to variation due to several factors, including variability in pre-tax income (or loss), the mix of jurisdictions to which such income relates, changes in how the Company does business, and tax law developments.
The
Company’s effective tax rate for the three and nine months ended September 30, 2024, and the same periods in the prior year differs from
the U.S. statutory rate of
There were no material changes to the Company’s unrecognized tax benefits during the three and nine months ended September 30, 2024, and the Company does not expect to have any significant changes to unrecognized tax benefits through the end of the fiscal year.
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| 13. | LEASES |
During
September 2023, the Company negotiated a contingent lease termination agreement with its landlord for the Berkeley facility lease.
If the Company issues
In
August 2024, the Company entered into an agreement with its landlord in the Netherlands to terminate its remaining operating leases,
by agreeing to pay $
Finance leases were not material at September 30, 2024 and December 31, 2023.
| Three Months Ended September, | Nine Months Ended September, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating lease costs | $ | $ | $ | $ | ||||||||||||
| Variable lease costs | ||||||||||||||||
| Short-term lease costs | ||||||||||||||||
| Total lease costs | $ | $ | $ | $ | ||||||||||||
| December 31, 2023 | ||||
| Weighted-average remaining lease term (in years) | ||||
| Weighted-average discount rate | % | |||
| Three Months Ended September, | Nine Months Ended September, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | $ | $ | $ | ||||||||||||
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| 14. | COMMITMENTS AND CONTINGENCIES |
Litigation
From time to time, the Company may become involved in various litigation and administrative proceedings relating to claims arising from its operations in the normal course of business. Management believes that the ultimate resolution of any such matters will not have a material adverse effect on the financial position or results of operations of the Company.
Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
Technical Development Agreement
During
the year ended December 31, 2021, the Company entered into a 2021 TDA with Ginkgo. Under the 2021 TDA, the Company and Ginkgo will collaborate
on certain projects that will use Ginkgo’s expertise in strain engineering and lab-scale fermentation processes, referred to
as “technical services”. Ginkgo provided the Company with a credit of $
As disclosed in Note 7 – Borrowings, in October 2022, the Company and Ginkgo executed several concurrent agreements including the Ginkgo Note Purchase Agreement, the amendment to the 2021 TDA, the 2022 TDA, a Pledge and Security Agreement, and Trademark and Patent Security Agreements.
Under the 2022 TDA and the amendment to the 2021 TDA, (collectively the “TDAs”), the Company and Ginkgo will continue to collaborate on certain projects using Ginkgo’s expertise in specialized engineering and lab-scale fermentation processes, for both b-silk and Mylo products. The TDAs include a royalty payment obligation based on future net sales if and when the first commercial sale of the products developed and improved under the TDAs occurs. Royalty payments, due in cash, are based on defined royalty rates for each country or jurisdiction in which the sale is made. In certain instances, a lump sum royalty payment may be due for a particular product, in which case no further royalty payments is required. At September 30, 2024, the Company has not accrued a liability for royalty payment as no payment obligation or commercial sale of the products developed and improved under the TDAs has occurred.
Upon
its execution, the Ginkgo Note Purchase Agreement required the Company to pay Ginkgo $
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Founder Shares – Related Party
The
Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its
Inflation Reduction Act of 2022
On
August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for,
among other things, a new U.S. federal
Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Merger, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Merger, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Merger, extension or otherwise, (ii) the structure of a Merger, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Merger (or otherwise issued not in connection with a Merger but issued within the same taxable year of a Merger) and (iv) the content of regulations and other guidance from the Treasury.
During the second quarter, the Internal Revenue Service (“IRS”) issued final regulations with respect to the timing and payment of the excise tax. Pursuant to those regulations, the Company would need to file a return and remit payment for any liability incurred during the period from January 1, 2023 to December 31, 2023 on or before October 31, 2024.
The
Company is currently evaluating its options with respect to payment of this obligation, which is the excise tax payable on the interim
condensed consolidated balance sheets. If the Company is unable to pay its obligation in full, it will be subject to additional
interest and penalties which are currently estimated at
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Cost Reduction Plan
On January 24, 2023, the Company’s Board of Directors approved a reduction in force of the Company’s workforce of up to 30 employees, effective on February 3, 2023. Employees affected by the Cost Reduction Plan obtained involuntary termination benefits that are provided pursuant to a one-time benefit arrangement.
During
the three months ended September 30, 2024 and 2023, the Company incurred restructuring costs of
| Restructuring liability | ||||
| Balance at January 1, 2024 | $ | |||
| Amounts paid or otherwise settled during the period | ( | ) | ||
| Balance at September 30, 2024 | $ | |||
During the period ended September 30, 2024, the Company paid all the remaining restructuring liability.
Supply Agreement
In
August 2022, the Company entered into an Amended and Restated Manufacturing and Supply Agreement, referred to as the “Supply Agreement”
with a supplier to procure appropriate raw materials, including pasteurized plant-based organic substrate. Under this Supply Agreement,
the supplier rented an additional farm in the Netherlands beginning in 2023. During the test and commissioning phase of this farm, the
Company has agreed to pay the supplier a fixed amount of $
On
October 19, 2023, the Company entered into a settlement agreement with its supplier. If the Company pays the supplier $
During
the fourth quarter of the year ended December 31, 2023, the Company paid $
During
the nine months ended September 30, 2024, the Company issued
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| 15. | BASIC AND DILUTED NET INCOME (LOSS) PER SHARE |
| Three Months Ended September, | Nine Months Ended September, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) attributable to common stockholders, basic and dilutive | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Denominator: | ||||||||||||||||
| Weighted-average common shares outstanding, basic | ||||||||||||||||
| Add: Options, with dilutive impact only | ||||||||||||||||
| Add: Private Warrants, with dilutive impact only | ||||||||||||||||
| Weighted-average shares outstanding, dilutive | ||||||||||||||||
| Three Months Ended September, | Nine Months Ended September, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Convertible preferred stock on an as-converted basis | ||||||||||||||||
| Unvested RSU’s | ||||||||||||||||
| Warrants to purchase preferred stock on an as-converted basis | ||||||||||||||||
| Warrants to purchase common stock | ||||||||||||||||
| Stock options outstanding | ||||||||||||||||
| Total | ||||||||||||||||
At September 30, 2023, no RSUs were vested as they did not meet the performance condition at the end the reporting period for the three and nine months ended September 30, 2023. In addition, outstanding stock options with performance conditions were not vested as the performance conditions were not met at September 30, 2024 and 2023. As the conditions were not satisfied at the end of each reporting period, the unvested shares were excluded when calculating diluted net income (loss) per share.
| 16. | SUBSEQUENT EVENTS |
The Company has evaluated all events and transactions that occurred after September 30, 2024 through the filing of this Quarterly Report on Form 10-Q and determined that there have been no events that have occurred that would require adjustment to disclosures in the unaudited interim condensed consolidated financial statements except as disclosed below.
Nasdaq listing rules require listed securities
to maintain a minimum bid price of $
35
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provide information that our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read together with the unaudited interim condensed consolidated financial statements as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023, and the respective notes thereto, included elsewhere in this report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” in this report. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” in this report.
Overview
We develop and leverage our Vegan Silk Technology Platform, which is used to produce b-silk, a biodegradable protein polymer and replacement for silicone elastomers in beauty and personal care. We began commercializing b-silk in direct-to-consumer products in 2019 and in business-to-business products in 2020. We are headquartered in California.
Recent Developments
Merger
On October 4, 2023, Bolt Threads, Inc. (“Legacy Bolt”) and Golden Arrow Merger Corp. (“GAMC”), a Delaware corporation, entered into a Merger Agreement (the “Merger Agreement”) with Beam Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of GAMC (the “Merger Sub”).
On August 13, 2024 (the “Closing Date”), a merger transaction between Legacy Bolt and GAMC was completed, refer to Note 4 in our unaudited interim condensed consolidated financial statements for more information. Pursuant to the Merger Agreement, (i) on the Closing Date, the Merger Sub merged with and into the Legacy Bolt (together with the other transactions contemplated by the Merger Agreement, the “Merger” or the “SPAC transaction”), with the Merger Sub ceasing to exist and Legacy Bolt surviving as a wholly owned subsidiary of GAMC and (ii) GAMC changed its name to Bolt Projects Holdings, Inc. Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company,” “Bolt”, “we,” “us,” or “our” refer to the business of Bolt Threads, Inc., which became the business of Bolt Projects Holdings, Inc. and its subsidiaries following the Closing Date.
The Company determined that Legacy Bolt was the accounting acquirer in the Merger based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805, Mergers.
The determination was primarily based on the following facts:
| ● | Former Legacy Bolt stockholders have a controlling voting interest in the Company. |
| ● | Legacy Bolt management continues to hold executive management roles for the post-combination company and is responsible for the day-to-day operations; and |
| ● | The founders of Legacy Bolt have two non-independent board seats and final approval in selection of independent seats. |
Accordingly, for accounting purposes, the Merger was treated as the equivalent of Legacy Bolt issuing stock for the net assets of GAMC, accompanied by a recapitalization. No goodwill or other intangible assets were recorded as a result of the Merger.
While GAMC was the legal acquirer in the Merger, because Legacy Bolt was deemed the accounting acquirer, the historical financial statements of Legacy Bolt became the historical financial statements of the combined company, upon the consummation of the Merger. As a result, the financial statements included within this filing reflect (i) the historical operating results of Legacy Bolt prior to the Merger; (ii) the combined results of Legacy Bolt and GAMC following the closing of the Merger; (iii) the assets and liabilities of Legacy Bolt at their historical cost; and (iv) the Company’s equity structure for all periods presented.
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Related Financings
Concurrently with the execution of the Merger Agreement, the certain investors (the “PIPE Subscribers”), including the Sponsor (which refers to Golden Arrow Sponsor, LLC), entered into the Original PIPE Subscription Agreements with GAMC pursuant to which the PIPE Subscribers originally committed to purchase in a private placement up to 2,787,457 shares of GAMC Class A common stock (the “PIPE Shares”) at a purchase price of $10.00 per share at an aggregate purchase price of up to $27.9 million (the “PIPE Financing”). The purchase of the PIPE Shares would be conditioned upon, among other things, the consummation of the Merger and would be consummated immediately prior to or substantially concurrently with the Closing Date. Pursuant to the Original PIPE Subscription Agreement executed by the Sponsor, the Sponsor agreed to purchase 800,000 shares of GAMC Class A common stock at a purchase price of $10.00 per share for an aggregate purchase price of $8.0 million. However, the number of subscribed shares to be purchased thereunder by the Sponsor would be reduced by the number of shares of GAMC Class A common stock that had not been elected for redemption as of the expiration of the redemption period related to the Closing and that were held by certain individuals mutually agreed upon by GAMC and the Company at any time from the date of the execution of the agreement up to immediately prior to the expiration of such redemption period.
In February 2024, concurrently with the execution of the Second Bridge Convertible Notes, the PIPE Subscribers, including the Sponsor, entered into the First Amendment to the Original PIPE Subscription Agreements with GAMC. Pursuant to the amendment, the gross proceeds from the Second Bridge Convertible Notes of $5.0 million counted towards the commitments for the purchase of PIPE shares under the Original PIPE Subscription Agreements on a dollar-for-dollar basis.
In June 2024, concurrently with the execution of the Third Bridge Convertible Notes, the PIPE Subscribers, including the Sponsor, entered into amendment to the PIPE Subscription Agreements with GAMC. Pursuant to the amendment, the gross proceeds from the Third Bridge Convertible Notes of $17.7 million counted towards the commitments for the purchase of PIPE shares under the Original PIPE Subscription Agreements on a dollar-for-dollar basis.
There were certain investors that did not purchase the PIPE Shares for total gross proceeds of $0.5 million related to the PIPE financing. After the Merger consummation in August 2024, the PIPE Subscribers purchased 470,120 PIPE Shares for a total gross proceed of $4.7 million.
As discussed previously, on August 13, 2024, the Merger was completed. Pursuant to the Company’s certificate of incorporation, as amended on August 13, 2024, the Company is authorized to issue 500,000,000 shares of Common stock, par value of $0.0001, and 50,000,000 shares of preferred stock, par value $0.0001. The holders of shares of Common stock are entitled to one vote for each share held. The preferred stock is non-voting. No shares of preferred stock were issued and outstanding as of September 30, 2024.
As a result of the Merger, among other things:(1) each then issued and outstanding GAMC Class A common stock, par value $0.0001 per share, converted automatically, on a one-for-one basis, into a share of the Company’s common stock; (2) each then issued and outstanding GAMC Class B common stock, par value $0.0001 per share, converted automatically, on a one-for-one basis, into a share of the Company’s Common stock; and (3) each then issued and outstanding GAMC Public Placement Warrant and Private Placement Warrant to purchase one GAMC Class A common stock converted automatically into the Company’s Public Placement Warrant and the Company’s Private Placement Warrant to acquire one share of the Company’s Common stock, respectively.
Immediately prior to the effective time of the Merger, each share of Legacy Bolt Convertible Preferred Stock and each Legacy Bolt Convertible Note automatically converted into shares of common stock of Legacy Bolt in accordance with the Merger Agreement and the Bridge NPA. In addition, each Legacy Bolt Bridge Warrant was automatically net exercised into shares of common stock of Legacy Bolt in accordance with the Warrant Agreement.
As a result of the Merger, among other things (1) all issued and outstanding shares of Legacy Bolt common stock as of immediately prior to the Closing (including Legacy Bolt common stock resulting from the Legacy Bolt Convertible Preferred Stock conversion, resulting from the Legacy Bolt Convertible Notes conversion, and resulting from the Legacy Bolt Bridge Warrants net exercise), were exchanged at an exchange ratio of 0.29489 (the “Exchange Ratio”) for an aggregate of 23,172,271 shares of the Company’s Common stock; (2) each issued and outstanding warrant to purchase Legacy Bolt Convertible Preferred Stock converted into a warrant to purchase shares of the Company’s Common stock (the “Private Warrant”), with each warrant subject to the same terms and conditions as were applicable to the original warrant and having an exercise price and number of shares of Common stock purchasable based on the Exchange Ratio and other terms contained in the Merger Agreement; (3) each issued and outstanding stock option to purchase Legacy Bolt common stock converted into a stock option to purchase shares of the Company’s Common stock, with each option subject to the same terms and conditions as were applicable to the original Legacy Bolt option and with an exercise price and number of shares of the Company’s Common stock purchasable based on the Exchange Ratio and other terms contained in the Merger Agreement; and (4) each issued and outstanding Legacy Bolt restricted stock unit (“RSU”) award converted into a RSU award to receive shares of the Company’s Common stock, with each RSU award subject to the same terms and conditions as were applicable to the Legacy Bolt RSU award, and with the number of shares of the Company’s Common stock to which the RSU award converted based on the Exchange Ratio and other terms contained in the Merger Agreement.
37
Public Company Costs
Upon the Closing of the Merger, Bolt began trading on Nasdaq under the ticker symbol “BSLK.” As most Bolt Threads’ current management team and business operations will comprise Bolt’s management and operations, Bolt will need to implement procedures and processes to address public company regulatory requirements and customary practices. We expect Bolt will incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.
Modification of Ginkgo Debt
On December 29, 2023, we entered an amendment (the “Ginkgo Note Purchase Agreement Amendment No. 1”) to our note purchase agreement, dated October 14, 2022 (the “Ginkgo Note Purchase Agreement”) with Ginkgo Bioworks, Inc. (“Ginkgo”) to modify our outstanding senior secured notes (the “Senior Secured Notes”) held by Ginkgo. Under the terms of the modification, $10.0 million of outstanding principal was exchanged for a convertible note with the same terms as the convertible notes issued pursuant to the Note Purchase Agreement entered into by the PIPE Subscribers. The remaining $20.0 million of outstanding principal was exchanged for Senior Secured Notes of $11.8 million, a nonexclusive right to license certain of our intellectual property, and a reduction of our prepaid balance relating to the 2022 Technical Development Agreement by $5.4 million. The interest rate of the remaining Senior Secured Notes was amended, from the existing rate of treasury rate plus 6.00% per annum, to 12.00% per annum, and the maturity date of the remaining Senior Secured Notes was extended, from the existing maturity date of October 14, 2024, to December 31, 2027. We evaluated the Ginkgo NPA Amendment and determined that it was required to be accounted for as a troubled debt restructuring in accordance with ASC 470-60, Debt — Troubled Debt Restructurings by Debtors. As a result of the IP Transfer, we recognized a gain of $2.5 million in other income (expense), net on the condensed consolidated statement of operations and comprehensive loss during the year ended December 31, 2023. We recorded the Amended Senior Note at its net carrying value, which was calculated by taking the carrying value of the Senior Secured Notes immediately prior to the 2023 Ginkgo Amendment and reducing it by the fair value of assets transferred. The future undiscounted cash payments related to principal and interest exceed the carrying value of the Amended Senior Note upon issuance. Therefore, we did not record a gain on the restructuring of the Senior Secured Notes, and fees paid to third parties were expensed as incurred. We calculate and record interest expenses on the Amended Senior Note using the effective interest method.
