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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro
forma condensed combined financial information and related notes have been prepared in accordance with Article 11 of Regulation S-X.
The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 gives effect to the Merger (as defined
below) as if it had occurred on January 1, 2022, and combines the historical results of Ginkgo Biowork s Holdings, Inc. ( Ginkgo ) and Zymergen, Inc. ( Zymergen ). The unaudited pro forma condensed combined statement of
operations for the year ended December 31, 2022 combines the audited consolidated statement of operations and comprehensive loss of Ginkgo for the year ended December 31, 2022 with Zymergen s unaudited consolidated statement of
operations and comprehensive loss for the period from January 1, 2022 through October 18, 2022, the day immediately preceding the Merger. Ginkgo s audited consolidated statement of operations and comprehensive loss for the year ended
December 31, 2022 includes Zymergen s results of operations from the completion date of the Merger through December 31, 2022.
The historical financial statements of Ginkgo and Zymergen have been adjusted in the accompanying unaudited pro forma condensed combined
financial information to give effect to the transaction accounting adjustments which are necessary to account for the Merger in accordance with generally accepted accounting principles in the United States ( GAAP ). These unaudited pro
forma condensed combined financial statements do not include any adjustments not otherwise described herein. The unaudited pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable.
The unaudited pro forma condensed combined financial information should be read in conjunction with:
Description of the Merger
2022, Ginkgo and Zymergen completed the previously announced acquisition contemplated by that certain Agreement and Plan of Merger, dated as of July 24, 2022 (the Merger Agreement ) among Zymergen, a Delaware public benefit corporation,
Ginkgo, and Pepper Merger Subsidiary Inc., a Delaware corporation and an indirect wholly owned subsidiary of Ginkgo ( Merger Subsidiary ). Pursuant to the Merger Agreement, Merger Subsidiary merged with and into Zymergen, with Zymergen
surviving as a wholly owned subsidiary of Ginkgo (the Merger ).
At the effective time of the Merger (the Effective
Time ), each share of common stock, par value $0.001 per share, of Zymergen (each, a Zymergen Common Share ) that was issued and outstanding immediately prior to the Effective Time (other than certain excluded shares specified in the
Merger Agreement) was cancelled, extinguished and converted into the right to receive 0.9179 of a share of Class A Common Stock, par value $0.0001 per share, of Ginkgo (each, a Ginkgo Class A Share, and such consideration the
Merger Consideration ) and cash in lieu of any fractional Ginkgo Class A Shares, without interest. Further, under the terms of the Merger Agreement, at the Effective Time:
Accounting for the Merger
The Merger was accounted for as a business combination using the acquisition method with Ginkgo as the accounting acquirer in accordance with
ASC 805, Business Combinations ( ASC 805 ). Under this method of accounting, the purchase consideration was allocated to Zymergen s assets acquired and liabilities assumed based upon their estimated fair values at the date of
completion of the Merger, which was October 19, 2022. The allocation of the purchase price, including the valuation of certain tangible and intangible assets acquired and the related tax effects, is preliminary and subject to revision during
the one-year measurement period from the date of completion of the Merger if any new information is obtained about facts and circumstances that existed as of the acquisition date. In addition, the acquisition
method of accounting requires the acquirer to recognize the consideration transferred at fair value. Any differences between the fair value of the purchase consideration and the estimated fair value of the assets acquired and liabilities assumed is
recorded as goodwill. Accordingly, the purchase consideration allocation and related adjustments reflected in this unaudited pro forma condensed combined financial information are preliminary and subject to revision based on a final determination of
fair value. Refer to Note 1, Basis of Presentation for more information.
The unaudited pro forma condensed combined financial
information presented is for informational purposes only and is not necessarily indicative of the results of operations that would have been realized if the Merger had been completed on the dates set forth above, nor is it indicative of the future
results of the combined company.
As a result of the foregoing, the unaudited pro forma condensed combined financial information is based
on management s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed and the related tax effects. The actual accounting may vary based on final analyses of the valuation of assets acquired
and liabilities assumed, particularly regarding certain tangible and intangible assets acquired and the related tax effects. Ginkgo will finalize the accounting for the Merger as soon as practicable within the measurement period in accordance with
ASC 805, but in no event later than one year from the completion of the Merger.
The unaudited pro forma condensed combined financial
information does not reflect any expected cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the Merger, any termination, restructuring or other costs to integrate the operations of Ginkgo
and Zymergen beyond what was recorded post-Merger during the period presented, or the costs necessary to achieve any such cost savings, operating synergies or revenue enhancements.
