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GreenLight Biosciences (GRNA)

Filed: 31 Mar 22, 5:26pm


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders’ and the Board of Directors of GreenLight Biosciences, Inc.,

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of GreenLight Biosciences, Inc. and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, redeemable convertible preferred stock and stockholders’ deficit, and cash flows, for each of the two years in the period ended December 31, 2021 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, expects continuing operating losses for the foreseeable future, needs to raise additional capital to finance its future operations and has stated that substantial doubt exists about its ability to continue as a going concern. Management’s evaluation of events and conditions and management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Deloitte & Touche LLP

Boston, Massachusetts

March 31, 2022

We have served as the Company’s auditor since 2019.

 

F-2


GREENLIGHT BIOSCIENCES, INC.

Consolidated Balance Sheets

(In thousands, except share and per share data)

 

   As of December 31, 
   2020  2021 

ASSETS

   

CURRENT ASSETS

   

Cash and cash equivalents

  $95,068  $31,446 

Prepaid expenses

   2,031   2,331 
  

 

 

  

 

 

 

Total Current Assets

   97,099   33,777 

Restricted cash

   80   362 

Property and equipment, net

   16,279   23,399 

Deferred offering costs

   —     4,099 

Other assets

   370   1,420 
  

 

 

  

 

 

 

TOTAL ASSETS

  $113,828  $63,058 
  

 

 

  

 

 

 

LIABILITIES, REDEEMABLE CONVERTIBLE

PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

   

CURRENT LIABILITIES

   

Accounts payable

  $4,537  $7,551 

Accrued expenses

   6,826   14,624 

Convertible debt

   —     31,691 

Long-term debt, current portion

   633   7,234 

Deferred revenue

   1,663   963 

Other current liabilities

   252   278 
  

 

 

  

 

 

 

Total Current Liabilities

   13,911   62,341 

Warrant liabilities

   125   2,105 

Long-term debt, net of current portion

   992   27,152 

Convertible debt

   17,273   —   

Other liabilities

   1,562   1,435 
  

 

 

  

 

 

 

TOTAL LIABILITIES

   33,863   93,033 

COMMITMENTS AND CONTINGENCIES (Note 18)

   

REDEEMABLE CONVERTIBLE PREFERRED STOCK (Note 12)

   218,787   218,790 

STOCKHOLDERS’ DEFICIT

   

Common stock, $0.001 par value; 191,500,000 shares authorized, 3,290,101 and 3,668,480 shares issued and 3,252,636 and 3,663,894 shares outstanding at December 31, 2020 and December 31, 2021, respectively

   3   4 

Additional paid-in capital

   2,434   4,800 

Accumulated deficit

   (141,259  (253,569
  

 

 

  

 

 

 

TOTAL STOCKHOLDERS’ DEFICIT

   (138,822  (248,765
  

 

 

  

 

 

 

TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK

   

AND STOCKHOLDERS’ DEFICIT

  $113,828  $63,058 
  

 

 

  

 

 

 

See notes to consolidated financial statements.

 

F-3


GREENLIGHT BIOSCIENCES, INC.

Consolidated Statements of Operations

(In thousands, except share and per share data)

 

   Years Ended December 31, 
   2020  2021 

REVENUE:

   

Collaboration revenue

  $962  $—   

Grant revenue

   785   1,595 
  

 

 

  

 

 

 

Total revenue

   1,747   1,595 

OPERATING EXPENSES:

   

Research and development

   42,866   89,832 

General and administrative

   11,165   20,321 
  

 

 

  

 

 

 

Total operating expenses

   54,031   110,153 
  

 

 

  

 

 

 

LOSS FROM OPERATIONS

   (52,284  (108,558

OTHER (EXPENSE) INCOME

   

Interest income

   83   37 

Interest expense

   (1,028  (2,419

Change in fair value of warrant liabilities

   (22  (1,370
  

 

 

  

 

 

 

Total other (expense), net

   (967  (3,752
  

 

 

  

 

 

 

Net loss

  $(53,251)   $(112,310
  

 

 

  

 

 

 

Preferred stock dividends

   (13,445  (17,453
  

 

 

  

 

 

 

Net loss available to common stockholders

  $(66,696)   $(129,763
  

 

 

  

 

 

 

Net loss per share available to common stockholders—basic and diluted

  $(20.76 $(38.36
  

 

 

  

 

 

 

Weighted-average common stock outstanding—basic and diluted

   3,211,968   3,382,860 
  

 

 

  

 

 

 

See notes to consolidated financial statements.

 

F-4


GREENLIGHT BIOSCIENCES, INC.

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit

(In thousands, except share and per share data)

 

  $0.001 PAR VALUE
CONVERTIBLE PREFERRED STOCK
  COMMON STOCK
$0.001 PAR VALUE
  ADDITIONAL
PAID-IN
CAPITAL
  ACCUMULATED
DEFICIT
  TOTAL
STOCKHOLDERS’
DEFICIT
 
  SHARES  AMOUNT  SHARES  AMOUNT 

Balances at January 1, 2020

  74,768,305  $110,288   3,121,514  $3  $1,381  $(88,008 $(86,624

Issuance of series D convertible preferred stock at $1.8118 per share, net of issuance costs of $543

  60,184,332   108,499   —     —     357   —     357 

Vesting of restricted stock awards

  —     —     31,086   —     —     —     —   

Stock-based compensation expense

  —     —     —     —     659   —     659 

Exercise of common stock options

  —     —     100,036   —     37   —     37 

Net loss

  —     —     —     —     —     (53,251  (53,251
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balances at December 31, 2020

            134,952,637  $          218,787   3,252,636  $3  $2,434  $(141,259 $(138,822

Vesting of restricted stock awards

  —     —     31,109   1   —     —     1 

Exercise of series A convertible preferred stock warrant

  20,307   3   —     —     —     —     —   

Warrants issued in connection with debt

  —     —     —     —     232   —     232 

Stock-based compensation expense

  —     —     —     —     1,991   —     1,991 

Exercise of common stock options

  —     —     380,149   —     143   —     143 

Net loss

  —     —     —     —     —     (112,310  (112,310
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balances at December 31, 2021

  134,972,944  $218,790   3,663,894  $4  $4,800  $(253,569 $(248,765
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

See notes to consolidated financial statements.

 

F-5


GREENLIGHT BIOSCIENCES, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

 

   Years Ended December 31, 
   2020   2021 

CASHFLOWS FROM OPERATING ACTIVITIES:

    

Net loss

  $(53,251  $(112,310

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation and amortization expense

   1,754    5,772 

Gain on disposal of property and equipment

   (15   (5

Stock-based compensation expense

   659    1,991 

Non-cash interest expense

   588    828 

Change in fair value of warrant liabilities

   22    1,370 

Changes in operating assets and liabilities

    

Prepaid expenses and other assets

   (1,489   (920

Accounts payable

   1,172    3,697 

Accrued expenses and other liabilities

   1,904    8,181 

Accrued interest

   (83   344 

Deferred rent

   477    (80

Deferred revenue

   1,663    (700
  

 

 

   

 

 

 

Net cash used in operating activities

   (46,599   (91,832
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Proceeds from sale of property and equipment

   —      109 

Purchases of property and equipment

   (10,047   (15,148
  

 

 

   

 

 

 

Net cash used in investing activities

   (10,047   (15,039
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Proceeds from issuance of Series D Preferred Stock

   109,042    —   

Payment of Series D issuance costs

   (186   —   

Proceeds from issuance of Convertible Debt

   16,775    13,500 

Payment of Convertible Debt issuance costs

   (134   —   

Proceeds from stock option exercises

   37    143 

Proceeds from secured debt, net of issuance costs and security deposits

   —      10,360 

Proceeds from secured term loan, net of issuance costs

   —      24,973 

Proceeds from tenant improvement allowance

   1,250    —   

Principal payments on secured debt and term loan payable

   —      (1,795

Principal payments on tenant improvement allowance payable

   (304   (161

Principal payments on capital lease obligations

   (632   (632

Payment of deferred offering costs

   —      (2,857
  

 

 

   

 

 

 

Net cash provided by financing activities

   125,848    43,531 
  

 

 

   

 

 

 

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

   69,202    (63,340

Cash, cash equivalents and restricted cash, beginning of year

   25,946    95,148 
  

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of year

  $95,148   $31,808 
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH-FLOW INFORMATION

    

Cash paid for interest

  $376    867 
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

    

Property and equipment included in accrued expenses and accounts payable

  $3,562   $1,216 
  

 

 

   

 

 

 

Property and equipment aquired under capital lease

  $934   $—   
  

 

 

   

 

 

 

Non-cash Series D issuance costs

  $357   $—   
  

 

 

   

 

 

 

Deferred financing costs in accrued expenses and accounts payable

  $—     $1,242 
  

 

 

   

 

 

 

Non-cash debt issuance costs

  $—     $610 
  

 

 

   

 

 

 

 

F-6


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

1.

NATURE OF BUSINESS AND BASIS OF PRESENTATION

Organization

GreenLight Biosciences, Inc. (“GreenLight” or the “Company”) was incorporated in Delaware in 2008. GreenLight, together with its wholly owned subsidiaries, GreenLight Pandemic Response, Inc. (“GLPRI”), and GreenLight Security Corporation (“GLSC”), is referred to on a consolidated basis as the “Company”. The Company has developed technology to create high-performing, natural ribonucleic acid (“RNA”) products to address global sustainability challenges and promote healthier plants, foods, and people.

The Company is located and headquartered in Medford, Massachusetts. The Company has additional lab and office space in Research Triangle Park, North Carolina, a manufacturing facility in Burlington, Massachusetts, additional lab and office space in Woburn, Massachusetts, and a manufacturing facility in Rochester, New York. The Company’s revenues and expenses are derived from operations in the United States. Since its inception, the Company has devoted substantially all of its efforts to research and development activities, including the development of the Company’s cell-free RNA production process. The Company does not currently generate revenue from sales of any products.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Business Combination Transaction

On August 9, 2021, the Company entered into the business combination agreement (“Business Combination Agreement”) with Environmental Impact Acquisition Corp. (“ENVI”) and Honey Bee Merger Sub, Inc. (“Merger Sub”). Pursuant to the Business Combination Agreement, on February 2, 2022, Merger Sub merged with and into GreenLight (the “Merger”), with GreenLight surviving the Merger as a wholly owned subsidiary of ENVI (the Merger, together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”).

Immediately before the closing of the Business Combination, ENVI held approximately $207.0 million in a trust account for its public stockholders. In connection with the Business Combination, ENVI’s public stockholders redeemed shares of public common stock for approximately $194.9 million, and the funds remaining after such redemptions, totalling approximately $12.1 million, became available to finance transaction expenses and the future operations of New GreenLight. In connection with the Business Combination, ENVI entered into agreements with new investors and existing GreenLight investors to subscribe for and purchase an aggregate of approximately 12.4 million shares of ENVI Class A Common Stock (the “PIPE Financing”). The PIPE Financing was consummated on February 2, 2022 and resulted in gross proceeds of approximately $136.4 million, prior to payment of the transaction costs (of which $13.5 million was advanced to GreenLight as of December 31, 2021 and an additional $21.8 million was advanced to GreenLight in January 2022). The direct and incremental transaction costs are approximately $25.0 million, with the net proceeds from the Business Combination of approximately $111.4 million expected.

The Merger is accounted for as a reverse recapitalization, whereby for accounting and financial reporting purposes, the Company was the acquirer. A reverse recapitalization does not result in a new basis of accounting, and the financial statements of the combined entity will represent the continuation of the consolidated financial statements of the Company in many respects. The shares of ENVI remaining after redemptions of shares of ENVI public common stock and the unrestricted net cash and cash equivalents on the date the Business Combination was consummated will be accounted for as a capital infusion to GreenLight.