In April 2024, we entered a second amendment to the Ginkgo Note Purchase Agreement (the “Ginkgo Note Purchase Agreement Amendment No. 2”). Pursuant to the second amendment, the interest from the Ginkgo NPA Amendment effective date until the occurrence of the SPAC transaction was paid in kind by capitalizing and adding such accrued interest to the principal of the Amended Senior Notes at our option. In addition, upon the occurrence of the SPAC transaction, we paid an aggregate principal amount of the Amended Senior Notes equal to $0.5 million.
Impact of Macroeconomic Trends
Unfavorable conditions in the economy in the United States and abroad may negatively affect the growth of our business and our results of operations. For example, macroeconomic events, including rising inflation, the U.S. Federal Reserve raising interest rates, and recent and potential future disruptions in access to bank deposits and lending commitments due to bank failures, have led to economic uncertainty and volatility globally. The effect of macroeconomic conditions may not be fully reflected in our results of operations until future periods. Moreover, negative macroeconomic conditions could adversely impact our ability to obtain financing in the future on terms acceptable to us, or at all. In addition, the geopolitical instability and related sanctions could continue to have significant ramifications on global financial markets, including volatility in the U.S. and global financial markets. While the macroeconomic trends discussed above are not currently having a material adverse impact on our business or results of operations, if economic uncertainty increases or the global economy worsens, our business, financial condition and results of operations may be harmed.
38
Key Factors Affecting Our Results and Performance
We believe that our future performance and success depends on, to a substantial extent, our ability to capitalize on the following opportunities, which in turn is subject to significant risks and challenges, including those discussed below and in the section of this report titled “Risk Factors.”
Product Dependency
To date, substantially all our revenue has been derived, and we expect substantially all of our revenue in the foreseeable future to continue to be derived, from sales of b-silk. Customer awareness of, and experience with, b-silk has been and is currently limited. As a result, b-silk has limited product and brand recognition within the beauty and personal care market as a substitute for silicone elastomers. We do not have a long history operating as a commercial company, and the novelty of b-silk, together with our limited commercialization experience, makes it difficult to evaluate our current business and predict our prospects with precision. Furthermore, our ability to increase revenues by identifying additional commercial opportunities and our ability to obtain new customers depends on several factors, including our ability to offer higher quality products at competitive prices, the strength of our competitors, and the capabilities of our sales and marketing departments. If we are not able to continue to increase sales of our products to existing customers or to obtain new customers in the future, we may not be able to increase our revenues.
In early 2023, we decided to discontinue the commercial development of Mylo, a leather alternative made from mycelium, the root structure of mushrooms, to focus exclusively on the commercialization of our Vegan Silk Technology Platform.
Manufacturing b-silk
Currently, we rely on a single manufacturing partner, Laurus Bio, to produce b-silk. Adverse changes or developments affecting our relationship with Laurus Bio could impair our ability to produce b-silk. To the extent that we are dependent on any manufacturing partner, we are subject to the risks faced by that partner to the extent that such risks impede the partner’s ability to stay in business and produce b-silk in a timely manner to us.
Research and Development
Our future plans include investments in research and development and related product opportunities. We believe that we must continue to dedicate resources to research and development efforts to maintain a competitive position. However, if we do not receive significant revenue from these investments, if the investments don’t yield expected benefits or if we don’t have the needed funding to invest in the technology, our results of operations could be adversely impacted.
Components of Results of Operations
Revenue
We derive revenue principally from leveraging our Vegan Silk Technology Platform to produce and sell our b-silk product (b-silk). We recognize revenue when b-silk is shipped to customers, since at that time control is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for the material
Cost of revenue and gross income (loss)
Cost of revenue consists of all the costs to manufacture, warehouse, and ship b-silk. These costs include contract manufacturers and inbound freight, internal and external quality assessments of work-in-process and finished goods inventory, warehousing, and packing and shipping supplies, and inventory impairment.
Our gross income (loss) is equal to total revenue less total cost of revenue.
Operating expenses
Research and development
Our research and development expenses primarily consist of personnel-related costs, including salaries, employee benefits, stock-based compensation, both external research and development costs and external product and operations costs incurred under agreements with contract research and other professional services organizations, lab supplies, software and maintenance, and allocated depreciation of property and equipment and lease expenses for both pilot plant and factory facilities.
39
Sales and marketing
Our sales and marketing expenses primarily consist of personnel-related costs, including salaries, employee benefits, and stock-based compensation, marketing expenses, and advertising expenses. We expect to incur additional sales and marketing expenses as we expect to increase our focus on the Vegan Silk Technology Platform to produce b-silk by expanding operations to increase sales.
General and administrative
Our general and administrative expenses primarily consist of personnel-related costs, including salaries, employee benefits, and stock-based compensation, professional services fees, software, and allocated depreciation of property and equipment and lease expenses for facilities. We expect to incur additional annual general and administrative expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.
Other income (expense)
Impairment expense
Impairment expense relates to impairment charges recognized on our long-lived assets, consisting of property, equipment, and right-of-use assets, when it is determined that the fair value of the assets is less than their carrying value.
Interest expense
Interest expense is associated with our outstanding debt, including amortization of debt discounts and issuance costs.
Gain (Loss) on lease termination
Loss on lease termination relates to charges recognized on the termination of our Berkeley and Netherlands facility leases. Refer to Note 13 in our unaudited interim condensed consolidated financial statements for additional information.
Loss on extinguishment of convertible notes
Loss on extinguishment of convertible notes is related to the Second Amendment to the Note Purchase Agreement, which we entered during June 2024. Due to the substantial change to the conversion feature, we accounted for this amendment as a debt extinguishment. Refer to Note 8 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of convertible preferred stock warrant liability
Certain financial instruments issued by us prior to the Merger are recognized as liabilities and carried at fair value on our balance sheet. Changes in the fair value of those instruments are captured in our results of operations. The convertible preferred stock warrant liability fair value adjustment consists of unrealized gains and losses as a result of marking our liability classified warrants to fair value at the end of each reporting period. We will continue to recognize changes in the fair value of such warrants until each respective warrant is exercised, expired, or qualifies for equity classification. For additional information on securities carried at fair value and fair value measurement please refer to Note 5 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of public placement warrant liability and related party private placement warrant liability
In connection with the Merger, we assumed previously issued warrants to purchase the Company’s Common stock, which are recognized as liabilities and carried at fair value on our balance sheet. Changes in the fair value of those instruments are captured in our results of operations. The public placement warrant liability and related party private placement warrant liability fair value adjustments consist of unrealized gains and losses as a result of marking our liability classified warrants to fair value at the end of each reporting period. We will continue to recognize changes in the fair value of such warrants until each respective warrant is exercised, expired, or qualifies for equity classification. For additional information on securities carried at fair value and fair value measurement please refer to Note 5 and Note 9 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of share-based termination liability
Certain share-based financial instruments issued by us as part of our lease and supply agreement terminations are recognized as liabilities and carried at fair value on our consolidated balance sheet. Changes in the fair value of those instruments are captured in our consolidated results of operations. The share-based termination liability fair value adjustment consists of unrealized gains and losses as a result of marking our liability classified share-based instruments to fair value at the end of each reporting period. We continued to recognize changes in the fair value of such share-based instruments until the shares were issued upon the Closing of the Merger. For additional information on securities carried at fair value and fair value measurement please refer to Note 5 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information
40
Remeasurement of convertible notes and related party convertible notes
Concurrently with our entry into the Merger Agreement, each of the PIPE Subscribers entered into a Note Purchase Agreement in which we issued each PIPE Subscriber a convertible promissory note. The convertible promissory notes are recognized as liabilities and carried at fair value on our condensed consolidated balance sheet, due to our selection of the Fair Value Option under ASC 825 — Financial Instruments. Changes in the fair value of the convertible promissory notes are captured in our consolidated results of operations. The convertible promissory notes fair value adjustment consists of unrealized gains and losses as a result of marking our notes to fair value at the end of each reporting period. In connection with the Merger, each Convertible Note automatically converted into shares of Common stock in accordance with the Merger Agreement and the Bridge NPA. Therefore, we will not continue to recognize changes in the fair value of such convertible promissory in future periods. For additional information on securities carried at fair value and fair value measurement, refer to Note 5 and Note 8 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report.
Other income (expense), net
Other income (expense), net consists primarily of realized and unrealized gain and losses on foreign currency transactions, realized gain and losses on the sale of assets, interest income, and sublease income.
Income tax provision
Income tax provision primarily consists of income taxes in certain foreign and state jurisdictions in which we conduct business. Refer to Note 12 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 for additional information.
Results of Operations for the Nine Months Ended September 30, 2024 and 2023
The results of operations presented below should be reviewed in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto included elsewhere in this report. The following table sets forth our results of operations data for the periods presented:
| Nine Months Ended September 30, | Dollar | Percentage | ||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenue | $ | 80 | $ | 2,032 | $ | (1,952 | ) | (96 | )% | |||||||
| Cost of revenue | 155 | 3,698 | (3,543 | ) | (96 | )% | ||||||||||
| Gross loss | (75 | ) | (1,666 | ) | 1,591 | (95 | )% | |||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 4,860 | 9,077 | (4,217 | ) | (46 | )% | ||||||||||
| Sales and marketing | 1,720 | 861 | 859 | 100 | % | |||||||||||
| General and administrative | 28,431 | 12,832 | 15,599 | 122 | % | |||||||||||
| Restructuring costs | — | 3,927 | (3,927 | ) | (100 | )% | ||||||||||
| Total operating expenses | 35,011 | 26,697 | 8,314 | 31 | % | |||||||||||
| Loss from operations | (35,086 | ) | (28,363 | ) | (6,723 | ) | 24 | % | ||||||||
| Other income (expense) | ||||||||||||||||
| Property and equipment impairment | — | (19,289 | ) | 19,289 | (100 | )% | ||||||||||
| Lease impairment | — | (2,278 | ) | 2,278 | (100 | )% | ||||||||||
| Interest expense | (930 | ) | (2,626 | ) | 1,696 | (65 | )% | |||||||||
| Gain (loss) on lease termination | 2,013 | (319 | ) | 2,332 | (731 | )% | ||||||||||
| Loss on extinguishment of convertible notes | (26,359 | ) | — | (26,359 | ) | (100 | )% | |||||||||
| Remeasurement of convertible preferred stock warrant liability | 6 | 126 | (120 | ) | (95 | )% | ||||||||||
| Remeasurement of public placement warrant liability | 24,286 | — | 24,286 | 100 | % | |||||||||||
| Remeasurement of related party private placement warrant liability | 12,671 | — | 12,671 | 100 | % | |||||||||||
| Remeasurement of share-based termination liability | (978 | ) | — | (978 | ) | 100 | % | |||||||||
| Remeasurement of convertible notes | (31,664 | ) | — | (31,664 | ) | 100 | % | |||||||||
| Remeasurement of related party convertible notes | (3,752 | ) | — | (3,752 | ) | 100 | % | |||||||||
| Other income (expense), net | 659 | 2,699 | (2,040 | ) | (76 | )% | ||||||||||
| Total other income (expense), net | (24,048 | ) | (21,687 | ) | (2,361 | ) | 11 | % | ||||||||
| Loss before income taxes | (59,134 | ) | (50,050 | ) | (9,084 | ) | 18 | % | ||||||||
| Income tax provision | — | — | — | 0 | % | |||||||||||
| Net loss | $ | (59,134 | ) | $ | (50,050 | ) | $ | (9,084 | ) | 18 | % | |||||
41
Comparison of the Nine months ended September 30, 2024 and 2023
Revenue
Revenue decreased by $2.0 million, or 96%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily attributable to decreased sales of products from the Vegan Silk Technology Platform, including our b-silk product. We have an agreement with one customer that contains minimum purchase requirements of $1 million and $1.5 million during the years ended December 31, 2023 and 2024, respectively. Prior to 2023, a single customer was evaluating and testing b-silk which led to smaller scale purchases and lower revenue. After completing their evaluations, beginning in the first quarter of 2023, that customer made several large-scale purchases that led to a significant increase in revenue for 2023. Due to the large-scale purchases made during the latter half of 2023, we expect the level of purchases from that customer to vary from quarter to quarter. As of September 30, 2024, based on year-to-date purchases, we do not expect the customer to make any additional purchases in 2024.
Cost of revenue and gross income (loss)
Cost of revenue decreased by $3.5 million, or 96%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily attributable to the decrease of biomanufacturing costs relative to the decreased sales from our Vegan Silk Technology Platform, including our b-silk product.
Gross loss decreased by $1.6 million, or 95%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily attributable to decreased cost of revenue, partially offset by decreased revenue.
Operating expenses
Research and development
Research and development expenses were $4.9 million and $9.1 million for the nine months ended September 30, 2024 and 2023, respectively. The expenses during 2024 were primarily related to the continued development of our Vegan Silk Technology Platform, in addition to stock-based compensation expense related to the vesting of certain Restricted Stock Unit grants based on the completion of the Merger transaction. The expenses during 2023 were primarily related to the development of Mylo and our Vegan Silk Technology Platform. During the nine months ended September 30, 2023, we focused on the development of a pilot production line in various locations, to assist in the eventual production of both Mylo and the Vegan Silk Technology Platform, while continuing to support development of Mylo and the Vegan Silk Technology Platform in third-party factory facilities. The decrease during the nine months ended September 30, 2024, was related to the discontinuation of the production of Mylo in 2023, that led to the reduced focus on research and development for both Mylo and the Vegan Silk Technology Platform, which included a decrease in personnel headcount, and the shift in focus from in-house process development to supporting and assisting manufacturing partners with production-related processes. Spending on the Vegan Silk Technology Platform on a standalone basis increased year-over-year and focused on continued refinement of the manufacturing process, support for manufacturing b-silk at additional facilities and modification of the strain to achieve a variety of strategic objectives for customers.
42
Sales and marketing
Sales and marketing expenses increased by $0.9 million, or 100%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily attributable to an increase of stock-based compensation expense related to the vesting of certain Restricted Stock Unit grants based on the completion of the Merger transaction that took place during August 2024, partially offset by a temporary suspension of our sales and marketing efforts until we could raise additional capital.
General and administrative
General and administrative expenses increased by $15.6 million, or 122%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily attributable to an increase of stock-based compensation expense of $10.6 million, most of which was related to the vesting of certain Restricted Stock Unit grants based on the completion of the Merger transaction that took place during August 2024, an increase of $11.5 million of Bridge Convertible Notes issuance costs, as well as an increase of $1.1 million of consulting and other costs related to operating as a public company, as well as an increase of executive bonuses of $0.2 million based on the completion of the merger transaction, partially offset by $5.5 million that represents a reduction of our general and administrative costs until we could raise additional capital, in addition to a reduction to legal fees of $2.3 million.
Restructuring costs
Restructuring costs decreased by $3.9 million, or 100%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was attributable to employee costs incurred related to our reduction in workforce during the first nine months of 2023.
Property and equipment impairment
Property and equipment impairment decreased by $19.3 million, or 100%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which is entirely a result of the impairment of property and equipment that was used previously in the manufacture of a product that we de-emphasized in order to adjust our strategic focus towards b-silk in early 2023.
Lease impairment
Lease impairment decreased by $2.3 million, or 100%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was entirely attributable to the ROU Assets related our leases in the Netherlands becoming impaired due to Mylo production being shut down in 2023.
Interest expense
Interest expense decreased by $1.7 million, or 65%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily attributable to an $18.2 million decrease in the principal balance of our Ginkgo debt as part of the Ginkgo Note Purchase Agreement Amendment No. 1 in December 2023.
