Ginkgo Bioworks Holdings, Inc. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2023, which is the end of the period covered by this Annual Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2023 as a result of a material weakness in our internal control over financial reporting as described below. Considering the material weakness in the Company’s internal control over financial reporting, we performed additional procedures to ensure that our consolidated financial statements included in this Form 10-K were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Following such additional procedures, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in this Annual Report, in conformity with GAAP. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such terms are defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a framework designed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of management and our directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. As of December 31, 2023, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013). Based on this evaluation, due to the material weakness described below, we concluded that the Company's system of internal control over financial repor ting was not effective as of December 31, 2023. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness was identified by our management as of December 31, 2023: the Company did not have effective management review controls to address the risks of material misstatement of various significant accounts. Management’s evaluation of the completeness and accuracy of data used in the performance of its controls was insufficient, as was the precision of the review, identification and resolution of items requiring follow-up, and/or timeliness of the review. This material weakness did not result in any material misstatements to the consolidated financial statements and there were no changes to previously released financial statements. Notwithstanding our material weakness, we have concluded that the financial statements and other financial information included in this Annual Report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States. 92 Table of Contents Our independent registered public accounting firm, Ernst & Young LLP (“EY”), who audited the consolidated financial statements included in this Annual Report, issued an adverse opinion on the effectiveness of our internal control over financial reporting due to the identification of the material weakness described above. Remediation of the Material Weakness in Internal Control Over Financial Reporting Following the identification of the material weaknesses in our internal control over financial reporting as of December 31, 2022, and with the oversight of the Audit Committee, we commenced remediation efforts to address the material weaknesses and enhance our control environment, including our internal control over financial reporting. While we have remediated the material weakness identified in the prior year associated with the information technology general controls over various key systems and have hired additional personnel with appropriate knowledge, experience and/or training commensurate with our technical accounting and financial reporting requirements, the material weakness described above continues to exist at December 31, 2023. As a result, we expect to continue remediation efforts during the remainder of fiscal 2024. In addition, until remediation steps have been completed and are operated for a sufficient period of time, and subsequent evaluation of their effectiveness is completed, the material weakness described above will continue to exist. Our ongoing remediation efforts include: • Continued employee training related to internal control over financial reporting specifically focused on data used in the operation of management review controls and the execution of management review controls with an appropriate level of precision and appropriate documentation of the identification and resolution of follow-up items; • Implementation and enhancement of control activities, including automation of certain control processes; and, • Development of other tools and enablers, including increasing the standardization of control support and documentation. Management and our board of directors are committed to the remediation of the material weakness described above, as well as the continued improvement of our internal control over financial reporting. We will continue to implement measures to remedy our internal control deficiencies, and we will continue to assess our internal controls and procedures and take further action as necessary or appropriate to address any other matters we identify. Changes in Internal Control over Financial Reporting Except as otherwise noted above under “Remediation of the Material Weakness in Internal Control Over Financial Reporting” including the ongoing remediation efforts described, there were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a–15(f) and 15d-15(f)) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Our plans for remediating the material weakness, described above, will constitute changes in our internal control over financial reporting, prospectively, when such remediation plans are effectively implemented. Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Ginkgo Bioworks Holdings, Inc. Opinion on Internal Control Over Financial Reporting We have audited Ginkgo Bioworks Holdings, Inc. internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Ginkgo Bioworks Holdings, Inc. (the Company) has not maintained effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management has identified a material weakness related to the execution of management review 93 Table of Contents controls related to various significant accounts. Management’s evaluation of the completeness and accuracy of data used in its controls was insufficient, as was the precision of the review, identification and resolution of items requiring follow-up, and/or timeliness of the review. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes. This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated February 29, 2024, which expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Boston, Massachusetts February 29, 2024 Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. PART III 94 Table of Contents Item 10. Directors, Executive Officers and Corporate Governance. The information required by this item is incorporated by reference to the relevant information from our definitive Proxy Statement for our 2024 Annual Meeting of Shareholders, which will be filed not later than 120 days after December 31, 2023. Item 11. Executive Compensation. The information required by this item is incorporated by reference to the relevant information from our definitive Proxy Statement for our 2024 Annual Meeting of Shareholders, which will be filed not later than 120 days after December 31, 2023. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this item is incorporated by reference to the relevant information from our definitive Proxy Statement for our 2024 Annual Meeting of Shareholders, which will be filed not later than 120 days after December 31, 2023. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this item is incorporated by reference to the relevant information from our definitive Proxy Statement for our 2024 Annual Meeting of Shareholders, which will be filed not later than 120 days after December 31, 2023. Item 14. Principal Accounting Fees and Services. The information required by this item is incorporated by reference to the relevant information from our definitive Proxy Statement for our 2024 Annual Meeting of Shareholders, which will be filed not later than 120 days after December 31, 2023. PART IV Item 15. Exhibits, Financial Statement Schedules. (1) As part of this Annual Report on Form 10-K, the consolidated financial statements are listed in the accompanying index to financial statements on page F-1 . (2) Financial statement schedules have been omitted because they are either not required or not applicable or the information is included in the consolidated financial statements or the notes thereto. (3) Exhibits: Exhibit Number Description 2.1† Agreement and Plan of Merger, dated as of July 24, 2022, by and among Ginkgo Bioworks Holdings, Inc., Pepper Merger Subsidiary Inc. and Zymergen Inc. (incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 25, 2022) 2.2 Merger Agreement, dated as of May 11, 2021, by and among Soaring Eagle Acquisition Corp., SEAC Merger Sub Inc. and Ginkgo Bioworks, Inc. (incorporated by reference to Exhibit 2.1 of SRNG’s Current Report on Form 8-K filed with the SEC on May 11, 2021) 2.3 Amendment to the Agreement and Plan of Merger, dated as of May 14, 2021, by and among Soaring Eagle Acquisition Corp., SEAC Merger Sub Inc. and Ginkgo Bioworks, Inc. (incorporated by reference to Exhibit 2.1 to SRNG’s Quarterly Report on Form 10-Q (File No. 001-40097) for the quarter ended March 31, 2021, filed with the SEC on May 24, 2021) 95 Table of Contents 3.1 Certificate of Incorporation of Ginkgo Bioworks Holdings, Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on September 20, 2021) 3.2 Amendment to Certificate of Incorporation of Ginkgo Bioworks Holdings, Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed with the SEC on September 20, 2021) 3.3 Bylaws of Ginkgo Bioworks Holdings, Inc. (incorporated by reference to Exhibit 3. 1 of the Company’s Current Report on Form 8-K filed with the SEC on October 27, 2023 ) 4.1 Specimen Class A Common Stock Certificate of Ginkgo Bioworks Holdings, Inc. (incorporated by reference to Exhibit 4.5 to Amendment No. 3 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on August 4, 2021) 4.2* Description of Securities of the Registrant 4.3 Warrant Agreement, dated as of February 23, 2021, by and among Soaring Eagle Acquisition Corp. and Continental Stock Transfer & Trust Company, as warrant agent (incorporated by reference to Exhibit 4.1 of SRNG’s Current Report on Form 8-K (File No. 001-40097), filed with the SEC on February 26, 2021) 4.4 Assignment and Assumption Agreement, dated as of September 16, 2021, by and among Ginkgo Bioworks Holdings, Inc., Continental Stock Transfer & Trust Company and Computershare Trust Company, N.A. (incorporated by reference to Exhibit 4.4 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 29, 2022) 10.1+ Form of Ginkgo Bioworks Holdings, Inc. 2021 Incentive Award Plan (incorporated by reference to Annex E of SRNG’s Form S-4/A (File No. 333-256121), filed with the SEC on August 4, 2021) 10.2+ Form of Ginkgo Bioworks Holdings, Inc. 2021 Employee Stock Purchase Plan (incorporated by reference to Annex F of SRNG’s Form S-4/A (File No. 333-256121), filed with the SEC on August 4, 2021) 10.3 Registration Rights Agreement, dated as of September 16, 2021, by and among Ginkgo Bioworks Holdings, Inc., Eagle Equity Partners III, LLC and the other Holders signatory thereto. (incorporated by reference to Exhibit 10.4 of Ginkgo’s Current Report on Form 8-K filed with the SEC on September 20, 2021) 10.4 Ginkgo Bioworks, Inc. 2008 Stock Incentive Plan, as amended as of June 18, 2014 (incorporated by reference to Exhibit 10.8 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.5 Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan (incorporated by reference to Exhibit 10.9 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.6 Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective May 1, 2019 (incorporated by reference to Exhibit 10.10 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.7 Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective September 9, 2019 (incorporated by reference to Exhibit 10.11 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.8 Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective November 14, 2019 (incorporated by reference to Exhibit 10.12 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.9 Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective April 8, 2020 (incorporated by reference to Exhibit 10.13 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.10 Amendment to the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan, effective March 15, 2021 (incorporated by reference to Exhibit 10.14 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.11 Form of Incentive Stock Option Agreement, granted under the Ginkgo Bioworks, Inc. 2008 Stock Incentive Plan (incorporated by reference to Exhibit 10.15 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 96 Table of Contents 10.12 Form of Restricted Stock Unit Agreement, granted under the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan (incorporated by reference to Exhibit 10.16 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.13 Form of Restricted Stock Agreement, granted under the Ginkgo Bioworks, Inc. 2014 Stock Incentive Plan (incorporated by reference to Exhibit 10.17 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.14 Form of Stock Option Agreement, granted under the Ginkgo Bioworks Holdings, Inc. 2021 Incentive Award Plan (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 15, 2022) 10.15 Form of Global Restricted Stock Unit Agreement, granted under the Ginkgo Bioworks Holdings, Inc. 2021 Incentive Award Plan (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 15, 2022) 10.16†‡ Lease Agreement, dated December 22, 2011, between Zoom Group LLC and Ginkgo Bioworks, Inc. (incorporated by reference to Exhibit 10.18 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.17† First Amendment to Lease Agreement, dated April 1, 2012 (incorporated by reference to Exhibit 10.19 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.18† Second Amendment to Lease, dated August 1, 2014 (incorporated by reference to Exhibit 10.20 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.19 Third Amendment to Lease, dated August 15, 2014 (incorporated by reference to Exhibit 10.21 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.20† Fourth Amendment to Lease, dated May 1, 2016 (incorporated by reference to Exhibit 10.22 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.21† Fifth Amendment to Lease, dated May 31, 2016 (incorporated by reference to Exhibit 10.23 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.22 Sixth Amendment to Lease, dated August 5, 2016 (incorporated by reference to Exhibit 10.24 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.23† Seventh Amendment to Lease, dated July 31, 2017 (incorporated by reference to Exhibit 10.25 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.24† Eighth Amendment to Lease, dated March 23, 2018 (incorporated by reference to Exhibit 10.26 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.25† Ninth Amendment to Lease, dated September 6, 2018 (incorporated by reference to Exhibit 10.27 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.26† Tenth Amendment to Lease, dated July 29, 2020 (incorporated by reference to Exhibit 10.28 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.27† Eleventh Amendment to Lease, dated August 14, 2020 (incorporated by reference to Exhibit 10.29 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 10.28† Twelfth Amendment to Lease, dated January 13, 2021 (incorporated by reference to Exhibit 10.30 to Amendment No. 1 to the Registration Statement on Form S-4 (File No. 333-256121), filed with the SEC on June 28, 2021) 97 Table of Contents 10.29† Thirteenth Amendment to Lease, dated September 6, 2021 (incorporated by reference to Exhibit 10.31 to the Registration Statement on Form S-1 (File No. 333-258712), filed with the SEC on September 15, 2021) 10.30 Fourteenth Amendment to Lease Agreement, dated June 1, 2022, by and between BCP-CG 27 Property LLC and Ginkgo Bioworks, Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 15, 2022) 10.31* Fifteenth Amendment to Lease Agreement, dated August 9, 2023, by and between BCP-CG 27 Property LLC and Ginkgo Bioworks, Inc. 10.32 Lease Agreement, dated March 18, 2016, by and between Jamestown 21-23-25 Drydock, L.P. and Ginkgo Bioworks, Inc. (incorporated by reference to Exhibit 10.31 to Amendment No. 1 to the Registration Statement (File No. 333-256121), filed with the SEC on June 28, 2021) 10.33†‡ First Amendment to Lease Agreement, dated August 13, 2018 (incorporated by reference to Exhibit 10.32 to Amendment No. 1 to the Registration Statement (File No. 333-256121), filed with the SEC on June 28, 2021) 10.34† Second Amendment to Lease Agreement, dated August 10, 2022, by and between IDB 21-25 Drydock Limited Partnership and Ginkgo Bioworks, Inc. (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 15, 2022) 10.35 Sublease, dated December 10, 2019, by and between Stanley Convergent Security Solutions, Inc., and Ginkgo Bioworks, Inc. (incorporated by reference to Exhibit 10.33 to Amendment No. 1 to the Registration Statement (File No. 333-256121), filed with the SEC on June 28, 2021) 10.36†‡ License Agreement, dated September 11, 2020, by and between Jamestown 21-23-25 Drydock, L.P. and Ginkgo Bioworks, Inc. (incorporated by reference to Exhibit 10.35 to Amendment No. 1 to the Registration Statement (File No. 333-256121), filed with the SEC on June 28, 2021) 10.37† Offer Letter, dated October 7, 2020, between Ginkgo Bioworks, Inc. and Mark Dmytruk (incorporated by reference to Exhibit 10.38 to Amendment No. 1 to the Registration Statement (File No. 333-256121), filed with the SEC on June 28, 2021) 10.38 Ginkgo Bioworks Holdings, Inc. Non-Employee Director Compensation Program (incorporated by reference to Exhibit 10.39 to Amendment No. 1 to the Registration Statement (File No. 333-256121), filed with the SEC on June 28, 2021) 10.39 Form of Founder Equity Grant Agreement (incorporated by reference to Exhibit 10.40 of SRNG’s Form S-4/A (File No. 333-256121), filed with the SEC on August 4, 2021) 10.40 Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.41 of SRNG’s Form S-4/A (File No. 333-256121), filed with the SEC on August 4, 2021) 10.41 Sponsor Support Agreement, dated as of May 11, 2021, by and among Eagle Equity Partners III, LLC, Ginkgo Bioworks, Inc., Soaring Eagle Acquisition Corp. and certain of its shareholders (incorporated by reference to Exhibit 10.4 of SRNG’s Current Report on Form 8-K (File No. 001-40097), filed with the SEC on May 11, 2021) 10.42 Voting Agreement, dated as of July 24, 2022, entered into by SVF Excalibur (Cayman) Limited (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 25, 2022) 21.1* Subsidiaries of the Registrant 23.1* Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 98 Table of Contents 97* Policy for Recoupment of Incentive Compensation 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) ________________________________________________________ * Filed herewith. † The annexes, schedules, and certain exhibits to this Exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant hereby agrees to furnish supplementally a copy of any omitted annex, schedule or exhibit to the SEC upon request. ‡ Certain confidential information contained in this Exhibit has been omitted because it is (i) not material and (ii) of the type that the registrant treats as private or confidential. + Indicates a management contract of compensatory plan. Item 16. Form 10-K Summary None. 99 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized . GINKGO BIOWORKS HOLDINGS, INC. Date: February 29, 2024 By: /s/ Jason Kelly Jason Kelly Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Name Title Date /s/ Jason Kelly Chief Executive Officer and Director February 29, 2024 Jason Kelly (Principal Executive Officer) /s/ Mark Dmytruk Chief Financial Officer February 29, 2024 Mark Dmytruk (Principal Financial Officer) /s/ Steven Coen Chief Accounting Officer February 29, 2024 Steven Coen (Principal Accounting Officer) /s/ Shyam Sankar Director, Chair of the Board February 29, 2024 Shyam Sankar /s/ Arie Belldegrun Director February 29, 2024 Arie Belldegrun /s/ Marijn Dekkers Director February 29, 2024 Marijn Dekkers /s/ Kathy Hopinkah Hannan Director February 29, 2024 Kathy Hopinkah Hannan /s/ Christian Henry Director February 29, 2024 Christian Henry /s/ Reshma Kewalramani Director February 29, 2024 Reshma Kewalramani /s/ Reshma Shetty President, Chief Operating Officer and Director February 29, 2024 Reshma Shetty /s/ Harry E. Sloan Director February 29, 2024 Harry E. Sloan 100 Table of Contents GINKGO BIOWORKS HOLDINGS, INC. Index to Consolidated Financial Statements as of December 31, 2023 and 2022 and for the Years Ended December 31, 2023, 2022 and 2021 Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F- 102 Consolidated Balance Sheets F- 104 Consolidated Statements of Operations and Comprehensive Loss F- 105 Consolidated Statements of Stockholders’ Equity F- 106 Consolidated Statements of Cash Flows F- 108 Notes to Consolidated Financial Statements F- 110 1. Organization and Basis of Presentation F- 110 2. Summary of Significant Accounting Policies F- 110 3. Acquisitions and Divestitures F- 120 4. Fair Value Measurements F- 131 5. Investments and Equity Method Investments F- 135 6. Variable Interest Entities F- 137 7. Goodwill and Intangible Assets, net F- 139 8. Leases F- 140 9. Warrant Liabilities F- 141 10. Supplemental Information F- 142 11. Commitments and Contingencies F- 145 12. Stockholders' Equity F- 147 13. Stock-Based Compensation F- 148 14. Revenue Recognition F- 153 15. Segment Information F- 154 16. Significant Collaborations Transactions F- 155 17. Employee Benefit Plans F- 166 18. Income Taxes F- 166 19. Net Loss per Share F- 169 20. Related Parties F- 170 21. Subsequent Events F- 171 101 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Ginkgo Bioworks Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Ginkgo Bioworks Holdings, Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 29, 2024 expressed an adverse opinion thereon. Adoption of New Accounting Standard As discussed in Note 2 to the consolidated financial statements, the Company changed its method for accounting for leases in 2022 due to the adoption of Accounting Standards Update (ASU) No. 2016-02 Leases (ASC 842), and the related amendment s. 