 

F-7


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Liquidity and going concern

Since its inception, the Company has devoted substantially all of its resources to building its platform and advancing development of its portfolio of programs, establishing and protecting its intellectual property, conducting research and development activities, organizing and staffing the Company, business planning, raising capital and providing general and administrative support for these operations. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Current and future programs will require significant research and development efforts, including extensive field trials, preclinical and clinical trials and regulatory approvals prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

As presented in the financial statements, the Company has incurred substantial losses since inception and incurred net losses of approximately $53.3 million and $112.3 million for the years ended December 31, 2020 and 2021, respectively. As of December 31, 2021, the Company had an accumulated deficit of approximately $253.6 million and cash and cash equivalents of approximately $31.4 million. Cash used in operating activities totaled approximately $46.6 million and $91.8 million for the years ended December 31, 2020 and 2021, respectively. The Company expects to generate operating losses and negative operating cash flows for the foreseeable future.

As of the issuance date of the annual consolidated financial statements for the years ended December 31, 2021 and 2020, the Company expects that its existing cash and cash equivalents of approximately $31.4 million as of December 31, 2021, plus proceeds from the Business Combination and the PIPE Financing, will not be sufficient to fund its operations for twelve months from the date these financial statements are issued. The Company is evaluating a range of opportunities to extend its cash runway, including management of program spending, platform licensing collaborations and/or potential financing activity.

The Company will not generate any revenue from product sales unless and until it successfully completes development and obtains regulatory approval for one or more of its product candidates. If the Company obtains regulatory approval for any of its product candidates, it expects to incur significant expenses related to developing its internal commercialization capability to support product sales, marketing and distribution.

As a result, the Company will need substantial additional funding to support its operating activities as it advances its product candidates through development, seeks regulatory approval and prepares for and, if any of its product candidates are approved, proceeds to commercialization. Until such time as the Company can generate significant revenue from product sales, if ever, the Company expects to finance its operating activities through a combination of equity offerings, debt financings, and license and development agreements in connection with any future collaborations. Adequate funding may not be available to the Company on acceptable terms, or at all.

If the Company is unable to obtain funding, the Company will be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

 

F-8


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Based on its recurring losses from operations incurred since inception, expectation of continuing operating losses for the foreseeable future, and need to raise additional capital to finance its future operations, the Company has concluded that there is substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the operations of the Company and its wholly owned subsidiaries, GLPRI and GLSC. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting period. The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition, the accrual of research and development costs, acquisition of in-process research and development assets, the fair values of common and Preferred Stock (as defined below), useful lives assigned to property and equipment, and the fair value of warrant liabilities. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates.

Operating Segments

Operating segments are identified as components of an enterprise about which separate discrete financial information is made available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The CODM is the Company’s Chief Executive Officer. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. Investments qualifying as cash equivalents primarily consist of money market funds. The Company’s cash equivalents in the consolidated balance sheets at December 31, 2020 and 2021, were approximately $95.1 million and $31.4 million, respectively.

Restricted Cash

The Company maintains letters of credit in conjunction with the Company’s lease agreements. As of December 31, 2020 and 2021, the underlying cash balance securing these letters of credit of approximately

 

F-9


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

$0.1 million and $0.3 million, respectively, was classified as a noncurrent asset in the consolidated balance sheets based on the terms of the lease agreement.

Concentrations of Credit Risk

The Company has no significant off-balance sheet credit risk. Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash and cash equivalents in financial institutions that it believes have high credit quality, has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

 

  

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

  

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly or indirectly.

 

  

Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

 

F-10


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Property and Equipment

Property and equipment are recorded at cost and depreciated over the estimated useful lives of the related assets using the straight-line method. Maintenance and repairs to an asset that do not improve or extend its life are expensed in the period incurred. Expenditures made to improve or extend the life of property and equipment are capitalized. Leasehold improvements are depreciated over the shorter of the useful life of the improvements or the remaining term of the associated lease. The estimated useful lives of property and equipment are as follows:

 

  ESTIMATED USEFUL LIFE

Laboratory equipment

 5 years

Computer equipment and software

 3 years

Leasehold improvements

 Shorter of useful life or lease term

Property and equipment subject to a capital lease are depreciated over the shorter of the useful life or the term of the lease. Construction in progress is stated at cost, which includes direct costs attributable to the setup or construction of the related asset. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in the Company’s statement of operations.

Acquired In-process Research and Development

The Company measures and recognizes acquisitions that are not deemed to be business combinations as acquisitions of assets based on the cost to acquire the assets, which includes transaction costs, and the consideration is allocated to the items acquired based on a relative fair value methodology. Goodwill is not recognized in asset acquisitions. In an asset acquisition, the cost allocated to acquire in-process research and development with no alternative future use is charged to research and development expense at the acquisition date. At the time of acquisition, the Company determines if a transaction should be accounted for as a business combination or acquisition of assets.

The Company applied asset acquisition treatment in accounting for the acquisition of the intangible assets of Bayer Crop Science, LLP acquired during the year ended December 31, 2020.

Impairment of Long-lived Assets

The Company evaluates its long-lived assets, which consist primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Such events and circumstances include, but are not limited to, significant decreases in the market value of an asset, adverse changes in the extent or manner in which the asset is being used, or significant changes in business climate. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. During the years ended December 31, 2020 and 2021, no impairment indicators were identified.

Redeemable Convertible Preferred Stock

The Company classifies redeemable convertible Preferred Stock (“Preferred Stock”) as temporary equity in the accompanying consolidated balance sheets due to certain redemption events that are not within the

 

F-11


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Company’s control such as a liquidation, winding up, certain mergers, and the occurrence of a deemed liquidation event as defined in the Company’s certificate of incorporation. In the event of a deemed liquidation event, the proceeds from the event are distributed in accordance with liquidation preferences (Note 12). As of December 31, 2020 and 2021, none of the circumstances under which the Company’s Preferred Stock would become redeemable are probable, and, as a result, the Company does not accrete the carrying values of the Preferred Stock to the redemption values. Subsequent adjustments of the carrying values to the ultimate redemption values will be made only when it becomes probable that such a liquidation event will occur.

Warrants

The Company applies relevant accounting guidance for warrants to purchase the Company’s stock based on the nature of the relationship with the counterparty. For warrants issued to investors or lenders in exchange for cash or other financial assets, the Company follows guidance issued within ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815, Derivatives and Hedging (“ASC 815”), to assist in the determination of whether the warrants should be classified as liabilities or equity. Warrants that are determined to require liability classification are measured at fair value upon issuance and are subsequently remeasured to their then fair value at each subsequent reporting period with changes in fair value recorded in current earnings. Warrants that are determined to require equity classification are measured at fair value upon issuance and are not subsequently remeasured unless they are required to be reclassified.

For warrants issued to nonemployees for goods or services, or to customers as non-cash consideration, the Company follows guidance issued within ASC 718, Compensation – Stock Compensation (“ASC 718”), to determine whether the share-based payments are equity or liability classified. Such warrants are measured at fair value on the grant date. The related expense or reduction in transaction price is recognized in the same period and in the same manner as if the Company had paid cash for the goods or services, or in the same manner that transfer of control of the related performance obligations occurs

Contract Revenue

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), which provides a five-step model for recognizing revenue from contracts with customers as follows:

 

  

Identify the contract with a customer

 

  

Identify the performance obligations in the contract

 

  

Determine the transaction price

 

  

Allocate the transaction price to the performance obligations in the contract

 

  

Recognize revenue when or as performance obligations are satisfied

For the year ended December 31, 2020, all contract revenue was generated from a collaboration agreement with Ingredion Incorporated (“Ingredion”) to develop a semicontinuous cell-free production process for the commercial production of certain molecules using biological synthesis tools and proprietary technology developed by the Company. The Ingredion Agreement is within the scope of ASC 606. There was no contract revenue generated during 2021 from the collaboration agreement with Ingredion.

Under ASC 606, an entity recognizes revenue when or as its customer obtains control of distinct promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

 

F-12


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Our customer arrangements primarily consist of a license, rights to our intellectual property, and research and developments services. Performance obligations are promises in a contract to transfer a distinct good or service to the customer and are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, we consider factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on its own, or whether the required expertise is readily available and whether the goods or services are integral or dependent to other goods or services in the contract.

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include fixed consideration or variable consideration. At the inception of each arrangement that includes variable consideration, the Company evaluates the amount of potential payments and the likelihood that the payments will be received. The Company utilizes either the most likely amount method or expected amount method to estimate the amount expected to be received based on which method best predicts the amount expected to be received. The amount of variable consideration, which is included in the transaction price, may be constrained and is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period when the variability is resolved. Under the collaboration agreement with Ingredion, the variability related to the variable consideration would be resolved when the Company has successfully achieved pilot scale production that satisfies specified volume, yield, and cost targets (“Milestone 2”).

For revenue related to sales-based royalties received from licensees, including milestone payments based on the level of sales, where the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any consideration related to sales-based royalty revenue resulting from the Ingredion collaboration agreement.

The Company allocates the transaction price based on the estimated stand-alone selling price of each of the performance obligations and develops assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in a contract with a customer. The Company utilizes key assumptions to determine the stand-alone selling price for service obligations, which may include other comparable transactions, pricing considered in negotiating the transaction, and the estimated costs. Any variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with the amounts we would expect to receive for the satisfaction of each performance obligation.

The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services. For performance obligations that consist of licenses and other promises, the Company applies judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. The Company has determined that the license and research and development services under the Ingredion agreement are a single combined performance obligation satisfied over time. The Company must select a single measure of progress that best depicts the Company’s measurement of progress. ASC 606-10-26-33 states that appropriate methods of measuring progress include output methods and input methods and notes that an entity should consider the nature of the good or service that the entity promised to transfer to the customer in determining the appropriate method for measuring progress. Since activities performed to research and validate one phase may be

 

F-13


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

useful in researching and validating subsequent phases, the Company believes that an input method, which tracks the Company’s efforts required to perform the contracted activities during the contract term, is more representationally faithful than an output method, which might track the agreed upon deliverables that are not similar to one another.

Grant Revenue

In July 2020, we entered into a grant agreement with the Bill & Melinda Gates Foundation to advance research in in vivo gene therapy for sickle cell disease and to explore new, low-cost capabilities for the in vivo functional cure of sickle cell and/or durable suppression of HIV in developing countries. The grant agreement with the Bill & Melinda Gates foundation provides for payments for reimbursed costs, which include general and administrative costs. As we are performing services under the agreement that are consistent with the Company’s ongoing central activities and we have determined that we are the principal in the agreement, we recognize grant revenue as we perform services under this agreement when the funding is committed, which occurs as underlying costs are incurred. Revenues and related expenses are presented gross in the consolidated statements of operations as we have determined that we are the primary obligor under the agreement relative to the research and development services we perform as the lead technical expert.

Deferred Revenue

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company’s consolidated balance sheets. If the related performance obligation is expected to be satisfied within the next twelve months, the related deferred revenue will be classified in current liabilities.

Research and Development Costs

Research and development expenses consist primarily of costs related to discovery and research and development of products, including personnel expenses, stock-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees, and external costs of outside vendors engaged to conduct field trials and clinical development activities. The Company records accruals for estimated costs incurred of our field trials, preclinical studies, and manufacturing development. A portion of our field trials, preclinical studies, and manufacturing development activities are conducted by third-party service providers, including contract research organizations and contract manufacturing organizations. The financial terms of these contracts may result in payments that do not match the periods over which materials or services are provided. We accrue the costs incurred under the agreements based on an estimate of actual work completed in accordance with the agreements. In the event we make advance payments for goods or services that will be used or rendered for future research and development activities, the payments are deferred and capitalized as a prepaid expense and recognized as expense as the goods are received or the related services are rendered. Research and development costs that do not meet the requirements to be recognized as an asset as the associated future benefits are uncertain and there is no alternative future use at the time the costs were incurred are expensed as incurred.