Gain (Loss) on lease termination
We recorded a gain on lease termination of $2.0 million and a loss on lease termination of $0.3 million for the nine months ended September 30, 2024 and 2023, respectively. During the nine months ended September 30, 2023, the loss was entirely attributable to the termination of our Berkeley lease. During the nine months ended September 30, 2024, the gain was entirely attributable to the termination of two of our Netherlands leases that resulted from de-recognizing our lease liability as we had previously recorded an impairment of our ROU Assets related to these leases in 2023. Refer to Note 13 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information
Loss on extinguishment of convertible notes
Loss on extinguishment of convertible notes increased by $26.4 million, or 100%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The loss is a direct result of the Second Amendment to the Note Purchase Agreement in June 2024, which was accounted for as a debt extinguishment because of a substantial change to the conversion feature. Immediately prior to the effective time of the Merger, each Convertible Note automatically converted into shares of Common stock in accordance with the Merger Agreement and the Bridge NPA. Refer to Note 8 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
43
Remeasurement of convertible preferred stock warrant liability
Remeasurement of convertible preferred stock warrant liability decreased by $0.1 million, or 95%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The change in the preferred stock warrant liability is a direct result of the assumptions used in the option pricing model used to calculate the fair value as of each balance sheet date, including the expected timing of a liquidity event, our estimated equity value at such time, and estimated volatility. Immediately prior to the consummation of the Merger in August 2024, each issued and outstanding convertible preferred stock warrant to purchase Legacy Bolt Convertible Preferred Stock converted into a warrant to purchase shares of the Company’s Common stock, with each warrant subject to the same terms and conditions as were applicable to the original warrant and having an exercise price and number of shares of Common stock purchasable based on the Exchange Ratio and other terms contained in the Merger Agreement. Refer to Note 5 and 9 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of public placement warrant liability
Remeasurement of public placement warrant liability increased by $24.3 million, or 100%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The change in the remeasurement of public placement warrant liability is entirely related to previously issued warrants to purchase the Company’s Common stock, which were assumed in connection with the Merger. In addition, the change in the fair value is a direct result of the assumptions used in the Monte Carlo simulation model used to calculate the fair value as of the Merger’s Closing Date and the balance sheet date, including our estimated equity value at such time, the risk-free rate at such time, the timing of the warrant expiration, and the estimated volatility. Refer to Note 5 and Note 9 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of private placement warrant liability
Remeasurement of related party private placement warrant liability increased by $12.7 million, or 100%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The change in the remeasurement of the related party private placement warrant liability is entirely related to previously issued warrants to purchase the Company’s Common stock, which were issued to the Sponsor, a related party, and were assumed in connection with the Merger. In addition, the change in fair value is a direct result of the assumptions used in the Monte Carlo simulation model used to calculate the fair value as of each balance sheet date, including our estimated equity value at such time, the risk-free rate at such time, the timing of the warrant expiration, and the estimated volatility. Refer to Note 5 and Note 9 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of share-based termination liability
Remeasurement of share-based termination liability increased by $1.0 million, or 100%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The share-based termination liability is related to transactions that took place during the third quarter of 2023. Further, the change in share-based termination liability is a direct result of the assumptions used in the model to calculate the fair value as of the balance sheet date. After the Merger was completed in August 2024, the Company issued the 750,000 shares of Common stock to its landlord and its supplier to settle the shared-based termination liability as of September 30, 2024. Refer to Note 5 and 13 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of convertible notes
The convertible notes are related to transactions that took place during the fourth quarter 2023 and the first nine months of 2024, which resulted in the remeasurement of convertible notes of $31.7 million for the nine months ended September 30, 2024. Further, the remeasurement in the convertible notes is a direct result of the assumptions used in the model used to calculate the fair value as of the balance sheet date. Immediately prior to the effective time of the Merger, each Convertible Note automatically converted into shares of Common stock in accordance with the Merger Agreement and the Bridge NPA. Refer to Note 5 and 8 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
44
Remeasurement of related party convertible notes
The related party convertible notes are related to transactions that took place during the fourth quarter 2023 and the first nine months of 2024, which resulted in the remeasurement of the related party convertible notes of $3.8 million for the nine months ended September 30, 2024. Further, the remeasurement in the related party convertible notes is a direct result of the assumptions used in the model used to calculate the fair value as of the balance sheet date. Immediately prior to the effective time of the Merger, each Convertible Note automatically converted into shares of Common stock in accordance with the Merger Agreement and the Bridge NPA. Refer to Note 5 and 8 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Other income (expense), net
Other income (expense), net decreased by $2.0 million, or 76%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, which was primarily attributable to a Federal Employee retention credit of $1.8 million recorded in 2023.
Results of Operations for the Three Months Ended September 30, 2024 and 2023
The results of operations presented below should be reviewed in conjunction with the unaudited interim condensed consolidated financial statements and notes thereto included elsewhere in this report. The following table sets forth our results of operations data for the periods presented:
| Three Months Ended September 30, | Dollar | Percentage | ||||||||||||||
| 2024 | 2023 | Change | Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenue | $ | 5 | $ | 1,289 | $ | (1,284 | ) | (100 | )% | |||||||
| Cost of revenue | 5 | 1,254 | (1,249 | ) | (100 | )% | ||||||||||
| Gross profit (loss) | — | 35 | (35 | ) | (100 | )% | ||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 3,476 | 844 | 2,632 | 312 | % | |||||||||||
| Sales and marketing | 1,597 | 33 | 1,564 | 4,739 | % | |||||||||||
| General and administrative | 15,133 | 4,039 | 11,094 | 275 | % | |||||||||||
| Restructuring costs | — | 243 | (243 | ) | (100 | )% | ||||||||||
| Total operating expenses | 20,206 | 5,159 | 15,047 | 292 | % | |||||||||||
| Loss from operations | (20,206 | ) | (5,124 | ) | (15,082 | ) | 294 | % | ||||||||
| Other income (expense) | ||||||||||||||||
| Property and equipment impairment | — | (6 | ) | 6 | (100 | )% | ||||||||||
| Lease impairment | — | (6 | ) | 6 | (100 | )% | ||||||||||
| Interest expense | (286 | ) | (902 | ) | 616 | (68 | )% | |||||||||
| Gain (loss) on lease termination | 2,013 | (319 | ) | 2,332 | (731 | )% | ||||||||||
| Remeasurement of convertible preferred stock warrant liability | (91 | ) | 126 | (217 | ) | (172 | )% | |||||||||
| Remeasurement of public placement warrant liability | 24,286 | — | 24,286 | 100 | % | |||||||||||
| Remeasurement of related party private placement warrant liability | 12,671 | — | 12,671 | 100 | % | |||||||||||
| Remeasurement of share-based termination liability | 334 | — | 334 | 100 | % | |||||||||||
| Remeasurement of convertible notes | (14,577 | ) | — | (14,577 | ) | 100 | % | |||||||||
| Remeasurement of related party convertible notes | 1,796 | — | 1,796 | 100 | % | |||||||||||
| Other income (expense), net | 452 | 679 | (227 | ) | (33 | )% | ||||||||||
| Total other income (expense), net | 26,598 | (428 | ) | 27,026 | (6,314 | )% | ||||||||||
| Income (Loss) before income taxes | 6,392 | (5,552 | ) | 11,944 | (215 | )% | ||||||||||
| Income tax provision | — | — | — | 0 | % | |||||||||||
| Net income (loss) | $ | 6,392 | $ | (5,552 | ) | $ | 11,944 | (215 | )% | |||||||
45
Comparison of the Three months ended September 30, 2024 and 2023
Revenue
Revenue decreased by $1.3 million, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was primarily attributable to decreased sales of products from the Vegan Silk Technology Platform, including our b-silk product. We have an agreement with one customer that contains minimum purchase requirements of $1.0 million and $1.5 million during the years ended December 31, 2023 and 2024, respectively. Prior to 2023, the customer was evaluating and testing b-silk which led to smaller scale purchases and lower revenue. After completing their evaluations, beginning in the first quarter and continuing during the third quarter of 2023, our primary customer base made several large-scale purchases that led to a significant increase in revenue for 2023. Due to the large-scale purchases made during the latter half of 2023, we expect the level of purchases from the customer to vary from quarter to quarter. As of September 30, 2024, based on year-to-date purchases, we do not expect the customer to make any additional purchases in 2024.
Cost of revenue and gross income (loss)
Cost of revenue decreased by $1.2 million, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was primarily attributable to the decrease of biomanufacturing costs relative to the decreased sales from our Vegan Silk Technology Platform, including our b-silk product.
Gross income (loss) decreased by $0.04 million, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was primarily attributable to decreased cost of revenue, partially offset by decreased revenue.
Operating expenses
Research and development
Research and development expenses increased by $2.6 million, or 312%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was primarily attributable to an increase of stock-based compensation expense related to the vesting of certain Restricted Stock Unit grants based on the completion of the Merger transaction that took place during August 2024.
Sales and marketing
Sales and marketing expenses increased by $1.6 million, or 4,739%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was primarily attributable to an increase of stock-based compensation expense related to the vesting of certain Restricted Stock Unit grants based on the completion of the Merger transaction that took place during August 2024, partially offset by a temporary suspension of our sales and marketing efforts until we could raise additional capital.
General and administrative
General and administrative expenses increased by $11.1 million, or 275%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was primarily attributable to an increase of stock-based compensation expense of $10.9 million, most of which was related to the vesting of certain Restricted Stock Unit grants based on the completion of the Merger transaction that took place during August 2024, an increase of $2.0 million of Bridge Convertible Notes issuance costs, an increase of $0.1 million of consulting and other costs related to operating as a public company, as well as an increase of executive bonuses of $0.4 million based on the completion of the merger transaction, partially offset by $0.8 million that represents a reduction of our general and administrative costs until we could raise additional capital, in addition to a reduction to legal fees of $1.3 million.
Restructuring costs
Restructuring costs decreased by $0.2 million, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was attributable to employee costs incurred related to our reduction in workforce during 2023.
46
Property and equipment impairment
Property and equipment impairment decreased by $6,000, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which is entirely a result of the impairment of property and equipment that was used previously in the manufacture of a product that we de-emphasized in order to adjust our strategic focus towards b-silk in 2023.
Lease impairment
Lease impairment decreased by $6,000, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was entirely attributable to the ROU Assets related our leases in the Netherlands becoming impaired due to Mylo production being shut down in 2023.
Interest expense
Interest expense decreased by $0.6 million, or 68%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was primarily attributable to an $18.2 million decrease in the principal balance of our Ginkgo debt as part of the Ginkgo Note Purchase Agreement Amendment No. 1 in December 2023.
Gain (Loss) on lease termination
We recorded a gain on lease termination of $2.0 million and a loss on lease termination of $0.3 million for the nine months ended September 30, 2024 and 2023, respectively. During the three months ended September 30, 2023, the loss was entirely attributable to the termination of our Berkeley lease. During the three months ended September 30, 2024, the gain was entirely attributable to the termination of two of our Netherlands leases that resulted from de-recognizing our lease liability as we had previously recorded an impairment of our ROU Assets related to these leases in 2023. Refer to Note 13 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of convertible preferred stock warrant liability
Remeasurement of convertible preferred stock warrant liability decreased by $0.2 million, or 172%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The change in the convertible preferred stock warrant liability is a direct result of the assumptions used in the option pricing model used to calculate the fair value as of each balance sheet date, including the expected timing of a liquidity event, our estimated equity value at such time, and estimated volatility. Immediately prior to the consummation of the Merger in August 2024, each issued and outstanding convertible preferred stock warrant to purchase Legacy Bolt Convertible Preferred Stock converted into a warrant to purchase shares of the Company’s Common stock, with each warrant subject to the same terms and conditions as were applicable to the original warrant and having an exercise price and number of shares of Common stock purchasable based on the Exchange Ratio and other terms contained in the Merger Agreement. Refer to Note 5 and 9 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of public placement warrant liability
Remeasurement of public placement warrant liability increased by $24.3 million, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The change in the remeasurement of the public placement warrant liability is entirely related to previously issued warrants to purchase the Company’s Common stock, which were assumed in connection with the Merger. In addition, the change in fair value is a direct result of the assumptions used in the Monte Carlo simulation model used to calculate the fair value as of each balance sheet date, including our estimated equity value at such time, the risk-free rate at such time, the timing of the warrant expiration, and the estimated volatility. Refer to Note 5 and Note 9 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of related party private placement warrant liability
Remeasurement of related party private placement warrant liability increased by $12.7 million, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The change in the remeasurement of the related party private placement warrant liability is entirely related to previously issued warrants to purchase the Company’s Common stock, which were issued to the Sponsor, a related party, and were assumed in connection with the Merger. In addition, the change in fair value is a direct result of the assumptions used in the Monte Carlo simulation model used to calculate the fair value as of each balance sheet date, including our estimated equity value at such time, the risk-free rate at such time, the timing of the warrant expiration, and the estimated volatility. Refer to Note 5 and Note 9 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
47
Remeasurement of share-based termination liability
Remeasurement of share-based termination liability increased by $0.3 million, or 100%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The share-based termination liability is related to transactions that took place during the third quarter of 2023. Further, the change in share-based termination liability is a direct result of the assumptions used in the model to calculate the fair value as of the balance sheet date. After the Merger was completed in August 2024, the Company issued the 750,000 shares of Common stock to its landlord and its supplier to settle the shared-based termination liability as of September 30, 2024. Refer to Note 5 and 13 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of convertible notes
The convertible notes are related to transactions that took place during the fourth quarter 2023 and the first nine months of 2024, which resulted in the remeasurement of convertible notes of $14.6 million for the three months ended September 30, 2024. Further, the remeasurement in the convertible notes is a direct result of the assumptions used in the model used to calculate the fair value as of the balance sheet date. Immediately prior to the effective time of the Merger, each Convertible Note automatically converted into shares of Common stock in accordance with the Merger Agreement and the Bridge NPA. Refer to Note 5 and 8 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Remeasurement of related party convertible notes
The related party convertible notes are related to transactions that took place during the fourth quarter 2023 and the first nine months of 2024, which resulted in the remeasurement of the related party convertible notes of $1.8 million for the three months ended September 30, 2024. Further, the remeasurement in the related party convertible notes is a direct result of the assumptions used in the model used to calculate the fair value as of the balance sheet date. Immediately prior to the effective time of the Merger, each Convertible Note automatically converted into shares of Common stock in accordance with the Merger Agreement and the Bridge NPA. Refer to Note 5 and 8 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 included elsewhere in this report for more information.
Other income (expense), net
Other income (expense), net decreased by $0.2 million, or 33%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, which was primarily attributable to a payment of $0.3 million related to an exit fee for a lease that took place during 2023.
Liquidity and Capital Resources
Capital Requirements
We have incurred losses and negative cash flows from operations since our inception and have historically funded our operations primarily with the proceeds from sales of our convertible preferred stock, convertible notes, and Senior Secured Notes. As of September 30, 2024, we had cash and cash equivalents totaling $6.5 million and an accumulated deficit of $455.5 million. As described above, in the third quarter of 2024, we completed the Merger between Legacy Bolt and GAMC.
We will need substantial capital to support our product development and operations. Based upon our current operating plan, we estimate that our cash and cash equivalents as of the date of this filing are insufficient to fund operating, investing, and financing cash flow needs for the following twelve months.
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These uncertainties raise substantial doubt regarding our ability to continue as a going concern for a period of twelve months subsequent to the date of this filing. To obtain the capital necessary to fund the operations, we expect to obtain funds through generating additional customer contracts and restructuring its current equity instruments as well as current financial obligations. Certain elements of the operating plan to alleviate the conditions that raise substantial doubt, including but not limited to the Company’s ability to achieve its operating cash flow targets, or restructure its current equity instruments and current financial obligations, are outside of the Company’s control. Accordingly, we cannot conclude that management’s plans will be effectively implemented within one year. These factors raise substantial doubt about our ability to continue as a going concern for one year following the date of this filing.
Because we are in the growth stage of our business, we plan to make capital expenditures and related transactions and may incur significant capital expenditures in the future as we expand our research and business. In addition, cash requirements relate primarily to working capital needed to operate and grow our business, including funding operating expenses, growth in working capital requirements to support increased revenue, continued expansion of our markets, continued development and expansion of our products, expanding fermentation capacity with our manufacturing partners, and the possible repayment or refinancing of any long-term debt that may be incurred. We will also require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions, or unforeseen circumstances and may determine to engage in equity or debt financings or enter into credit facilities for other reasons. Any equity securities issued subsequent to the Merger may provide for rights, preferences or privileges senior to those of holders of Common stock in Bolt Projects Holdings, Inc. If we raise funds by issuing debt securities, these debt securities would have rights, preferences, and privileges senior to those of holders of Common stock in Bolt Projects Holdings, Inc. The terms of debt securities or borrowings could impose significant restrictions on our operations. Additionally, the credit market and financial services industry have experienced recent periods of volatility and uncertainty that could impact the availability and cost of equity and debt financing. We cannot guarantee that any necessary additional financing will be available on terms favorable to us, or at all. Additionally, even if we raise sufficient capital through additional equity or debt financings, strategic alternatives or otherwise, there can be no assurance that the revenue or capital infusion will be sufficient to enable us to develop our business to a level where it will be profitable or generate positive cash flow. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.
Senior Secured Notes
On December 29, 2023, we entered the Ginkgo Note Purchase Agreement Amendment No. 1 to modify our Senior Secured Notes. Under the terms of the modification, $10.0 million of outstanding principal was exchanged for an equal number of Convertible Notes with the same terms as the convertible notes issued pursuant to the Note Purchase Agreement entered into by the PIPE Subscribers. The remaining $20.0 million of outstanding principal, $0.1 million of unamortized issuance costs, and accrued interest of $1.7 million related to the outstanding principal, were exchanged for amended senior secured notes with a principal balance of $11.8 million, a nonexclusive right to license Bolt Threads’ intellectual property relating to Mylo, and a reduction of the prepaid balance relating to the 2022 TDA by $5.4 million. The Amended Senior Note increased the interest rate from the Senior Secured Notes from the existing rate of treasury rate plus 6% per annum to a fixed rate of 12% per annum. In addition, the Amended Senior Note extended the maturity date from October 14, 2024 per the Senior Secured Notes to December 31, 2027. We evaluated the Ginkgo Note Purchase Agreement Amendment and determined that it was required to be accounted for as a troubled debt restructuring in accordance with ASC 470-60, Debt — Troubled Debt Restructurings by Debtors. As a result of the IP Transfer, we recognized a gain of $2.5 million in other income (expense), net on the consolidated statement of operations and comprehensive loss during the year ended December 31, 2023. We recorded the Amended Senior Note at its net carrying value, which was calculated by taking the carrying value of the Senior Secured Notes immediately prior to the 2023 Ginkgo Amendment and reducing it by the fair value of assets transferred. The future undiscounted cash payments related to principal and interest exceed the carrying value of the Amended Senior Note upon issuance. Therefore, we did not record a gain on the restructuring of the Senior Secured Notes, and fees paid to third parties were expensed as incurred. We calculate and record interest expenses on the Amended Senior Note using the effective interest method.