GINKGO BIOWORKS HOLDINGS, INC.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2022
(in thousands, except share and per share data)
| Ginkgo Historical Year Ended December 31, 2022 | Zymergen Reclassed For the Period from January 1, 2022 through October 18, 2022 (Note 2) | Zymergen Transaction Accounting Adjustments | (Note 3) | Pro Forma Combined | ||||||||||||||||
| Foundry revenue | $ | 143,666 | $ | 6,987 | $ | $ | 150,653 | |||||||||||||
| Biosecurity revenue: | ||||||||||||||||||||
| Product | 35,455 | 35,455 | ||||||||||||||||||
| Service | 298,585 | 298,585 | ||||||||||||||||||
| Collaborations, grants and other | 3,105 | 3,105 | ||||||||||||||||||
| Total revenue | 477,706 | 10,092 | 487,798 | |||||||||||||||||
| Costs and operating expenses: | ||||||||||||||||||||
| Cost of Biosecurity product revenue | 20,646 | 20,646 | ||||||||||||||||||
| Cost of Biosecurity service revenue | 183,570 | 183,570 | ||||||||||||||||||
| Research and development | 1,052,643 | 135,414 | (1,862 | ) | (a | ) | 1,186,195 | |||||||||||||
| General and administrative | 1,429,799 | 124,652 | (6,203 | ) | (b | ) | 1,548,248 | |||||||||||||
| Goodwill impairment charge | 40,645 | 40,645 | ||||||||||||||||||
| Restructuring charges (benefit) | (1,609 | ) | (1,609 | ) | ||||||||||||||||
| Total operating expenses | 2,686,658 | 299,102 | (8,065 | ) | 2,977,695 | |||||||||||||||
| Loss from operations | (2,208,952 | ) | (289,010 | ) | 8,065 | (2,489,897 | ) | |||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income | 20,262 | 63 | 20,325 | |||||||||||||||||
| Interest expense | (106 | ) | (17,423 | ) | (17,529 | ) | ||||||||||||||
| Loss on equity method investments | (43,761 | ) | (43,761 | ) | ||||||||||||||||
| Loss on investments | (53,335 | ) | (53,335 | ) | ||||||||||||||||
| Change in fair value of warrant liabilities | 124,970 | 124,970 | ||||||||||||||||||
| Gain on deconsolidation of subsidiaries | 31,889 | 31,889 | ||||||||||||||||||
| Other income (expense), net | 7,634 | (2,068 | ) | 5,566 | ||||||||||||||||
| Total other income (expense), net | 87,553 | (19,428 | ) | 68,125 | ||||||||||||||||
| Loss before income taxes | (2,121,399 | ) | (308,438 | ) | 8,065 | (2,421,772 | ) | |||||||||||||
| Income tax (benefit) provision | (15,027 | ) | (10 | ) | (15,037 | ) | ||||||||||||||
| Net loss | (2,106,372 | ) | (308,428 | ) | 8,065 | (2,406,735 | ) | |||||||||||||
| Net loss attributable to non-controlling interest | (1,443 | ) | (1,443 | ) | ||||||||||||||||
| Net loss attributable to Ginkgo Bioworks Holdings, Inc. stockholders | $ | (2,104,929 | ) | $ | (308,428 | ) | $ | 8,065 | $ | (2,405,292 | ) | |||||||||
| Net loss per share attributable to Ginkgo Bioworks Holdings, Inc. common stockholders, basic and diluted | $ | (1.25 | ) | $ | (1.37 | ) | ||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||
| Basic | 1,679,061,465 | 79,526,869 | (c | ) | 1,758,588,334 | |||||||||||||||
| Diluted | 1,679,838,849 | 79,526,869 | (c | ) | 1,759,365,718 |
See the accompanying notes to unaudited pro forma condensed combined financial information.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1. Basis of Presentation
unaudited pro forma condensed combined financial information and related notes have been prepared in accordance with Article 11 of Regulation S-X.
Both Ginkgo s and Zymergen s historical financial statements were prepared in accordance with GAAP and presented in U.S. dollars. As
discussed in Note 2, Reclassification Adjustments , certain reclassifications were made to align Zymergen s financial statement presentation with that of Ginkgo.
The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with
ASC 805, with Ginkgo identified as the accounting acquirer, using the fair value concepts defined in ASC Topic 820, Fair Value Measurement ( ASC 820 ) and based on the historical consolidated financial statements of Ginkgo and Zymergen.
Under ASC 805, assets acquired and liabilities assumed in a business combination are recognized and measured at their assumed acquisition date fair value with certain limited exceptions, while transaction costs associated with a business combination
are expensed as incurred. The excess of purchase consideration over the estimated fair value of assets acquired and liabilities assumed is allocated to goodwill.
The purchase consideration and estimated fair values of assets acquired and liabilities assumed will be updated and finalized within the
measurement period that will not extend beyond one year from the closing of the Merger. Estimated fair value adjustments could change significantly from those amounts used in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2022 gives effect to the Merger as if it
occurred on January 1, 2022.
The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies
or dis-synergies, operating efficiencies or cost savings that may result from the Merger and integration costs that may be incurred beyond what was recorded post-Merger during the period presented. The pro
forma adjustments represent Ginkgo s best estimates and are based upon currently available information and certain assumptions that Ginkgo believes are reasonable under the circumstances. There were no material transactions between Ginkgo and
Zymergen during the periods presented. Accordingly, adjustments to eliminate transactions between Ginkgo and Zymergen have not been reflected in the unaudited pro forma condensed combined financial information.