General and Administrative Expenses

The Company expenses general and administrative costs to operations as incurred. General and administrative expenses consist primarily of compensation, benefits and other employee-related expenses for personnel in the Company’s administrative, finance, legal, information technology, business development, communications, and human resources functions. Other costs include the legal costs incurred in connection with filing and prosecuting patent and trademark applications, general and administrative related facility costs, insurance costs and professional fees for accounting, tax, consulting, legal and other services.

 

F-14


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Stock-Based Compensation Expense

The Company accounts for all stock-based payment awards granted to employees and non-employees as stock-based compensation expense at grant date fair value. The Company’s stock-based payments include stock options and grants of common stock, including common stock subject to vesting. The measurement date for employee and non-employee awards is the date of grant, and stock-based compensation costs are recognized as expense over the recipient’s requisite service period, which is the vesting period, on a straight-line basis. The Company has also issued common stock options with milestone or performance-based vesting conditions and recorded the expense for these awards if or when it was deemed probable that the milestone or performance condition would be achieved. Stock-based compensation is classified in the accompanying statements of operations based on the function to which the related services are provided. The Company recognizes stock-based compensation expense for the portion of awards that have vested. Forfeitures are accounted for as they occur.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company has historically been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The Company uses the simplified method as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term for options granted to employees and non-employees, whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its lack of sufficient historical data. The expected term of stock options granted to non-employees is determined in the same manner as stock options granted to employees. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common stock and does not expect to pay any cash dividends in the foreseeable future.

Income Taxes

The Company is primarily subject to U.S. federal, Massachusetts, North Carolina and New York state income taxes. The Company accounts for income taxes using the asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities represent future tax consequences of temporary differences between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities and for loss carryforwards using enacted tax rates expected to be in effect in the years in which the differences reverse. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense.

Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. We evaluate uncertain tax positions on a regular basis. The evaluations are based on several factors, including changes in facts and circumstances, and changes in tax law. Interest and penalties related to unrecognized tax benefits are included within the provision for income tax. To date, we have not been subject to any interest or penalties.

 

F-15


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of common shares outstanding during the period and, if dilutive, the weighted-average number of potential shares of common stock. Net loss per share attributable to common stockholders is calculated using the two-class method, which is an earnings allocation formula that determines net loss per share for the holders of the Company’s common shares and participating securities. The Company’s Preferred Stock contains participation rights in any dividend paid by the Company and is deemed to be a participating security. Net loss attributable to common stockholders and participating preferred shares are allocated to each share on an as-converted basis as if all of the earnings for the period had been distributed. The participating securities do not include a contractual obligation to share in losses of the Company and are not included in the calculation of net loss per share in the periods in which a net loss is recorded.

Diluted net loss per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method. The Company allocates earnings first to preferred stockholders based on dividend rights and then to common and preferred stockholders based on ownership interests. The weighted-average number of common shares included in the computation of diluted net loss gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, warrants and Preferred Stock.

Common stock equivalent shares are excluded from the computation of diluted net loss per share if their effect is antidilutive. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is generally the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for the years ended December 31, 2020 and 2021.

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. As of December 31, 2020 and 2021, the Company had no items qualifying as other comprehensive loss; accordingly, comprehensive loss equaled net loss.

Deferred Offering Costs

As of December 31, 2021, the Company capitalized deferred offering costs of approximately $4.1 million. Deferred offering costs include certain legal, accounting, consulting and other third-party fees incurred directly related to the anticipated business combination. At the closing of the business combination, these costs will be recorded in stockholders’ deficit as a reduction of additional paid-in capital.

Subsequent Events

The Company considers events or transactions that have occurred after the balance sheet date of December 31, 2021, but prior to the filing of the financial statements with the Securities and Exchange Commission (“SEC”), to provide additional evidence relative to certain estimates or to identify matters that require additional recognition or disclosure. Subsequent events have been evaluated through the date these financial statements were issued.

 

F-16


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), as subsequently amended (“Topic 842”), to improve financial reporting and disclosures about leasing transactions. This ASU requires companies that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases, where the lease terms exceed 12 months. The recognition, measurement and presentation of expense and cash flows arising from a lease by a lessee will depend primarily on its classification as a finance or operating lease; both types of leases will be recognized on the balance sheet. This ASU also requires disclosures to help financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. On June 3, 2020, the FASB issued ASU 2020-05, which amended the effective dates of Topic 842 to give immediate relief from business disruptions caused by the COVID-19 pandemic and provides a one-year deferral of the effective date for nonpublic companies. Therefore, for public companies, the effective date is still December 15, 2018, while the effective date for private companies will now be fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. As the Company qualifies as an emerging growth company, the Company will follow the annual reporting guidance as of January 1, 2022 in connection with the issuance of its annual financial statements for the year ended December 31, 2022, and apply the provisions of ASC 842 in interim periods commencing after December 15, 2022. The Company will use the optional transition method to the modified retrospective approach in which Topic 842 will not be applied to comparative periods presented and incremental disclosures are not required for periods before the Company’s adoption of Topic 842. The Company has elected this transition approach as well as the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward the historical lease classification of contracts entered into prior to January 1, 2022. As a result of electing the package of practical expedients described above, existing leases and related initial direct costs have not been reassessed prior to the effective date, and therefore, adoption of the lease standard did not have an impact on the Company’s previously reported consolidated financial statements. The Company also elected the following practical expedients: (i) combining lease and non-lease components for all asset classes and (ii) leases with an initial term of 12 months or less are not recorded in the consolidated balance sheets, and the associated lease payments are recognized in the consolidated statements of operations on a straight-line basis over the lease term.

The Company expects the adoption of Topic 842 will result in the recognition of right-of-use assets and lease liabilities. These amounts are still being determined through the development of an incremental borrowing rate. The Company does not expect the adoption of Topic 842 to have a material impact to the consolidated statements of operations and comprehensive income, redeemable convertible preferred stock and stockholders’ equity (deficit), or cash flows.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments in ASU 2020-06 simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Under ASU 2020-06, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. These changes will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that was bifurcated under previously existing guidance. The new guidance also requires the if-converted method to be applied for all convertible instruments. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted. Upon adoption, entities may apply the new standard on a modified retrospective or full retrospective basis. The Company is currently evaluating the impact that the adoption of ASU 2020-06 may have on its financial position and results of operations. The Company’s analysis includes, but is not limited to, reviewing existing convertible debt agreements, assessing potential disclosures, and evaluating the impact of adoption on the Company’s

 

F-17


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

consolidated financial statements. The Company is in the process of determining the impact the ASU 2020-06 will have on the financial statements, as well as its plan for implementation.

 

3.

BAYER ASSET ACQUISITION

On December 10, 2020, the Company entered into an Assignment and License Agreement (“ALA”) with Bayer CropScience LLP (“Bayer”) to acquire certain assets related to Bayer’s Bee Health, Insect Control, and Deliver intellectual property (the “Bayer Assets” or the “acquired IPR&D”).

The Company acquired the Bayer Assets for cash consideration of $2.0 million. As of the acquisition date, the acquired set of assets does not meet the definition of a business and thus the IPR&D acquired was accounted for as an asset acquisition. As of the acquisition date, the assets acquired had no alternative future use and had not reached a stage of technological feasibility. As a result, the amounts were recorded as research and development expense in the accompanying consolidated statements of operations. Additionally, the Company has also agreed to make additional contingent cash payments up to an aggregate of $2.0 million based on the achievement of certain development, regulatory and commercialization events as set forth in the ALA. The ALA includes potential milestone payments that are dependent upon the development of products using the intellectual property licensed under the ALA and contingent upon the achievement of certain development or regulatory approval milestones, as well as commercial milestones. As of December 31, 2020 and 2021, no milestones have been achieved and it is not probable that the Company will reach any milestones and hence did not recognize these potential obligations in the consolidated financial statements.

As the acquired IPR&D was determined to have no alternative future use and the contingent payments were not determined to be a derivative, these payments will be recorded when the contingency is resolved, and the related consideration is issued or becomes issuable. As of December 31, 2020 and 2021, no contingent payments have been accrued or paid.

 

4.

LICENSE AGREEMENT

In August 2020, the Company entered into a Development and Option Agreement (the “Development and Option Agreement”) with Acuitas Therapeutics, Inc. (“Acuitas”). Under the terms of the Development and Option Agreement, the parties agreed to a program for the joint development of certain products combining the Company’s mRNA constructs with Acuitas’s liquid nanoparticle technology (“Acuitas LNP Technology”). Upon entering the Development and Option Agreement, the Company incurred a $0.8 million technology access fee. Under the Development and Option Agreement, the Company may reserve up to three specified targets (“Reserved Targets”) for development of therapeutic products related to such targets, using the Acuitas LNP Technology. In order to reserve a Reserved Target, the Company must provide a target reservation notice to Acuitas and must pay a target reservation and maintenance fee of $0.1 million per target per contract year. For each Reserved Target, the Company may also reserve up to three additional vaccine or antibody targets meant to be included within the same product as the Reserved Target (“Additional Targets”), which incur additional target reservation fees per contract year. Under the Development and Option Agreement, the Company is required to maintain at least one Reserved Target.

Under the Development and Option Agreement, the Company has the right to exercise a license option to develop and commercialize one or more therapeutic products relating to each Reserved Target. In the event that the Company exercises the options, the Company will pay $1.5 million for the first non-exclusive license, approximately $1.8 million for the second non-exclusive license and approximately $2.8 million for the third non-exclusive license. Under the terms of the Development and Option Agreement, the Company is also responsible for the full-time employee funding obligations and reimbursements to Acuitas for certain development and material costs incurred by them, which totaled approximately $0.5 million in 2021.

 

F-18


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

In January 2021, the Company exercised the first option under the Development and Option Agreement and entered into a non-exclusive license agreement with Acuitas (the “Acuitas License Agreement”), under which the Company was granted a non-exclusive, worldwide, sublicensable license under the Acuitas LNP Technology to research, develop, manufacture, and commercially exploit vaccine products consisting of certain of the Company’s mRNA constructs and Acuitas’s LNP technology. In connection with the option exercise, the Company paid Acuitas an option exercise fee of $1.5 million. Under the Acuitas License Agreement, the Company is required to pay Acuitas an annual license maintenance fee of $1.0 million for the first and second targets and $0.8 million for the third target until the Company achieves a particular development milestone. Acuitas is entitled to receive potential clinical and regulatory milestone payments in in the low double-digit millions for this exercised option. With respect to the sale of each licensed product, the Company is also obligated to pay Acuitas percentage royalties in the low single digits on net sales of the licensed products by the Company and its affiliates and sublicensees in a given country until the last to occur, in such country, of (i) the expiration or abandonment of all licensed patent rights covering the licensed product, (ii) expiration of any regulatory exclusivity for the licensed product, or (iii) ten years from the first commercial sale of the licensed product.

The option exercise fee under the Development and Option Agreement was recorded as research and development expense upon the Company’s exercise of the first option. Additionally, the technology access fees, target reservation and maintenance fees, expenses associated with the full-time employee funding obligations and reimbursements for development and material costs incurred by Acuitas are recorded as research and development expense when incurred. The annual maintenance fee will be recorded as an expense on an annual basis based on the stated amount for the applicable year. Upon determination that a milestone payment is probable to occur, the amount of the milestone payment will be recorded as research and development expense. As the triggering of these milestone payments was not considered probable as of December 31, 2020 and 2021, no expense has been recorded during these periods. The royalty payment is contingent upon sales of licensed products under the Acuitas License Agreement. As such, when such expenses are considered probable and estimable at the commencement of sales, the Company will accrue royalty expense for the amount the Company is obligated to pay.