Under the Ginkgo Note Purchase Agreement relating to the Senior Secured Notes, we are required to provide audited financial statements to the lender within a certain time after the end of each fiscal year. We failed to meet that requirement related to the 2022 audited financial statements and as such, Ginkgo had the right to require immediate repayment of the full balance of principal and accrued interest. However, we subsequently received waivers from Ginkgo. Accordingly, we are in compliance with this requirement as of the date of this filing.
On April 3, 2024, we entered a second amendment to the Ginkgo Note Purchase Agreement. Such amendment provides that (i) cash interest payments due from the date of the amendment until the occurrence of the Merger may, at our option, be paid in kind by capitalizing and adding such accrued interest to the principal of the Amended Senior Note and (ii) immediately following the Merger, we prepay $250,000 in aggregate principal amount of the Amended Senior Note for each interest payment that was so paid in kind, in addition to accrued but unpaid interest on the principal amount prepaid. In connection with the Closing of the Merger, we paid an aggregate amount of $0.5 million.
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Cash Flow Summary — Nine months ended September 30, 2024 and 2023
The following table summarizes our cash flows for the periods presented:
| Nine months ended, September 30, | ||||||||
| 2024 | 2023 | |||||||
| (in thousands) | ||||||||
| Cash used in operating activities | $ | (13,363 | ) | $ | (24,120 | ) | ||
| Cash used in investing activities | (23 | ) | (669 | ) | ||||
| Cash provided by financing activities | 18,949 | — | ||||||
| Exchange rate effect on cash, cash equivalents and restricted cash | 8 | (65 | ) | |||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | 5,571 | (24,854 | ) | |||||
Operating Activities
Net cash used in operating activities was $13.4 million for the nine months ended September 30, 2024, a decrease of $10.8 million compared to the nine months ended September 30, 2023. The decrease in net cash used in operating activities was primarily attributable to a decrease in operating expenses and non-cash adjustments, being partially offset by the timing of settling receivables and payables in operating activities.
Investing Activities
Net cash used in investing activities was $0.02 million for the nine months ended September 30, 2024 and consisted entirely of the purchase of property and equipment. Net cash used in investing activities was $0.7 million for the nine months ended September 30, 2023 and consisted of the purchases of property and equipment, being partially offset by the sale of property and equipment.
Financing Activities
Net cash provided by financing activities was $18.9 million for the nine months ended September 30, 2024 and consisted of $22.6 million proceeds received from Convertible Notes related to PIPE Subscribers, $5.3 million proceeds from the Merger and PIPE financing and $0.2 million proceeds from related party notes, being partially offset by payments totaling $5.5 million of deferred transaction costs and $3.7 million of debt-related repayments. We had no financing activities for the nine months ended September 30, 2023.
Off-Balance Sheet Arrangements and Contractual Obligations
As of September 30, 2024 and through the date hereof, we do not have any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include manufacturing arrangements, leases, and debt arrangements.
Recent Accounting Pronouncements
Refer to Note 3 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023 for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the dates of the statement of financial position included in this filing.
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Critical Accounting Policies and Estimates
Our unaudited interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses, and related disclosure in the notes of the unaudited interim condensed consolidated financial statements. Bolt Threads evaluates its accounting policies, estimates, and judgments on an on-going basis. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
While the significant accounting policies are described in more detail in Note 3 in our unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2024 and 2023, management believes that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our unaudited interim condensed consolidated financial statements.
Revenue Recognition
Our revenue contracts represent a single performance obligation to sell our products to customers. Sales are recorded at the time control of the product is transferred to customers, in an amount that reflects the consideration we expect to be entitled to in exchange for the goods sold. Control is the ability of customers to “direct the use of” and “obtain” the benefit from our products. In evaluating the timing of the transfer of control of products to customers, we consider several control indicators, including significant risks and rewards of products, our right to payment and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are shipped to customers.
Deferred Transaction Costs
Deferred transaction costs consist of direct legal, accounting, filing and other fees and costs directly attributable to the Company’s planned Merger. We capitalized deferred transaction costs prior to the close of the Merger and included within the condensed consolidated balance sheet. The Company reclassified the deferred transaction costs related to the Merger to additional paid-in capital to offset the proceeds received upon Closing of the Merger.
Impairment of Long-lived Assets
We evaluate the recoverability of our long-lived assets, such as property and equipment and operating lease right-of-use assets, for impairment whenever events or circumstances indicate that the carrying amounts of such assets may not be recoverable. In determining the recoverability of the asset value, we perform an analysis at the asset group level, since this is the lowest level of identifiable cash flows, and primarily perform an assessment of historical and projected future cash flows and other relevant factors and circumstances, including changes in the economic environment and future operating plans of the business. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated future cash flows, we recognize an impairment loss for the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. Projecting undiscounted future cash flows requires the use of estimates and assumptions that are largely unobservable and classified as Level 3 inputs in the fair value hierarchy. If actual performance does not align with or exceed such projections, we may be required to recognize impairment charges in futures periods and such charges could be material.
Stock-Based Compensation
We grant restricted stock units (“RSUs”) to employees and non-employee consultants, which vest upon the satisfaction of both the service-based condition or performance milestone-based condition(s) and a liquidity event condition. The fair value of restricted stock units is determined based on our estimated fair value of Common stock at the date of the grant. As of September 30, 2024, we have recognized $14.9 million as stock-based compensation expense for the RSUs.
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We also grant stock options to employees and non-employees with an exercise price equal to the fair value of the shares at the date of grant. All stock option grants are accounted for using the fair value method and compensation is recognized as the underlying options vest. We use the Black-Scholes option pricing model to determine the fair value of stock option awards. The Black-Scholes model considers several variables and assumptions in estimating the fair value of the stock-based awards. These variables include the fair market value of Common stock, stock-price volatility, expected term, expected dividends, risk-free interest rates, and forfeitures.
| ● | Fair Value of Common Stock — Given the absence of a public trading market, we considered numerous objective and subjective factors to determine the fair market value of Common stock. These factors included but were not limited to (i) contemporaneous third-party valuations of Common stock; (ii) the rights and preferences of preferred stock relative to Common stock; (iii) the lack of marketability of Common stock; (iv) developments in the business; and (v) the likelihood of achieving a liquidity event, such as an initial public offering or sale of Bolt Threads, given prevailing market conditions. |
In valuing our Common stock at various dates, the third-party valuation specialists determined the equity value of our business using a mix of the income and market approaches. The income approach focuses on the income-producing capability of the business, while the market approach measures the value of the business through an analysis of recent sales or offerings of comparable investments.
Application of these approaches involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses, and future cash flows, discount rates, market multiples, the selection of comparable companies, and the probability of possible future events. Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact our valuations as of each valuation date and may have a material impact on the valuation of our Common stock. The estimates will not be necessary to determine the fair value of new awards once the underlying shares begin trading.
| ● | Expected Volatility — Expected volatility is estimated based on historical volatilities of comparable public companies operating in our industry. |
| ● | Expected Term — The expected term of the options represents the period the options are expected to be outstanding and is estimated using the simplified method. We believe it is appropriate to use the simplified method in determining the expected life of options because we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for options. |
| ● | Dividend Yield — We have historically not issued dividends and do not expect to in the future. |
| ● | Risk-free Interest Rate — The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. |
| ● | Forfeitures — Forfeitures are recognized as they occur. |
We use the same input to estimate the fair value of awards granted to non-employees.
Following the Merger, the Bolt Board of Directors will determine the fair value of Bolt Common stock based on the closing price on the date of grant, as reported on the principal exchange on which the Common stock is listed for trading.
Common Stock Warrants
We account for Common stock warrants as equity if the contract requires physical settlement or net physical settlement or if we have the option of physical settlement or net physical settlement and the warrants meet the requirements to be classified as equity. Common stock warrants classified as equity are initially measured at fair value using the Black-Scholes-Merton option-pricing model using various inputs, including our estimates of expected stock price volatility, term, risk-free rate and future dividends, on the issuance date and are not subsequently remeasured.
We account for Common stock warrants as a liability if we can be required under any circumstances to settle the warrant by transferring cash or other assets. Common stock warrants classified as liabilities are initially recorded at fair value using the Black-Scholes-Merton option-pricing model on the issuance date and remeasured at fair value each balance sheet date with the offset adjustments recorded in remeasurement of Common stock warrant liability within the condensed consolidated statements of operations and comprehensive loss.
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Convertible Preferred Stock Warrants
We record convertible preferred stock warrants issued as freestanding warrants as liabilities in the condensed consolidated balance sheets at their estimated fair value at the time of initial recognition based on an option pricing model. Liability-classified warrants are subject to re-measurement at each balance sheet date, and any change in fair value is recognized in the condensed consolidated statements of operations and comprehensive loss. We will continue to remeasure the liability-classified warrants until the earlier of the exercise or expiration, the completion of a deemed liquidation event, the conversion of preferred stock into Common stock, or until holders of the preferred stock can no longer trigger a deemed liquidation event. On expiration, the preferred stock warrants will automatically net exercise, unless the warrant holder provides written notice that it does not wish to exercise its warrants. Upon exercise, the related preferred stock warrant liability will be reclassified to preferred stock.
Convertible Notes
Convertible notes are regarded as hybrid instruments, consisting of a liability component and an equity component. We determined that the convertible notes are eligible for the fair value option election in connection with the convertible notes under the Bridge NPA and the Ginkgo NPA Amendment as each instrument met the definition of a “recognized financial liability” which is an acceptable financial instrument eligible for the fair value option under ASC 825-10-15-4 and do not meet the definition of any of the financial instruments found within ASC 825-10-15-5 that are not eligible for the fair value option. At the date of issuance, the fair value for each instrument is derived from the instrument’s implied discount rate at inception. Changes in fair value of the convertible notes are measured through the accompanying condensed consolidated statement of operations and comprehensive loss until settlement.
Share-based Termination Liability
In September 2023, we negotiated a contingent lease termination agreement with our landlord for the Berkeley facility lease. If the Company issues 600,000 shares of the new public company to its landlord after the closing of the merger transaction with Golden Arrow Merger Corp. (“GAMC”), the Berkeley lease facility will be considered terminated as of September 10, 2023 pursuant to the lease termination agreement. Further, in October 2023, we entered into a settlement agreement with one of our suppliers. If the Company pays the supplier $1.0 million and issues 150,000 shares of the new public company to the supplier after the closing of the merger transaction with GAMC, the Supply Agreement will be considered terminated as of July 13, 2023 pursuant to the settlement agreement.
We recorded the contingent issuance of shares as a liability in the consolidated balance sheets at its estimated fair value at the time of initial recognition based on an option pricing model, with changes in fair value recorded through earnings, as the new public company shares are not considered to be indexed to the Company’s own shares at the time the termination occurred.
Emerging Growth Company and Smaller Reporting Company Status
We are an emerging growth company under the JOBS Act. The JOBS Act provides that an emerging growth company can delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis), or (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period up to December 31, 2026, the last day of our fiscal year following the fifth anniversary of GAMC’s initial public offering, or such earlier time as when (i) our annual gross revenue exceeds $1.235 billion, (ii) we issue more than $1.0 billion of non-convertible debt in any three-year period or (iii) we become a large accelerated filer as defined in Rule 12b-2 under the Exchange Act.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited consolidated financial statements.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, we are not required to provide this information.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2024. Based on that evaluation, our Chief Executive Officer and our Chief Accounting Officer concluded that, as a result of the material weakness in our internal control over financial reporting described below, the design and operation of our disclosure controls and procedures were not effective as of September 30, 2024.
Material Weakness
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses in our internal control over financial reporting exist as of September 30, 2024:
| ● | We did not maintain a sufficient complement of personnel possessing the appropriate technical accounting competency, training, and experience to address, review, and record financial reporting transactions under U.S. GAAP or maintain appropriate segregation of duties. |
| ● | We did not design and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over the preparation and review of account reconciliations and journal entries. |
| ● | We did not design and maintain formal and effective controls over information technology general controls for IT systems that are relevant to the preparation of the financial statements. |
| ● | We did not maintain formalized minutes for meetings of the Board of Directors throughout the entire year. |
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We have begun the process of, and are focused on, designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate these material weaknesses. Our efforts include several actions:
| ● | We have engaged consultants to provide additional depth and breadth in our technical accounting and financial reporting capabilities. |
| ● | We have engaged consultants to assist with the financial statement closing process and segregating duties among accounting personnel to enable adequate review controls. |
| ● | We have hired key finance roles (VP Finance, and Controller). |
The actions that we are taking are subject to ongoing senior management review, as well as oversight of the audit committee of our Board of Directors. We also may conclude that additional measures may be required to remediate the material weaknesses or determine to modify the remediation plans described above. We will not be able to conclude that we have remediated the material weaknesses until the applicable controls are fully implemented and operate for a sufficient period of time and management has concluded, through formal testing, that these controls are operating effectively. We will continue to monitor the design and effectiveness of these and other processes, procedures, and controls and make any further changes management deems appropriate.
Based on additional procedures, management concluded that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.
Changes in Internal Control over Financial Reporting
Other than the ongoing remediation efforts described above, there have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We do not currently have any outstanding material litigation.
Item 1A. Risk Factors
Our future operating results could differ materially from the results described in this Quarterly Report on Form 10-Q due to the risks and uncertainties described below. You should consider carefully the following information about risks below in evaluating our business. If any of the following risks actually occur, our business, financial conditions, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our Common stock would likely decline. In addition, we cannot assure investors that our assumptions and expectations will prove to be correct. Important factors could cause our actual results to differ materially from those indicated or implied by forward-looking statements. See “Forward-Looking Statements” for a discussion of some of the forward-looking statements that are qualified by these risk factors. Factors that could cause or contribute to such differences include those factors discussed below.
Our history of losses and negative cash flows from operations and the need for substantial capital raise substantial doubt about our ability to continue as a going concern.
In Note 2 to our consolidated financial statements included in this Quarterly Report on Form 10-Q, we disclose that there is substantial doubt about our ability to continue as a going concern. We will need additional capital to support our planned product development and operations. Based upon our current operating plan, we estimate that our cash and cash equivalents as of the issuance date of the unaudited interim condensed consolidated financial statements included in this report are insufficient for us to fund operating, investing, and financing cash flow needs for the twelve months subsequent to the issuance date of these unaudited interim condensed consolidated financial statements. To obtain the capital necessary to fund our operations, we may seek to obtain funds through public or private equity offerings, debt financing transactions, refinancing or restructuring its current debt obligations, or any other means. If we are unable to obtain sufficient funding, we could be forced to delay, reduce or eliminate all of our sales efforts, our research and development programs, future research and development efforts, and our financial condition and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern. Future financial statements may disclose substantial doubt about our ability to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all. Additionally, even if we raise sufficient capital through additional equity or debt financings, strategic alternatives or otherwise, there can be no assurance that the revenue or capital infusion will be sufficient to enable us to develop our business to a level where it will be profitable or generate positive cash flow. Any equity securities issued may provide rights, preferences or privileges senior to those of our current holders of Common stock. If we raise funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of Common stock and a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for our business activities. The terms of any debt securities issued could also impose significant restrictions on our operations.
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We have a history of net losses and may not be able to achieve or maintain profitability in the future.
In the years ended December 31, 2023, and 2022, we incurred net losses of $57.7 million and $51.7 million, respectively. In the nine months ended September 30, 2024, and 2023, we incurred net loss of $59.1 million and $50.1 million, respectively. As of September 30, 2024, our accumulated deficit was $455.5 million. Since our inception, we have been engaged primarily in research and development and early-stage commercial activities. Because we have a limited history of commercial operations and we operate in a rapidly evolving industry, we cannot be certain that we will generate sufficient revenue to achieve or maintain profitability.