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 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. 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. 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. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 102 Table of Contents Cell Engineering Revenue Recognition Description of the Matter Cell Engineering revenues were $143.5 million for the year ended December 31, 2023. As discussed in Note 2 to the consolidated financial statements, for certain Cell Engineering revenue agreements, the Company recognizes revenue over the period of performance using a measure of progress based on costs incurred to date as compared to total estimated costs. The Company evaluates its measure of progress to recognize revenue for these agreements at each reporting period and, as necessary, adjusts the measure of progress and related revenue recognition. Auditing Cell Engineering revenue recognized using a measure of progress is especially challenging because the determination of the measure of progress involves significant management judgment and assumptions related to the estimated costs to satisfy the applicable performance obligation under the agreement. How We Addressed the Matter in Our Audit To test the measure of progress used to recognize revenue for certain Cell Engineering revenue agreements, our audit procedures included, among others, evaluating the identified measure of progress by reviewing customer contracts and the contract analyses prepared by management. We also evaluated the accuracy and completeness of the underlying data used in management’s determination of the measure of progress. We tested management’s estimate of costs by performing inquiries of individuals responsible for managing the execution of the Cell Engineering revenue agreements and inspecting evidence related to the progress under the agreement. We also performed analytical comparisons of actual costs incurred compared to estimated remaining costs, compared management’s historical estimates of remaining costs to actual costs incurred, and performed sensitivity analyses over management’s estimates of costs. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2018. Boston, Massachusetts February 29, 2024 103 Table of Contents Ginkgo Bioworks Holdings, Inc. Consolidated Balance Sheets (in thousands, except per share data) As of December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 944,073 $ 1,315,792 Accounts receivable, net 17,157 80,907 Accounts receivable - related parties 742 1,558 Prepaid expenses and other current assets 39,777 51,822 Total current assets 1,001,749 1,450,079 Property, plant and equipment, net 188,193 314,773 Operating lease right-of-use assets 206,801 400,762 Investments 78,565 112,188 Equity method investments — 1,543 Intangible assets, net 82,741 111,041 Goodwill 49,238 60,210 Other non-current assets 58,055 88,725 Total assets $ 1,665,342 $ 2,539,321 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 9,323 $ 10,451 Deferred revenue (includes $ 5,426 and $ 10,309 from related parties) 44,486 47,817 Accrued expenses and other current liabilities 110,051 114,694 Total current liabilities 163,860 172,962 Non-current liabilities: Deferred revenue, net of current portion (includes $ 119,053 and $ 131,188 from related parties) 158,062 174,767 Operating lease liabilities, non-current 221,835 413,256 Warrant liabilities 5,700 10,868 Other non-current liabilities 18,733 31,191 Total liabilities 568,190 803,044 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock, $ 0.0001 par value; 200,000 shares authorized; none issued — — Common stock, $ 0.0001 par value (Note 12) 199 190 Additional paid-in capital 6,385,997 6,136,378 Accumulated deficit ( 5,290,528 ) ( 4,397,659 ) Accumulated other comprehensive income (loss) 1,484 ( 2,632 ) Total stockholders’ equity 1,097,152 1,736,277 Total liabilities and stockholders’ equity $ 1,665,342 $ 2,539,321 The accompanying notes are an integral part of these consolidated financial statements. F-104 Table of Contents Ginkgo Bioworks Holdings, Inc. Consolidated Statements of Operations and Comprehensive Loss (in thousands, except per share data) Year Ended December 31, 2023 2022 2021 Cell Engineering revenue (1) $ 143,531 $ 143,666 $ 112,989 Biosecurity revenue: Product 28,949 35,455 23,040 Service 78,975 298,585 177,808 Total revenue 251,455 477,706 313,837 Costs and operating expenses: Cost of Biosecurity product revenue 7,481 20,646 20,017 Cost of Biosecurity service revenue 46,524 183,570 109,673 Research and development 580,621 1,052,643 1,149,662 General and administrative 385,025 1,429,799 862,952 Impairment of lease assets 96,210 — — Total operating expenses 1,115,861 2,686,658 2,142,304 Loss from operations ( 864,406 ) ( 2,208,952 ) ( 1,828,467 ) Other income (expense): Interest income 57,217 20,262 837 Interest expense ( 93 ) ( 106 ) ( 2,373 ) Loss on equity method investments ( 2,635 ) ( 43,761 ) ( 77,284 ) Loss on investments ( 54,827 ) ( 53,335 ) ( 11,543 ) Change in fair value of warrant liabilities 5,168 124,970 58,615 Gain on settlement of partnership agreement — — 23,826 (Loss) gain on deconsolidation of subsidiaries ( 42,502 ) 31,889 — Other income (expense), net 9,138 7,634 ( 1,733 ) Total other income (expense), net ( 28,534 ) 87,553 ( 9,655 ) Loss before income taxes ( 892,940 ) ( 2,121,399 ) ( 1,838,122 ) Income tax benefit ( 71 ) ( 15,027 ) ( 1,480 ) Net loss ( 892,869 ) ( 2,106,372 ) ( 1,836,642 ) Loss attributable to non-controlling interest — ( 1,443 ) ( 6,595 ) Net loss attributable to Ginkgo Bioworks Holdings, Inc. stockholders $ ( 892,869 ) $ ( 2,104,929 ) $ ( 1,830,047 ) Net loss per share attributable to Ginkgo Bioworks Holdings, Inc. common stockholders : Basic $ ( 0.46 ) $ ( 1.25 ) $ ( 1.35 ) Diluted $ ( 0.46 ) $ ( 1.25 ) $ ( 1.39 ) Weighted average common shares outstanding: Basic 1,944,420 1,679,061 1,359,849 Diluted 1,944,420 1,679,839 1,360,373 Comprehensive loss: Net loss $ ( 892,869 ) $ ( 2,106,372 ) $ ( 1,836,642 ) Other comprehensive loss: Foreign currency translation adjustment 4,116 ( 917 ) ( 1,715 ) Total other comprehensive gain (loss) 4,116 ( 917 ) ( 1,715 ) Comprehensive loss $ ( 888,753 ) $ ( 2,107,289 ) $ ( 1,838,357 ) (1) Includes related party revenue of $ 22,222 , $ 38,813 , and $ 47,161 for the years ended December 31, 2023, 2022, and 2021, respectively. The accompanying notes are an integral part of these consolidated financial statements. F-105 Table of Contents Ginkgo Bioworks Holdings, Inc. Consolidated Statements of Stockholders’ Equity (in thousands) Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Non- Controlling Interest Total Stockholders’ Equity Balance as of December 31, 2020 1,288,596 $ 129 $ 929,125 $ ( 467,878 ) $ — $ 8,676 $ 470,052 Issuance of common stock upon exercise or vesting of equity awards 91,080 9 167 — — — 176 Vesting of restricted stock - earnouts 38,799 4 ( 4 ) — — — — Tax withholdings related to net share settlement of equity awards ( 797 ) — ( 9,463 ) — — — ( 9,463 ) Founder shares repurchase ( 2,707 ) — ( 24,998 ) — — — ( 24,998 ) Issuance of warrants to purchase Series D convertible preferred stock — — 300 — — — 300 Issuance of Series D and B convertible preferred stock upon exercise of warrants 1,014 — — — — — — Issuance of Series E convertible preferred stock in exchange for warrants 408 — — — — — — Issuance of common stock for a business acquisition 1,634 — 15,160 — — — 15,160 Issuance of common stock upon reverse recapitalization, net of offering costs (Note 3) 193,366 19 1,509,610 — — — 1,509,629 Assumption of Public and Private Placement Warrants — — ( 194,453 ) — — — ( 194,453 ) Contributions from non-controlling interests — — — — — 59,933 59,933 Stock-based compensation expense — — 1,579,400 — — — 1,579,400 Foreign currency translation — — — — ( 1,715 ) — ( 1,715 ) Net loss — — — ( 1,830,047 ) — ( 6,595 ) ( 1,836,642 ) Balance as of December 31, 2021 1,611,393 161 3,804,844 ( 2,297,925 ) ( 1,715 ) 62,014 1,567,379 Issuance of common stock upon exercise or vesting of equity awards 124,651 13 239 — — — 252 Tax withholdings related to net share settlement of equity awards ( 296 ) — ( 981 ) — — — ( 981 ) Issuance of common stock for business and asset acquisitions, net of issuance costs 114,517 12 279,733 — — — 279,745 Issuance of common stock pursuant to public offering, net of issuance costs 41,384 4 98,906 — — — 98,910 Issuance of common stock in exchange for services 327 — 1,000 — — — 1,000 Deconsolidation of subsidiaries — — — — — ( 55,408 ) ( 55,408 ) Acquisition of non-controlling interests — — 7,390 — — ( 7,390 ) — Adoption of ASC 842 — — — 5,195 — — 5,195 The accompanying notes are an integral part of these consolidated financial statements. F-106 Table of Contents Ginkgo Bioworks Holdings, Inc. Consolidated Statements of Stockholders’ Equity (in thousands) Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Non- Controlling Interest Total Stockholders’ Equity Stock-based compensation expense — — 1,945,247 — — 2,227 1,947,474 Foreign currency translation — — — — ( 917 ) — ( 917 ) Net loss — — — ( 2,104,929 ) — ( 1,443 ) ( 2,106,372 ) Balance as of December 31, 2022 1,891,976 190 6,136,378 ( 4,397,659 ) ( 2,632 ) — 1,736,277 Issuance of common stock upon exercise or vesting of equity awards 98,767 9 546 — — — 555 Tax withholdings related to net share settlement of equity awards ( 14 ) — ( 23 ) — — — ( 23 ) Settlement of contingent consideration 3,848 — 8,896 — — — 8,896 Issuance of common stock for asset acquisitions 4,771 — 6,820 — — — 6,820 Issuance of common stock in exchange for services 2,023 — 2,500 — — — 2,500 Forfeiture of restricted stock ( 56 ) — — — — — — Stock-based compensation expense and other — — 230,880 — — — 230,880 Foreign currency translation — — — — 4,116 — 4,116 Net loss — — — ( 892,869 ) — — ( 892,869 ) Balance as of December 31, 2023 2,001,315 $ 199 $ 6,385,997 $ ( 5,290,528 ) $ 1,484 $ — $ 1,097,152 The accompanying notes are an integral part of these consolidated financial statements. F-107 Table of Contents Ginkgo Bioworks Holdings, Inc. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities: Net loss $ ( 892,869 ) $ ( 2,106,372 ) $ ( 1,836,642 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 70,507 42,552 29,076 Stock-based compensation 229,884 1,930,641 1,606,020 Non-cash customer consideration ( 1,373 ) ( 34,263 ) ( 24,185 ) Loss on equity method investments 2,635 43,761 77,284 Loss on investments 54,827 53,335 11,543 Change in fair value of notes receivable 2,416 ( 3,757 ) 3,508 Change in fair value of warrant liabilities ( 5,168 ) ( 124,970 ) ( 58,615 ) Change in fair value of contingent consideration liability 9,168 ( 1,262 ) ( 293 ) Loss (gain) on deconsolidation of subsidiaries 42,502 ( 31,889 ) — Impairment of long-lived assets 121,404 — — Deferred income tax benefit ( 801 ) ( 14,609 ) — Loss on disposal of equipment 842 3,091 — Non-cash lease expense 28,313 19,082 — Non-cash in-process research and development 9,182 1,162 — Amortization of finance lease right-of-use assets 1,047 1,871 — Non-cash severance and retention bonus expense associated with an acquisition — 6,152 — Other non-cash activity 2,147 283 23 Changes in operating assets and liabilities: Accounts receivable ($( 644 ), $ 3,040 and $ 614 from related parties) 50,068 55,024 ( 114,094 ) Prepaid expenses and other current assets 10,473 ( 8,523 ) ( 3,607 ) Operating lease right-of-use assets 9,275 13,233 — Other non-current assets 2,570 921 ( 539 ) Accounts payable ( 1,183 ) ( 10,844 ) ( 2,247 ) Accrued expenses and other current liabilities 16,899 ( 39,639 ) 44,796 Deferred revenue, current and non-current ($( 17,018 ), $( 19,324 ) and $ 40,743 from related parties) ( 35,917 ) ( 36,417 ) ( 10,498 ) Operating lease liabilities, current and non-current ( 22,800 ) ( 10,792 ) — Deferred rent, non-current — — 6,032 Other non-current liabilities 452 31 18,620 Net cash used in operating activities ( 295,500 ) ( 252,198 ) ( 253,818 ) Cash flows from investing activities: Purchases of property and equipment ( 40,801 ) ( 52,271 ) ( 56,521 ) Deconsolidation of subsidiaries - cash ( 42,980 ) ( 55,721 ) — Business acquisitions, net of cash acquired — 82,367 ( 12,040 ) Asset acquisitions, net of cash acquired — ( 7,639 ) — Purchases of notes receivable (2022: $ 10,000 from related party) ( 350 ) ( 40,000 ) — Proceeds from notes receivable — 10,000 304 Purchase of investment in equity securities — ( 3,691 ) ( 5,000 ) Proceeds from sale of equipment 4,428 — — Other ( 990 ) ( 439 ) — Net cash used in investing activities ( 80,693 ) ( 67,394 ) ( 73,257 ) The accompanying notes are an integral part of these consolidated financial statements. F-108 Table of Contents Ginkgo Bioworks Holdings, Inc. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from financing activities: Proceeds from reverse recapitalization, net of redemptions of $ 867,253 and offering costs of $ 108,118 (Note 3) — — 1,509,629 Proceeds from exercise of stock options 93 240 167 Repurchases of common stock — — ( 24,998 ) Taxes paid related to net share settlement of equity awards ( 23 ) ( 981 ) ( 9,463 ) Principal payments on finance/capital leases and lease financing obligation ( 1,295 ) ( 1,237 ) ( 1,123 ) Contributions from non-controlling interests — — 59,933 Proceeds from public offering, net of issuance costs — 99,303 — Contingent consideration payment ( 1,411 ) ( 521 ) — Payment of equity issuance costs ( 580 ) ( 1,467 ) — Net cash (used in) provided by financing activities ( 3,216 ) 95,337 1,534,145 Effect of foreign exchange rates on cash and cash equivalents ( 588 ) 908 ( 19 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 379,997 ) ( 223,347 ) 1,207,051 Cash and cash equivalents, beginning of period 1,315,792 1,550,004 380,801 Restricted cash, beginning of period 53,789 42,924 5,076 Cash, cash equivalents and restricted cash, beginning of period 1,369,581 1,592,928 385,877 Cash and cash equivalents, end of period 944,073 1,315,792 1,550,004 Restricted cash, end of period 45,511 53,789 42,924 Cash, cash equivalents and restricted cash, end of period $ 989,584 $ 1,369,581 $ 1,592,928 The accompanying notes are an integral part of these consolidated financial statements. F-109 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 1. Organization and Basis of Presentation Business The mission of Ginkgo Bioworks Holdings, Inc. (“Ginkgo” or the “Company”) is to make biology easier to engineer. The Company designs custom cells for customers across multiple markets. Since inception, the Company has devoted its efforts to improving its platform for programming cells to enable customers to leverage biology to create impactful products across a range of industries. The Company’s platform comprises (i) equipment, robotic automation, software, data pipelines and tools, and standard operating procedures for high throughput cell engineering, fermentation, and analytics (referred to collectively as the “Foundry”), (ii) a library of proprietary biological assets and associated performance data (referred to collectively as “Codebase”), and (iii) the Company’s team of expert users, developers and operators of the Foundry and Codebase. With a mission to make biology easier to engineer, the Company has recognized the need to invest in biosecurity as a key component of its platform. The Company’s Biosecurity business is building a global infrastructure for biosecurity to empower governments, communities, and public health leaders to prevent, detect and respond to a wide variety of biological threats. On September 16, 2021, Soaring Eagle Acquisition Corp. (“SRNG”) consummated a merger transaction pursuant to a merger agreement (the “Merger Agreement”), by and among SRNG, SEAC Merger Sub Inc., a wholly owned subsidiary of SRNG (“Merger Sub”), and Ginkgo Bioworks, Inc. (“Old Ginkgo”), whereby Merger Sub merged with and into Old Ginkgo, the separate corporate existence of Merger Sub ceased and Old Ginkgo survived the merger as a wholly owned subsidiary of SRNG (the “SRNG Business Combination”). In connection with the consummation of the SRNG Business Combination, SRNG changed its name to “Ginkgo Bioworks Holdings, Inc.” and, among other transactions contemplated by the Merger Agreement, the existing equity holders of Old Ginkgo exchanged their equity interests of Old Ginkgo for equity interests of Ginkgo. See Note 3 for additional information on the SRNG Business Combination. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with the rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The SRNG Business Combination was accounted for as a reverse recapitalization, in accordance with GAAP (the “Reverse Recapitalization”). Under this method of accounting, SRNG was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Old Ginkgo issuing stock for the net assets of SRNG, accompanied by a recapitalization. The net assets of SRNG are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Old Ginkgo. The shares and corresponding capital amounts and loss per share prior to the Reverse Recapitalization have been retroactively restated to reflect the Exchange Ratio established in the Merger Agreement. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, majority owned subsidiaries and variable interest entities if the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated. As discussed in Note 3 , Acquisitions and Divestitures, effective October 3, 2023, the Company deconsolidated its wholly owned subsidiary, Zymergen Inc. (“Zymergen”), following Zymergen's filing for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. F-110 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. In the accompanying consolidated balance sheet, $ 4.4 million in inventory as of December 31, 2022 was reclassified from inventory, net to prepaid expenses and other current assets. Total current assets as of December 31, 2022 is not changed as a result of this reclassification. In the accompanying consolidated statements of cash flows, (i) $ 0.2 million and $ 0.6 million of changes in inventory were reclassified to changes in prepaid expenses and other current assets for the years ended December 31, 2022 and 2021, respectively, (ii) $ 1.3 million and $ 0.3 million was reclassified from other non-cash activity to change in fair value of contingent consideration liability for the years ended December 31, 2022 and 2021, respectively, and (iii) $ 1.2 million was reclassified from other non-cash activity to non-cash in-process research and development for the year ended December 31, 2022. The total cash used in operating activities for the years ended December 31, 2022 and 2021 is not changed as a result of these reclassifications. Variable Interest Entities The Company evaluates its variable interests in variable interest entities (“VIE”) and consolidates VIEs when the Company is the primary beneficiary. The Company determines whether it is the primary beneficiary of each VIE based on its assessment of whether the Company possesses both (i) the power to direct the activities that most significantly affect the VIE’s economic performance and (ii) the obligation to absorb losses that could be significant to the VIE or the right to receive benefits that could be significant to the VIE. The Company reevaluates the accounting for its VIEs upon the occurrence of events that could change the primary beneficiary conclusion. As of December 31, 2023 and 2022, the maximum risk of loss related to the Company’s VIEs was limited to the carrying value of its investment in such entities. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent liabilities in the consolidated financial statements. The Company bases its estimates on historical experience and other market-specific or relevant assumptions that it believes to be reasonable under the circumstances. Reported amounts and disclosures reflect the overall economic conditions that management believes are most likely to occur, and the anticipated measures management intends to take. Actual results could differ materially from those estimates. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash and cash equivalents, restricted cash, trade accounts receivable and notes receivable. The Company’s cash and cash equivalents and restricted cash are maintained in bank deposit accounts and money market funds that regularly exceed federally insured limits. The Company is exposed to credit risk on its cash, cash equivalents and restricted cash in the event of default by the financial institutions to the extent account balances exceed the amount insured by the Federal Deposit Insurance Corporation. The Company believes that it is not exposed to significant credit risk as its deposits are generally held in financial institutions that management believes to be of high credit quality. To date, the Company has not experienced any material write-offs related to its trade accounts receivable. A portion of the Company’s Biosecurity revenue is derived from sales of services to foreign government agencies in certain developing countries. The Company’s maximum credit risk exposure with respect to notes receivable is equivalent to the carrying value of the notes as of the balance sheet date. The Company mitigates this risk by requiring collateral for certain notes and monitoring the counterparty’s financial condition. For the year ended December 31, 2023, one customer within the Cell Engineering segment and one customer within the Biosecurity segment accounted for 12 % and 11 %, respectively, of the Company’s total revenue. For the year ended December 31, 2022, two customers within the Biosecurity segment each accounted for 11 % of the Company’s total revenue. For the year ended December 31, 2021, one customer within the Cell Engineering segment and one customer within the Biosecurity segment accounted for 11 % and 17 %, respectively, of the Company’s total revenue. Cash and Cash Equivalents The Company’s cash is comprised of bank deposits, overnight sweep accounts and money market funds. The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash F-111 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements equivalents. The carrying value of the Company’s cash and cash equivalents approximate fair value due to their short-term maturities. Restricted Cash Restricted cash primarily includes cash balances collateralizing letters of credit associated with the Company’s facility leases and a customer prepayment requiring segregation and restrictions in its use in accordance with the customer agreement. Restricted cash is included in prepaid expenses and other current assets and other non-current assets on the consolidated balance sheet. Allowance for Credit Losses The Company maintains an allowance for credit losses to provide for the estimated amounts of receivables that will not be collected over the estimated life of the assets. The allowance is calculated by considering previous loss history, delinquency of receivables balances, current economic conditions and anticipated future economic conditions in the geographies and industries in which the Company’s customers operate. To the extent an individual customer’s credit quality deteriorates, the Company measures an allowance based on the risk characteristics of the individual customer. Once a receivable is deemed to be uncollectible, such balance is charged against the allowance. The allowance is calculated at each reporting period with changes recorded to general and administrative expense in the consolidated statements of operations and comprehensive loss. Accounts receivable are net of an allowance for credit losses of $ 1.0 million and $ 1.1 million at December 31, 2023 and 2022, respectively. Property, Plant, and Equipment, net Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Land is stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the remaining lease term for leasehold improvements. Estimated lives of property, plant and equipment are as follows: Estimated Useful Life Computer equipment and software 2 to 5 years Furniture and fixtures 7 years Lab equipment 1 to 5 years Buildings and facilities 15 to 30 years Vehicles 5 years Leasehold improvements Shorter of useful life or remaining lease term Expenditures for maintenance and repairs are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation or amortization is removed from the balance sheet and any resulting gain or loss is recorded in other income (expense), net in the consolidated statements of operations and comprehensive loss. Construction in progress relates to assets which have not been placed in service as of period end. Equity Method Investments The Company utilizes the equity method to account for its investments in common stock, or in-substance common stock, when it possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The Company uses judgment when determining the level of influence over the operating and financial policies of the investee considering key factors including, among others, the Company’s ownership interest, representation on the board of directors, participation in policy-making decisions and material contractual arrangements and obligations. Income and losses are allocated based upon relative ownership interest unless there is a substantive profit-sharing agreement in place. For investments with a substantive profit-sharing agreement, the Company utilizes the hypothetical liquidation at book value (“HLBV”) method to allocate income and losses from the equity method investment. Under the HLBV method, the Company utilizes the capital account at the end of the period assuming the book value of the entity was liquidated or sold F-112 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements minus the same calculation at the beginning of the period. The difference is the share of earnings or losses attributable to the equity method investment. Under the equity method, if there is a commitment for the Company to fund the losses of its equity method investees, the Company would continue to record its share of losses resulting in a negative equity method investment, which would be presented as a liability on the consolidated balance sheet. Commitments may be explicit and may include formal guarantees, legal obligations, or arrangements by contract. Implicit commitments may arise from reputational expectations, intercompany relationships, statements by the Company of its intention to provide support, a history of providing financial support or other facts and circumstances. When the Company has no commitment to fund the losses of its equity method investees, the carrying value of its equity method investments will not be reduced below zero. The Company had no commitment to fund additional losses of its equity method investments during the years ended December 31, 2023, 2022 and 2021, other than dissolution costs for Joyn Bio, LLC (see Notes 3 and 6 ). The Company evaluates its equity method investments for impairment whenever events or circumstances indicate that the carrying value of the investment may not be recoverable. The Company considers the investee’s financial position, forecasts and economic outlook, and the estimated duration and extent of losses to determine whether a recovery is anticipated. An impairment that is other-than-temporary is recognized in the period identified. The Company has no t recognized an impairment loss related to its equity method investments for the years ended December 31, 2023, 2022 and 2021. The Company may elect the fair value option for its equity method investments on an investment-by-investment basis. For all equity method investments accounted for under the fair value option, the Company carries the equity method investment at fair value and records all subsequent changes in fair value as a component of loss on equity method investments in the consolidated statements of operations and comprehensive loss. Investments Investments include marketable equity securities in publicly-traded companies, non-marketable equity securities in privately-held companies, Simple Agreement for Future Equity (“SAFE”) and warrants, in each case, in which the Company does not possess the ability to exercise significant influence over the investee. Investments in marketable equity securities of publicly-traded companies and warrants are measured at fair value with subsequent changes in fair value recorded in loss on investments in the consolidated statements of operations and comprehensive loss. Investments in non-marketable equity securities of privately-held companies and SAFEs, which do not have readily determinable fair values, are carried at cost, less any impairments, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Each period the Company assesses relevant transactions to identify observable price changes, and the Company regularly monitors these investments to evaluate whether there is an indication of impairment. The Company evaluates whether an investment’s fair value is less than its carrying value using an estimate of fair value, if such an estimate is available. For periods in which there is no estimate of fair value, the Company evaluates whether an event or change in circumstances has occurred that may have a significant adverse effect on the value of the investment. See Notes 4 and 5 for additional information on Investments. Fair Value Measurements The Company categorizes its assets and liabilities measured at fair value in accordance with the authoritative accounting guidance that establishes a consistent framework for measuring fair value and requires disclosures for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. ASC 820, Fair Value Measurement (“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. F-113 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 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 among the following: • Level 1- Quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2- Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and • Level 3- Unobservable inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. To the extent that the valuation is based on models or inputs that are either 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. The Company valued its money market fund holdings, notes receivable, marketable equity securities, warrant liabilities and contingent consideration liabilities at fair value on a recurring basis. The carrying amounts of the Company’s other financial instruments, which include accounts receivable, certain prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities approximate their fair values due to their short-term nature. Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book values of the assets exceed their fair value. See Notes 8 and 10 for a description of impairment losses recorded on long-lived assets. Business Combinations The Company accounts for business combinations using the acquisition method of accounting. The Company recognizes the identifiable assets acquired and liabilities assumed at their acquisition-date fair values and recognizes any excess of the total consideration paid over the fair value of the identifiable net assets as goodwill. Any purchase price that is considered contingent consideration is measured at its estimated fair value at the acquisition date and remeasured at each reporting period, with changes in estimated fair value recorded in general and administrative expenses in the consolidated statements of operations and comprehensive loss. Acquisition transaction costs are expensed when incurred. The operating results of an acquisition are included in the Company’s consolidated financial statements as of the acquisition date. Intangible Assets, net Intangible assets, net consist of certain definite-lived assets including patents, processes and know-how related to technology acquired through business combinations and asset acquisitions. The Company amortizes such intangible assets on a straight-line basis over their estimated useful life. The Company reviews intangible assets for impairment whenever events or changes in circumstances have occurred which could indicate that the carrying value of the assets are not recoverable. Recoverability is measured by comparing the carrying value of the intangible assets to the future undiscounted cash flows expected to be generated by the asset. In determining the expected future cash flows, the Company uses assumptions believed to be reasonable, but which are unpredictable and inherently uncertain. Actual future cash flows may differ from the estimates used in impairment testing. The Company recognizes an impairment loss when and to the extent that the estimated fair value of an intangible asset is less than its carrying value. The Company has no t recognized an impairment loss for the years ended December 31, 2023, 2022 and 2021. F-114 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Goodwill Goodwill represents the excess of acquisition cost over the fair market value of the net assets acquired. Goodwill is tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. The Company considers various qualitative factors that could indicate impairment such as macroeconomic conditions, industry and market environment, technological obsolescence, overall financial performance of the Company, cash flow from operating activities and market capitalization. If the qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, the Company performs a quantitative assessment to compare the fair value of the reporting unit to its carrying value, including goodwill. If the carrying value of the reporting unit exceeds the fair value, an impairment loss is recognized. A combination of the income approach and the market approach may be used to determine fair value of the reporting unit. The Company has no t recognized an impairment loss for the years ended December 31, 2023, 2022 and 2021. A portion of the goodwill balance was eliminated following the deconsolidation of Zymergen (see Notes 3 and 7 ). Leases The Company adopted ASU 2016-02, Leases (Topic 842) (“ASC 842”) on January 1, 2022 using the modified retrospective approach with a cumulative-effect adjustment to the opening balance of accumulated deficit in the period of adoption. In accordance with ASC 842, the Company determines if an arrangement is or contains a lease at contract inception based on the terms and conditions in the contract. A contract contains a lease if there is an identified asset and the Company has the right to control the asset. For leases with terms greater than 12 months, the Company recognizes a right-of-use asset (“ROU asset”) and a lease liability as of the lease commencement date on the balance sheet. ROU assets represent the Company’s right to use an underlying asset over the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Lease ROU assets and liabilities are measured based on the present value of fixed lease payments that are unpaid as of the lease commencement date. The Company’s ROU assets balance is reduced by any initial direct costs and lease incentives received or expected to be received. Some of the Company's leases include options to extend or terminate the lease; these options are included in the lease term for calculations of its ROU assets and liabilities when it is reasonably certain that the Company will exercise those options. The Company’s leases are classified as either operating or finance, as determined at inception, with the classification affecting the pattern of expense recognition in the statement of operations. A lease is classified as a finance lease if risks and rewards are conveyed without the transfer of control. For operating leases, expense is generally recognized on a straight-line basis over the lease term. For finance leases, interest on the lease liability is recognized using the effective interest method, while the ROU asset is amortized on a straight-line basis from the commencement date to the earlier of the end of the useful life of the ROU asset or the end of the lease term. Leases with an initial term of 12 months or less which meet the definition of a short-term lease are not recorded on the balance sheet and the lease expense for these leases is recognized on a straight-line basis over the lease term. In limited instances, the Company acts as a lessor, primarily with certain real estate subleases. Finance leases, short-term leases and subleases are not a significant component of the Company's financial condition or results of operations. The current portion of the Company’s operating lease liabilities is included in accrued expenses and other current liabilities on the balance sheet. The Company has lease agreements with both lease and non-lease components (such as real estate taxes, insurance and common area maintenance charges) and has elected the practical expedient to combine these lease and non-lease components for its real estate leases and non-lab equipment leases. The Company has not elected this practical expedient for lab equipment leases and the lease and non-lease components are accounted for separately for these leases. Non-lease components are typically variable in nature and are recognized as lease expense in the period in which they arise. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments and uses the implicit rate when readily determinable. The Company’s incremental borrowing rate is based on management’s estimate of the rate of interest the Company would have to pay to borrow on a fully collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Revenue Recognition The Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue when the customer obtains control of the promised goods or services at F-115 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the promises and distinct performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligations. Cell Engineering Revenue The Company generates license and service revenue through the execution of license and collaboration agreements whereby customers obtain license rights to the Company’s proprietary technology and intellectual property for use in the research, development and commercialization of engineered organisms, and derived products. Under these agreements, the Company typically provides research and development services, which includes the provision of a license to the Company’s intellectual property. Additionally, the customer obtains license rights to the output of the Company’s services in order to commercialize the resulting output of such services. Generally, the terms of these agreements provide that the Company receives some combination of: (1) service fees in the form of (i) upfront payments upon consummation of the agreement or other fixed payments, (ii) reimbursement for costs incurred for research and development services and (iii) milestone payments upon the achievement of specified technical criteria, plus (2) downstream value share payments in the form of (i) milestone payments upon the achievement of specified commercial criteria, (ii) royalties on sales of products from or comprising engineered organisms arising from the collaboration or licensing agreement and (iii) royalties related to cost of goods sold reductions realized by customers. The Company’s collaboration and licensing agreements often contain multiple promises, including (i) licenses and assignments of intellectual property and materials and (ii) research and development services, and the Company determines whether each of the promises is a distinct performance obligation based on the nature of each agreement. As the Company is generally performing research and development services that are highly integrated and interrelated to the licenses and assignments of intellectual property and materials, the promises are generally inseparable. As such, the Company typically combines the research and development services, licenses, and assignments into a single performance obligation. However, for certain agreements, the Company only grants licenses or effects such transfers and assignments upon the successful completion of the research and development services or delivery of a developed product. For these agreements, the Company typically considers (i) the research and development services and (ii) the licenses, transfers, and assignments as distinct performance obligations, as each is transferred separately and has a separately identifiable benefit. Options to acquire additional goods and services are evaluated to determine if such options provide a material right to the counterparty that it would not have otherwise received without entering into the contract. If so, the option is accounted for as a separate performance obligation. If not, the option is considered a marketing offer which is accounted for as a separate contract upon the counterparty’s election of the option. At contract inception, the Company determines the transaction price, including fixed consideration and any estimated amounts of variable consideration. Any upfront cash payment received upon consummation of the agreement is fixed and generally nonrefundable. Variable consideration is subject to a constraint, and amounts are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration may include reimbursement for costs incurred for the Company’s research and development efforts, milestone payments upon the achievement of certain technical and commercial criteria, and royalties on sales of products from or comprising engineered organisms arising from the agreement. With respect to the research and development reimbursements and milestone payments, the Company uses the most likely amount method to estimate variable consideration. With respect to agreements that include royalties on sales or other contingent payments based on sales, the Company applies the royalty recognition constraint which requires a constraint until the royalty or value-sharing transaction occurs. Certain agreements contain payment in the form of shares of equity securities or other financial instruments that are convertible into equity upon a triggering event. Any non-cash consideration is measured at the estimated fair value of the non-cash consideration at contract inception. For equity securities and financial instruments received that are not actively traded, the Company generally engages a third-party valuation specialist to determine the estimated fair value of the upfront non-cash consideration. The fair value is generally determined based on a recent round of financing or by using a scenario-based valuation model. Significant unobservable inputs are used in the fair value measurements including expectations regarding future financings of the customer, scenario dates and probabilities, expected volatility, discount F-116 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements rates and recovery rates. Changes in these assumptions can materially affect the value of the non-cash consideration at contract inception and, accordingly, the total amount of revenue recognized for the contract. For agreements with promises that are combined into a single performance obligation, the entire transaction price is allocated to the single performance obligation. For agreements with multiple performance obligations, the transaction price is allocated to the performance obligations using the relative standalone selling price methodology. For agreements featuring variable consideration, the Company allocates variable consideration to one or more, but not all, performance obligations if certain conditions are met. Specifically, the Company assesses whether the variable consideration relates solely to its efforts to satisfy the performance obligation and whether allocating such variable consideration entirely to the performance obligation is consistent with the overall allocation objective. If these conditions are not met, the Company allocates the variable consideration based on the relative standalone selling price methodology. The key assumptions utilized in determining the standalone selling price for each performance obligation include development timelines, estimated research and development costs, commercial markets, likelihood of exercise (in the case of options considered to be material rights), and probabilities of success. For agreements where the licenses or assignments are considered separate performance obligations or represent the only performance obligation, the Company recognizes revenue at the point in time that the Company effectively grants the license as the licenses or assignments represent functional intellectual property. For agreements where the licenses and the research and development services represent a combined performance obligation, the Company recognizes revenue over the period of performance using a measure of progress based on costs incurred to date as compared to total estimated costs. The Company evaluates its measure of progress to recognize revenue at each reporting period and, as necessary, adjusts the measure of progress and related revenue recognition. The Company’s measure of progress and revenue recognition involves significant judgment and assumptions, including, but not limited to, estimated costs and timelines to complete its performance obligations. The Company evaluates contract modifications and amendments to determine whether any changes should be accounted for prospectively or on a cumulative catch-up basis. The Company utilizes the right to invoice practical expedient when it has a right to consideration in an amount that corresponds directly with the value of the Company’s performance to date. Royalties are recognized as revenue when sales have occurred as the Company applies the sales or usage-based royalties recognition constraint. The Company has determined the application of this exception is appropriate because the license granted in the agreement is the predominant item to which the royalties relate. As the Company receives upfront payments for technical services under certain of its arrangements, the Company evaluates whether any significant financing components exist given the term over which the fees will be earned may exceed one year. Based on the nature of the Company’s agreements, there are no significant financing components as the purpose of the upfront payment is not to provide financing, but rather to secure technical services, exclusivity rights, and Foundry capacity, or the timing of transfer of those goods or services is at the discretion of the customer. Deferred revenue represents consideration received by the Company in excess of revenue recognized and primarily results from transactions where the Company receives upfront payments and non-cash equity consideration. In instances where the Company has received consideration in advance for an undefined number of technical development plans (“TDPs”) under its customer agreements, the Company records the advance payments as deferred revenue, net of current portion on the consolidated balance sheet. Upon the execution of a specific TDP, the Company reclassifies the estimated consideration to be earned under that TDP within the next twelve months as current deferred revenue. The Company also classifies unexercised material rights related to future TDPs as deferred revenue, net of current portion on the consolidated balance sheet. When a TDP is executed, and the material right is exercised, the amount allocated to the material right, which will be earned within the next twelve months, is reclassified to current deferred revenue. All other deferred revenue is classified as current or non-current based on the timing of when the Company expects to earn the underlying revenue based upon the projected progress of activities under the TDP. Biosecurity Revenue The Company has generated Biosecurity revenue through its commercial pathogen testing, sequencing, and analysis services provided to governments and other organizations. Service revenue also consists of biomonitoring and bioinformatic support services. The Company recognizes product and service revenue using the five-step model under ASC 606. F-117 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Before the fourth quarter of 2023, product revenue consisted of sales of lateral flow assay (“LFA”) diagnostic test kits, polymerase chain reaction (“PCR”) sample collection kits, and pooled test kits, which the Company sold to customers on a standalone basis. Product revenue was billed and recognized when the test kits were shipped, and risk of loss is transferred to the carrier. The Company’s test kits were generally not subject to a customer right of return except for product recalls under the rules and regulations of the U.S. Food and Drug Administration (“FDA”). The Company elected to include shipping and handling fees billed to customers as a component of Biosecurity revenue. Service revenue generally consists of multiple promised goods and services including, but not limited to, sample collection, sample storage and transportation, outsourced laboratory analysis, access to results reported through a web-based portal, analytical reporting of results, and overall program management. Service revenue is generally recognized ratably over time as the related services are performed, which depicts the pattern of transfer to the customer. The Company’s contracts with customers are generally two years or less in length and contain a fixed amount of consideration. Under typical payment terms for testing services, amounts are billed monthly in arrears for services performed or in advance based on contractual billing terms. Options to acquire additional goods and services are evaluated to determine whether they provide the counterparty with a material right that it would not have otherwise received without entering into the contract. If so, the option is accounted for as a separate performance obligation. If not, the option is considered a marketing offer, and upon the counterparty's election of the option, it is accounted for as a separate contract. Cost of Biosecurity Revenue The cost of Biosecurity service revenue consists of costs related to the Company's end-to-end pathogen testing, sequencing, and analysis services. This includes costs incurred for sample collection equipment and materials, outsourced laboratory analysis, access to results reported through a proprietary web-based portal, and reporting of results to public authorities. Additionally, the cost of Biosecurity service revenue includes direct labor cost associated with bioinformatics, lab network management, delivery logistics, and customer support. Before the fourth quarter of 2023, cost of Biosecurity product revenue consisted of costs associated with the sale of diagnostic and sample collection test kits, which included costs incurred to purchase test kits from third parties. Research and Development Costs Research and development costs are expensed as incurred. Research and development costs consist of direct and indirect internal costs related to specific projects and initiatives, acquired intellectual property deemed to be in-process research and development, as well as fees paid to other entities that conduct certain research and development activities on the Company’s behalf. Patent Costs The Company expenses all costs as incurred in connection with the filing, prosecution, maintenance, defense, and enforcement of patent applications, including direct application fees and related legal and consulting expenses. Patent costs are included in general and administrative expenses within the consolidated statements of operations and comprehensive loss. Stock-Based Compensation The Company measures and recognizes compensation expense for all stock-based awards based on estimated grant-date fair values recognized over the requisite service period. For awards that vest solely based on a service condition, the Company recognizes compensation expense on a straight-line basis over the requisite service period. For awards that vest based on multiple conditions, the Company recognizes compensation expense using the accelerated attribution method on a tranche-by-tranche basis over the requisite service period such that the amount of compensation expense recognized at each reporting period is at least equal to the vested tranches at that date. For awards with a performance-based vesting condition, the Company recognizes stock-based compensation when achievement of the performance condition is deemed probable. Upon achieving a performance condition that was not previously considered as probable, the Company records a cumulative catch-up adjustment to reflect the portion of the grantee’s requisite service that has been provided to date. For awards with market conditions, the compensation expense recognized over the requisite service period is not reversed if the market condition is not satisfied. The Company recognizes forfeitures as they occur. F-118 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements The Company estimates the grant date fair value of stock options using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including expected term, expected volatility, risk-free interest rate and expected dividend yield. The expected term is determined using the “simplified” method, which estimates the expected term as the average of the vesting term plus the contractual term. The Company uses the “simplified” method as it does not have sufficient historical data regarding employee exercise behavior. Expected volatility is based on the historical volatility of the stock prices of similar publicly traded peer companies. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the stock options. The Company has not paid, and does not expect to pay, dividends in the foreseeable future. For awards with market conditions, the Company recognizes stock-based compensation based on the estimated grant date fair value of the awards determined using a Monte Carlo simulation model, which incorporates various assumptions including expected stock price volatility, risk-free interest rates, expected term, and expected dividend yield. The Company estimates volatility using a weighted average of its own historical volatility and the historical volatility of selected comparable publicly-traded companies due to the limited time period of historical market data for the Company's Class A common stock. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the awards. The expected term is equal to the contractual term and a dividend yield of zero is assumed. Income Taxes The Company accounts for income taxes using the asset and liability method, which 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. Under this method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of the assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Potential for recovery of deferred tax assets is evaluated by considering several factors, including estimating the future taxable profits expected, estimating future reversals of existing taxable temporary differences, considering taxable profits in carryback periods, and considering prudent and feasible tax planning strategies. The Company accounts for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in the law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity, and changes in facts or circumstances related to a tax position. The Company evaluates uncertain tax positions on an annual basis and adjusts the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes. As of December 31, 2023 and 2022, the Company did no t have any uncertain tax positions and no accrued interest or penalties related to uncertain tax positions. The Company does not expect a material change in unrecognized tax benefits in the next twelve months. Comprehensive Loss Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Other comprehensive loss consists of foreign currency translation adjustments. Net Loss per Share The Company follows the two-class method when computing net loss per share attributable to Ginkgo Bioworks Holdings, Inc. common stockholders as the Company has issued shares that meet the definition of participating securities. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires earnings for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all earnings for the period had been distributed. During periods of loss, there is no allocation required under the two-class method since the participating securities do not have a contractual obligation to fund the losses of the Company. F-119 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Basic net loss per share is computed by dividing the net loss attributable to Ginkgo Bioworks Holdings, Inc. common stockholders 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 increased to include the effect of dilutive potential common shares, such as outstanding stock options, unvested restricted stock awards, unvested restricted stock units, warrants and contingently issued shares. Dilutive securities are excluded from the calculation of diluted weighted average common shares outstanding if their effect would be anti-dilutive based on the treasury stock method. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures . The amendments in this ASU eliminate the accounting guidance for troubled debt restructurings (“TDRs”) by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Specifically, rather than applying the recognition and measurement guidance for TDRs, an entity must evaluate whether a modification results in a new loan or a continuation of an existing loan. The Company adopted ASU 2022-02 on January 1, 2023. The adoption of ASU 2022-02 did not have a material impact on the Company’s consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), which focuses on improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU require that public business entities on an annual basis (1) disclose specific categories in the tabular rate reconciliation, using both percentages and reporting currency amounts, and (2) provide additional information for reconciling items that meet a quantitative threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The amendments in this ASU are effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments should be applied on a prospective basis, with retrospective application permitted. The Company is currently evaluating the impact that this ASU will have on its disclosures in the consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) . This standard requires that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, as well as other segment items and a description of its components. Additionally, it requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU does not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that this ASU will have on its disclosures in the consolidated financial statements. In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions . This standard clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security, and therefore is not considered in measuring fair value. It also introduces required disclosures for equity securities subject to contractual sale restrictions. This standard becomes effective for the Company on January 1, 2024, with early adoption permitted. The Company does not expect the adoption of the ASU to have a material impact on the Company’s consolidated financial statements and related disclosures. 3. Acquisitions and Divestitures Fiscal 2022 Acquisitions Zymergen On October 19, 2022 (the “Zymergen Closing Date”), the Company acquired all of the outstanding equity of Zymergen Inc. (“Zymergen”), a company that specializes in integrating computational and manufacturing technologies to design, F-120 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements develop, and commercialize bio-based breakthrough products in a broad range of industries (the “Zymergen Acquisition”). Under the merger agreement (“Agreement and Plan of Merger”), on the Zymergen Closing Date, each share of Zymergen common stock that was issued and outstanding as of immediately prior to the effective time was automatically cancelled, extinguished and converted into the right to receive 0.9179 shares of the Company’s Class A common stock and cash in lieu of any fractional shares. The following table summarizes the acquisition date fair value of the purchase price consideration transferred for Zymergen (in thousands): Fair value of Class A common stock issued to Zymergen shareholders (1) $ 236,331 Fair value of replacement Ginkgo RSUs and Ginkgo Class A common stock issued under Zymergen RIFs attributable to pre-combination services (2) 1,571 Less: Cash severance and retention bonuses incurred for the benefit of the combined company (3) ( 6,152 ) Total Zymergen purchase price consideration $ 231,750 (1) As consideration for the Zymergen Acquisition, the Company delivered to Zymergen stockholders 99.4 million shares of its Class A common stock, of which approximately 96.9 million represents consideration transferred for the Zymergen Acquisition under ASC 805. The fair value of the Company’s Class A common stock issued as consideration transferred was determined based on $ 2.44 per share, which was the closing price of the Company’s Class A common stock on the Zymergen Closing Date. An immaterial amount related to the incremental value received by the holders of Zymergen stock options was excluded from total consideration transferred and recognized as post-combination compensation expense. (2) Represents the fair value of the replacement Ginkgo RSUs and Ginkgo Class A common stock issued under the Zymergen RIFs attributable to pre-combination services. The remaining portion of the fair value is associated with future service and will be recognized as stock-based compensation expense in the period subsequent to the Zymergen Acquisition over the remaining service period. (3) Represents cash bonuses payable to Zymergen employees in accordance with Zymergen severance and retention plans at the Zymergen Closing Date. These payments were determined to be for the benefit of the combined company, and accordingly, a portion of the fair value otherwise recognized as consideration transferred was allocated to post-combination compensation expense. The Zymergen Acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations ("ASC 805"). The Company allocated the consideration transferred to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date. During 2023, as a result of updated information about facts and circumstances that existed at the acquisition date regarding the collectability of an acquired accounts receivable balance and accrued expenses under a collaboration agreement, the Company recorded a measurement period adjustment to the estimated fair values initially recorded as of October 19, 2022, which resulted in a decrease to goodwill of $ 2.2 million, an increase to accounts receivable of $ 1.8 million, and a decrease to accrued expenses and other current liabilities of $ 0.4 million. Goodwill is primarily attributed to Zymergen’s assembled workforce and the expected synergies from combining operations and has been assigned to the Cell Engineering segment. Goodwill is not expected to be deductible for tax purposes F-121 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements The following table presents the final allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date (in thousands): Final Allocation Cash and cash equivalents $ 150,553 Accounts receivable 2,817 Inventory 1,166 Prepaid expenses and other current assets 11,592 Property and equipment 97,194 Operating lease right-of-use assets 205,349 Intangible assets 18,600 Goodwill 10,660 Other non-current assets 11,898 Accounts payable ( 13,907 ) Deferred revenue ( 8,189 ) Accrued expenses and other current liabilities ( 55,541 ) Operating lease liabilities ( 194,582 ) Deferred tax liability ( 5,690 ) Other non-current liabilities ( 171 ) Net assets acquired $ 231,750 The fair value of intangible assets was determined using the relief from royalty method of the income approach. The fair value measurements were primarily based on significant inputs not observable in the market and thus represent a Level 3 measurement. The significant inputs used included the estimated annual net cash flows (including projected revenues attributable to the asset, royalty rates and obsolescence rates), and the discount rate that reflects the risks inherent in the future cash flows. Property and equipment is mostly comprised of lab equipment, leasehold improvements and construction in progress. The fair value of property and equipment was primarily determined using the cost approach, which estimates fair value by determining the replacement or reproduction cost of an asset of comparable utility, adjusted for loss in value due to depreciation and economic obsolescence. The following table presents the final purchase price allocation and remaining useful lives for identifiable intangible assets acquired as of the acquisition date (in thousands): Estimated fair value Estimated useful life (in years) Developed technology $ 14,900 10 Database 3,700 7 Total $ 18,600 In conjunction with the Agreement and Plan of Merger, Zymergen initiated a reduction-in-workforce implemented in stages (each a “RIF”) for the benefit of the combined company. Under the RIFs, employees received enhanced severance benefits consisting of cash bonuses and accelerated vesting of their outstanding Zymergen restricted stock units ("Zymergen RSU"). These benefits were triggered upon a change in control occurring within twelve months of the employee’s termination date. The Company recognized $ 11.1 million in cash-based severance and stock-based compensation costs in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022 related to the RIFs. In August and September 2022, Zymergen also approved the grant of retention bonuses to certain employees denominated in cash and/or Zymergen RSUs designed to retain and reward key talent of Zymergen during the pendency of the proposed Zymergen Acquisition and thereafter. These retention bonuses were deemed for the benefit of the combined company. A portion of the retention bonuses vested and became payable upon the closing of the Zymergen Acquisition, with the remaining portion recognized as post-combination compensation expense over the requisite service period. The Company F-122 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements recognized $ 7.4 million in cash-based retention and stock-based compensation costs in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022. The Company’s revenue and net loss for the year ended December 31, 2022 included $ 2.2 million and $ 26.0 million, respectively, from Zymergen since the Zymergen Closing Date. The Company incurred transaction and integration costs of $ 11.9 million during fiscal year 2022, which were included in general and administrative expenses, inclusive of a success fee which was partly paid in 0.3 million shares of Ginkgo Class A common stock. Additionally, the Company incurred $ 1.7 million of equity issuance costs during fiscal year 2022, which were included in additional paid-in capital in the consolidated balance sheet. Supplemental Pro Forma Information (unaudited) The following supplemental pro forma financial information presents the combined results of operations of the Company and Zymergen as if the acquisition had occurred on January 1, 2021. The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the operating results that would have been realized if the Zymergen Acquisition had been completed on January 1, 2021, or of future operating results. The pro forma financial information reflects pro forma adjustments to give effect to certain events the Company believes to be directly attributable to the Zymergen Acquisition, including depreciation and amortization expense related to acquired tangible and intangible assets, acquisition-related costs, stock-based compensation expense, retention and severance bonuses, and adjustments to align inventory and leasing accounting policies. Year Ended December 31, (in thousands) 2022 2021 Total revenue $ 489,670 $ 330,580 Net loss $ ( 2,366,005 ) $ ( 2,235,586 ) Zymergen Bankruptcy and Deconsolidation On October 3, 2023, Zymergen and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the “Zymergen Bankruptcy”) in the U.S. Bankruptcy Court for the District of Delaware (“Bankruptcy Court”). Neither the Company nor any of its other subsidiaries filed for bankruptcy protection. Zymergen has been operated as a distinct legal entity, separate and apart from the Company, since it was acquired in October 2022. Shortly after its acquisition, the Company entered into a non-exclusive license with Zymergen with respect to Zymergen’s intellectual property, including its databases, automation, and software capabilities. In connection with the Zymergen Bankruptcy, also on October 3, 2023, the Company entered into an asset purchase agreement with Zymergen (the “Zymergen APA”) as the stalking horse bidder under Section 363 of the U.S. Bankruptcy Code to acquire exclusive rights to substantially all of Zymergen’s intellectual property assets and certain other assets. The Company’s bid included a $ 6.2 million cash component and the potential assumption of a facility lease (previously included in the Company's consolidated financial statements prior to Zymergen's deconsolidation discussed below) with a remaining minimum commitment of $ 37.4 million and a remaining lease term of approximately 9 years. The Company’s bid also included an undertaking by the Company to offer employment to 91 of Zymergen’s employees (provided such employees remain employed by Zymergen at the closing of the transactions contemplated by the Zymergen APA) whereby the Company would assume any post-closing employment obligations and maintain salary and certain employee benefits levels for a one-year period. On December 14, 2023, Zymergen concluded its auction. On December 21, 2023, the Bankruptcy Court approved the sale of substantially all of Zymergen’s assets to the Company through certain of the Company's affiliates as contemplated by the Zymergen APA. While as of December 31, 2023, Zymergen remained a wholly-owned subsidiary of the Company, as a result of the bankruptcy proceedings, the Company no longer had a controlling financial interest over Zymergen as defined under ASC 810, Consolidation , and therefore has deconsolidated Zymergen’s financial position as of October 2, 2023. The deconsolidation included the derecognition of the carrying amounts of Zymergen’s consolidated assets and liabilities that were previously included in the Company’s consolidated financial statements. Upon deconsolidation, the Company recorded a loss of $ 42.5 million, representing the remaining net book value of the Company’s investment that was reduced to a fair value of zero . Subsequent to the deconsolidation, the Company accounts for its investment in Zymergen using the cost method of accounting, which is recorded at zero in the Company’s consolidated balance sheet as of December 31, F-123 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 2023. Zymergen’s results of operations were removed from the Company’s consolidated statements of operations and comprehensive loss beginning October 3, 2023. The historical financial results for Zymergen have not been classified as a discontinued operation because it does not represent a strategic shift with a major effect on the Company's operations and financial results. The following table presents Zymergen’s consolidated assets and liabilities which have been deconsolidated from the Company's consolidated balance sheet as of October 2, 2023. The amounts presented are before the elimination of intercompany balances. October 2, 2023 Assets Current assets: Cash and cash equivalents $ 34,321 Accounts receivable, net 11,047 Prepaid expenses and other current assets 11,190 Total current assets 56,558 Property, plant and equipment, net 8,938 Operating lease right-of-use assets 135,800 Intangible assets, net 16,679 Goodwill 10,660 Other non-current assets 19,486 Total assets 248,121 Liabilities Current liabilities: Deferred revenue 730 Accrued expenses and other current liabilities 20,426 Total current liabilities 21,156 Non-current liabilities: Operating lease liabilities, non-current 184,301 Other non-current liabilities 172 Total liabilities 205,629 Net assets deconsolidated $ 42,492 F-124 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements The following table presents Zymergen’s results of operations for the periods presented, included in the Company's consolidated statements of operations and comprehensive loss prior to the elimination of intercompany balances. Period from January 1, 2023 - October 2, 2023 Period from October 19, 2022 - December 31, 2022 Total revenue $ 8,370 $ 2,249 Total operating expenses 200,975 29,459 Loss from operations ( 192,605 ) ( 27,210 ) Total other income, net 23,620 1,260 Loss before income taxes ( 168,985 ) ( 25,950 ) Income tax provision 14 3 Net loss $ ( 168,999 ) $ ( 25,953 ) Related Party Transactions Prior to the deconsolidation, the Company had an existing employee leasing arrangement with Zymergen. The employee leasing charges were considered intercompany transactions and were eliminated in the Company's consolidated financial statements. As of the deconsolidation date, the employee leasing charges are now considered related party transactions and have been recognized in the Company's consolidated financial statements. Employee lease expense totaled $ 4.9 million for the period from October 3, 2023 to December 31, 2023. The Company had $ 1.7 million due to Zymergen as of December 31, 2023 included in accrued expenses and other current liabilities on the balance sheet. Bayer Acquisition and Joint Venture Dissolution On October 17, 2022, the Company completed an asset purchase under the Asset Purchase Agreement (“APA”) with Bayer CropScience LP, a Delaware limited partnership (“Bayer”). Pursuant to the APA, the Company acquired certain assets and liabilities of Bayer, including Bayer’s 175,000 -square-foot West Sacramento Biologics Research & Development site, team, and internal discovery and lead optimization platform. Concurrently with the APA, Bayer and Ginkgo entered into the Joint Venture Termination Agreement (“JV Termination Agreement”) and the Technical Development Agreement (“Bayer TDA”). The JV Termination Agreement initiated the dissolution of Joyn Bio, LLC (“Joyn Bio”), the joint venture created by Ginkgo and Bayer in 2017, and provided for the disbursement of contributed intellectual property back to the respective owners, the disbursement of joint ownership of certain intellectual property rights created by Joyn Bio, including with respect to Joyn Bio’s nitrogen fixation technology to each party, the disbursement of property and equipment as agreed to by the parties, the assumption by Ginkgo of Joyn Bio's two real estate leases and the transfer of certain employees to Ginkgo. Under the Bayer TDA, (i) Ginkgo will grant Bayer exclusive licenses to Ginkgo’s joint ownership right, title and interest to Joyn Bio’s nitrogen fixation intellectual property, (ii) for a three-year period, the parties will research, develop and produce microbial strains and related processes to enable the research, development, production, manufacturing and commercialization of Bayer products in agriculture as part of cell programs pursuant to TDPs agreed to by the parties, including one targeted to nitrogen fixation and (iii) for a three-year period, Ginkgo will provide certain non-cell-engineering services to Bayer related to product support as described in statements of work agreed to by the parties. In consideration for all programs, services and related licenses, Ginkgo will receive $ 90.0 million in equal quarterly installments over the three-year term plus royalties on worldwide net sales of certain Bayer products developed under the Bayer TDA. The APA, JV Termination Agreement and Bayer TDA were accounted for as a single transaction as they were entered into at the same time and in contemplation of one another, the occurrence of each agreement was dependent on the occurrence of the