The Company recorded an aggregate of $0.8 million and $2.0 million of research and development expenses, consisting of the technology access fees, option exercise fee and technology maintenance fees, for the years ended December 31, 2020 and 2021, respectively.

 

F-19


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

5.

FAIR VALUE MEASUREMENTS

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values:

 

DESCRIPTION

  DECEMBER 31,
2020
   QUOTED PRICES
IN ACTIVE
MARKETS FOR
IDENTICAL
ASSETS
(LEVEL 1)
   SIGNIFICANT
OBSERVABLE
INPUTS
(LEVEL 2)
   SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3)
 

Asset

        

Money market funds

  $55,747   $55,747   $—     $—   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets measured at fair value

  $55,747   $55,747   $—     $—   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilitiy

        

Warrant liability

  $125   $—     $—     $125 

Convertible debt

  $17,273   $—     $—     $17,273 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities measured at fair value

  $17,398   $—     $—     $17,398 
  

 

 

   

 

 

   

 

 

   

 

 

 

 

DESCRIPTION

  DECEMBER 31,
2021
   QUOTED PRICES
IN ACTIVE
MARKETS FOR
IDENTICAL
ASSETS

(LEVEL 1)
   SIGNIFICANT
OBSERVABLE
INPUTS
(LEVEL 2)
   SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3)
 

Asset

        

Money market funds

  $31,446   $31,446   $—     $—   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets measured at fair value

  $31,446   $31,446   $—     $—   
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilitiy

        

Warrant liabilities

  $2,105   $—     $—     $2,105 

Convertible debt

  $31,691   $—     $—     $31,691 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities measured at fair value

  $33,796   $—     $—     $33,796 
  

 

 

   

 

 

   

 

 

   

 

 

 

Money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy.

There have been no transfers between fair value levels during the years ended December 31, 2020 and 2021. The carrying values of other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

The fair value of the common and Preferred Stock warrant liabilities was determined using the Black-Scholes option-pricing model with the assumptions as disclosed in Note 11. These assumptions include significant judgments including the fair value of the underlying common and Preferred Stock. An increase or decrease in the estimated fair value will result in increases or decreases in the fair value of the warrant liabilities

 

F-20


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

and such changes could be material.

The carrying value of each of the Horizon term loan, the SVB term loan, and the equipment financing as of December 31, 2021 approximates their fair value as the interest rate approximates the market rate for loans with similar terms and risk characteristics. The Company estimated the fair value of the convertible debt using a discounted cash flow analysis and currently prevailing market terms as of December 31, 2021. The carrying value and fair value of the convertible debt was $30.2 million and $28.9 million, respectively, as of December 31, 2021. The fair value of the convertible debt was determined using Level 3 inputs. See Note 10 for further detail of all outstanding debt as of December 31, 2021.

The following table presents a roll-forward of the aggregate fair values of the Company’s liabilities for which fair value is determined by Level 3 inputs:

 

   WARRANT 
   LIABILITY 

Balance—January 1, 2020

  $103 

Change in fair value

   22 
  

 

 

 

Balance—December 31, 2020

   125 

Issuance of common stock warrant

   610 

Change in fair value

   1,370 
  

 

 

 

Balance—December 31, 2021

  $2,105 
  

 

 

 

 

6.

COLLABORATION ARRANGEMENT

The Company’s collaboration revenue is generated through collaboration arrangements with Ingredion. Starting in December 2015, the Company entered into a Master Collaboration and Exclusive License Agreement and related amendments (collectively, the “Ingredion Agreements”) with Ingredion to develop a semicontinuous cell-free production process for the commercial production of certain molecules using biological synthesis tools and proprietary technology developed by the Company. The parties have mutually agreed to end the collaboration and an official termination notice was received on September 30, 2021.

As per the Ingredion Agreements, (a) the Company and Ingredion were to agree to specific collaboration projects from time to time and the Company was to be compensated by Ingredion for each project according to an agreed-upon billing schedule, (b) Ingredion was to make payments to the Company upon achievement of specific technical milestones, and (c) Ingredion was also to make royalty payments, including annual minimum royalty payments, to the Company if and when certain commercial and regulatory milestones are met.

 

F-21


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

The Company recognized funded research and collaboration revenue of approximately $1.0 million and $0 in the consolidated statements of operations during the years ended December 31, 2020 and 2021, respectively, related to specific collaboration projects associated with the Ingredion Agreements. Costs associated with the Ingredion Agreements were recorded as research and development expenses.

Under the Ingredion Agreements, the Company was entitled to receive up to $12,000 in milestone payments upon the achievement of six separate milestones, including demonstration of feasibility, achievement of pilot scale production that satisfies specified volume, yield, and cost targets (“Milestone 2”), and achievement of commercial scale production that satisfies specified volume, yield, and cost targets, as well as achievement of three separate targets for net sales by Ingredion of products based on the licensed technology. At the end of each reporting period, the Company re-evaluated the probability of achievement of Milestone 2 and any related constraint, and if necessary, adjusted its estimate of the overall transaction price. Any such adjustments were added to the transaction price with a corresponding adjustment being made to the measure of progress, and, as necessary, recorded on a cumulative catch-up basis, which would have affected collaboration revenue in the period of adjustment. As of December 31, 2020 and 2021, no milestones had been achieved, and during the year ended December 31, 2021, the Ingredion Agreements were terminated. As such, no milestone payments have been included in the transaction price.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). The Company was entitled to receive royalties on net sales by Ingredion of products based on the licensed technology. The royalty rate was in the mid-single digits and was subject to an annual minimum royalty in the amounts of $0.1 million starting 30 months after achievement of Milestone 2, $0.5 million per year after the fifth anniversary of achievement of Milestone 2, and $1.0 million annually after the eighth anniversary of achievement of Milestone 2. As of December 31, 2020 and 2021, no milestones had been achieved, and during the year ended December 31, 2021, the Ingredion Agreements were terminated. As such, no royalty revenue has been recognized.

 

7.

GRANT REVENUE

In July 2020, the Company was approved to receive a grant from the Bill & Melinda Gates Foundation in the amount of approximately $3.3 million. As of December 31, 2021, the Company had received the entire grant award, of which approximately $2.4 million was received during the year ended December 31, 2020, and the remaining approximately $0.9 million was received during the year ended December 31, 2021. The grant funds are to be used for the sole purpose of research for in vivo gene therapy for sickle cell disease and to explore new, low-cost capabilities for the in vivo functional cure of sickle cell and or durable suppression of HIV in developing countries. The Company incurred research and development costs of approximately $0.7 million and $1.4 million associated with this grant as of December 31, 2020 and 2021, respectively. The Company has recognized revenue of approximately $0.8 million and $1.6 million in the consolidated statements of operations for the years ended December 31, 2020 and 2021, respectively, and recorded the balance of approximately $1.7 million and $1.0 million as deferred revenue in the consolidated balance sheets as of December 31, 2020 and 2021, respectively. The research supported by this grant is expected to be completed by May 31, 2022.

 

F-22


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

8.

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following as of December 31, 2020 and 2021:

 

   DECEMBER 31, 
   2020   2021 

Computer hardware and software

  $533   $732 

Laboratory equipment

   8,040    19,590 

Leasehold improvements

   4,545    10,442 

Construction in progress

   6,847    1,894 
  

 

 

   

 

 

 

Total

   19,965    32,658 

Less: Accumulated depreciation and amortization

   (3,686   (9,259
  

 

 

   

 

 

 

Property and equipment, net

  $16,279   $23,399 
  

 

 

   

 

 

 

As of December 31, 2020 and 2021, property and equipment, net included capital lease assets of approximately $2.5 million, with accumulated amortization of approximately $0.9 million and $1.5 million, respectively, within the consolidated balance sheets. Depreciation and amortization expense for the years ended December 31, 2020 and 2021, was approximately $1.7 million and $5.7 million respectively, within the consolidated statements of operations.

 

9.

ACCRUED EXPENSES

Accrued expenses as of December 31, 2020 and 2021 consisted of the following:

 

   December 31, 
   2020   2021 

Accrued employee compensation and benefits

  $4,024   $8,492 

Accrued research and development

   612    4,059 

Accrued professional fees

   568    1,888 

Accrued other

   1,622    185 
  

 

 

   

 

 

 

Total accrued expenses

  $6,826   $14,624 
  

 

 

   

 

 

 

 

10.

DEBT

A summary of the outstanding debt as of December 31, 2021 is as follows:

 

As of December 31, 2021

 

Description

 Issuance Date(s) Maturity Date(s) Stated Interest
Rate
  Principal
Balance
Outstanding
  Unamortized
Debt
Discount
  Debt
Balance
 

Trinity Equipment Financing

 March 2021 - August 2021 March 2024 - August 2024  9.48% - 9.73%   9,454   (252  9,202 

Term Loan - Silicon Valley Bank

 September 2021 September 2024  3.50%   10,000   (225  9,775 

Term Loan - Horizon

 December 2021 May 2025  9.00%   15,000   (582  14,418 

Capital Lease

     992   —     992 
    

 

 

  

 

 

  

 

 

 

Total Debt

     35,446   (1,060  34,386 

Less: current portion, net of current portion of debt discount

       (7,234
      

 

 

 

Total long-term

       27,152 

Convertible Note - PIPE Investors

 December 2021 December 2022  0.33%   13,500   0   13,500 

Convertible Notes

 April & May 2020 April & May 2022  5.00%   18,213   (22  18,191 
    

 

 

  

 

 

  

 

 

 
     31,713   (22  31,691 
    

 

 

  

 

 

  

 

 

 
     67,159   (1,082  66,077 

 

(a)

As of December 31, 2020 and 2021, the Company’s debt liability included $16.8 million of convertible notes issued by GLPRI in 2020, as well as the associated accrued interest liability of $0.6 million and $1.4 million, respectively.

 

F-23


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Convertible Instruments - PIPE Investors

In December 2021, certain new and existing investors in GreenLight (the “Prepaying PIPE Investors”) agreed to purchase from GreenLight convertible instruments with an aggregate principal amount of approximately $35.3 million (the “PIPE Instruments”), $13.5 million of which was received on or before December 31, 2021. The remainder of the PIPE Instruments were issued in January 2022 in exchange for cash totaling approximately $21.8 million. As such, the Company recorded $13.5 million of the debt liability as of December 31, 2021. The PIPE Instruments bear interest at the minimum applicable federal rate per annum payable at maturity. The PIPE Instruments have a maturity date on the earlier of twelve months after their issuance dates or an event of default. The PIPE Instruments are pre-payable in whole or in part at any time. The terms of the PIPE Instruments require GreenLight to settle the total outstanding principal together with any accrued but unpaid interest on the maturity date. See Note 18 for further discussion of the PIPE transaction.

The PIPE Instruments provided for the automatic conversion of the outstanding principal into shares of the class of capital stock issued in a Qualified Financing (as defined below). Upon the closing of certain change of control transactions or an initial public offering (“IPO”), GreenLight was obligated to repay the Prepaying PIPE Investors an amount equal to the outstanding principal balance and interest accrued on the PIPE Instruments in preference to any payments made to the holders of GreenLight’s common stock.

In conjunction with entering into the PIPE Instruments, each PIPE Investor entered into a side letter agreement (the “Side Letter”) with GreenLight, which required the PIPE Investor to tender its PIPE Instrument as a corresponding payment for all or a portion of such PIPE Investor’s purchase of shares upon the closing of a business combination with ENVI.