Our ability to generate revenue in the near-term is highly dependent on the successful commercialization of our current and future biomaterials products, including b-silk, and the decrease in costs of producing such products, both of which are subject to many risks and uncertainties as described below. We expect that it will take time for b-silk production to ramp up to a more economical scale thereby decreasing our cost of production. As a result, we may have significant losses and negative cash flow as we work to expand our market share for at least the next few years, as we incur additional costs and expenses for the continued development and expansion of our business, including the costs of establishing capacity with our current manufacturing partner and any future manufacturing partners and ongoing expenses of research, product development, and commercialization. The amount we spend will impact on our ability to become profitable and this will depend, in part, on the number of new products that we attempt to develop and the costs of further commercializing our existing products. We may not achieve any or all of these goals and, thus, we cannot provide assurances that we will ever be profitable. Even if we can successfully produce and sell b-silk and our other products, whether we will be able to generate a profit on any of these products is highly uncertain and depends on several factors including the cost of production, the price we are able to charge for these products, further market adoption of our products, and the emergence of competing products.
Our operating results may fluctuate significantly because of a variety of factors, including, but not limited to, end market demand, timing of regulatory actions and variation in manufacturing costs, many of which are outside of its control.
We are subject to, among other things, the following factors that may negatively affect our operating results:
| ● | The announcement or introduction of new products by our competitors. |
| ● | Fluctuating prices of biomaterials due to availability of raw materials, skepticism of silicone elastomer substitutes, and uncertain rise and fall of current market demands. |
| ● | Changing availability of and prices from contract manufacturers, as well as potential modest capital expenditures depending on the infrastructure of various contract manufacturers. |
| ● | Our ability to upgrade and develop our systems and infrastructure to accommodate growth. |
| ● | Our ability to secure adequate fermentation capacity with our manufacturing partner and any future manufacturing partners. |
| ● | Our ability to secure production of b-silk and any future biomaterial products at scale. |
| ● | Our ability to attract and retain key personnel in a timely and cost-effective manner. |
| ● | Our ability to attract new customers, retain existing customers, and maintain or increase order volume from existing customers. |
| ● | Technical difficulties. |
| ● | The amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure. |
| ● | Our ability to identify and enter into relationships with appropriate and qualified third-party providers of necessary testing and manufacturing services. |
| ● | Regulation by federal, state or local governments; and |
| ● | General economic conditions, as well as economic conditions specific to the cosmetics and personal care industry. |
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As a result of our limited operating history and the nature of the markets in which we compete, it is difficult for us to forecast our revenues or earnings accurately. We have based our anticipated future expense levels largely on our investment plans and estimates of future events, although certain of our expense levels will largely become fixed. As a strategic response to changes in the competitive environment, we may from time to time make certain decisions concerning expenditures, pricing, service or marketing that could have a material and adverse effect on our business, results of operations and financial condition, either for several periods or more generally.
We may incur significant expenses and capital expenditures in the future to execute our business plan and we may be unable to adequately control our expenses or raise additional capital on favorable terms, if at all.
Subject to the availability of the capital, we plan to make capital expenditures and may incur significant capital expenditures in the future as we expand our research and business. In addition, cash requirements relate primarily to working capital needed to operate and grow our business, including funding operating expenses, growth in working capital requirements to support increased revenue, continued expansion of our markets, continued development and expansion of our products, expanding fermentation capacity with our manufacturing partner and any future manufacturing partners, and the possible repayment or refinancing of any long-term debt that may be incurred. Our ability to meet future liquidity needs and capital requirements will depend upon numerous factors, including the timing and quantity of product orders and shipments; attaining and expanding positive gross margins for b-silk and future biomaterial products; the timing and amount of our operating expenses; the timing and costs of working capital needs; the timing and costs of expanding our research and development teams; the ability of our customers to continue to order products from us; our ability to obtain financing arrangements to support our operations, including financing arrangements to repay or refinance any long-term debt that may be incurred, and the terms of such agreements that may require us to pledge or restrict substantial amounts of our cash to support these financing arrangements; the timing and costs of hiring and training necessary personnel; the extent to which our products gain more market acceptance; the timing and costs of product development and introductions; the extent of our ongoing and new research and development initiatives; and changes in our strategy or our planned activities. In addition, if we are unable to fund our operations with the cash flows from operations and cannot obtain external financing on favorable terms or at all, we may not be able to sustain future operations which could cause us to delay, reduce or cease operations and could have a material adverse effect on our business, results of operations and financial condition.
We may not be able to generate sufficient cash to service all our debt obligations and may be forced to take other actions to satisfy our obligations under our debt obligations, which may not be successful.
Our ability to make scheduled payments on or to refinance our debt service obligations and other obligations depends on our ability to generate cash in the future and our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our debt. As of September 30, 2024, we have estimated principal and interest payments on debt due in the next twelve months of zero and $1.5 million, respectively.
If our cash flows and capital resources are insufficient to fund our debt service and other obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, or to seek additional capital or restructure or refinance our debt. These alternative measures may not be successful and may not permit us to meet our scheduled debt obligations. If our operating results and available cash are insufficient to meet our debt service and other obligations, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or to obtain the proceeds sought from them, and these proceeds may not be adequate to meet any debt service or other obligations then due. Further, we may need to refinance all or a portion of our debt on or before maturity, and we cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms or at all.
We may be able to incur more debt in the future, which could further exacerbate the risks of leverage, including the ability to service our indebtedness.
We may need to incur additional debt in the future to further our research and development into products, marketing, or working capital. Although the covenants contained in our current indebtedness instruments may impose some limits on our ability to incur new debt, these agreements may permit the incurrence of significant additional debt if we satisfy certain conditions, or such debt instruments may be amended in the future to do so. If we incur new debt, the risks related to being in a highly leveraged company that we now face could intensify, including our ability to service such indebtedness.
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We are subject to several restrictive debt covenants under the Ginkgo Note Purchase Agreement.
In April 2024, we entered into a second amendment to our note purchase agreement, dated October 14, 2022 (the “Ginkgo Note Purchase Agreement”) with Ginkgo Bioworks, Inc. (“Ginkgo”) to modify our outstanding senior secured notes (the “Senior Secured Notes”) held by Ginkgo. As amended, the Ginkgo Note Purchase Agreement contains customary affirmative covenants and also contains restrictive covenants, including, among others, limitations on: the incurrence of additional debt, liens or other encumbrances on property, acquisitions and investments, loans and guarantees, mergers, consolidations, liquidations and dissolutions, asset sales, dividends and other payments in respect of our capital stock, prepayments of certain debt, transactions with affiliates and changes to our type of business, management of the business, control of the business or business locations. Additionally, the Ginkgo Note Purchase Agreement contains subjective acceleration clauses to accelerate the maturity date of the Senior Secured Notes if a material adverse change has occurred within the business, operations, or financial condition of the Company.
Our ability to generate sufficient cash from operations to meet our debt obligations will depend upon our future operating performance, which will be affected by general economic, financial, competitive, business and other factors beyond our control. A breach of any of these covenants or restrictions, as applicable, or any inability to pay interest on, or principal of, our outstanding debt as it becomes due could result in an event of default. Upon an event of default, if not waived by our lenders, our lenders may declare all amounts outstanding as due and payable. Such an acceleration of the maturity of our indebtedness may, among other things, prevent or limit us from engaging in transactions that benefit us, including responding to changing business and economic conditions and taking advantage of attractive business opportunities.
Our ability to use net operating losses to offset future taxable income will be subject to certain limitations as a result of the Business Combination and related transactions.
As of December 31, 2023, we had federal net operating loss (“NOL”) carryforwards of $341.0 million of which $73.3 million will begin to expire in 2030 and $224.4 million of which can be carried forward indefinitely. As of December 31, 2023, we had state NOL carryforwards of $258.4 million which begin to expire in various amounts in 2030. We may have generated additional NOLs since then. A portion of these NOL carryforwards could expire unused and be unavailable to offset future taxable income. In addition, in general, under Sections 382 and 383 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who own at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Our existing NOLs could be subject to limitation under Sections 382 and 383 of the Code if we have undergone, or undergo in the future, any ownership changes for purposes of these provisions. The Business Combination and related transactions constituted such an ownership change. Our NOLs may also be impaired under state law. A portion of our existing NOLs is also subject to the so called separate-return-limitation-year (“SRLY”) rules that apply to consolidated tax groups.
Our ability to utilize our NOLs is also conditioned upon attaining profitability and generating U.S. federal and state taxable income. As described under the risk factor titled “We have a history of net losses and may not be able to achieve or maintain profitability in the future,” we have incurred significant net losses in the past, and it is anticipated that we will continue to incur significant losses in the future; therefore, we do not know whether or when we will generate the U.S. federal or state taxable income necessary to utilize our NOL carryforwards, even to the extent they are not subject to limitation by Sections 382 and 383 of the Code or the SRLY rules.
Risks Related to Our Products and Operations
Our revenue is primarily generated from sales of our b-silk product, and we are therefore highly dependent on the success of this product.
To date, substantially all our revenue has been derived, and we expect it to continue to be substantially derived, from sales of b-silk. We began commercializing b-silk in direct-to-consumer products in 2018 and in business-to-business products in 2020, but our commercialization of b-silk to date has still been limited. Customer awareness of, and experience with, b-silk has been and is currently limited. As a result, b-silk has limited product and brand recognition within the beauty and personal care market as a substitute for silicone elastomers. We do not have a long history operating as a commercial company, and the novelty of b-silk, together with our limited commercialization experience, makes it difficult to evaluate our current business and predict our prospects with precision. These factors also make it difficult for us to forecast our financial performance and future growth, and such forecasts are subject to several uncertainties, including those outside of our control.
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b-silk and future biomaterial product candidates may not achieve market success. If our products do not achieve market success, we may be unable to generate significant revenues.
We currently have limited customer commitments for commercial quantities of our b-silk. Some prospective customers are currently evaluating and testing b-silk prior to making large-scale purchase decisions. The successful commercialization of b-silk is also dependent on additional customers’ ability to commercialize the end-products that they make from b-silk, which may never gain market acceptance.
Market acceptance of b-silk and future biomaterial product candidates will depend on numerous factors, many of which are outside of our control, including among others:
| ● | Public acceptance of b-silk and future biomaterial product candidates. |
| ● | Our ability to produce b-silk with consistent quality that offers functionality comparable or superior to existing or new silicone elastomers or silicone elastomer alternatives. |
| ● | Our ability to produce b-silk and future biomaterial product candidates to fit their intended purposes. |
| ● | Our ability to demonstrate the benefits of b-silk in terms of safety and efficacy, as well as meet “clean beauty” standards such as biodegradability and environmental friendliness. |
| ● | Our ability to maintain and obtain further necessary regulatory approvals for b-silk. |
| ● | The speed at which potential customers qualify b-silk for use in their products, including any required third-party testing. |
| ● | Our ability to produce new products or customizations of existing products to match changes in public demand. |
| ● | The time it takes for our commercial-scale volume to be established. |
| ● | The pricing of b-silk and future biomaterial product candidates compared to competitive products, including silicone-based elastomers. |
| ● | The effectiveness of our market strategy. |
| ● | Ease of administration of our products. |
| ● | The strategic reaction of companies that market competitive products. |
| ● | Our reliance on third party manufacturing partners to produce b-silk. |
| ● | Our reliance on third parties who support or control distribution channels; and |
| ● | General market conditions include fluctuating demand for b-silk and our future biomaterial product candidates. |
We may be unable to manage rapid growth effectively, and our ability to successfully implement our business plan will depend on a number of factors outside of our control.
Any failure by us to manage growth effectively could have a material and adverse effect on our business, results of operations and financial condition. We anticipate that a period of significant expansion will be required to address potential growth, including expanding the production of b-silk and research activities. This expansion will place a significant strain on our management, operational and financial resources. To manage the expected growth of our operations and personnel, we must establish appropriate and scalable operational and financial systems, procedures and controls and must establish a qualified finance, administrative and operations staff. Our management may be unable to hire, train, retain and manage the necessary personnel or to identify, manage and exploit potential strategic relationships and market opportunities.
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We currently rely on a single manufacturing partner and manufacturing facility for the production of b-silk and in the future intend to rely on a small number of manufacturing partners and manufacturing facilities both in the U.S. and internationally.
While we expect to enter into manufacturing agreements with multiple manufacturers to increase the supply of b-silk and limit our reliance on any one manufacturing partner, we currently rely on a single manufacturing partner, Laurus Bio, and a single manufacturing facility of Laurus Bio (the “Laurus Bio Facility”) to produce b-silk. The Laurus Bio services agreement was renewed in October 2024. Additionally, adverse changes or developments affecting our relationship with Laurus Bio or the Laurus Bio Facility could impair our ability to produce b-silk. Any shutdown or period of reduced production at the Laurus Bio Facility or the manufacturing facilities of future manufacturing partners, which may be caused by regulatory noncompliance or other issues, as well as other factors beyond our control, such as severe weather conditions, natural disaster, fire, power interruption, work stoppage, disease outbreaks or pandemics, acts of war, political unrest, equipment failure, delay in supply delivery, or shortages of material, equipment, decreased fermentation capacity, or labor, would significantly disrupt our ability to product b-silk in a timely manner, meet our contractual obligations and operate our business. The Laurus Bio Facility is in Bangalore, India, which may increase the magnitude of disruption from any of the foregoing events, or adversely impact our customers’ or prospective customers’ confidence in the stability of our supply chain. Performance guarantees may not be sufficient to cover damages or losses, or the guarantors under such guarantees may not have the ability to pay. Any insurance coverage we have may not cover or be sufficient to fully cover all our potential losses and may not continue to be available to us on acceptable terms, or at all.
Additionally, because our operations depend on an international manufacturing partner, we are subject to risks that are inherent in operating globally, including:
| ● | Changes in laws and regulations or imposition of currency restrictions and other restraints in various jurisdictions. |
| ● | Limitation of ownership rights, including expropriation of assets by a local government, and limitation on the ability to repatriate earnings. |
| ● | Sovereign debt crises and currency instability in developed and developing countries. |
| ● | Imposition of burdensome tariffs and quotas. |
| ● | Difficulty in staffing and managing global operations. |
| ● | Difficulty in enforcing agreements, collecting receivables and protecting assets through non-U.S. legal systems. |
| ● | National and international conflict, including war, civil disturbances and terrorist acts; and |
| ● | Economic downturns and social and political instability. |
These risks could increase our cost of doing business internationally, increase our counterparty risk, disrupt our operations, disrupt the ability of suppliers and customers to fulfill their obligations and limit our ability to sell our product in certain markets.
Pricing and availability for b-silk and our future products may be impacted by factors out of our control, including, but not limited to, end market demand, variation in manufacturing costs, and supplier availability.
Pricing and availability of b-silk can be volatile due to numerous factors beyond our control, including general, domestic and international economic conditions, labor costs, production levels, competition for fermentation capacity and consumer demand. This volatility could significantly affect the availability and cost of b-silk for us, and may therefore have a material adverse effect on our business, results of operations and financial condition. We believe pricing and availability of any of our future biomaterial products may be similarly volatile.
We currently outsource the production of b-silk to a single third-party manufacturing partner. Our contract manufacturing partner secures all of the necessary raw materials. Due to the high rate of growth in the silicone elastomer replacement market, the demand for raw materials used in our products may outpace supply, which could result in price increases and deficits in the supply necessary to meet customer demand. If we are unable to secure the required quantities of third-party raw materials, we may not be able to fulfil customer demand or any forecasts or guidance we provide to the public.
If our costs of producing b-silk materially increase, we would have to raise our prices, which could negatively impact on our ability to gain new customers and keep existing customers.
We currently rely on a single manufacturing partner to produce b-silk. The price we pay our contract manufacturing partner for b-silk has depended in part on the fluctuating cost of the raw materials used in the manufacturing processes, particularly urea costs. While we have negotiated fixed prices for upcoming production runs, we may not be able to secure such agreements in the future. We have faced, and could continue to face, resistance from some customers in accepting any increase in our prices as a result of market acceptance and the cost of producing b-silk. Some multi-year contracts and non-contractual pricing arrangements with customers may permit limited price adjustments to reflect increased costs. However, such adjustments may not occur quickly enough, or be sufficient, to prevent a materially adverse effect on net income and cash flow. Furthermore, any price adjustments may not cover all input costs, and these adjustments are not present in many of our customer contracts. In the event we experience increased b-silk costs, we may have to raise our prices, which could affect our ability to gain new customers or retain existing customers. Further, our inability to raise our prices to mitigate the effects of these increased input costs could have a material adverse effect on our financial results.
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We may also experience material increases in customer cancellations or reductions in the future on account of the macroeconomic environment, especially in the event of a prolonged recession or a worsening of current conditions as a result of many factors, including inflation. As a result, we may have to make changes to our pricing model to address these dynamics, any of which could adversely affect our business, results of operations and financial condition.
There can be no assurance our manufacturing suppliers will provide the quality needed by us in the quantities requested or at a reasonable price. Because we do not control the actual production of b-silk, we are also subject to delays caused by interruption in production including but not limited to those resulting from conditions outside of our control, such as pandemics, weather, transportation interruptions, labor shortages, strikes, terrorism, natural disasters, and other catastrophic events.
We have limited experience in marketing and selling b-silk, and if we are unable to gain market acceptance from consumer product companies and others, our business may be adversely affected.