other agreements, and the work performed under the Bayer TDA will utilize the tangible assets acquired from Bayer under the APA and the IP distributed to Ginkgo under the JV Termination Agreement. F-125 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements The assets acquired under the APA and JV Termination Agreement meet the definition of a business and were accounted for under ASC 805. The Bayer TDA was accounted for under ASC 606. A summary of the purchase price relating to the business combination is as follows (in thousands): Cash $ 79,825 Fair value of previously held equity interest in Joyn Bio 14,000 Fair value of notes receivable from Joyn Bio 10,119 Total purchase consideration $ 103,944 Prior to the completion of the business combination, the Company, through its majority-owned holding company Cooksonia, LLC (“Cooksonia”), held a 50 % equity interest in Joyn Bio that was accounted for as an equity method investment. The Company remeasured its 50 % equity interest in Joyn Bio at fair value as of the acquisition date and recorded a gain of $ 14.0 million equal to the difference between the carrying value of its equity method investment in Joyn Bio of zero and the fair value of $ 14.0 million on the acquisition date. The gain is included within loss on equity method investments in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022. Additionally, prior to the completion of the business combination, Joyn Bio had issued to Ginkgo a series of convertible promissory notes in the aggregate principal amount of $ 10.0 million (see Note 20 ). The notes were effectively settled as part of the business combination and were included as part of the consideration transferred for the business combination. The carrying value of the notes prior to the acquisition was $ 4.8 million due to losses attributable to the equity method investment being allocated to the notes receivable as a result of the equity method investment being reduced to zero during the year ended December 31, 2022. The Company recorded a gain on the notes receivable of $ 5.3 million within other income (expense), net in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022 for the excess of the $ 10.1 million outstanding principal and accrued interest over their carrying value of the notes. The following table presents the final allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date (in thousands): Property, plant, and equipment $ 83,951 Intangible assets 11,500 Goodwill 11,172 Deferred tax liability ( 2,679 ) Net assets acquired $ 103,944 The fair value of Ginkgo’s equity interest in Joyn Bio pre-dissolution was determined using a discounted cash flow method. The fair value of intangible assets, which consists of Joyn Bio's developed technology, was determined using the relief from royalty method of the income approach. Significant assumptions used in the valuations included the estimated annual net cash flows (including projected future revenues and costs, terminal growth rates, royalty rates and obsolescence rates), and a discount rate that reflects the risks inherent in the future cash flows. Property, plant, and equipment consists of land, buildings, site improvements and personal property. The fair value of land was determined using the sales comparison approach and the fair value of the buildings, site improvements and personal property was determined using the cost and sales comparison approaches. Under the cost approach, the Company estimated the cost to acquire or construct comparable assets and made adjustments for physical deterioration. Intangible assets consist of Joyn Bio's developed technology and have an estimated useful life of five years . Goodwill primarily reflects the value of future programs expected to arise after the acquisition and the assembled workforce. Goodwill is not expected to be deductible for tax purposes. The Company incurred $ 0.2 million and $ 3.0 million in costs associated with the winding up and dissolution of Joyn Bio during the years ended December 31, 2023 and 2022, respectively, which were recorded within operating expenses. Dissolution costs are shared equally between Ginkgo and Bayer. The joint venture was fully dissolved in the third quarter of 2023. The Company incurred transaction and integration costs of $ 12.0 million during the year ended December 31, 2022 related to the business combination, which were included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. The transaction does not represent a material business combination and, therefore, pro forma financial information is not provided. Operating results of the acquired business have been included in the consolidated statements of operations and comprehensive loss since the date of acquisition and were not material to the Company’s results of operations for the year ended December 31, 2022. F-126 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Altar On October 3, 2022, the Company acquired all of the outstanding shares of capital stock of Altar SAS (“Altar”), a French biotechnology company with a proprietary adaptive evolution platform. A fleet of Altar's automated adaptive laboratory evolution instruments will be integrated into Ginkgo's Foundry to serve customers across various industries. The total purchase consideration was $ 12.0 million and consisted of $ 2.8 million in cash, $ 1.4 million in restricted shares of Ginkgo Class A common stock subject to forfeiture if certain vesting conditions are not met, $ 5.6 million in unrestricted shares of Ginkgo Class A common stock, $ 1.6 million in contingent consideration and $ 0.6 million in assumed liabilities. The Company accounted for the transaction as a business combination under ASC 805. The net assets acquired primarily consisted of $ 8.4 million of intangible assets related to Altar's developed technology and $ 4.7 million of goodwill, which is not deductible for tax purposes. The business is reported as part of the Company’s Cell Engineering reportable segment. The Company incurred $ 2.3 million in acquisition related costs during the year ended December 31, 2022, which were included in general and administrative expenses. Pro forma information has not been presented because it is not material to the financial statements. Altar's results of operations have been included in the consolidated statements of operations and comprehensive loss since the date of acquisition and were not material to the Company’s results of operations for the year ended December 31, 2022. FGen On April 1, 2022, the Company acquired all of the outstanding equity interests of FGen AG (“FGen”), a company organized under the laws of Switzerland that specializes in strain development and optimization. FGen has developed an ultra-high-throughput screening platform built on nanoliter reactor technology which the Company believes will enhance its cell screening capabilities and potentially increase the likelihood of finding enzymes, pathways, and strains or cell lines that perform to diverse cell program specifications. The Company accounted for the transaction as a business combination under ASC 805. Accordingly, the assets and liabilities acquired were recorded at their estimated fair value on the date of acquisition. FGen's results of operations have been included in the consolidated statements of operations and comprehensive loss since the date of acquisition and were not material to the Company’s results of operations for the year ended December 31, 2022. The FGen acquisition does not represent a material business combination and, therefore, pro forma financial information is not provided. The consideration paid was comprised of common stock and contingent consideration as follows (in thousands): Fair value of Class A common stock $ 17,015 Fair value of contingent consideration - restricted stock 3,842 Fair value of contingent consideration - milestones 8,464 Total FGen consideration $ 29,321 The Company issued 5.7 million shares of its Class A common stock on the acquisition date comprised of 4.0 million unrestricted shares valued at $ 17.0 million based on the closing market price of $ 4.20 per share and 1.7 million restricted shares classified as contingent consideration and subject to vesting conditions. The contingent consideration in the form of restricted stock was valued at $ 3.8 million as of the acquisition date based on management’s estimate of the number of shares expected to vest and the closing market price of $ 4.20 . The restricted shares were issued in three tranches with separate vesting conditions. Tranches 1 and 2 vest based on the price difference between the 15-day volume weighted average price (“VWAP”) of Ginkgo’s Class A common stock calculated on the date immediately prior to closing and the 15-day VWAP calculated on the date immediately prior to Ginkgo’s filing of the registration statement to register the unrestricted shares. The contingency was resolved on April 4, 2022 when the Company filed its Form S-1 registration statement and a total of 0.5 million shares vested and 0.6 million shares were forfeited related to tranches 1 and 2. The remaining 0.7 million tranche 3 restricted shares will vest on the 24-month anniversary of the closing, provided, however, that the number of shares that vest will be reduced by any post-closing purchase price adjustments and indemnity claims. The estimated fair value of tranche 1 and 2 shares on the registration statement date was $ 1.9 million, which was reclassified from a liability into stockholders’ equity upon the determination of the number of shares that vested. The Company recognized a $ 0.8 million loss on the change in fair value of the contingent consideration related to tranche 1 and 2, which is included in general and administrative expenses in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2022. F-127 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements As part of the acquisition, the Company is required to make milestone payments up to a maximum of $ 25.0 million, with $ 20.0 million payable based on the successful integration and deployment of the FGen technology across the Company's programs over a 36-month period and $ 5.0 million payable to certain employees based on continuing service. The milestones are payable in cash or Class A common stock at the election of the Company. The $ 5.0 million payable to employees is accounted for separately from the business combination as post combination compensation expense to be recognized over the requisite service period. The fair value of the $ 20.0 million in contingent consideration on the acquisition date was determined using a scenario-based method. The significant assumptions used include the expected time of achievement and probability of success related to each milestone and a discount rate. The Company allocated the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective estimated fair values on the acquisition date. During the year ended December 31, 2022, the Company recorded measurement period adjustments which did not have a material impact on goodwill. The intangible assets acquired consist of FGen's developed technology which was measured at fair value using the multi-period excess earnings method under the income approach. Under this method, an intangible asset's fair value is equal to the present value of the incremental after-tax cash flows attributable only to the intangible asset after deducting charges representing the contribution of other assets to those cash flows. The significant assumptions used include the estimated annual net cash flows (including revenue growth rates, EBITDA and EBIT margins, applicable tax rate, and contributory asset charges), a discount rate, and the tax amortization benefit. Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired and primarily reflects the value of future programs expected to arise after the acquisition. The Company incurred $ 1.7 million of acquisition-related costs during the year ended December 31, 2022, which were included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. The following table presents the final allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date (in thousands): Final Allocation Cash and cash equivalents $ 1,430 Accounts receivable 144 Other non-current assets 10 Property and equipment 34 Intangible assets (1) 21,100 Goodwill (2) 10,615 Accounts payable and accrued expenses ( 29 ) Deferred revenue ( 104 ) Deferred tax liability ( 3,879 ) Net assets acquired $ 29,321 (1) Estimated useful life of 15 years. (2) Non-deductible for tax purposes. Asset Acquisitions On October 3, 2022, the Company completed the acquisition of all of the outstanding equity interests in Circularis Biotechnologies, Inc., (“Circularis”), a biotechnology company with a proprietary circular RNA and promoter screening platform. The aggregate purchase consideration was $ 18.6 million, of which $ 4.3 million was paid in cash, $ 10.2 million was paid in Ginkgo Class A common stock, $ 3.7 million represents contingent consideration and $ 0.4 million represents direct transaction costs. The Company accounted for the transaction as an asset acquisition as substantially all of the value received was concentrated in the acquired developed technology. The Company allocated the purchase consideration primarily to the developed technology intangible asset, which is being amortized over a useful life of five years . Additionally, the purchase agreement includes $ 2.5 million of employee retention payments, which will be recognized as compensation expense over the requisite service period. On August 17, 2022, the Company acquired certain epidemiological data infrastructure assets from Baktus, Inc., a Delaware-based public benefit corporation. The Company accounted for the transaction as an asset acquisition as the value F-128 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements being acquired primarily relates to a single identifiable intangible asset. The total purchase consideration was $ 11.1 million and consisted of $ 2.0 million in cash, $ 8.4 million in Ginkgo Class A common stock and $ 0.7 million of direct transaction costs. Of the shares issued, 0.3 million are restricted shares that will vest on the 18-month anniversary of the closing and will be reduced by any indemnity claims. The restricted shares are classified as contingent consideration liability in the consolidated balance sheet (see Note 4 ). Additionally, the purchase agreement includes $ 1.0 million of employee retention payments, which will be recognized as compensation expense over the requisite service period. As a result of the acquisition, the Company recognized $ 11.2 million in intangible assets consisting of developed technology, customer relationships and assembled workforce and $ 0.1 million in deferred revenue. Fiscal 2021 Acquisitions SRNG Business Combination On September 16, 2021 (the “Closing Date”), the Company and SRNG completed the merger transaction contemplated by the Merger Agreement (the “Closing"), with Old Ginkgo surviving the merger as a wholly owned subsidiary of SRNG. Pursuant to the Merger Agreement, SRNG acquired all of the outstanding equity interests of Old Ginkgo for approximately $ 15.8 billion in aggregate consideration in the form of common stock of Ginkgo valued at $ 10 per share (the “Base Equity Consideration”). The Base Equity Consideration was allocated among Old Ginkgo equity holders based on an exchange ratio of 49.080452 ("Exchange Ratio"). Accordingly, upon the closing of the SRNG Business Combination, all shares of Old Ginkgo Class A common stock and Old Ginkgo Class B common stock issued and outstanding immediately prior to the SRNG Business Combination converted into Ginkgo Class A common stock and Ginkgo Class B common stock, respectively, each with a par value of $ 0.0001 per share, based on the Exchange Ratio. All equity awards under Old Ginkgo's stock incentive plans were assumed by the Company and converted into comparable equity awards that are settled or exercisable for shares of the Company’s common stock. As a result, (i) each outstanding stock option to acquire Old Ginkgo common stock was converted into an option to purchase approximately 49.080452 shares of Ginkgo common stock, (ii) each outstanding share of restricted common stock was converted into approximately 49.080452 shares of restricted common stock of Ginkgo and (iii) each outstanding award of restricted stock units was assumed and converted into a restricted stock unit having the same terms and conditions as applied to the Old Ginkgo restricted stock unit so converted but relating to approximately 49.080452 shares of common stock of Ginkgo. In addition to the Base Equity Consideration, the equity holders of Old Ginkgo received approximately 188.7 million shares of Ginkgo common stock (the “Earnout Consideration”), which are subject to forfeiture to the extent that the vesting conditions described below are not satisfied on or before the fifth anniversary of the Closing, which is September 16, 2026 (the "Earnout Period"). If at any point during the trading hours of a trading day, for any 20 trading days within any period of 30 consecutive trading days during the Earnout Period, the trading price per share of the Company's Class A common stock is greater than or equal to: • $ 12.50 , then 25 % of the Earnout Consideration will immediately vest; • $ 15.00 , then an additional 25 % of the Earnout Consideration will immediately vest; • $ 17.50 , then an additional 25 % of the Earnout Consideration will immediately vest; and • $ 20.00 , then the remaining 25 % of the Earnout Consideration will immediately vest. The Company evaluated the earnout shares and concluded that they qualify for the scope exception from derivative accounting in ASC 815-10-15-74 and meet the criteria for equity classification under ASC 815-40. The Company determined that the earnout shares underlying rollover equity awards (i.e., restricted stock awards, restricted stock units and options) granted under the Company's stock incentive plans (together the "Rollover Equity Awards") that are unvested as of the Closing Date are within the scope of ASC 718 (see Note 13 ). The remaining earnout shares issued to holders of Old Ginkgo common stock and those earnout shares underlying vested Rollover Equity Awards were initially measured at fair value at Closing and recorded within additional paid-in-capital ("APIC") and had no net impact on APIC. Since those earnout shares are equity-classified, there is no remeasurement unless reclassification is required. Upon meeting an earnout target, the earnout shares delivered to the equity holders are recorded in equity as shares outstanding with the appropriate allocation to par value of common stock and APIC. The first earnout target of $ 12.50 was met on November 15, 2021 and, as a result, approximately 38.8 million earnout shares became vested and outstanding. In connection with the entry into the Merger Agreement, Eagle Equity Partners III, LLC, a Delaware limited liability company (the “Sponsor”), forfeited 11.5 million of its shares of Ginkgo Class A common stock and an additional 16.7 million of its shares of Ginkgo Class A common stock (the "Sponsor Earnout Shares") became subject to vesting and F-129 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements forfeiture conditions identical to those applicable to the Earnout Consideration issued to Old Ginkgo equity holders. Similar to the Earnout Consideration, the Sponsor Earnout Shares were accounted for as equity classified instruments and were included as merger consideration and recorded in additional paid-in capital. The Sponsor Earnout Shares