The PIPE Instruments included the following conversion and redemption features:

 

 a)

Upon an equity financing involving the sale of capital stock of the Company primarily for capital-raising purposes on terms no less favorable to the purchasers than the terms of GreenLight’s Series D Preferred Stock financing (a “Qualified Financing”), all then outstanding principal on each PIPE Instrument would automatically convert into that number of shares of capital stock issued in such Qualified Financing equal to the quotient obtained by dividing (i) the outstanding principal amount of the PIPE Instrument by (ii) the lower of the Conversion Discount Price or the Capped Price (each as defined for purposes of the PIPE Instrument).

 

 b)

Upon a change of control or an IPO, the holders of the PIPE Instruments would be entitled to receive an amount equal to the outstanding principal and interest on the holders’ PIPE Instruments in preference to the holders of GreenLight’s common stock.

 

 c)

Upon the occurrence of an event of default, the PIPE Instruments would automatically become due and payable. Upon such acceleration, all outstanding principal (with no penalty) and unpaid accrued interest would become payable.

The Company assessed the embedded features within the PIPE Instruments and did not identify any material embedded derivative in connection with the automatic conversion upon a Qualified Financing. The other embedded features did not meet the definition of a derivative or were clearly and closely related to the host contract, and thus did not require separate accounting.

In February of 2022, in accordance with the Side Letter, the PIPE Instruments were surrendered and cancelled upon the occurrence of a business combination with Environmental Impact Acquisition Corp. See Note 18 for further discussion of the business combination.

Term Loan – Horizon

In December 2021, the Company entered into a loan and security agreement with Horizon Technology Finance Corporation and Powerscourt Investments XXV, LP (together “Horizon”), which provided for a term loan facility in an aggregate principal amount of up to $25.0 million, $15.0 million of which was borrowed at the closing and the remainder of which may be borrowed following the achievement of certain milestones, but not after June 30, 2022.

Accrued interest is payable monthly. The principal of each term loan must be repaid in equal monthly installments beginning February 1, 2023 (or August 1, 2023 if any of the remaining $10.0 million is borrowed), with a scheduled final maturity date of July 1, 2025. The Company may prepay the term loans in full, but not in part, without premium or penalty, other than a premium equal to (i) 3% of the principal amount of any prepayment made within 12 months after the applicable funding date, (ii) 2% of the principal amount of any

 

F-24


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

prepayment made between 12 and 24 months after the applicable funding date and (iii) 1% of the principal amount of any prepayment made more than 24 months after the applicable funding date. On the earlier of the scheduled final maturity date and the prepayment in full of the term loans, the Company must pay a final payment fee equal to 3.0% of the original principal amount of the funded term loans.

The debt was recorded based on proceeds received net of related debt issuance costs of approximately $0.6 million. The debt issuance costs include the fair value of approximately $0.4 million for the warrants the Company is committed to issue in conjunction with this financing. The Company is obligated to issue 80% of the warrant obligation during the three months ending March 31, 2022, and such warrant obligation is calculated at 3% of the loan commitment. The number of warrants to be issued and strike price will be set at the lower of $5.26 and 90% of the public trading value of shares of ENVI if issued after the close of the Business Combination. Since the Company is committed to issue these warrants, the Company has recorded the estimated fair value of these warrants as of the date of the loan and security agreement of $0.5 million, of which $0.4 million is recorded as debt issuance cost and $0.1 million is recorded in other assets for the portion of the principal amount not yet borrowed by the Company as of December 31, 2021. Total debt issuance costs of approximately $0.6 million is being amortized over the term of the financing agreement.

Term Loan – Silicon Valley Bank

In September 2021, the Company entered into a loan and security agreement with Silicon Valley Bank (“SVB”), which provided for a term loan facility in an aggregate principal amount of up to $15.0 million, $10.0 million of which was borrowed at the closing and the remainder of which may be borrowed following the achievement of certain milestones, but not after March 31, 2022.

Accrued interest is payable monthly. The principal of each term loan must be repaid in equal monthly installments beginning April 1, 2022 (or October 1, 2022, if GreenLight borrows any of the remaining $5.0 million), with a scheduled final maturity date of September 1, 2024. On the earlier of the scheduled final maturity date and the prepayment in full of the term loans, the Company must pay a final payment fee equal to 4.0% of the original principal amount of the term loans. GreenLight may prepay the term loans in increments of $5.0 million and without premium or penalty, other than a premium equal to (i) with respect to any prepayment made on or before September 22, 2022, 3% of the principal so prepaid, (ii) with respect to any prepayment made after September 22, 2022 and on or before September 22, 2023, 2% of the principal so prepaid and (iii) with respect to any prepayment made after September 22, 2023 and on or before September 1, 2024, 1% of the principal so prepaid. GreenLight granted a first-priority, perfected security interest in substantially all of its present and future personal property and assets, excluding intellectual property, to secure its obligations to SVB.

The debt was recorded based on proceeds received net of related debt issuance costs of approximately $0.3 million. The debt issuance costs include the fair value of approximately $0.2 million for the 51,724 shares of common warrants the Company previously issued in conjunction with this financing. No additional common warrants were issued in conjunction with this financing. Total debt issuance costs of approximately $0.4 million is being amortized over the term of the financing agreement.

 

F-25


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Equipment Financing

On March 29, 2021, the Company entered into a master equipment financing agreement with Trinity Capital (Trinity) authorizing equipment financing in the aggregate of approximately $11.3 million with advances to be made as follows: (1) up to $5.0 million at execution of the agreement and (2) the remaining balance to be drawn at Company’s option but no later than September 1, 2021. The monthly payment factors are determined by Trinity based on the Prime Rate reported in The Wall Street Journal on the first day of the month in which a financing schedule is executed, which as of the effective date of the equipment financing agreement was 3.25%. The effective interest rate on the advances ranged from 13.2% to 16.3% as of December 31, 2021. As of December 31, 2021, the Company has drawn the entire $11.3 million on multiple advances, which is repayable over a 36-month period that commenced on the advance date. The carrying value of the assets subject to a lien under this financing arrangement is approximately $13.3 million.

The debt was recorded based on proceeds received net of related debt issuance costs of approximately $0.4 million, which are being amortized over the term of the financing agreement. The debt issuance costs include the fair value of approximately $0.1 million for the 219,839 common stock warrants the Company issued in conjunction with this financing.

Convertible Notes

In April and May 2020, GLPRI issued a series of convertible notes payable in exchange for cash totaling approximately $16.8 million (the “2020 Notes”). The Company guaranteed payment and performance of the 2020 Notes. The 2020 Notes bear interest at 5% per annum that is accrued each period and is payable at maturity. The effective interest rate was 5.4% as of December 31, 2021. The total amount of accrued interest on the notes is approximately $0.6 million and $1.4 million as of December 31, 2020 and 2021, respectively. The 2020 Notes mature two years after their respective issuance dates. The 2020 Notes are only pre-payable with the consent of the holders. GLPRI is required to settle the total outstanding principal together with any accrued but unpaid interest on the maturity date.

The 2020 Notes provide the option to convert the outstanding principal, plus accrued and unpaid interest, into shares of the Company’s Series D Preferred Stock (on or after the date of the Series D Preferred Stock financing) or the right to receive royalties on future sales of certain of GLPRI’s products.

In conjunction with entering into the 2020 Note agreements, each holder entered into a side letter agreement (the “Side Letter”) with GreenLight and GLPRI, which gives the holder the right to convert the 2020 Notes into shares of Series D Preferred Stock at a discounted conversion price (85% of the price per share of the Series D Preferred Stock) in the event that the Series D financing is deemed an inside round. This discount did not apply as the Series D financing was determined not to be an inside round. At issuance, the Company concluded that the fair value of the discount feature was de minimis.

The 2020 Notes include the following conversion and redemption features:

 

  

From the date of the initial closing of the then-next equity financing of the Company (the “Series D Financing”) until maturity, conversion at the option of the holder into Series D Preferred Stock (based upon the original issue price of the Series D Preferred Stock) or the right to receive certain royalty payments over a 15-year period, commencing on the conversion date (such royalty payment being equal to the net sales of specified GLPRI products multiplied by the adjusted royalty rate, such royalty payment not to exceed the net profit in any quarter).

 

  

Upon the occurrence of certain contingent events after the Company’s Series D Financing and before maturity, automatic conversion into Series D Preferred Stock (based upon the original issue price of the Series D Preferred Stock).

 

F-26


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

  

Automatic redemption upon an event of default, as defined in the 2020 Notes. Upon the occurrence of an event of default, the 2020 Notes will either automatically become due and payable or can become due and payable at the holder’s option (based on the nature of the event of default). Upon such acceleration, all outstanding principal (with no penalty) and unpaid accrued interest will become payable.

The Company assessed the embedded features within the 2020 Notes and determined that the features do not meet the definition of a derivative or were clearly and closely related to the host contract, and thus did not require separate accounting. In addition, the optional redemption feature to receive royalty payments is subject to a scope exception from derivative accounting.

The 2020 Notes were recorded based on proceeds received and were recorded net of related debt issuance costs of approximately $0.1 million, which are being amortized to interest expense using the effective interest rate method over the term of the notes.

In August 2021, the 2020 Notes were amended and restated to make the Company the sole obligor under the 2020 Notes and to remove the right to receive royalties on future sales of certain products.

Loan Interest Expense and Amortization

The Company’s total interest expense was approximately $1.0 million and $2.4 million for the year ended December 31, 2020 and 2021, respectively. The following summarizes the components of total interest expense:

 

   December 31, 
   2020   2021 

Interest paid or accrued

  $440   $2,253 

Noncash amortization of debt discount and deferred financing cost

   588    166 
  

 

 

   

 

 

 

Total

  $1,028   $2,419 
  

 

 

   

 

 

 

 

F-27


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Scheduled future principal payments on total outstanding debt, as of December 31, 2021, are as follows:

 

   December 31, 

2022

  $37,176 

2023

   13,916 

2024

   11,972 

2025 and thereafter

   2,657 
  

 

 

 

Total

  $65,721 
  

 

 

 

 

F-28


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

11.

WARRANTS

Preferred Stock Warrants Classified as Liabilities

The Company has outstanding warrants to purchase shares of Series A-1, A-2, and A-3 Preferred Stock. These warrants are recognized as liabilities on the consolidated balance sheets and were measured at their inception date fair value and subsequently remeasured at each reporting period with changes recorded as a component of other income in the Company’s consolidated statement of operations. Preferred stock warrants classified as liabilities consisted of the following as of December 31, 2020, and 2021:

 

  AS OF DECEMBER 31, 2020

Warrant Class

 Shares  Fair Value  

Issuance Date

 Exercise Price  

Expiration Date

Series A-1

  58,127  $75  December 31, 2011 $0.15  The earlier of January 17, 2022 or a deemed liquidation or IPO

Series A-2

  24,510   21  August 26, 2014 $1.53  The earlier of August 25, 2024 or the date of a qualifying acquisition

Series A-3

  18,174   29  December 18, 2015 $0.23  The earlier of December 18, 2025 or a deemed liquidation or IPO
 

 

 

  

 

 

    

Total

  100,811  $125    
 

 

 

  

 

 

    

 

  AS OF DECEMBER 31, 2021

Warrant Class

 Shares  Fair Value  

Issuance Date

 Exercise Price  

Expiration Date

Series A-1

  37,820  $228  December 31, 2011 $0.15  The earlier of January 17, 2022 or a deemed liquidation or IPO

Series A-2

  24,510   138  August 26, 2014 $1.53  The earlier of August 25, 2024 or the date of a qualifying acquisition

Series A-3

  18,174   110  December 18, 2015 $0.23  The earlier of December 18, 2025 or a deemed liquidation or IPO
 

 

 

  

 

 

    

Total

  80,504  $476    
 

 

 

  

 

 

    

 

F-29


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

The Company estimated the fair value of the warrants as of December 31, 2020, and 2021 using the Black-Scholes option-pricing model with the following assumptions:

 

   As of December 31, 2020 

Valuation Assumptions

  Series A-1  Series A-2  Series A-3 

Fair value of underlying series of preferred stock

  $1.45  $1.54  $1.76 

Risk free interest rate

   0.10  0.27  0.36

Expected volatility

   88.4  78.5  82.4

Estimated time (in years)

   1.05   3.65   4.97 

 

   As of December 31, 2021 

Valuation Assumptions

  Series A-1  Series A-2  Series A-3 

Fair value of underlying series of preferred stock

  $6.12  $6.13  $6.16 

Risk free interest rate

   0.06  0.97  1.12

Expected volatility

   87.6  85.5  84.9

Estimated time (in years)

   0.05   2.65   3.97 

Preferred Stock Warrant Classified as Equity

In connection with the July 2020 issuance of Series D convertible Preferred Stock, a warrant to purchase shares of Series D Preferred Stock was issued. The holder of the warrant is entitled to purchase 874,130 shares of the Company’s Series D Preferred Stock at an exercise price of $1.8118 per share.