We sell b-silk through our own direct sales force, and we have limited experience in marketing and selling b-silk. Our future sales will depend in large part on our ability to increase our marketing efforts and adequately address our customers’ needs. The beauty and personal care market is a large and diverse market, and competition for sales and marketing personnel is intense. We may not be able to attract and retain sufficient personnel to maintain an effective sales and marketing force. In addition, if we choose in the future to use distribution partners, we will likely have less control over the sales and marketing personnel of our distribution partners. The personnel at such distribution partners may therefore not be adequately trained with respect to our products or may not be sufficiently incentivized to sell b-silk. If we are unable to successfully market our products and adequately address our customers’ needs, it could negatively impact sales and market acceptance of our products and we may never generate sufficient revenue to achieve or sustain profitability.
A limited number of customers, distributors and collaboration partners account for a material portion of our revenue and they may continue to do so for the foreseeable future. The loss of major customers, distributors or collaboration partners could harm our operating results.
Our revenues have varied materially from quarter to quarter and are dependent on sales to, and collaborations with, a limited number of customers, distributors and/or collaboration partners. For example, for the year ended December 31, 2023, one customer accounted for approximately 95% of our revenue. Our agreement with this customer, which operates primarily in the United States, has historically included minimum purchase requirements for 2022, 2023, 2024 and 2025 of $0.5 million, $1.0 million, $1.5 million and $2.25 million, respectively, and will terminate on December 31, 2026 or earlier by mutual written agreement of the parties or for any reason upon 180 days’ written notice. The minimum purchase requirements stipulate minimum amounts of b-silk that the customer is required to purchase from us during the specified years, and the maximum prices at which we can sell those amounts of b-silk to the customer during those years, as well as an annual priority fee that The customer is obligated to pay us, which is several hundred thousand dollars annually.
We believe our revenue concentration for 2023 was primarily attributable to our limited history of commercial operations and limited revenue, which we expect will dissipate as additional customers and potential customers progress through their own testing, validation and development cycles with b-silk and transition to using b-silk in their commercial products, which will lead to increased demand for b-silk from additional customers. We believe this concentration for 2023 was also attributable to buying patterns from the customer that we do not expect to continue past 2023 due to changes in the customer’s sales plans that it has communicated to us. In the nine months ended September 30, 2024, the customer accounted for none of our revenue. However, until we can achieve broader market acceptance of b-silk, we may face risks associated with concentrated customer base. There are risks whenever a significant percentage of revenue is concentrated with a limited number of customers. For example, revenue from these customers may fluctuate from time to time based on these customers’ business needs or financial condition, the timing of which may be affected by market conditions or other facts outside of our control. These customers could also potentially pressure us to reduce the prices we charge for our product, which could have an adverse effect on our margins and financial position and could negatively affect our revenue and results of operations. If any of our largest customers terminates its relationship with us, such termination could negatively affect our revenues and results of operations.
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We cannot be certain that customers, distributors and/or collaboration partners that have accounted for material revenues in past periods, individually or as a group, will continue to generate similar revenues in any future period. If we fail to renew with, or if we lose a major customer, distributor or collaboration partner, our revenues could decline if we are unable to replace the lost revenues with revenues from other sources. Furthermore, if we lose one or more of our distributors and cannot replace the distributor in a timely manner or at all, our business, results of operation and financial condition may be materially adversely affected.
Our estimated contracted revenues vary from purchase orders on an “as needed” basis to contracts with minimum purchase obligations, and the failure of our customers to continue placing orders or to abide by their contracts could have a material adverse effect on our operations and financial results.
For the nine months ended September 30, 2024 and 2023, 100% and 1% of our product revenue was derived from purchase orders made by customers on an as-needed basis, and 0% and 99% of orders occurred under specified multi-year minimum contractual purchase obligations, respectively. Going forward, we expect to encounter a mixture of multi-year contractual purchase commitments and as-needed purchase orders. As a result, our manufacturing volume will continue to be based on estimates and forecasts that can be incorrect. Additionally, customers issuing purchase orders can cancel purchase orders or reduce or delay orders at any time. Incorrect estimates and projections or the cancellation, delay, or reduction of customer purchase orders, or customers’ failure to fulfill their minimum purchase obligations could result in reduced sales, excess inventory, unabsorbed overhead, and reduced income from operations.
We often schedule internal production levels and place orders for b-silk with our manufacturing partner before receiving firm orders from our customers. Therefore, if we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products to deliver to our customers. Factors that could affect our ability to accurately forecast demand for our products include the following:
| ● | An increase or decrease in consumer demand for b-silk or for the products of our competitors. |
| ● | Our failure to accurately forecast consumer acceptance of new product candidates. |
| ● | Delays in the production of b-silk, or the unsatisfactory performance of our manufacturing partner. |
| ● | Delays in the ability of b-silk to meet certain customer performance requirements and other specifications. |
| ● | New product introductions by us or our competitors. |
| ● | Changes in our relationships with our customers. |
| ● | Changes in general market conditions or other factors that may result in cancellations of orders or a reduction or increase in the rate of reorders placed by retailers. |
| ● | Changes in laws and regulations applicable to our products or the way we sell b-silk; and |
| ● | Weak economic conditions or consumer confidence, which could reduce demand for b-silk. |
Inventory levels higher than consumer demand may result in inventory write-downs and the sale of excess inventory at discounted prices, which could have an adverse effect on our business, results of operations and financial condition. Any overestimation of the demand for b-silk will result in a decline in forecasted revenue. Additionally, if we underestimate or are otherwise unable to produce enough b-silk from our manufacturing partner or any future manufacturing partners to meet the demand for b-silk, we may not be able to meet customer demand, resulting in delays in the shipment of products and lost revenue, and damage to our reputation and customer and consumer relationships. We may not be able to manage inventory levels successfully to meet future order and reorder requirements.
We may face challenges selling b-silk and future biomaterial products at commercial scale and at commercially viable cost, and we may not be able to commercialize b-silk or future biomaterial products to the extent necessary to make a profit or sustain and grow our current business.
To commercialize b-silk and future biomaterial products, we must be successfully producing at commercial scale or at a commercially viable cost. If we cannot achieve commercially viable production economics with our manufacturing partner or any future manufacturing partners for enough b-silk or our future biomaterial products to support our business plan, including through establishing and maintaining sufficient production scale and volume, we will be unable to achieve a sustainable products business. Our production costs depend on many factors that could have a negative effect on our ability to offer our planned products at competitive prices, including our ability to establish and maintain sufficient production scale and volume, exchange rates and contract manufacturing costs.
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To reduce per-unit production costs to be able to reliably sell b-silk with positive margins, we must increase the amount of b-silk we purchase from our manufacturing partner or future manufacturing partners to achieve economies of scale and optimize the manufacturing process to make the manufacturing process more efficient. However, if we do not sell production output in a timely manner or in sufficient volumes, our investment in production will lead to higher working capital costs, which harms our cash position and could generate losses. Additionally, we may incur added storage costs as well as supply chain delays and disruptions, all of which can adversely affect the value of such products. Since achieving competitive product prices generally requires increased production volumes and cash flows from sales are in their early stages, we have had to produce and sell b-silk at a loss in the past, and we may continue to do so as we build our business. If we are unable to achieve adequate revenues from a combination of b-silk sales and other sources such as future biomaterial products, we may not be able to invest in production and we may not be able to pursue our business plans.
Certain contracts granting exclusivity rights to customers may limit our ability to sell products in certain markets.
We may enter into certain agreements with customers, which, subject to the terms therein, grant these customers the exclusive right with respect to certain limited applications to purchase certain products from us for a contractually specified period of time. These arrangements could prevent us from selling products to certain prospective customers, which could have a material and adverse impact on our potential revenues and our ability more generally to expand our customer base and product lines.
We may face substantial competition from incumbent materials as well as other new entrants, and if we are unable to continue developing innovative products and technologies and/or scale our production of b-silk, we may fail to gain, or may lose, market share to our competitors.
We face and will face substantial competition from a variety of companies in the cosmetic ingredients segment. Some competitors’ products are suitable for a range of uses at a price that may be lower than our product offerings. Many of these companies have longer operating histories, greater name recognition, larger customer bases, and significantly greater financial, sales and marketing, manufacturing, technical, and other resources than us. Our competitors may be able to adapt more quickly to new or emerging technologies, changes in customer requirements and changes in laws and regulations. In addition, current and potential competitors have established or may establish financial or strategic relationships among themselves or with existing or potential customers or other third parties. Accordingly, new competitors or alliances among competitors could emerge and rapidly acquire a significant market share. There can be no assurance that we can develop products that are more effective or achieve greater market acceptance than competitive products, or that our competitors will not succeed in developing products and technologies that are more effective than those being developed by us and that would therefore render our products and technologies less competitive or even obsolete. We cannot assure you that we will be able to compete successfully against current or new competitors. We believe our ability to compete successfully in designing, engineering, and manufacturing our products at significantly reduced cost to customers does and will depend on a number of factors, which may change in the future due to increased competition, our ability to develop new technologies and to meet our customers’ needs and the availability of our offerings. If we are unable to compete successfully, our business, results of operations and financial condition would be adversely affected.
If we are unable to coordinate with our current manufacturing partner and any future manufacturing partners to successfully commence, scale up or sustain production of b-silk at existing and planned manufacturing facilities, our customer relationships, business and results of operations may be adversely affected.
A substantial component of our planned production capacity in the near and long-term depends on successful operations at our existing and potential large-scale manufacturing partners. We may partner with additional manufacturing facilities which we expect will allow us to increase production capacity. However, there can be no assurances that we will be able to commence operations or contract additional production capacity on our expected timeline, if at all. Delays or problems in the start-up or operation of facilities could cause delays in our ramp-up of production and hamper our ability to reduce our production and logistics costs. Delays could occur due to a variety of factors, including regulatory requirements and our ability to fund commissioning costs.
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Once each production, purification, and downstream processing source is secured, they must perform as we expect. If our suppliers encounter significant delays in financing, cost overruns, engineering issues, contamination problems, equipment or raw material supply constraints, unexpected equipment maintenance requirements, safety issues, work stoppages or other serious challenges in bringing these facilities online for our products and operating them at commercial scale, including as a result of the impacts of the COVID-19 pandemic, we may be unable to supply our renewable products in the time frame and at the cost we have planned. It is difficult to predict the effects of scaling up production of industrial fermentation to commercial scale, as it involves various risks to the quality and consistency of our molecules. In addition, in order to produce molecules at existing and potential future plants, suppliers have been and may in the future be required to perform thorough transition activities and modify the design of plants. Any modifications to the manufacturing facility could cause complications in the operations of the plant, which could result in delays or failures in production. If we are unable to contract additional manufacturing capacity necessary to meet existing and potential customer demand, we may need to continue to use, or increase our use of, existing contract manufacturing sources, which may not be available on terms acceptable to us, if at all, and generally entail greater cost to us and would therefore reduce our anticipated gross margins. Further, if our efforts to increase (or commence, as the case may be) contracted production are not successful, our existing partners may decide not to work with us to develop additional production capacity, demand more favorable terms or delay their commitment to invest capital in our production. If we are unable to increase and sustain manufacturing capacity and operations sufficient to satisfy the existing and potential demand of our customers and partners, our business and results of operations may be adversely affected.
Our financial results could vary materially from quarter to quarter and are difficult to predict.
Our revenues and results of operations could vary materially from quarter to quarter because of a variety of factors, many of which are outside of our control. As a result, comparing our results of operations on a period-to-period basis may not be meaningful. Factors that could cause our quarterly results of operations to fluctuate include:
| ● | achievement, or failure, with respect to technology, product development or manufacturing milestones needed to allow us to enter identified markets on a cost-effective basis or obtain milestone-related payments from collaboration partners; |
| ● | delays or greater than anticipated expenses associated with the use of new manufacturing partners; |
| ● | the cost of conducting research and development activities to optimize b-silk and future biomaterial products; |
| ● | impairment of assets based on shifting business priorities and working capital limitations; |
| ● | disruptions in the production process at any manufacturing facility, including disruptions due to outbreak of disease, contamination, safety or other technical difficulties, or scheduled downtime as a result of transitioning equipment to the production of b-silk; |
| ● | losses of, or the inability to secure new customers, collaboration partners, contract manufacturers, suppliers or distributors; |
| ● | losses associated with producing our products as we ramp to commercial production levels; |
| ● | the timing and size of b-silk sales to customers; |
| ● | increases in price or decreases in availability of b-silk; |
| ● | the unavailability of contract manufacturing capacity altogether or at reasonable cost; |
| ● | exit costs associated with terminating contract manufacturing relationships; |
| ● | fluctuations in foreign currency exchange rates; |
| ● | change in the fair value of debt and derivative instruments; |
| ● | fluctuations in the price of and demand for silicone elastomers and other products for which b-silk is an alternative; |
| ● | variability in sales of b-silk; |
| ● | competitive pricing pressures, including decreases in average selling prices of b-silk; |
| ● | unanticipated expenses or delays associated with changes in governmental regulations and environmental, health, labor and safety requirements; |
| ● | departure of executives or other key management employees resulting in transition and severance costs; |
| ● | our ability to use our net operating loss carryforwards to offset future taxable income; |
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| ● | business interruptions such as pandemics or natural disasters like earthquakes and tsunamis; |
| ● | our ability to integrate businesses that we may acquire in the future; |
| ● | risks associated with the international aspects of our business; and |
| ● | changes in general economic, industry and market conditions, both domestically and in our foreign markets, including rising interest rates, taxes and inflation. |
Due to the factors described above, among others, the results of any quarterly or annual period may not meet our expectations or the expectations of our investors and may not be meaningful indications of our future performance.
We depend on key personnel.
We depend greatly on our executive officers and other employees. Our success will depend, in part, upon our ability to attract and retain additional skilled personnel. There can be no assurance that we will be able to find, attract and retain additional qualified employees, directors, and advisors having the skills necessary to operate, develop and grow our business. Our inability to hire qualified personnel, the loss of services of any of our executive officers, or the loss of services of other key employees, or advisors that may be hired in the future, may have a material and adverse effect on our business.
Our management has limited experience in operating a public company.
Our executive officers have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage their new roles and responsibilities. The transition to being a public company subjects us to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations and financial condition.
An increase in our shipping and freight costs could have a material adverse effect on our financial results because we may not be able to pass through all of these increased costs to our customers.
We currently rely upon third-party transportation providers for a significant portion of our product shipments. Our utilization of delivery services for shipments is subject to risks, including increases in fuel prices and container costs, which would increase our shipping costs, increased labor costs and employee strikes, disease outbreaks or pandemics (such as COVID-19), and inclement weather, which may impact the ability of providers to provide delivery services that adequately meet our shipping needs, if at all. In the past, we have seen our shipping and freight costs fluctuate substantially, particularly during COVID-19. While we presently transfer all shipping and freight costs to customers, we may not always be able to secure such terms and will continue to have shipping and freight costs associated with our business development activities. To the extent we are not able to transfer an increase in freight and shipping costs to our customers, it may have a negative impact on our profitability.
We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in, and the value of, our Common stock.
As a public company, our management is required to establish and maintain internal control over financial reporting required by Section 404(a) of the Sarbanes-Oxley Act. If we are unable to establish or maintain appropriate internal control over financial reporting or implement these additional requirements in a timely manner or with adequate compliance, it could result in material misstatements in our consolidated financial statements, failure to meet our reporting obligations on a timely basis, increases in compliance costs, and subject us to adverse regulatory consequences, all of which may adversely affect investor confidence in, and the value of, our Common stock.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, that company’s principal executive and principal financial officers, or persons performing similar functions, and influenced by that company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.
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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses in our internal control over financial reporting exist as of September 30, 2024:
| ● | We did not maintain a sufficient complement of personnel possessing the appropriate technical accounting competency, training, and experience to address, review, and record financial reporting transactions under U.S. GAAP or maintain appropriate segregation of duties. |
| ● | We did not design and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures, including controls over the preparation and review of account reconciliations and journal entries. |
| ● | We did not design and maintain formal and effective controls over information technology general controls for IT systems that are relevant to the preparation of the financial statements. |
| ● | We did not maintain formalized minutes for meetings of the Board of Directors throughout the entire year. |
We have begun the process of, and are focused on, designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate these material weaknesses. Our efforts include several actions:
| ● | We have engaged consultants to provide additional depth and breadth in our technical accounting and financial reporting capabilities. |
| ● | We have engaged consultants to assist with the financial statement closing process and segregating duties among accounting personnel to enable adequate review controls. |
| ● | We have hired key finance roles (i.e., VP Finance, and Controller). |
Although our management intends to complete these remediation efforts as quickly as practicable, it cannot at this time estimate how long it will take. The primary costs associated with these remediation efforts are corresponding recruiting and additional salary and consulting costs, which are difficult to estimate at this time, but which may be significant. These additional resources and procedures are intended to enable us to broaden the scope and quality of our internal review of underlying information related to financial reporting and to formalize and enhance our internal control procedures. However, while we are designing and implementing measures to remediate our existing material weaknesses, we cannot predict the success of such measures or the outcome of our assessment of these measures at this time. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business, personnel, IT systems and applications, or other factors. If we fail to remediate our existing material weaknesses or identify new material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, if we are unable to conclude that our internal controls over financial reporting are effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when required to do so, it is possible that a material misstatement of our financial statements would not be prevented or detected on a timely basis, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of the Common stock could be negatively affected.