are considered legally issued and outstanding shares of common stock subject to restrictions on transfer and do not participate in the earnings or losses of the Company prior to vesting. The SRNG Business Combination is accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, SRNG was treated as the “acquired” company for financial reporting purposes. Accordingly, the SRNG Business Combination was treated as the equivalent of Old Ginkgo issuing stock for the net assets of SRNG, accompanied by a recapitalization. The net assets of SRNG are stated at historical cost, with no goodwill or other intangible assets recorded. PIPE Investment On May 11, 2021, concurrently with the execution of the Merger Agreement, SRNG entered into subscription agreements with certain accredited investors (the “PIPE Investors”). In connection with the consummation of the SRNG Business Combination on September 16, 2021, the PIPE Investors collectively consummated investments for 76.0 million shares of the Company's Class A common stock at a price of $ 10.00 per share (the "PIPE Shares") for an aggregate amount of $ 760.0 million (the “PIPE Investment”). Summary of Net Proceeds The following table summarizes the elements of the net proceeds from the SRNG Business Combination (in thousands): Cash - SRNG Trust and cash (net of redemptions) $ 857,747 Cash - PIPE Investment 760,000 Less: Payment of underwriter fees and other offering costs ( 108,118 ) Net proceeds from the SRNG Business Combination $ 1,509,629 Summary of Shares Issued The following table summarizes the number of shares of common stock outstanding immediately following the consummation of the SRNG Business Combination (in thousands): SRNG shares outstanding prior to the SRNG Business Combination 215,625 Less: redemption of SRNG shares prior to the SRNG Business Combination ( 86,725 ) Less: SRNG shares forfeited ( 11,534 ) Common stock of SRNG (1) 117,366 Shares issued pursuant to the PIPE Investment 76,000 SRNG Business Combination and PIPE Investment shares 193,366 Conversion of Old Ginkgo Series B preferred stock to common stock 203,346 Conversion of Old Ginkgo Series C preferred stock to common stock 228,641 Conversion of Old Ginkgo Series D preferred stock to common stock 302,465 Conversion of Old Ginkgo Series E preferred stock to common stock 170,227 Conversion of Old Ginkgo common stock (2) 387,016 Total shares of Ginkgo common stock outstanding immediately following the SRNG Business Combination 1,485,061 (1) Includes 16.7 million shares of Class A common stock, the Sponsor Earnout Shares, that are subject to forfeiture if certain earnout conditions are not met, as the shares are legally outstanding as of the Closing of the SRNG Business Combination. (2) Excludes 283.4 million shares of Class A and Class B common stock underlying rollover equity instruments (i.e., restricted stock units and stock options) and 0.3 million shares of Class A and Class B common stock underlying unvested restricted stock awards. F-130 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 4. Fair Value Measurements The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands): As of December 31, 2023 Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 913,729 $ 913,729 $ — $ — Synlogic, Inc. warrants (1) Investments 654 — 654 — Marketable equity securities (2) Investments 19,190 18,401 789 — Notes receivable Prepaid expenses and other current assets 12,293 — — 12,293 Notes receivable Other non-current assets 13,601 — 11,765 1,836 Total assets $ 959,467 $ 932,130 $ 13,208 $ 14,129 Liabilities: Public Warrants Warrant liabilities $ 3,794 $ 3,794 $ — $ — Private Placement Warrants Warrant liabilities 1,906 — 60 1,846 Contingent consideration Accrued expenses and other current liabilities 18,468 — — 18,468 Contingent consideration Other non-current liabilities 5,805 — — 5,805 Total liabilities $ 29,973 $ 3,794 $ 60 $ 26,119 As of December 31, 2022 Classification Total Level 1 Level 2 Level 3 Assets: Money market funds Cash and cash equivalents $ 1,089,026 $ 1,089,026 $ — $ — Synlogic, Inc. warrants (1) Investments 1,937 — 1,937 — Marketable equity securities (2) Investments 25,714 21,312 4,402 — Notes receivable Other non-current assets 37,660 — 30,000 7,660 Total assets $ 1,154,337 $ 1,110,338 $ 36,339 $ 7,660 Liabilities: Public Warrants Warrant liabilities $ 6,900 $ 6,900 $ — $ — Private Placement Warrants Warrant liabilities 3,968 — 108 3,860 Contingent consideration Accrued expenses and other current liabilities 6,378 — — 6,378 Contingent consideration Other non-current liabilities 18,095 — — 18,095 Total liabilities $ 35,341 $ 6,900 $ 108 $ 28,333 (1) The fair value of Synlogic, Inc. warrants is calculated as the quoted price of the underlying common stock, less the unpaid exercise price of the warrants. (2) Marketable equity securities classified as Level 2 reflect a discount for lack of marketability due to regulatory sales restrictions. Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. Transfers from Level 2 to Level 1 during the years ended December 31, 2023 and 2022 were due to a lapse of regulatory sales restrictions on marketable equity securities. The estimated fair value of a portion of the Private Placement Warrants was transferred from a Level 3 to Level 2 fair value measurement as of December 31, 2022, as the transfer of Private Placement Warrants to anyone other than the initial purchasers or any of their permitted transferees results in the Private Placement Warrants having substantially the same terms as the Public Warrants. The F-131 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Company determined that the fair value of the transferred Private Placement Warrants is equivalent to that of Public Warrants. There were no other transfers to/from Levels 1, 2, or 3 during any of the periods presented. Notes Receivable For all of its notes receivable, the Company has elected the fair value option, for which changes in fair value are recorded in other income (expense), net in the consolidated statements of operations and comprehensive loss. As of December 31, 2022, the Company held a $ 30.0 million senior secured note previously purchased from Bolt Threads, Inc. (“Bolt Threads”). In December 2023, the Company and Bolt Threads exchanged the $ 30.0 million senior secured note for (i) a $ 11.8 million senior secured note with an estimated fair value of $ 11.8 million, (ii) a $ 10.0 million convertible promissory note with an estimated fair value of $ 12.2 million, (iii) a $ 5.3 million reduction in the technical services credit previously due to Bolt Threads and recorded as deferred revenue and (iv) a non-exclusive license to certain intellectual property of Bolt Threads with an estimated fair value of $ 1.6 million, which was expensed as in-process research and development in the accompanying consolidated statements of operations and comprehensive loss for the year ended December 31, 2023. The new senior secured note receivable bears interest at 12 % per annum, is due December 31, 2027 and is included in other non-current assets as of December 31, 2023 at its estimated fair value. The convertible promissory note bears interest at 8 % per annum, is convertible into equity securities of Bolt Threads upon a qualified financing, a non-qualified financing, or special purpose acquisition company transaction, at a conversion price equal to 80 % of the price paid per share under the respective conversion scenario, or is otherwise payable on demand any time after the maturity date of October 4, 2024. The convertible promissory note is included in prepaid expenses and other current assets as of December 31, 2023 at its estimated fair value. The Company used the yield method to value the senior secured note. Under this method, the estimated future cash flows, consisting of principal and interest payments, are discounted to present value using an applicable market yield or discount rate. Increases or decreases in the market yield or discount rate would result in a decrease or increase, respectively, in the fair value measurement. The market yield is determined using a corporate bond yield curve corresponding to the credit rating category of the issuer. The fair value of senior secured note is based on observable market inputs, which represent a Level 2 measurement within the fair value hierarchy. In addition to the convertible promissory note issued by Bolt Threads, the Company holds a series of convertible debt instruments issued by customers as payment for Cell Engineering services. The Company used a scenario-based method to value the convertible debt instruments issued by customers and by Bolt Threads. Under this method, future cash flows are evaluated under various payoff scenarios, probability-weighted, and discounted to present value. The significant unobservable (Level 3) inputs used in the fair value measurement as of December 31, 2023 were scenario probabilities of between 5 % and 85 %, a discount rate of 17.0 % and estimated time to event date of one to two years . The significant unobservable (Level 3) inputs used in the fair value measurement as of December 31, 2022 were scenario probabilities of between 15 % and 55 %, a discount rate of 12.5 % and estimated time to event date of one to three years . Significant changes in these inputs could have resulted in a significantly lower or higher fair value measurement. As of December 31, 2023, the convertible debt instruments had an unpaid principal balance of $ 21.0 million and a fair value of $ 14.1 million. As of December 31, 2022, the convertible debt instruments had an unpaid principal balance of $ 7.5 million and a fair value of $ 7.7 million. In December 2023, the Company entered into an amendment with a customer regarding two outstanding convertible promissory notes, with an aggregate principal amount of $ 10.3 million. The Company used a scenario-based method to value the convertible notes as of the amendment date. The significant unobservable (Level 3) inputs used in the fair value measurement as of the amendment date included scenario probabilities of between 10 % and 75 %, a discount rate of 15 %, time to event date of up to one year , and estimated fair value per share of the equity securities to which the Company would be entitled to upon conversion of the notes, obtained from a third-party valuation. F-132 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements The following table provides a reconciliation of notes receivable measured at fair value using Level 3 significant unobservable inputs (in thousands): 2023 2022 Balance at January 1, $ 7,660 $ 11,559 Additions 2,653 7,660 Additions from note exchanges and amendments 13,939 — Proceeds from notes receivable — ( 10,404 ) Settlements ( 7,707 ) — Change in fair value ( 2,416 ) 705 Write-off — ( 1,860 ) Balance at December 31, $ 14,129 $ 7,660 Warrant Liabilities The fair value of the Public Warrants is based on the observable quoted price of such warrants on the New York Stock Exchange. The fair value of the Private Placement Warrants is estimated using the Black-Scholes option pricing model, which is considered to be a Level 3 fair value measurement. The primary unobservable input used in the valuation of the Private Placement Warrants is expected stock-price volatility. The Company estimated the volatility of its Private Placement Warrants using a Monte-Carlo simulation of the redeemable Public Warrants that assumes optimal exercise of the Company's redemption option at the earliest possible date. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend yield is based on the historical rate, which the Company anticipates remaining at zero. Refer to Note 9 for additional details on the Company’s warrant liabilities. The following table provides quantitative information regarding Level 3 inputs used in the recurring valuation of the Private Placement Warrants as of their measurement dates: December 31, 2023 December 31, 2022 Exercise price $ 11.50 $ 11.50 Stock price $ 1.69 $ 1.69 Volatility 70.5 % 71.5 % Term (in years) 2.71 3.71 Risk-free interest rate 4.01 % 4.11 % The following table provides a reconciliation of the Private Placement Warrants measured at fair value using Level 3 significant unobservable inputs (in thousands): 2023 2022 Balance at January 1, $ 3,860 $ 58,558 Transfer to Level 2 — ( 125 ) Change in fair value ( 2,014 ) ( 54,573 ) Balance at December 31, $ 1,846 $ 3,860 Contingent Consideration Each reporting period the Company remeasures its contingent consideration liability associated with business acquisitions to its estimated fair value. The fair value of contingent consideration liability related to restricted stock was estimated using the quoted price of Ginkgo's Class A common stock, an estimate of the number of shares expected to vest, probability of vesting, and a discount rate. The fair value of contingent consideration liability related to earnout payments was estimated using unobservable (Level 3) inputs as illustrated in the table below. Material increases or decreases in these inputs could result in a higher or lower fair value measurement. Changes in the fair value of contingent consideration are recorded in general and administrative expense in the consolidated statements of operations and comprehensive loss. F-133 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements The Company can settle all contingent consideration liabilities, other than those related to the Dutch DNA acquisition, in cash or shares of Class A common stock at the Company’s election. During the year ended December 31, 2023, the Company settled $ 10.8 million in contingent consideration liabilities through payment of $ 1.9 million in cash and vesting of 5.5 million shares of restricted stock valued at $ 8.9 million. Of that amount, $ 1.4 million related to the Circularis asset acquisition was recorded as an increase to the acquired intangible asset with an offset to additional paid-in-capital as the contingent consideration liability was deemed improbable until the filing of a registration statement. During the year ended December 31, 2022, the Company settled $ 2.6 million in contingent consideration liabilities through payment of $ 0.7 million in cash and vesting of 0.5 million shares of restricted stock valued at $ 1.9 million. The following table provides quantitative information regarding Level 3 inputs used in the fair value measurements of contingent consideration liabilities as of the periods presented: Contingent Consideration Liability Valuation Technique Unobservable Input December 31, 2023 Range December 31, 2022 Range Earnout payments (FGen, Dutch DNA and Altar acquisitions) (1) Probability-weighted present value Probability of payment 10 % - 100 % 2 % - 100 % Discount rate 13.4 % 12.2 % - 13.1 % Earnout payments (Dutch DNA acquisition) (1) Discounted cash flow Projected years of payments 2025-2028 2025-2028 Discount rate 10.3 % 12.0 % (1) For FGen and Altar acquisitions, see Note 3 . In July 2021, the Company acquired Dutch DNA Biotech B.V. (“Dutch DNA”) and is obligated to make contingent earnout payments up to a maximum of $ 20.0 million, payable upon the achievement of certain technical and commercial milestones by Dutch DNA, as outlined in a Technical Development Agreement executed between the Company and Dutch DNA prior to the close of the acquisition. The following table provides a reconciliation of the contingent consideration liability measured at fair value using Level 3 significant unobservable inputs (in thousands): 2023 2022 Balance at January 1 $ 24,473 $ 8,467 Additions 1,397 19,912 Change in fair value 9,168 ( 1,262 ) Settlements and payments ( 10,765 ) ( 2,644 ) Balance at December 31, $ 24,273 $ 24,473 Nonrecurring Fair Value Measurements The Company measures the fair value of certain assets, including investments in privately held companies without readily determinable fair values, on a nonrecurring basis when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable and when there are observable price changes for the identical or similar security of the same issuer. The fair value of non-marketable equity securities is classified within Level 3 of the fair value hierarchy when the Company estimates fair value using unobservable inputs. It is classified within Level 2 when the estimate is based on an observable transaction price paid by third-party investors for the identical or similar security of the same issuer. Investment Impairments During the years ended December 31, 2023 and 2022, the Company recorded impairment charges of $ 33.0 million and $ 10.1 million, respectively, related to its investment in Genomatica preferred stock. The fair value estimates used to determine the impairment charges in 2023 were derived using the guideline public company method under the market approach, while an enterprise value analysis was performed in 2022, with an equal weighting between discounted cash flow analyses and the guideline public company method. Significant unobservable (Level 3) inputs included estimated annual net cash flows (including revenue and expense growth rates and capitalization rates), the weighted-average cost of capital used to discount future cash flows, and the selection of guideline public company multiples for revenue and EBITDA. Material increases or decreases in these inputs could result in higher or lower fair value measurements. F-134 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements During the year ended December 31, 2023, the Company recorded an $ 8.3 million impairment loss related to a non-marketable equity security. The fair value measurement was determined by deriving an equity value of the investee from a recent financing transaction in the investee's own securities, which occurred in September 2021, and applying a downward market adjustment of 87 % to the implied equity value. The equity value was then allocated to the different classes of the securities of the investee using the option-pricing model (“OPM”). The OPM involves making assumptions around the investees’ expected time to liquidity and volatility derived from selected guideline public companies. These assumptions are considered Level 3 inputs. During the year ended December 31, 2023, the Company recorded a $ 1.8 million impairment loss related to a SAFE to write-down its carrying amount to its estimated fair value. The fair value measurement of the impairment loss was determined using the scenario-based method, whereby dissolution scenarios with partial recovery and no recovery were probability weighted 15 % and 85 %, respectively, and discounted to present value using a discount rate of 14 %. SAFEs During the years ended December 31, 2023 and 2022, the Company received a total purchase amount of $ 11.0 million and $ 39.5 million, respectively, in SAFEs from customers as prepayment for Cell Engineering services. The Company used a scenario-based method to value the SAFEs as of each contract inception date, which resulted in total fair value of $ 4.5 million and $ 22.1 million for SAFEs received during the years ended December 31, 2023 and 2022, respectively. Under the scenario-based method, future cash flows are evaluated under qualified financing and dissolution scenarios with partial recovery and no recovery in dissolution. The cash flows under each scenario are probability-weighted and discounted to present value. The significant unobservable (Level 3) inputs used in the fair value measurement at contract inception during 2023 were scenario probabilities of between 20 % and 60 %, discount rate of 14 % and estimated time to event date of one to two years . The significant unobservable (Level 3) inputs used in the fair value measurement at contract inception during 2022 were scenario probabilities of between 18 % and 65 %, discount rate of 13 % and estimated time to event date of one to two years . Additionally, the Company recorded impairments of lab equipment and assets related to an operating lease. Refer to Note 10 for additional detail. 