The warrant was determined to represent compensation for services provided by the holder and was accounted for under ASC 718. The warrants were issued to the holder in relation to its role in assisting the Company with identifying the lead investor for the financing round. The warrant meets the requirements for equity classification under ASC 718 and should be measured at cost, which was determined to be equal to its grant date fair value of approximately $0.4 million. As the services related to its issuance were completed during 2020, the Company recognized the cost of the warrant during the year ended December 31, 2020. As the warrant was determined to be a direct and incremental cost of the Series D financing, the cost of the warrant was recorded as a stock issuance cost.

 

  Preferred Stock Warrant classified as Equity   

Warrant Class

 Shares  Issuance Date  Exercise Price per Share  Expiration Date

Series D preferred stock

  874,130   July 24, 2020  $1.8118  The earlier of July 24,
2025 or the date of a
qualifying acquisition or
IPO

Common Stock Warrant classified as Liability

In connection with the equipment financing in March 2021, the Company issued a warrant to purchase 219,839 shares of the Company’s common stock at an exercise price of $0.82 per share.

The warrant was determined to represent additional consideration provided to the lender at the closing of the financing agreement and thus considered a component of the financing transaction, and therefore was accounted for under ASC 480. The warrant meets the requirements for liability classification under ASC 480 and should be

 

F-30


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

measured at cost at its inception date fair value and subsequently remeasured at the end of each reporting period, with changes recorded as a component of other income in the Company’s consolidated statement of operations.

 

Warrant Class

 Shares  Fair Value  

Issuance Date

 

Exercise Price

 

Expiration Date

Common stock

  219,839  $1,188  March 29, 2021 $0.82 

The earlier of March 29,

2031 or the date of a

qualifying acquisition

The warrant’s fair value upon issuance and as of December 31 2021 was estimated to be approximately $0.1 million and $1.2 million, respectively, and was measured using a Black-Scholes option-pricing model with the following assumptions:

 

Valuation Assumptions

  At Issuance (as of
March 29, 2021)
  As of
December 31, 2021
 

Fair value of common stock

  $0.82  $5.89 

Risk free interest rate

   1.73  1.52

Expected volatility

   72.10  63.30

Expected term (in years)

   10.00   9.25 

In connection with Loan Agreement the Company entered into with Horizon Technology Finance Corporation and Powerscourt Investments XXV, LP in December 2021, the Company committed to issue the lender a warrant to purchase shares of the Company’s common stock which was issued subsequent to year-end. The Company valued the commitment to issue warrants using the Black-Scholes option pricing model adjusted based on probability of issuance as of year-end and determined the fair value to be $0.5 million as of December 31, 2021. The significant inputs used to determine fair value are 1.5% risk free interest rate, 59.6% annualized volatility, 10 year term and $5.26 strike price.

Common Stock Warrant classified as Equity

In connection with the Loan Agreement the Company entered into with Silicon Valley Bank in June 2016, the Company issued the bank a warrant to purchase 40,000 shares of the Company’s common stock at an exercise price per share of $0.22 (the “Common Warrant”). The Common Warrant will be exercisable for ten years from the date of issuance. The Common Warrant was determined to represent additional consideration for services provided by the lender, rather than a component of the financing transaction, and therefore was accounted for under ASC 718. The Common Warrant meets the requirements for equity classification under ASC 718 and is measured at cost, which was determined to be equal to its grant date fair value of approximately $5 thousand.

In connection with the term loan obtained in September 2021 from SVB, the Company authorized a warrant to SVB to purchase up to 51,724 shares of the Company’s common stock at an exercise price per share of $1.74 (the “2021 Common Warrant”). As of December 31, 2021, the warrant is exercisable for up to 34,483 shares of common stock. The 2021 Common Warrant is classified as a component of permanent equity because it is a freestanding financial instrument that is legally detachable and separately exercisable from the debt instrument with which it was issued, is immediately exercisable, does not embody an obligation for the Company to repurchase its shares, and permits the holder to receive a fixed number of shares of common stock upon exercise. The Company valued the 2021 Common Warrant at issuance using the Black-Scholes option pricing model and determined the fair value of the 2021 Common Warrant to be approximately $0.2 million.

 

F-31


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Common stock warrant classified as a component of permanent equity consisted of the following at December 31, 2021:

 

As of December 31, 2021

 

Warrant Class

 Shares  Issuance Date  Exercise Price per Share  Expiration Date 

Common stock warrant

  40,000   June 14, 2016  $0.22   

The earlier of June 13,

2026 or the date of a

qualifying acquisition

 

 

 

Common stock warrant

  51,724   September 22, 2021  $1.74   

The earlier of September

21, 2031 or the date of a

qualifying acquisition

 

 

 

 

 

 

    

Total

  91,724    
 

 

 

    

During the years ended December 31, 2020 and 2021 there were no exercises of existing common stock warrants.

 

12.

REDEEMABLE CONVERTIBLE PREFERRED STOCK

The Company has issued Series A-1 redeemable convertible Preferred Stock (the “Series A-1 Preferred Stock”), Series A-2 redeemable convertible Preferred Stock (the “Series A-2 Preferred Stock”), Series A-3 redeemable convertible Preferred Stock (the “Series A-3 Preferred Stock” and together with the Series A-1 Preferred Stock and the Series A-2 Preferred Stock, the “Series A Preferred Stock”), Series B redeemable convertible Preferred Stock (the “Series B Preferred Stock”), Series C redeemable convertible Preferred Stock (the “Series C Preferred Stock”) and Series D redeemable convertible Preferred Stock (the “Series D Preferred Stock”), all of which are collectively referred to as the “Preferred Stock.”

Series D Preferred Stock — In June 2020, the Company issued and sold 56,601,159 shares of Series D Preferred Stock at a price of $1.8118 per share. In July 2020, the Company issued and sold an additional 3,583,173 shares of Series D Preferred Stock at a price of $1.8118 per share, resulting in aggregate gross cash proceeds of approximately $109.0 million. Issuance costs associated with the Series D Preferred Stock closings were approximately $0.5 million, of which $0.4 million represents non-cash stock issuance costs associated with the Series D warrants discussed in Note 11.

 

F-32


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Authorized Shares

At December 31, 2020 and 2021, the Company was authorized to issue 145,948,944 shares of redeemable convertible preferred stock with a par value of $0.001 per share (“Preferred Stock”). The following table summarizes details of Preferred Stock authorized, issued and outstanding as of December 31, 2020 and 2021:

 

   Years Ended December 31, 

Redeemable Convertible Preferred Stock Classes

  2020   2021 

Series A-1 redeemable convertible preferred stock, $0.001 par value, 2,865,698 shares authorized, 2,807,571 shares issued and outstanding as of December 31, 2020 and 2,827,878 shares issued and outstanding as of December 31, 2021 Liquidation preference of $6,079 and $6,334 at December 31, 2020 and December 31, 2021, respectively

  $4,411   $4,414 

Series A-2 redeemable convertible preferred stock, $0.001 par value, 7,018,203 shares authorized, 6,993,693 shares issued and outstanding as of December 31, 2020 and December 31, 2021 Liquidation preference of $18,224 and $19,138 at December 31, 2020 and December 31, 2021, respectively

   11,438    11,438 

Series A-3 redeemable convertible preferred stock, $0.001 par value, 8,647,679 shares authorized 8,629,505 shares issued and outstanding as of December 31, 2020 and December 31, 2021 Liquidation preference of $28,952 and $30,544 at December 31, 2020 and December 31, 2021, respectively

   19,917    19,917 

Series B redeemable convertible preferred stock, $0.001 par value, 21,245,353 shares authorized, issued and outstanding as of December 31, 2020 and December 31, 2021 Liquidation preference of $22,567 and $24,017 at December 31, 2020 and December 31, 2021, respectively

   18,671    18,671 

Series C redeemable convertible preferred stock, $0.001 par value, 35,152,184 shares authorized, 35,092,183 shares issued and outstanding as of December 31, 2020 and December 31, 2021 Liquidation preference of $65,014 and $69,595 at December 31, 2020 and December 31, 2021, respectively

   55,851    55,851 

Series D redeemable convertible preferred stock, $0.001 par value, 71,019,827 shares authorized, 60,184,332 shares issued and outstanding and as of December 31, 2020 and December 31, 2021 Liquidation preference of $113,736 and $122,459 at December 31, 2020 and December 31, 2021, respectively

   108,499    108,499 
  

 

 

   

 

 

 

Total

  $218,787   $218,790 
  

 

 

   

 

 

 

 

F-33


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Voting Rights

The holders of each share of Preferred Stock (“Preferred Stockholders”) generally have the right to one vote for each share of common stock into which such Preferred Stock could then convert. On matters on which the holders of shares of a particular series of Preferred Stock have the right to vote separately as a single class, such holders have the right to one vote per share of Preferred Stock of that particular series.

Conversion

Each share of Preferred Stock is convertible into common stock at any time at the option of the holder. Each share will be converted into such number of shares of common stock as is determined by dividing the applicable original issuance price by the applicable conversion price in effect at the time of the conversion. The conversion price is subject to adjustment upon the happening of specified events, including the issuance or deemed issuance of certain additional shares of common stock, stock splits and combinations, dividends, distributions, mergers and reorganizations. The original issuances prices of the shares of Series A-1, Series A-2, Series A-3, Series B, Series C and Series D Preferred Stock are $1.5300, $1.645, $2.3185, $0.8565, $1.5946 and $1.8118 per share, respectively. As of December 31, 2020 and 2021, the Series A-1, Series A-2, Series A-3, Series B, Series C and Series D conversion prices are $1.2100, $1.2700, $1.6300, $0.8565, $1.5946 and $1.8118 per share, respectively. As such, the shares of Preferred Stock convert on a one-for-one basis, except that the shares of Series A-1, Series A-2 and Series A-3 Preferred Stock convert at the rates of approximately 1.26446, 1.29528 and 1.42239 shares of common stock, respectively, per share of Preferred Stock.

Conversion is mandatory at the earlier of the closing of a firm commitment underwritten public offering of the Company’s common stock at a price of at least $5.4354 per share and with net proceeds to the Company of at least $75.0 million or at the election of the holders of a majority of the outstanding shares of Series D Preferred Stock.

Dividends

The holders of Series A-1 Preferred Stock are entitled to receive cumulative dividends that accrue at an annual rate of approximately 5%. The holders of Series A-2, Series A-3, Series B, Series C and Series D Preferred Stock are entitled to receive cumulative dividends that accrue at an annual rate of approximately 8%. Dividends are payable only when, as and if declared by the Board of Directors. In the event the Company declares, pays, or sets aside any dividends on shares of any class of capital stock of the Company, other than dividends on shares of common stock payable in shares of common stock, the holders of Preferred Stock will be entitled to receive, before or at the same time as such dividends, a dividend on each outstanding share of Preferred Stock in the amount of the accruing dividends unpaid as of such date as well as a comparable dividend on an as-converted basis. As of December 31, 2020, and 2021, no dividends had been declared.