As a remote-first company, we are subject to heightened operational and cybersecurity risks.
As a remote-first company, we are subject to heightened operational and cybersecurity risks. We are a remote-first company, meaning that for all existing roles many of our employees work from their homes or other non-company dwellings. For example, technologies in our employees’ and service providers’ homes and shared office spaces may not be as robust and could cause the networks, information systems, applications, and other tools available to employees and service providers to be more limited or less reliable. Further, the security systems in place at our employees’ and service providers’ homes and shared office spaces may be less secure than those used in corporate offices, and while we have implemented technical and administrative safeguards to help protect our systems as our employees and service providers work from home, we may be subject to increased cybersecurity risk which could expose us to risks of data or financial loss, and could disrupt our business operations. There is no guarantee that the data security and privacy safeguards we have put in place will be completely effective or that we will not encounter risks associated with employees and service providers accessing company data and systems remotely. We also face challenges due to the need to operate with a remote workforce and are addressing so to minimize the impact on our ability to operate.
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Risks Related to Intellectual Property and Information Technology
We may not be able to protect adequately our patents and other intellectual property assets, which could adversely affect our competitive position and reduce the value of our products, and litigation to protect our patents and intellectual property assets may be costly.
Our commercial success may depend in part on our ability to obtain patent protection for technologies and products we develop, to preserve trade secrets and to operate without infringing the proprietary rights of others. There can be no assurance that any patents or patent applications that we own, obtain or file or are able to obtain or license from third parties will afford any competitive advantages or will not be challenged or circumvented by third parties. Furthermore, there can be no assurance that others will not independently develop similar technologies or duplicate any technology developed by us. Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that before any of our potential products can be commercialized, any related patents may expire or may have only a brief remaining life span following commercialization, thus reducing any advantage of the patents.
If we are not able to obtain patent coverage or defend the patent protection for our technologies, then we will not be able to exclude competitors from developing or marketing competing technologies, and we may not generate enough revenue from product sales to justify the cost of development of our technologies and to achieve or maintain profitability. The patents currently in the portfolio have expiration dates ranging from 2034 to 2040 and any patents resulting from pending patent applications are expected to have durations that will expire between 2034 and 2044.
Our patent position involves complex legal and factual questions. Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents. Patents may not be issued for any pending or future pending patent applications owned by or licensed to us, and claims allowed under any issued patent or future issued patent owned or licensed by us may not be valid or sufficiently broad to protect our technologies. Moreover, we may be unable to protect certain of our intellectual property in the United States or in foreign countries. Foreign jurisdictions may not afford the same protections as U.S. law, and we cannot ensure that foreign patent applications will have the same scope as the U.S. patents. There will be many countries in which we will choose not to file or maintain patents because of the costs involved. Competitors may also design around our technology or develop competing technologies.
Additionally, any issued patents owned by or licensed to us now or in the future may be challenged, invalidated or circumvented. To the extent competitors or other third parties develop and market products or procedures that we believe infringe our patents and proprietary rights, we may be compelled to initiate lawsuits to protect and enforce our intellectual property rights. Such litigation is typically expensive, time-consuming and uncertain as to outcome, and may involve opponents who have much more extensive financial resources than we do. An unfavorable outcome of any such litigation could have a material adverse effect on our business and results of operations.
Third parties may claim that we infringe on their proprietary rights and may prevent us from commercializing and selling our products.
We may be required to defend against challenges to the validity of our patents and against claims relating to the alleged infringement of patent or proprietary rights of third parties.
Litigation initiated by a third-party claiming patent invalidity or patent infringement could:
| ● | require us to incur substantial litigation expense, even if we are successful in the litigation; |
| ● | require us to divert significant time and effort of our management; |
| ● | result in the loss of our rights to develop, manufacture or market our products; and |
| ● | require us to pay substantial monetary damages or royalties in order to license proprietary rights from third parties or to satisfy judgments or to settle actual or threatened litigation. |
Although patent and intellectual property disputes may be settled through licensing or similar arrangements, costs associated with these arrangements may be substantial and could include the long-term payment of royalties. Furthermore, the required licenses may not be made available to us on acceptable terms. Accordingly, an adverse determination in a judicial or administrative proceeding or a failure to obtain necessary licenses could prevent us from manufacturing and selling our products or increase our costs to market our products.
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We rely in part on trade secrets to protect our technology, and our failure to obtain or maintain trade secret protection could limit our ability to compete.
We rely on trade secrets to protect some of our technology and proprietary information, especially where we believe patent protection is not appropriate or obtainable. However, trade secrets are difficult to protect. Litigating a claim that a third party had illegally obtained and was using our trade secrets would be expensive and time-consuming, and the outcome would be unpredictable. Moreover, if our competitors independently develop similar knowledge, methods and know-how, it will be difficult for us to enforce our rights, and our business could be harmed.
If we experience a significant disruption in our information technology systems, including security breaches, or if we fail to implement new systems and software successfully, our business operations and financial condition could be adversely affected.
We depend on information technology systems to, among other functions, process orders and bills, collect and make payments, interact with customers and suppliers, manage inventory, coordinate research & development, store scientific and regulatory data, facilitate communication and project management internally and with partners, and otherwise conduct business. We also depend on these systems to respond to customer inquiries, contribute to our overall internal control processes, maintain records of our property, plant and equipment and record and pay amounts due to vendors and other creditors. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies and the loss of sales and customers. As we upgrade or change systems, we may also experience interruptions in service, loss of data or reduced functionality and other unforeseen material issues which could adversely impact our ability to provide quotes, take customer orders and otherwise run our business in a timely manner. In addition, if our new systems fail to provide accurate and increased visibility into pricing and cost structures, it may be difficult to improve or maximize our profit margins. As a result, our results of operations could be adversely affected.
In addition, cyber-attacks or security breaches could compromise confidential, business critical information, cause a disruption in our operations or harm our reputation. Our information technology systems are subject to potential disruptions, including significant network or power outages, cyberattacks, computer viruses, other malicious codes and/or unauthorized access attempts, any of which, if successful, could result in data leaks or otherwise compromise our confidential or proprietary information and disrupt our operations. Despite our efforts to protect sensitive information and comply with and implement data security measures, there can be no assurance that any controls and procedures that we have in place will be sufficient to protect us. Further, as cyber threats are continually evolving, our controls and procedures may become inadequate, and we may be required to devote additional resources to modify or enhance our systems in the future. We may also be required to expend resources to remediate cyber-related incidents or to enhance and strengthen our cyber security. Any such disruptions to our information technology systems, breaches or compromises of data, and/or misappropriation of information could result in violation of privacy and other laws, litigation, fines, negative publicity, lost sales or business delays, any of which could have a material adverse effect on our business, financial condition or results of operations.
Risks Related to Government Regulation
Government regulations and private party actions relating to the marketing and advertising of cosmetic products that include b-silk or other products we develop may restrict, inhibit or delay our ability to sell such products and harm our business.
A variety of federal, state, and foreign government authorities regulate the advertising and promotion of cosmetic products, including the marketing claims that can be made regarding their properties and benefits. In the United States, the Food and Drug Administration (“FDA”) regulates the marketing of cosmetic products. While cosmetic products and labeling do not require pre-market approval and the FDA does not have a list of approved or accepted claims, cosmetic labeling and claims must be truthful and not misleading. In addition, a cosmetic product may not be marketed with claims regarding the treatment or prevention of diseases or conditions or an effect on the structure or function of the body, which would cause such products to meet the definition of a drug and be subject to the requirements applicable to drug products. The FDA has issued warning letters to companies marketing their cosmetic products or ingredients for improper drug claims, including, for example, product claims regarding anti-aging properties and barrier defense to protect the skin.
In addition, consumer protection laws and regulations governing our business continue to expand. In some states such as California, class-action lawsuits may be based on similar standards regarding false and misleading advertising and other increasingly novel theories of liability. There is a degree of subjectivity in determining whether a labeling or marketing claim is appropriate under these standards. While we believe our product claims are truthful, not misleading, and would not cause our products to be regulated as drugs, there is always a risk that the FDA may determine otherwise, issue us a warning letter or untitled letter, require us to modify our product claims or take other enforcement action, or that we may be subject to consumer protection litigation. In addition, plaintiffs’ lawyers have filed class action or false advertising lawsuits against cosmetic companies based on their marketing claims. Federal and state consumer protection agencies are expected to continue their active enforcement of applicable laws and regulations. Any inquiry into the regulatory status of our products and any related interruption in the marketing and sale of these products could damage our reputation and image in the marketplace.
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Other regulatory authorities, such as the U.S. Federal Trade Commission (“FTC”), typically require adequate and reliable scientific substantiation to support marketing claims. This standard for substantiation can vary widely from market to market and there is no assurance that the research and development efforts that we undertake to support our claims will be deemed adequate for any particular product or claim. The FTC also has issued Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Guides”), under which product testimonials must come from “bona fide” users of a product and otherwise reflect the honest opinions, beliefs, or experience of the endorser. Additionally, companies must disclose material connections between themselves and their endorsers and are subject to liability for false or unsubstantiated statements regarding its products made by endorsers including, for example, marketing atypical results of using a product. The FTC actively investigates online product reviews and may bring enforcement actions against a company for failure to comply with applicable requirements for testimonials. If we fail to comply with the Guides or make improper product claims, the FTC could bring an enforcement action against us, and we could be fined and/or forced to alter our marketing materials.
If our products are not manufactured in compliance with applicable legal requirements, do not meet quality and cosmetic constituent standards, or otherwise result in adverse health effects in consumers, it could result in reputational harm, remedial costs, or governmental authority enforcement.
In the United States, the Federal Food, Drug and Cosmetic Act, administered and enforced by the FDA, prohibits the introduction, or delivery for introduction, into interstate commerce of cosmetics that are adulterated or misbranded. The FDA has historically recommended (but not required) certain voluntary good manufacturing practices (“GMPs”) designed to reduce the risk of violating this prohibition. However, recent legislation expanded the FDA’s authority to regulate cosmetics, including their manufacturing. Specifically, in December 2022, President Biden signed into law the Consolidated Appropriations Act, 2023, which included the Modernization of Cosmetics Regulation Act of 2022 (“MoCRA”). MoCRA established, among other things, new FDA authority over cosmetics, including requirements to register manufacturing facilities and list cosmetic products and ingredients, report serious adverse events, substantiate safety of the cosmetic, label cosmetics with certain information, and maintain certain records. The FDA now also has authority to enforce, and is required to issue, regulations governing GMPs for cosmetics, a proposed rule for which is required under the law to be issued by December 2024.
While many of MoCRA’s provisions apply directly to the entities whose name appears on the label of the finished cosmetic, and we do not produce any finished cosmetics, our customers will be required to comply with MoCRA, and may contractually impose certain of these requirements on us. Until cosmetic GMPs are promulgated, adherence to recommended GMPs can reduce the risk that the FDA finds such products have been rendered adulterated or misbranded in violation of applicable law. The FDA’s draft guidance on cosmetic GMPs, most recently updated in June 2023, provides recommendations related to process documentation, recordkeeping, building and facility design, equipment maintenance and personnel. The FDA also recommends that manufacturers maintain product complaint and recall files and voluntarily report adverse events to the agency. In addition, FDA regulations prohibit or otherwise restrict the use of certain ingredients in cosmetic products. If our third-party suppliers fail to manufacture our products in compliance with voluntary GMPs, or mandatory GMPs when promulgated and if imposed, we or our customers could be subject to regulatory enforcement action, and we could be deemed in breach of our contractual arrangements with our customers, which could have a material adverse impact on our business. Such failures could also lead to customer complaints, adverse events, product withdrawal or recall, or increase the likelihood that our products are rendered adulterated or misbranded, any of which could result in negative publicity, remedial costs, or regulatory enforcement that could impact our ability to continue selling certain products.
If our products are found to be defective or unsafe, we may be subject to various product liability claims, which could harm our reputation and business.
Our success depends, in part, on the quality and safety of our products. If our products are found to be defective, unsafe, or otherwise fail to meet our customers’ expectations or if our product claims are found to be unfair or deceptive, our relationships with customers could suffer, the appeal of one or more of our products could be diminished and we could lose sales, any of which could result in an adverse effect on our business.
We may be subject to product liability claims, including that our products fail to meet quality or manufacturing specifications, contain contaminants, include inadequate instructions as to their proper use, include inadequate warnings concerning side effects and interactions with other substances, or cause adverse reactions or side effects. Product liability claims could increase our costs, and adversely affect our business and financial results.
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Changes in government regulation may require us to modify our operations, including formulations that we utilize in our products.
Several intergovernmental organizations, countries and other political subdivisions of countries have enacted, or are considering enacting, laws and regulations designed to encourage or mandate the increased use of sustainable alternatives to plastics, or to dictate how much water, power, or other inputs may be used to manufacture products. These laws and regulations could require us to modify our manufacturing operations and processes, product designs, and/or product formulations to comply with these laws and regulations. Our inability or failure to comply with these laws and regulations could negatively affect our ability to manufacture and supply products, and/or the demand for, and marketability of, our products, which would have an adverse impact on our financial results.
Risks Related to our Warrants
Our Warrants are exercisable for our Common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
We currently have 9,583,333 Public Warrants and 5,000,000 Private Placement Warrants that are exercisable for shares of our Common stock in accordance with the terms of the Warrant Agreement. These Warrants have an exercise price of $11.50 per share of Common stock. To the extent such warrants are exercised, additional shares of Common stock will be issued, which will result in dilution to the then existing holders of Common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of Common stock. However, there is no guarantee that the Public Warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless.
We may amend the terms of the Warrants in a manner that may be adverse to holders with the approval by the holders of at least 50% of the then outstanding Warrants.
The Warrants were issued in registered form under the Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The Warrant Agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision but requires the approval by the holders of at least 50% of the then outstanding Public Warrants to make any change that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the Warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding Public Warrants approve of such amendment. Although our ability to amend the terms of the Warrants with the consent of at least 50% of the then outstanding Public Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants, convert the Warrants into stock or cash, shorten the exercise period or decrease the number of warrant shares issuable upon exercise of a Warrant.
We may redeem your unexpired Warrants prior to their exercise at a time that is disadvantageous to you, thereby making your Warrants worthless.
We have the ability to redeem outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of 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 we give notice of redemption. If and when the Warrants become redeemable by us, then we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding Warrants could force you (i) to exercise your Warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your Warrants at the then-current market price when you might otherwise wish to hold your Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding Warrants are called for redemption, is likely to be substantially less than the market value of your Warrants. None of the Private Placement Warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees. Recent trading prices for a share of our Common stock have not exceeded the $18.00 per share threshold at which the Public Warrants would become redeemable.
In addition, we have the ability to redeem the outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant if, among other things, the last reported sale price of our Common stock for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders equals or exceeds $10.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like). In such a case, the holders will be able to exercise their warrants prior to redemption for several shares of Common stock determined based on the redemption date and the fair market value of our Common stock. The value received upon exercise of the warrants (i) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher and (ii) may not compensate the holders for the value of the warrants, including because the number of shares received is capped at 0.361 shares of Common stock per warrant (subject to adjustment) irrespective of the remaining life of the warrants. We may only redeem the Public Warrants in accordance with this provision if we concurrently redeem the outstanding Private Placement Warrants on the same terms.
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The Private Placement Warrants are identical to the Public Warrants except that (i) none of the Private Placement Warrants will be redeemable by us so long as they are held by the Sponsor or its permitted transferees and (ii) the Private Placement Warrants will be exercisable for cash or on a cashless basis at the election of such holder, in either case as long as they are held by the Sponsor or its permitted transferees, whereas the Public Warrants will only be exercisable on a cashless basis at our election.
We may only call the Public Warrants for redemption upon a minimum of 30 days’ prior written notice of redemption to each holder; provided that holders will be able to exercise their Public Warrants prior to the time of redemption and, at our election, any such exercise may be required to be on a cashless basis, or if the holders of the Private Placement Warrants elect to exercise their Private Placement Warrants on a cashless basis, then we will not receive any cash proceeds from the exercise of such warrants.
In the event we determine to redeem the Warrants, holders of redeemable warrants would be notified of such redemption as described in the warrant agreement. Specifically, if we elect to redeem all of the redeemable warrants as described above, we will fix a date for the redemption (the “Redemption Date”). Notice of redemption will be mailed by first class mail, postage prepaid, by us not less than 30 days prior to the Redemption Date to the registered holders of the redeemable warrants to be redeemed at their last addresses as they appear on the registration books. Any notice mailed in the manner provided in the Warrant Agreement will be conclusively presumed to have been duly given whether the registered holder received such notice. Accordingly, if a holder fails to receive the notice of or otherwise fails to respond on a timely basis, it could lose the benefit of being a holder of a Warrant. In addition, beneficial owners of the redeemable warrants will be notified of such redemption via us posting of the redemption notice to DTC.