Note 2. Reclassification Adjustments
During the preparation of this unaudited pro forma condensed combined financial information, management performed an analysis of
Zymergen s financial information to identify differences in accounting policies and financial statement presentation as compared to Ginkgo. The pro forma adjustments include adjustments to align Zymergen s accounting policies to
Ginkgo s accounting policies and include certain reclassification adjustments to conform Zymergen s historical financial statement presentation to Ginkgo s financial statement presentation.
Refer to the table below for a summary of adjustments made to conform Zymergen s historical statements
of operations and comprehensive loss presentation for the period from January 1, 2022 through October 18, 2022 with that of Ginkgo s:
| (in thousands) | Ginkgo Historical Consolidated Statements of Operations and Comprehensive Loss Line Items | Zymergen Historical Consolidated Statements of Operations and Comprehensive Loss Line Items | Zymergen For the Period from January 1, 2022 through October 18, 2022 | Reclassification | Zymergen Reclassed For the Period from January 1, 2022 through October 18, 2022 | |||||||||||||
| Foundry revenue | $ | $ | 6,987 | (a)(b) | $ | 6,987 | ||||||||||||
| Biosecurity product revenue | ||||||||||||||||||
| Biosecurity service revenue | ||||||||||||||||||
| Revenues from research and development service agreements | 6,456 | (6,456) | (a) | |||||||||||||||
| Automation revenue | 531 | (531) | (b) | |||||||||||||||
| Collaboration and other revenue | 2,085 | 1,020 | (c) | 3,105 | ||||||||||||||
| Grant revenue | 1,020 | (1,020) | (c) | |||||||||||||||
| Cost of Biosecurity product revenue | ||||||||||||||||||
| Cost of Biosecurity service revenue | ||||||||||||||||||
| Research and development | Research and development | 101,266 | 34,148 | (d)(e) | 135,414 | |||||||||||||
| Cost of automation revenue | 3,063 | (3,063) | (d) | |||||||||||||||
| Cost of service revenue | 31,085 | (31,085) | (e) | |||||||||||||||
| General and administrative | General and administrative | 111,940 | 12,712 | (f) | 124,652 | |||||||||||||
| Sales and marketing | 12,712 | (12,712) | (f) | |||||||||||||||
| Goodwill impairment charge | 40,645 | 40,645 | ||||||||||||||||
| Restructuring charges (benefit) | (1,609) | (1,609) | ||||||||||||||||
| Interest income | Interest income | 63 | 63 | |||||||||||||||
| Interest expense | Interest expense | (17,423) | (17,423) | |||||||||||||||
| Loss on equity method investments | ||||||||||||||||||
| Loss on investments | ||||||||||||||||||
| Change in fair value of warrant liabilities | Gain on change in fair value of warrant liabilities | |||||||||||||||||
| Gain on deconsolidation of subsidiaries | ||||||||||||||||||
| Other income (expense), net | Other expense, net | (2,068) | (2,068) | |||||||||||||||
| Income tax (benefit) provision | Benefit from (provision for) income taxes | (10) | (10) |
Note 3 Pro Forma Adjustments to the Unaudited Condensed Combined Statements of Operations
Adjustments included in the Zymergen Transaction Accounting Adjustments column of the accompanying unaudited pro forma condensed combined
statement of operations for the years ended December 31, 2022 follows:
| (in thousands) | For the Year Ended December 31, 2022 | |||
| Pro forma transaction accounting adjustments: | ||||
| Remove historical Zymergen depreciation of property and equipment (i) | $ | (10,300 | ) | |
| Record depreciation based on the fair value of Zymergen s property and equipment (ii) | 5,548 | |||
| Remove historical Zymergen amortization of intangible assets (iii) | (1,805 | ) | ||
| Record amortization based on the fair value of Zymergen s intangible assets (iv) | 1,614 | |||
| Record compensation expense for Zymergen RSUs granted and cash retention bonuses payable under the Zymergen New Retention Plan (v) | 3,377 | |||
| Adjustment for Enhanced Severance and Zymergen New Retention Plan cash bonuses incurred for the benefit of the combined company (vi) | (1,580 | ) | ||
| Adjust the expense for Zymergen s consumables inventory (vii) | (587 | ) | ||
| Record incremental rent expense for Zymergen s operating leases (viii) | 1,871 | |||
| Net pro forma transaction accounting adjustment to research and development expense | $ | (1,862 | ) |
| (in thousands) | For the Year Ended December 31, 2022 | |||
| Pro forma transaction accounting adjustments: | ||||
| Remove historical Zymergen depreciation of property and equipment (i) | $ | (6,060 | ) | |
| Record depreciation based on the fair value of Zymergen s property and equipment (ii) | 2,597 | |||
| Record compensation expense for Zymergen RSUs granted and cash retention bonuses payable under the Zymergen New Retention Plan (iii) | 732 | |||
| Adjustment for Enhanced Severance and Zymergen New Retention Plan cash bonuses incurred for the benefit of the combined company (iv) | (4,571 | ) | ||
| Record incremental rent expense for Zymergen s operating leases (v) | 1,099 | |||
| Net pro forma transaction accounting adjustment to general and administrative expense | $ | (6,203 | ) |