Redemption

The Company’s Preferred Stock may only be redeemed upon a deemed liquidation event as described in the Company’s certificate of incorporation. Upon redemption, holders of shares of Preferred Stock of a particular series are entitled to receive a redemption amount equal to the original issue price of the shares of that series, plus any accrued but unpaid dividends and any declared but unpaid dividends for the shares of that series, subject to the terms summarized in the “Liquidation Preference” section below.

 

F-34


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Liquidation Preference

In the event of any liquidation, dissolution or winding up of the Company, the holders of shares of Preferred Stock of a particular series are entitled to receive an amount per share equal to the greater of (i) the original issuance price of the shares of Preferred Stock of that series, plus any accruing dividends that are unpaid, whether or not declared, plus any other dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had such shares of Preferred Stock been converted into common stock. Such liquidating distributions are payable first, to the holders of shares of Series D Preferred Stock, second, to the holders of shares of Series C Preferred Stock and Series B Preferred Stock on a pari passu basis, third, to the holders of shares of Series A Preferred Stock on a pari passu basis, and finally, to the holders of shares of common stock. If insufficient assets and funds are available to permit payment of the full amount of the applicable liquidation preference payable to the holders of any series of Preferred Stock (or group of series payable on a pari passu basis), then all available assets and funds will be distributed to the holders of such series (or group of series) on a pro rata basis, taking into account the order of priority set forth in the previous sentence.

After payment in full to the Preferred Stockholders, the holders of common stock are entitled to receive the remaining assets of the Company available for distribution on a pro rata basis based on the number of shares held.

 

13.

COMMON STOCK

The Company was authorized to issue 191,500,000 shares of $0.001 par value common stock as of December 31, 2020 and 2021.

The voting, dividend, and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers, and preferences of the holders of the Preferred Stock set forth above.

Each share of common stock generally entitles the holder to one vote, together with the holders of Preferred Stock, on all matters submitted to the stockholders for a vote. As of December 31, 2020 and 2021, no cash dividends have been declared or paid.

As of December 31, 2021, the Company has reserved the following shares of common stock for potential conversion of outstanding Preferred Stock, potential conversion of convertible debt and PIPE Notes with accrued interest through the applicable year-end, into Series D Preferred Stock, the vesting of restricted stock and exercise of stock options and preferred and common stock warrants:

 

   As of December 31,
2021
 

Redeemable convertible preferred stock

   141,430,910 

Convertible debt with accrued interest

   10,042,251 

Options to purchase common stock

   29,752,443 

Preferred stock warrants

   954,634 

Common stock warrants

   311,563 
  

 

 

 

Total

   182,491,801 
  

 

 

 

 

14.

STOCK-BASED COMPENSATION

2012 Stock Incentive Plan

The Company adopted the 2012 Stock Incentive Plan (the “Plan”) in April 2012 for the issuance of stock options and other stock-based awards to employees, consultants, officers, and directors. As of December 31,

 

F-35


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

2020 and 2021, the maximum number of shares of Common Stock issuable under the Plan is 30,555,461. There were 7,592,252 and 2,556,608 shares of common stock available for future grants under the Plan as of December 31, 2020 and 2021, respectively.

The Plan is administered by the Company’s board of directors (the “Board”). The exercise prices, vesting and other restrictions are determined at the discretion of the Board, except that the exercise price per share of incentive stock options may not be less than 100% of the fair market value of the common stock on the date of grant. Stock options awarded under the Plan expire ten years after the grant date unless the Board sets a shorter term. Vesting periods for awards under the plans are determined at the discretion of the Board. Incentive stock options granted to employees and non-statutory options and restricted stock awards granted to employees, officers, members of the Board, advisors, and consultants of the Company typically vest over four or five years.

The fair value of stock option awards is estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:

 

   

Years Ended December 31,

   

2020

  2021

Fair value of underlying common stock

  $ 0.46 - $ 0.65  $ 0.82 - $ 5.89

Weighted average risk-free interest rate

  0.27% - 1.55%  0.48% - 1.42%

Expected term (in years)

  5 - 6  6

Expected volatility

  69.5% -70.4%  56.3% - 68.9%

Expected dividend yield

  0.00%  0.00%

The following table summarizes the activity of the Company’s stock options under the Plan for the year ended December 31, 2021:

 

           AVERAGE   AGGREGATE 
       WEIGHTED-   REMAINING   INTRINSIC 
       AVERAGE   CONTRACTUAL   VALUE 
   SHARES   EXERCISE PRICE   TERM (in years)   (in thousands) 

Outstanding at December 31, 2020

   22,538,570   $0.41    8.5   $9,170 

Granted

   5,725,888    2.13    —      —   

Exercised

   (380,149   0.38      2,096 

Cancelled or forfeited

   (688,474   1.07      —   
  

 

 

   

 

 

   

 

 

   

 

 

 

Outstanding at December 31, 2021

   27,195,835   $0.76    8.0   $139,505 
  

 

 

   

 

 

   

 

 

   

 

 

 

Vested and expected to vest at December 31, 2021

   27,195,835   $0.76    8.0   $139,505 

Exercisable at December 31, 2021

   11,191,724   $0.34    6.9   $62,157 

The weighted-average grant date fair value of stock options granted during the years ended December 31, 2020, and 2021 was $0.40 per share and $1.28 per share, respectively. As of December 31, 2021, total unrecognized compensation expense related to stock options totaled approximately $9.4 million, which is expected to be recognized over a weighted-average period of 2.9 years.

The aggregate intrinsic value of common stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had

 

F-36


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

exercise prices lower than the fair value of the Company’s common stock. The intrinsic value of options exercised in 2020 and 2021, was approximately $0.1 million and $2.1 million, respectively.

Restricted Stock

The fair value of each restricted common stock award is estimated on the date of grant based on the fair value of the Company’s common stock on that same date. Since 2018, the Company has issued 131,925 shares of restricted common stock to independent members of the Board of Directors, members of the Scientific Advisory Board and certain scientific founders, having a fair value of approximately $84 thousand, and subject to vesting over periods of 2 to 4 years.

A summary of the Company’s restricted stock activity during the years ended December 31, 2020, and 2021 is presented below:

 

   SHARES   WEIGHTED
AVERAGE GRANT
DATE FAIR
VALUE
 

Unvested shares as of December 31, 2020

   37,465   $0.37 

Vested

   (31,109   0.54 
  

 

 

   

 

 

 

Unvested shares as of December 31, 2021

   6,356   $0.76 
  

 

 

   

 

 

 

The total fair value of restricted stock that vested during the year ended December 31, 2020 and 2021 was approximately $11 thousand and $25 thousand, respectively.

Stock-Based Compensation Expense

Stock-based compensation expense recorded as research and development and general and administrative expenses, for employees, directors and non-employees during the years ended December 31, 2020 and 2021 is as follows:

 

   Years Ended December 31, 
   2020   2021 

Research and development

  $306   $1,018 

General and administrative

   353    973 
  

 

 

   

 

 

 

Total stock-based compensation expense

  $        659   $        1,991 
  

 

 

   

 

 

 

The Company expects to recognize additional stock-based compensation expense associated with 439,678 shares subject to GreenLight options that vest based on both a liquidity and a service condition. At the date of grant in 2020, achievement of the conditions in the performance-based award was deemed not probable and, accordingly, the grant date fair value of the award was zero based upon the probable outcome of such conditions. The liquidity condition is satisfied upon the occurrence of certain events, including a merger or acquisition or other business combination transaction involving the Company and a publicly traded special purpose acquisition company or other similar entity and, as a result, the liquidity condition for certain of GreenLight’s options will be satisfied upon the completion of the Business Combination. Assuming achievement of the highest level of performance, the performance-based award would have had a grant date fair value of $0.2 million. In December 2021, the Company’s Board of Directors voted to extend the length of time to allow for the performance vesting to occur by March 31, 2022. The fair value of the award, as modified, was $2.1 million as of the modification date. Upon closing of the Business Combination, the Company expects to recognize approximately $1.4 million of incremental stock-based compensation expense associated with these options, and the remainder will be recognized over the remaining service period. As of December 31, 2021, the performance condition has not yet been achieved, and 439,678 shares subject to performance-based options were not vested.

 

F-37


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

16.

NET LOSS PER SHARE

The following table summarizes the computation of basic and diluted net loss per share attributable to common stockholders of the Company:

 

  Years Ended December 31, 
  2020  2021 

Numerator:

  

Net loss

 $(53,251 $(112,310

Less: Accruals of dividends of preferred stock

  (13,445  (17,453
 

 

 

  

 

 

 

Net loss available to common stockholders

 $(66,696 $(129,763
 

 

 

  

 

 

 

Denominator:

  

Weighted-average common stock outstanding

  3,211,968   3,382,860 
 

 

 

  

 

 

 

Net loss per share, basic and diluted

 $(20.76 $(38.36
 

 

 

  

 

 

 

The Company’s potential dilutive securities include redeemable convertible preferred stock, unvested restricted stock, common stock options and common and preferred stock warrants that will convert to common stock. The Company excluded the following potential common stock, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect:

 

   As of December 31, 
   2020   2021 

Redeemable convertible preferred stock

   141,405,233    141,430,910 

Convertible debt with accrued interest

   9,583,023    10,042,251 

Unvested restricted stock

   37,465    6,356 

Options to purchase common stock

   22,538,570    27,195,835 

Prefered stock warrants

   131,096    954,634 

Common stock warrants

   40,000    311,563 
  

 

 

   

 

 

 

Total

   173,735,387    179,941,549 
  

 

 

   

 

 

 

 

17.

INCOME TAXES

As the Company generated net operating losses (“NOLs”) during 2020 and 2021, has generated historical NOLs, and is forecasting to continue to generate NOLs, the Company did not record a provision for or benefit from income taxes for the years ended December 31, 2020, and 2021.

 

F-38


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

A reconciliation of the Company’s effective tax rate to the statutory federal income tax rate is as follows for the years ended December 31, 2020, and 2021:

 

   Years Ended December 31, 
   2020  2021 

Federal income tax (benefit)/expense at statutory rate

   21.0  21.0

State income tax benefit

   5.4  6.9

Permanent items

   -0.2  -0.5

Change in Valuation Allowance

   -29.3  -30.6

Federal R&D Tax Credits

   3.1  3.0

Other

   0.0  0.2
  

 

 

  

 

 

 

Effective income tax rate

   0.0  0.0
  

 

 

  

 

 

 

Deferred tax assets and liabilities reflect the net tax effects of NOLs and tax credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting and the amounts used for tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2020, and 2021 were as follows:

 

   Years Ended December 31, 
   2020   2021 

Deferred tax assets:

    

Federal net operating loss carryforwards

  $26,464   $48,956 

State net operating loss carryforwards

   6,542    12,477 

Tax credits

   4,059    8,736 

Stock based compensation

   89    233 

Capitalized research and development expenses

   4,398    3,649 

Accruals and other

   763    1,482 
  

 

 

   

 

 

 

Total deferred tax assets

   42,315    75,533 

Valuation allowance

   (39,965   (74,340
  

 

 

   

 

 

 

Total deferred tax assets

  $2,350   $1,193 
  

 

 

   

 

 

 

Deferred tax liabilities:

    

Depreciation and amortization

  $(2,350  $(1,193
  

 

 

   

 

 

 

Total deferred tax liabilities

  $(2,350  $(1,193
  

 

 

   

 

 

 

Total net deferred tax assets (liability)

  $—     $—   
  

 

 

   

 

 

 

As of December 31, 2021, the Company had federal NOL carryforwards of $232,116 and state NOL carryforwards of approximately $197,424, which are available to reduce future taxable income. The Company also had federal tax credits of $7,485 as of December 31, 2021. The federal NOLs generated before 2018 of approximately $27,104 will expire at various dates through 2037, and NOL carryforwards generated after 2017 of approximately $205,012 have an indefinite carryforward period. The state NOLs and tax credit carryforwards will expire at various dates through 2040.