General Risk Factors
Global economic and financial market conditions, including severe market disruptions and the potential for a significant and prolonged global economic downturn, could impact our business operations in a number of ways, including, but not limited to, reduced demand in key customer end-markets, such as cosmetics and personal care products.
The global economy can be negatively impacted by a variety of factors such as the spread or fear of spread of contagious diseases in locations where end-products utilizing b-silk or any of our other future biomaterial products are sold, man-made or natural disasters, actual or threatened war, terrorist activity, political unrest, civil strife and other geopolitical uncertainty. Such adverse and uncertain economic conditions may impact retail, specifically cosmetics and personal care products, and other customer and consumer demand for our products. In addition, our ability to manage normal commercial relationships with our suppliers, current manufacturing partner and any future manufacturing partners, customers, consumers and creditors may suffer. Our results of operations depend upon, among other things, the financial health and strength of our customers as well as our suppliers, current manufacturing partner and any future manufacturing partners, or other third parties on which we rely, our ability to maintain and increase sales volume with our existing customers, our ability to attract new customers, and our ability to provide products that fulfill our customers’ needs at the right price. Decreases in demand for our products without a corresponding decrease in costs would put downward pressure on margins and would negatively impact our financial results. Prolonged unfavorable economic conditions or uncertainty may have an adverse effect on our sales and profitability.
Changes in the U.S. and global social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment could also adversely affect our business. If global economic conditions remain volatile for a prolonged period or experience further disruptions, our business, results of operations and financial condition could be adversely affected.
The market price of shares of our Common stock has been and may be in the future volatile or may decline regardless of our operating performance. You may lose some or all your investment.
The trading price of our Common stock has been volatile in the past, and may continue to be volatile in the future. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in this section and the following:
| ● | our operating and financial performance and prospects; |
| ● | our quarterly or annual earnings or those of other companies in our industry compared to market expectations; |
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| ● | conditions that impact demand for our b-silk or our future biomaterial products; |
| ● | future announcements concerning our business, our clients’ businesses or our competitors’ businesses; |
| ● | the public’s reaction to our press releases, other public announcements and filings with the SEC; |
| ● | the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”); |
| ● | the size of our public float; |
| ● | coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; |
| ● | market and industry perception of our success, or lack thereof, in pursuing our growth strategy; |
| ● | strategic actions by us or our competitors, such as acquisitions or restructurings; |
| ● | changes in laws or regulations which adversely affect our industry or us; |
| ● | privacy and data protection laws, privacy or data breaches, or the loss of data; |
| ● | changes in accounting standards, policies, guidance, interpretations or principles; |
| ● | changes in senior management or key personnel; |
| ● | issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; |
| ● | changes in our dividend policy; |
| ● | adverse resolution of new or pending litigation against us; and |
| ● | changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events. |
These broad market and industry factors may materially reduce the market price of our Common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our Common stock is low. As a result, you may suffer a loss on your investment.
In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of management from our business regardless of the outcome of such litigation.
We may acquire or invest in companies, which may divert our management’s attention and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions.
We may evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products, and other assets in the future. An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel, or operations of the acquired companies. Key personnel of the acquired companies may choose not to work for us, their software may not be easily adapted to work with ours, or we may have difficulty retaining the customers of any acquired business due to changes in ownership, management, or otherwise. We may also experience difficulties integrating personnel of the acquired company into our business and culture. Acquisitions may also disrupt our business, divert our resources and require significant management attention that would otherwise be available for development of our existing business. The anticipated benefits of any acquisition, investment, or business relationship may not be realized or we may be exposed to unknown risks or liabilities.
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Negotiating these transactions can be time-consuming, difficult, and expensive, and our ability to close these transactions may often be subject to approvals that are beyond our control. Consequently, these transactions, even if undertaken and announced, may not close. For one or more of those transactions, we may:
| ● | issue additional equity securities that would dilute our stockholders; |
| ● | use cash that we may need in the future to operate our business; |
| ● | incur debt on terms unfavorable to us or that we are unable to repay; |
| ● | incur large charges or substantial liabilities; |
| ● | encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures; and |
| ● | become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges. |
Future litigation or similar legal proceedings could have a material adverse effect on our business and results of operations.
Lawsuits and other administrative or legal proceedings may arise in the course of our operations. We may also face heightened regulatory or other public scrutiny as a result of going public via a transaction with a special purpose acquisition company. These sorts of lawsuits or proceedings can involve substantial costs, including the costs associated with investigation, litigation and possible settlement, judgment, penalty or fines. In addition, lawsuits and other legal proceedings may be time-consuming and may require a commitment of management and personnel resources that will be diverted from our normal business operations. Although we generally maintain insurance to mitigate certain costs, there can be no assurance that costs associated with lawsuits or other legal proceedings will not exceed the limits of insurance policies. Moreover, we may be unable to continue to maintain our existing insurance at a reasonable cost, if at all, or to secure additional coverage, which may result in costs associated with lawsuits and other legal proceedings being uninsured. Our business, financial condition, and results of operations could be adversely affected if a judgment, penalty or fine is not fully covered by insurance.
Concentration of ownership among our existing directors, executive officers and principal stockholders may prevent new investors from influencing significant corporate decisions.
Our directors and executive officers and their affiliates and holders of greater than 5% of the Common stock, in the aggregate, beneficially own approximately 90% of our outstanding stock. Though we are not considered a “controlled company” for purposes of the Nasdaq Stock Market, subject to any fiduciary duties owed to our other stockholders under Delaware law, these stockholders may still be able to exercise significant influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, and will have some control over our management and policies. Some of these persons or entities may have interests that are different from yours. For example, these stockholders may support proposals and actions with which you may disagree or which are not in your best interests. The concentration of ownership could delay or prevent a change in control of us, or otherwise discourage a potential acquirer from attempting to obtain control of us, which in turn could reduce the price of our stock.
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In addition, these stockholders could use their voting influence to maintain our existing management and directors in office or support or reject other management and Board of Directors proposals that are subject to stockholder approval, such as amendments to our employee stock plans and approvals of significant financing transactions.
Sales of a substantial number of our securities in the public market by the registered holders or by our other existing securityholders could cause the price of our Common stock and Warrants to fall.
The sale of shares of our Common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that it deems appropriate.
We have filed a registration statement covering the resale of up to 28,319,770 shares of Common stock and 5,000,000 Private Placement Warrants by the registered holders named therein. In particular, the securities registered include a significant portion of our total shares of Common stock outstanding. The registered holders include a number of beneficial owners of more than 5% of our Common stock, and they will be able to sell all of their registered shares (subject to contractual lockups and, in the case of our directors, executive officers and employees, compliance with our insider trading compliance policy) for so long as the registration statement to which the subject prospectus forms a part (the “resale prospectus”) is available for use. Approximately 70% of the shares of Common stock outstanding as of November 13, 2024, 2024 are held by 5% beneficial owners that have shares registered for resale pursuant to the resale prospectus.
Sales of a substantial number of our shares of Common stock or Warrants in the public market by the registered holders or by our other existing security holders, or the perception that those sales might occur, could depress the market price of our Common stock and Warrants and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price of our Common stock and Warrants. The sale of all the securities being offered under the resale prospectus could result in a significant decline in the public trading price of our securities. Despite such a decline in the public trading price, some of the registered holders may still experience a positive rate of return on the securities they purchased due to the differences in the purchase prices described in the resale prospectus and may still have incentive to sell their securities even at such depressed public trading prices. Other security holders may not be able to experience positive rates of return on securities they purchase due to the lower closing price at which our shares of Common stock are then trading.
We do not intend to pay dividends for the foreseeable future.
We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. Moreover, the terms of our Ginkgo Note Purchase Agreement may restrict our ability to pay dividends, and any additional debt we may incur in the future may include similar restrictions. As a result, stockholders must rely on sales of their Common stock after price appreciation as the only way to realize any future gains on their investment.
If securities or industry analysts do not publish or cease publishing research or reports about our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline.
The trading market for our securities is influenced by the research and reports that industry or securities analysts may publish about our business, market or competitors. If no securities or industry analysts commence coverage of our business, our share price and trading volume would likely be negatively impacted. If any of the analysts who may cover our business change their recommendation regarding our shares of Common stock adversely, or provide more favorable relative recommendations about our competitors, the price of our shares of Common stock would likely decline. If any analyst who may cover our business were to cease coverage of us or fail to regularly publish reports on it, we could lose visibility in the financial markets, which in turn could cause its share price or trading volume to decline.
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The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act, the requirements of the Sarbanes-Oxley Act and the requirements of Nasdaq, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
As a public company, we are subject to laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act, related regulations of the SEC and the requirements of Nasdaq. As a newly public company, complying with these statutes, regulations and requirements occupies a significant amount of time for our Board of Directors and management and significantly increases our costs and expenses. For example, we have had to institute a more comprehensive compliance function, comply with rules promulgated by Nasdaq, prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws, establish new internal policies, such as those relating to insider trading. We have also had to retain and rely on outside counsel and accountants to a greater degree in these activities. In addition, being subject to these rules and regulations has made it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officer.
Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
Our certificate of incorporation and bylaws fully provide indemnification and advancement of expenses for our directors and officers permitted by Section 145 of the DGCL. Additionally, we entered into indemnification agreements with our directors and officers that make indemnification rights and obligations mandatory in most respects, which may result in us incurring indemnification or advancement expenses that would not otherwise be required under the DGCL. While have secured an insurance policy intended to reimburse us for most or all of our indemnification and advancement expenses, we do not know if we will be able to maintain insurance with adequate levels of coverage. Any significant uninsured liability may require us to pay substantial amounts, which would have an adverse effect on our financial condition and results of operations.
If we are not able to maintain a listing on the national exchange for our securities, the trading market for our securities will be adversely affected.
If we are not able to maintain a listing for our Common stock on the Nasdaq for any reason, an active trading market for our securities may fail to develop or not be sustained. In the absence of an active trading market for our Common stock, you may not be able to sell your shares when desired or at or above the prices at which you acquired them. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses or technologies using our shares as consideration, which, in turn, could materially and adversely affect our business.
Our failure to meet the continued listing requirements of Nasdaq could result in a delisting of our Common stock.
On November 6, 2024, we received a letter from Nasdaq stating that the closing bid price for our Common stock over the prior 30 days was below the minimum required share price for continued listing on Nasdaq. The notice had no immediate impact on the listing of our Common stock, which will continue to be listed and traded on Nasdaq during the period allowed to regain compliance, subject to our compliance with other listing standards.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided an initial period of 180 calendar days, or until May 5, 2025, to regain compliance with the minimum bid price requirement. If, at any time during this 180-day period, the closing bid price of the Company’s Common stock is at least $1.00 for a minimum of 10 consecutive business days, Nasdaq staff will provide written notification that the Company has achieved compliance with the minimum closing bid price requirement. In the event we do not regain compliance with the minimum closing bid price requirement by May 5, 2025, we may be eligible for an additional 180-calendar-day compliance period. To qualify, we must submit an application to transfer to Nasdaq, which would require us to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the minimum closing bid price requirement. We would also need to pay an application fee to Nasdaq and provide written notice of our intention to cure the minimum closing bid price deficiency during the second compliance period. However, if it appears to the Nasdaq staff that we will not be able to cure the deficiency, or if we are otherwise not eligible, Nasdaq may notify us that our securities will be subject to delisting.
A delisting of our Common stock from Nasdaq may make it more difficult for us to raise capital on favorable terms in the future. Such a delisting would likely have a negative effect on the price of our Common stock and would impair your ability to sell or purchase our Common stock when you wish to do so. Further, if we were to be delisted from Nasdaq, our Common stock would cease to be recognized as covered securities, and we would be subject to regulation in each state in which we offer our securities. Moreover, there is no assurance that any actions that we would take to restore our compliance, if needed, would stabilize the market price or improve the liquidity of our Common stock, prevent our Common stock from falling below the minimum bid price required for continued listing again, or prevent future non-compliance with Nasdaq’s rules. There is also no assurance that we will maintain compliance with the other listing standards of Nasdaq.
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We qualify as an “emerging growth company,” and the reduced public company reporting requirements applicable to emerging growth companies may make our securities less attractive to investors.
We qualify as an “emerging growth company,” as defined in the JOBS Act. For so long as we remain an emerging growth company, we are permitted and plan to rely on exemptions from certain disclosure requirements that are applicable to public companies that are not emerging growth companies. These provisions include, but are not limited to: an exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act; reduced disclosure obligations regarding executive compensation arrangements in our periodic reports, registration statements and proxy statements; and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, the JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We take advantage of the exemptions discussed above. As a result, the information we provide will be different than the information that is available with respect to other public companies that are not emerging growth companies or that are not taking advantage of such exemptions.
We will remain an emerging growth company until the earliest of (i) December 31, 2026, the end of the fiscal year following the fifth anniversary of the closing of the GAMC IPO, (ii) the first fiscal year after our annual gross revenue exceeds $1.235 billion, (iii) the date on which we have, during the immediately preceding three-year period, issued more than $1.00 billion in non-convertible debt securities, or (iv) the end of any fiscal year in which the market value of our Common stock held by non-affiliates exceeds $700.0 million as of the end of the second quarter of that fiscal year.
We cannot predict whether investors will find our Common stock less attractive if we rely on these exemptions. If some investors find our Common stock less attractive as a result, there may be a less active trading market for our securities, and the market price of our securities may be more volatile.
Our certificate of incorporation contains anti-takeover provisions that could adversely affect the rights of our stockholders.
Our certificate of incorporation contains provisions to limit the ability of others to acquire control of us or cause it to engage in change-of-control transactions, including, among other things:
| ● | provisions that authorize our Board of Directors, without action by its stockholders, to issue additional shares of or Common stock and preferred stock with preferential rights determined by our Board of Directors; |
| ● | provisions that permit only a majority of our Board of Directors, the chairperson of the Board of Directors or the chief executive officer to call stockholder meetings and therefore do not permit stockholders to call special meetings of the stockholders; |
| ● | provisions limiting stockholders’ ability to act by written consent; and |
| ● | a staggered board whereby our directors are divided into three classes, with each class subject to retirement and re-election once every three years on a rotating basis. |
These provisions could have the effect of depriving our stockholders of an opportunity to sell their shares of Common stock at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of us in a tender offer or similar transaction. With our staggered Board of Directors, at least two annual or special meetings of stockholders will generally be required in order to effect a change in a majority of our directors. Our staggered Board of Directors can discourage proxy contests for the election of our directors and purchases of substantial blocks of our shares by making it more difficult for a potential acquirer to gain control of our Board of Directors in a relatively short period of time.
Our certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our certificate of incorporation requires, to the fullest extent permitted by law, that (i) derivative actions brought in our name, (ii) asserting a claim of breach of fiduciary duty owed by any of our directors, officers or stockholders, (iii) actions asserting a claim pursuant to the DGCL, our certificate of incorporation and our bylaws, or (iv) any actions asserting claims governed by the internal affairs doctrine, may be brought only in the Court of Chancery in the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware). Subject to the preceding sentence, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. However, such forum selection provisions will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction.
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The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, and other employees and result in increased costs for investors to bring a claim. Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Additionally, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As noted above, our certificate of incorporation provides that the federal district courts of the United States of America will have jurisdiction over any action arising under the Securities Act. Accordingly, there is uncertainty as to whether a court would enforce such provision. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring any interest in shares of Common stock or our capital stock shall be deemed to have notice of and consented to the forum provisions in our certificate of incorporation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
None.
Use of Proceeds
Not applicable.
Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a) The information set forth below is included herein for purposes of providing disclosures under Item 5.02 (a) of Form 8-K.
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On November 7, 2024, Esther van den Boom notified the Company of her resignation from the Board of Directors and as chairperson of the Audit Committee, effective as of that date. Ms. van den Boom's resignation is not due to any disagreement with the Company on any of its operations, policies, or practices. The Board appointed Jeri Finard as a member of the Audit Committee.
(b) None.
(c) Insider Trading Arrangements and Policies.
During the
three months ended September 30, 2024, no director or “officer” (as defined in Rule 16a-1(f) under the Exchange Act) of the
Company
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Item 6. Exhibits
EXHIBIT INDEX
| * | Filed herewith. |
| ** | Furnished herewith. |
| + | Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
| # | Indicates management contract or compensatory plan. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, duly authorized.
| Bolt Projects Holdings, Inc. | ||
| Date: November 13, 2024 | By: | /s/ Daniel Widmaier |
| Name: | Daniel Widmaier | |
| Title: | Chief Executive Officer (principal executive officer) | |
| Date: November 13, 2024 | By: | /s/ Randy Befumo |
| Name: | Randy Befumo | |
| Title: | Interim Chief Financial Officer (principal financial officer and principal accounting officer) | |
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