After consideration of all the evidence, both positive and negative, the Company has recorded a valuation allowance against its deferred tax assets at December 31, 2020, and 2021 because the Company’s management has determined that it is more likely than not that these assets will not be fully realized.

 

F-39


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

Utilization of the NOL carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL and research and development credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The Company has not completed an evaluation of ownership changes through December 31, 2021, to assess whether utilization of the Company’s NOL or research and development credit carryforwards would be subject to an annual limitation under Section 382. To the extent an ownership change occurs in the future, the NOL and credit carryforwards would be subject to limitation.

The Company has generated federal and state research and development credits but has not conducted a study to document the qualified activity. This study may result in an adjustment to the Company’s research and development credit carryforwards; however, until a study is completed, and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the deferred tax asset established for the research and development credit carryforwards and the valuation allowance.

As of December 31, 2020, and 2021, the Company had not recorded any uncertain tax provisions. The Company files income tax returns in the U.S. federal and various state jurisdictions. The federal and state income tax returns are generally subject to examinations for the tax years ended December 31, 2018, through December 31, 2021. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. There are currently no federal or state audits in process.

 

18.

COMMITMENTS AND CONTINGENCIES

Operating Leases

On May 15, 2009, the Company entered into an operating lease in Medford, Massachusetts, for office and laboratory space that comprises the headquarters. On August 15, 2020, the Company entered into an expansion and extension of its lease effective from August 15, 2020, through the lease term end date of February 14, 2024, unless otherwise extended.

On January 15, 2019, the Company entered into an operating lease for office, laboratory, and greenhouse facilities in Research Triangle Park, North Carolina. The Company has occupied the greenhouse space since January 2019 and the office and laboratory space since January 2020. The lease term is for 84 months from the first day of the first full month following the commencement of the office and laboratory space occupation. The initial lease term expires in December 2026. The Company has the option to extend the lease for an additional five-year term. The lease agreement provided for a base tenant improvement allowance of approximately $0.5 million and an additional tenant improvement allowance of $1.0 million to finance a portion of the capital improvements of the facility. The additional tenant improvement allowance paid for by the landlord is repayable along with the monthly base rent at 9% interest over the lease term. As of December 31, 2021, approximately $0.8 million of the additional tenant improvement allowance was recorded in other liabilities. The Company is required to pay for any additional tenant improvement costs.

On January 1, 2020, the Company entered into an operating lease for its manufacturing facility in Rochester, New York, for an initial term of 63 months, expiring on March 31, 2025. The Company has the option to extend the lease for up to two additional terms of five years each. The lease agreement provided for a base tenant improvement allowance of approximately $17 thousand and an additional tenant improvement allowance of approximately $0.3 million to finance a portion of the capital improvements of the facility. The additional tenant improvement allowance paid for by the landlord is repayable along with the monthly base rent at 10% interest over 60 months. The Company is required to pay for any additional tenant improvement costs.

 

F-40


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

On October 28, 2020, the Company entered into a license and services agreement for an on-demand cleanroom in Burlington, Massachusetts for its pre-clinical and early phase clinical material manufacturing. The license is for a 24-month period and the clean rooms are expected to be available starting the third quarter of 2021.

On November 15, 2020, the Company entered into an operating lease with its landlord for additional lab space in Woburn, Massachusetts. On January 11, 2021, the Company entered into an expansion of its Woburn lab space lease effective from March 1, 2021, that was amended on March 22, 2021, and further amended on April 14, 2021, for additional space effective from April 1, 2021, and June 1, 2021, respectively. The lease term has an end date of February 14, 2024.

On February 22, 2021, the Company entered into a sublease agreement for additional lab space in Medford, Massachusetts. The initial term of the lease is 48 months, expiring on February 28, 2025, unless otherwise extended.

On June 23, 2021, the Company entered into an operating lease agreement for additional office space in Medford, Massachusetts. The initial term of the lease is 44 months, expiring on February 28, 2025, unless otherwise extended.

On September 30, 2021, the Company entered into a lease for new laboratory, office and greenhouse space in Research Triangle Park, North Carolina, with an anticipated commencement date in January of 2022. The lease term expires in July 2033, unless extended. The base rent for this lease is approximately $2.3 million per year, subject to a 3% increase each year.

On November 1, 2021, the Company entered into an operating lease for additional laboratory and office space in Rochester, New York. The initial term of the lease is 51 months, expiring on March 31, 2026, unless otherwise extended. Base rent for this lease is approximately $0.1 million per year with annual escalations for cost-of-living adjustments.

Rent expense is recognized on a straight-line basis over the lease term. Total rent expense in the consolidated statements of operations for the operating leases was approximately $2.1 million and $5.1 million for the years ended December 31, 2020 and 2021, respectively.

A summary of the Company’s future minimum lease payments under noncancelable operating leases, excluding tenant improvement payables, as of December 31, 2021, is as follows:

 

   FOR THE YEARS
ENDED
DECEMBER 31,
 

2022

  $7,841 

2023

   7,257 

2024

   2,549 

2025

   1,450 

2026

   1,242 

Thereafter

   5,359 
  

 

 

 

Total

  $25,698 
  

 

 

 

Capital lease obligation

The Company acquired certain equipment with a value of approximately $0.9 million and $0 under capital lease arrangements during the years ended December 31, 2020 and 2021, respectively. Amortization of assets

 

F-41


GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

held under capital leases is included in depreciation expense. The Company leases certain laboratory equipment under capital lease agreements with fixed payments due through December 2023. Capital lease obligations are recorded as long-term debt on the Company’s consolidated balance sheet as of December 31, 2020 and 2021.

Future minimum lease payments under the capital lease agreements as of December 31, 2021, together with the present value of the minimum lease payments are as follows:

 

   FOR THE YEARS
ENDED
DECEMBER 31,
 

2022

  $779 

2023

   330 

Thereafter

   —   
  

 

 

 

Total minimum lease payments

  $1,109 

Less: amount representing interest

   (117
  

 

 

 

Present value of obligations under capital leases

  $992 
  

 

 

 

Current portion of capital lease obligations

  $672 
  

 

 

 

Capital lease obligations, long-term

  $320 
  

 

 

 

Legal proceedings

Legal claims may arise from time to time in the normal course of business. There are no such claims as of December 31, 2020 and 2021, that are expected to have a material effect on the Company’s consolidated financial statements.

Other funding commitments

In November 2021, the Company entered into a manufacturing and development contract service agreement with a contract development and manufacturing organization for the Company’s mRNA COVID-19 vaccine. Based on the Company’s minimum purchase commitments, the Company expects to pay the organization a minimum of approximately $11.5 million in service fees under the agreement, excluding the cost of raw materials. Based on the current schedule, the Company expects to incur the majority of these expenses in 2022 and a portion in the first quarter of 2023.

 

19.

Defined Contribution Plan

The GreenLight Biosciences 401(k) Retirement Plan is a defined contribution plan in the form of a qualified 401(k) plan in which substantially all employees are eligible to participate upon employment. Subject to certain IRS limits, eligible employees may elect to contribute from 1% to 100% of their compensation. Company contributions to the plan are at the sole discretion of the Company. During the year ended December 31, 2021, the Company did not provide any matching contribution to employees.

 

20.

SUBSEQUENT EVENTS

The Company has completed an evaluation of all subsequent events through March X, 2022, the date these consolidated financial statements were available to be issued. There were no subsequent events that require adjustments to or disclosure in the financial statements, except for those referenced below.

Business Combination

On February 2, 2022, the Company’s stockholders approved the Business Combination, by and among the company formerly known as ENVI, GreenLight Biosciences, Inc. and Honey Bee Merger Sub, Inc., pursuant to which Honey Bee Merger Sub, Inc. was merged with and into GreenLight, with GreenLight surviving the merger.

As a result of the Merger, and upon consummation of the Merger and the other transactions contemplated by the Business Combination Agreement, GreenLight became a wholly owned subsidiary of ENVI. Upon the closing of the Business Combination, the Company changed it’s name to GreenLight Biosciences Holdings, PBC (“New GreenLight”), with stockholders of GreenLight becoming stockholders of New GreenLight.

 

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GREENLIGHT BIOSCIENCES, INC.

Notes to Consolidated Financial Statements

 

The following transactions at closing of the Merger included:

 

  

Merger Sub merged with and into GreenLight, with GreenLight surviving as a wholly owned subsidiary of New GreenLight;

 

  

each issued and outstanding share of capital stock of GreenLight converted into a number of shares of New GreenLight Common Stock equal to the product of (x) the conversion ratio applicable to such share, if any, under GreenLight’s certificate of incorporation, multiplied by (y) 0.6656, which is the quotient obtained by dividing (a) 120,000,000, by (b) the number of Fully-Diluted Shares as defined in the Business Combination Agreement;

 

  

each GreenLight Option converted into an option to purchase a number of shares of New GreenLight Common Stock in accordance with the terms and subject to the conditions of the Business Combination Agreement;

 

  

each GreenLight Warrant, to the extent outstanding and unexercised, converted into a warrant to acquire shares of New GreenLight Common Stock in accordance with the terms and subject to the conditions of the Business Combination Agreement; and

 

  

each share of ENVI Class A Common Stock and ENVI Class B Common Stock that was issued and outstanding immediately prior to the Merger became one share of New GreenLight Common Stock.

Collaboration Agreement

In March 2022, the Company entered into a License Agreement with Serum Institute of India Private Limited (“SIIPL”), pursuant to which the Company granted SIIPL an exclusive, sub-licensable, royalty-bearing license to use the Company’s proprietary technology platform to develop, manufacture and commercialize up to three mRNA products in all territories other than the United States, the 27 member states of the European Union, the United Kingdom, Australia, Japan, New Zealand, Canada, South Korea, China, Hong Kong, Macau, and Taiwan (the “SIIPL Territory”). The first licensed product target will be a shingles product, and SIIPL has an option to add up to two additional product targets through the end of 2024.

Pursuant to the License Agreement, SIIPL will pay the Company an upfront license fee of $5.0 million, as well as payments upon target selection and reservation of exclusivity. In addition, the Company may receive up to a total of an additional $22 million in milestone payments across all three product targets, as well as manufacturing technology transfer payments. SIIPL shall pay royalty payments on the sale of products resulting from the licensed technology for the term of the License Agreement. The License Agreement shall terminate on a product-by- product and country-by-country basis on the later of the expiration of the patent rights owned by the Company or the tenth anniversary of the first commercial sale of the applicable product(s) in the applicable country.

SIIPL is responsible for the development, formulation, filling and finishing, registration and commercialization of the products in the SIIPL Territory, subject to oversight from a joint steering committee composed of representatives of the Company and SIIPL. SIIPL will use commercially reasonable efforts to develop and obtain regulatory approval for the products in the countries in the SIIPL Territory. The License Agreement includes terms customary in the industry for provisions related to sublicensing, intellectual property, and termination, and customary representations and warranties of GreenLight and SIIPL, along with certain customary covenants, including confidentiality, limitation of liability and indemnity provisions.

Operating Leases

In March 2022, the Company entered into a lease for new laboratory space in Lexington, Massachusetts, with an anticipated commencement date of April 2022. The lease term expires in May 2033. The base rent for this lease is $3.9 million per year, subject to a 3% increase each year.

 

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