5. Investments and Equity Method Investments The Company partners with other investors to form business ventures, including Motif FoodWorks, Inc. (“Motif”), Allonnia, LLC (“Allonnia”), Arcaea, LLC (“Arcaea”), Verb Biotics, LLC (“Verb”), BiomEdit, LLC (“BiomEdit”) and Ayana Bio, LLC (“Ayana”) (collectively “Platform Ventures”). The Company also partners with existing entities, including Genomatica, Inc. (“Genomatica”) and Synlogic, Inc. (“Synlogic”) (collectively, “Legacy Structured Partnerships”) with complementary assets for high potential synthetic biology applications. The Company holds equity interests in these Platform Ventures and Legacy Structured Partnerships. The Company also holds equity interests in other public and private companies as a result of entering into collaboration and license revenue arrangements with these entities. The Company accounts for its investments in Platform Ventures under the equity method. The Company's marketable equity securities consist of Synlogic common stock, Synlogic warrants and the shares of common stock of other publicly traded companies. Marketable equity securities are measured at fair value with changes in fair value recorded in other (expense) income in the consolidated statements of operations and comprehensive loss. The Company’s non-marketable equity securities consist of preferred stock of Genomatica and preferred and common stock of other privately held companies without readily determinable fair values. Non-marketable equity securities are initially recorded using the measurement alternative at cost and subsequently adjusted for any impairment and observable price changes in orderly transactions for the identical or a similar security of the same issuer. Impairment losses and adjustments from observable price changes are recorded in loss on investments in the consolidated statements of operations and comprehensive loss. The Company also holds investments in early-stage synthetic biology product companies via SAFEs. The Company enters into SAFE agreements in conjunction with a revenue contract with a customer under which the Company grants the customer a prepaid Cell Engineering services credit equal to the principal amount of the SAFE (the “Purchase Amount”), which may be used and drawn down as payment for the Company’s research and development services. The SAFEs will automatically convert into shares of preferred stock equal to the Purchase Amount divided by the discount price, which is calculated as the price per share sold in a qualified equity financing multiplied by a discount rate. The SAFEs also provide the Company with the right to future equity of the entity in a liquidation scenario or the cash-out amount in liquidation and F-135 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements dissolution scenarios or at the election of the SAFE issuer prior to an agreed outside date. The Company initially records SAFEs at fair value (see Note 4) and adjusts the carrying amount of the instrument at each reporting period for any impairments. Investments and equity method investments consisted of the following (in thousands): As of December 31, 2023 2022 Investments: SAFEs $ 23,898 $ 22,108 Non-marketable equity securities 22,938 17,544 Marketable equity securities 17,563 20,895 Genomatica preferred stock 11,885 44,885 Synlogic common stock 1,627 4,819 Synlogic warrants 654 1,937 Total $ 78,565 $ 112,188 Equity method investments (1) : BiomEdit $ — $ 369 Other — 1,174 Total $ — $ 1,543 (1) Equity method investments in Platform Ventures with a carrying value of zero as of December 31, 2023 and 2022 were excluded from the table. Loss on investments and equity method investments consisted of the following (in thousands): Year Ended December 31, 2023 2022 2021 (Loss) gain on investments: Genomatica $ ( 33,000 ) $ ( 10,115 ) $ — Non-marketable equity securities ( 9,928 ) ( 195 ) — Marketable equity securities ( 4,682 ) ( 28,269 ) ( 13,854 ) Synlogic common stock ( 3,192 ) ( 10,526 ) 1,649 SAFEs ( 2,742 ) — — Synlogic warrants ( 1,283 ) ( 4,230 ) 662 Total $ ( 54,827 ) $ ( 53,335 ) $ ( 11,543 ) Loss on equity method investments: BiomEdit $ ( 1,461 ) $ ( 8,503 ) $ — Joyn Bio (1) — ( 3,043 ) ( 17,230 ) Allonnia — — ( 12,698 ) Arcaea — — ( 47,356 ) Verb Biotics — ( 15,900 ) — Ayana — ( 15,989 ) — Other ( 1,174 ) ( 326 ) — Total $ ( 2,635 ) $ ( 43,761 ) $ ( 77,284 ) (1) The loss on equity method investment in Joyn Bio for the year ended December 31, 2022 is comprised of a $ 17.0 million loss offset by a $ 14.0 gain on the remeasurement of the retained equity interest in Joyn Bio at fair value as of the acquisition date (see Note 3 ). The loss on equity method investment in excess over the carrying value of zero of the equity method investment in Joyn Bio during F-136 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements the year ended December 31, 2022 was recorded as a reduction in the convertible promissory notes receivable from Joyn Bio (see Note 20 ). The components of loss on investments for each period were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Impairment charges $ ( 44,043 ) $ ( 10,310 ) $ — Ongoing mark-to-market adjustments on marketable equity securities ( 9,157 ) ( 43,025 ) ( 11,543 ) Downward adjustments from observable price changes ( 1,627 ) — — Total loss on investments $ ( 54,827 ) $ ( 53,335 ) $ ( 11,543 ) The carrying value for non-marketable equity securities accounted for using the fair value measurement alternative and held as of December 31, 2023, including cumulative unrealized losses, were as follows (in thousands): As of December 31, 2023 Total initial cost $ 114,701 Impairment charges ( 54,353 ) Downward adjustments from observable price changes ( 1,627 ) Carrying value $ 58,721 6. Variable Interest Entities Consolidated Variable Interest Entities As of December 31, 2023 and 2022 , the Company consolidated Cooksonia, LLC (“Cooksonia”), a variable interest entity (“VIE”), as the Company holds a variable interest in and is deemed the primary beneficiary of the VIE. The Company initially held a 70 % equity interest in Cooksonia, which was formed by the Company and certain other investors for the purposes of holding the Company’s investment in Joyn Bio. The Company concluded that it held a variable interest in and was the primary beneficiary of Cooksonia as it controlled the most significant activities of Cooksonia by controlling 100 % of the board of directors of Cooksonia and held a controlling financial interest in Cooksonia. In 2022, in conjunction with the termination of the Joyn Bio joint venture (see Note 3 ), the Company acquired the remaining 30 % non-controlling interest in Cooksonia. The acquisition of the non-controlling interest did not result in a change of control, accordingly, the Company accounted for the acquisition as an equity transaction with no gain or loss recognized in the consolidated statements of operations and comprehensive loss. The carrying amount of the non-controlling interest in Cooksonia was adjusted to zero and Cooksonia became a wholly owned subsidiary of the Company as of December 31, 2022. 2022 Deconsolidation The Company holds an interest in 9.0 million common units (representing 100 % of common units at inception) in each of Ayana and Verb, two Platform Ventures formed in September 2021 by the Company and certain of its investors. The Company has agreed to provide Ayana and Verb with certain licenses to intellectual property for use in the development or production of products that the parties agree to research and develop under technical development plans (“TDPs”). Additionally, in September 2021, Ayana and Verb entered into a Series A Preferred Unit Purchase Agreement under which each entity sold 9.0 million Series A preferred units to certain of the Company’s investors for aggregate proceeds of approximately $ 30.0 million each. During 2021, the Company concluded that it held a variable interest in and was the primary beneficiary of Ayana and Verb as it controlled the most significant activities of these entities. These conclusions were reached because, as of the primary beneficiary assessment dates in 2021, for both Verb and Ayana: (i) the Company had substantive control of the board of directors; (ii) all capital contributions were made by related parties of Ginkgo; and (iii) Ginkgo or its related parties comprised the entirety of the joint steering committee (“JSC”), the governing body which holds significant oversight with respect to the entities' research and development programs. During 2022, V erb and Ayana each hired a new chief executive officer who was not an affiliate, related party or agent of Ginkgo. The chief executive officer was also appointed to each entity's JSC and board of directors. As a result, the F-137 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Company concluded it no longer had substantive control of each entity's JSC and board of directors. Accordingly, the Company concluded that it was no longer the primary beneficiary of Verb and Ayana as it no longer controlled the most significant activities of the entities. As a result of this change in the primary beneficiary determination, the Company deconsolidated Verb in the first quarter of 2022 and Ayana in the third quarter of 2022 and recorded a gain on deconsolidation of $ 31.9 million for the year ended December 31, 2022 in the consolidated statements of operations and comprehensive loss. The gain on deconsolidation was equal to the fair value of the retained interest in each entity as of the deconsolidation date and was calculated using the option pricing method. The option pricing method used a back-solve methodology to infer the total equity value based on the pricing of the Series A preferred unit financing, which is the most recent financing transaction to the deconsolidation event. The JSC, with equal representation from each of Verb or Ayana and Ginkgo, governs the TDPs under which the Company will perform agreed-upon research and development services in return for consideration on a cost-plus basis for all services provided. Ginkgo has agreed to provide Verb and Ayana with licenses to certain of its intellectual property for use in the development, production and commercialization of each entity's products under the TDPs. The Company's common unit investment in Verb and Ayana is accounted for as an equity method investment, and accordingly, Verb and Ayana are related parties of Ginkgo. The initial carrying value of the equity method investment was equal to the fair value of the retained interest of $ 15.9 million for Verb and $ 16.0 million for Ayana as of the applicable deconsolidation date. The Series A preferred units issued by Verb and Ayana receive a liquidation preference prior to common units. As such, the Company concluded that this represents a substantive profit-sharing arrangement and the Company is recognizing earnings and losses on the equity method investment using the HLBV method. The Company recorded a loss on its equity method investment in Verb and Ayana of $ 31.9 million in the year ended December 31, 2022, due to a basis difference associated with in-process research and development identified as part of the initial accounting for the equity method investment. This loss reduced the carrying value of the equity method investment in each of Verb and Ayana to zero . There is no commitment for the Company to provide further financial support to Verb and Ayana, and therefore the carrying value of the equity method investment will not be reduced below zero . Unconsolidated Variable Interest Entities With respect to the Company’s investments in Motif, Allonnia, Genomatica, Arcaea, BiomEdit, Verb and Ayana (subsequent to the deconsolidation of Verb and Ayana) (collectively, the “Unconsolidated VIEs”), the Company has concluded these entities represent VIEs. However, although the Company may have board representation and is involved in the ongoing development activities of the entities via its participation on the JSC, the Company has concluded that it is not the primary beneficiary of these entities. This conclusion is supported by the fact that: (i) the Company does not control the board of directors of any of the Unconsolidated VIEs, and no voting or consent agreements exist between the Company and other members of each respective board of directors or other investors, (ii) the holders of preferred security interests in the Unconsolidated VIEs hold certain rights that require their consent prior to taking certain actions, which include certain significant operating and financing decisions, and (iii) the Company’s representation on the JSC of each respective entity does not give it control over the development activities of any of the Unconsolidated VIEs, as all JSC decisions are made by consensus and there are no agreements in place that would require any of the entities to vote in alignment with the Company. As the Company’s involvement in the Unconsolidated VIEs does not give it the power to control the decisions with respect to their development or other activities, which are their most significant activities, the Company has concluded that it is not the primary beneficiary of the Unconsolidated VIEs. With respect to Cooksonia’s investment in Joyn Bio prior to the joint venture’s termination on October 17, 2022 (see Note 3 ), as Cooksonia did not control Joyn Bio’s board of directors, it did not have the power to control the decisions related to the development activities of Joyn Bio, which were its most significant activities. Accordingly, the Company has concluded that Cooksonia was not the primary beneficiary of Joyn Bio. The Company provided $ 10.0 million in financial support to Joyn Bio during the year ended December 31, 2022 in the form of convertible promissory notes (see Note 20 ), which were deemed necessary to fund Joyn Bio’s operations pre-dissolution. Joyn Bio was fully dissolved in the third quarter of 2023. Additionally, the Company holds equity interests in certain privately-held companies that are not consolidated as the Company is not the primary beneficiary. As of December 31, 2023 and 2022, the maximum risk of loss related to the Company’s unconsolidated VIEs was limited to the carrying value of its investments in such entities. Refer to Notes 5 and 16 for additional details on the Company’s investments and equity method investments. F-138 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 7. Goodwill and Intangible Assets, net All goodwill is allocated to the Cell Engineering reporting unit and segment identified in Note 15 . Changes in the carrying amount of goodwill consisted of the following (in thousands): As of December 31, 2023 2022 Beginning balance $ 60,210 $ 21,312 Goodwill acquired in acquisitions — 39,712 Deconsolidation of Zymergen ( 10,660 ) — Measurement period adjustments (1) ( 2,120 ) ( 548 ) Impact of foreign currency translation 1,808 ( 266 ) Ending balance $ 49,238 $ 60,210 (1) For the year ended December 31, 2023, the measurement period adjustment is primarily related to the Zymergen acquisition. See Note 3 for a description. Intangible assets, net consisted of the following (in thousands): Gross Carrying Value (1) Accumulated Amortization (1) Net Carrying Value Weighted Average Amortization Period (in years) December 31, 2023 Developed technology (2) $ 105,279 $ ( 22,663 ) $ 82,616 8.8 Customer relationships 380 ( 261 ) 119 0.9 Assembled workforce 190 ( 184 ) 6 0.3 Total intangible assets $ 105,849 $ ( 23,108 ) $ 82,741 December 31, 2022 Developed technology $ 115,824 $ ( 8,825 ) $ 106,999 9.4 Database 3,700 ( 107 ) 3,593 6.8 Customer relationships 380 ( 71 ) 309 1.6 Assembled workforce 190 ( 50 ) 140 1.0 Total intangible assets $ 120,094 $ ( 9,053 ) $ 111,041 (1) Gross carrying value and accumulated amortization include the impact of cumulative foreign currency translation adjustments. (2) During 2023, the Company deconsolidated $ 13.5 million of developed technology and $ 3.2 million of database intangible assets related to the deconsolidation of Zymergen (see Note 3 ). Amortization expense was $ 15.7 million, $ 5.6 million and $ 1.2 million for the years ended December 31, 2023, 2022 and 2021, respectively. The estimated future amortization expense for intangible assets remaining as of December 31, 2023 is as follows (in thousands): 2024 $ 13,747 2025 13,623 2026 13,623 2027 10,548 2028 3,442 Thereafter 27,758 Total $ 82,741 F-139 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 8. Leases The Company leases real estate for office and lab space as well as equipment used in research and development activities under operating and finance leases. The Company’s real estate leases have initial lease terms ranging from 24 months to 14.4 years and are all classified as operating. Real estate leases may contain periods of free rent, tenant improvement incentives, expansion options, rent escalation clauses at pre-determined rates or at the prevailing market rates at the time of the increase, and options to extend or terminate the lease without cause at the option of either party during the lease term. The Company is not reasonably certain to exercise these options at the commencement of the lease. Equipment leases have initial lease terms ranging from 36 to 60 months and are classified as operating or finance if the lease contains bargain purchase options which the Company is reasonably certain to exercise. Variable lease cost for real estate leases primarily consists of certain non-lease components such as real estate taxes, insurance and common area maintenance charges. These non-lease components are typically variable in nature and are recognized as lease expense in the period in which they arise. None of the Company's lease agreements contain material restrictive covenants or residual value guarantees. In September 2023, Zymergen ceased the use of and exited a leased facility consisting of approximately 300,000 square feet of office and laboratory space in Emeryville, California. The facility was used pursuant to an operating lease with a minimum term expiring in August 2033. Zymergen's ceasing to use the space resulted in an impairment loss of $ 96.2 million, including $ 36.6 million for the right-of-use asset and $ 59.6 million for the related leasehold improvements. The impairment loss represents the amount by which the carrying value of the assets exceed their estimated fair values, as determined using a discounted cash flow model under the income approach. The fair value measurements are based on significant inputs not observable in the market and therefore represent Level 3 fair value measurements. The key inputs used in the valuation were estimated sublease rental income and a discount rate of 8.5 %. The impairments are presented as impairment of lease assets in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2023. The following table presents the components of total lease cost (in thousands): Year Ended December 31, 2023 2022 Operating lease cost $ 59,588 $ 35,242 Finance lease cost: Amortization of ROU assets 1,047 1,871 Interest on lease liabilities 79 104 Finance lease cost 1,126 1,975 Variable lease cost 15,862 8,879 Sublease income ( 11,170 ) ( 5,190 ) Total lease cost $ 65,406 $ 40,906 Rent expense under operating leases was $ 17.7 million for the year ended December 31, 2021. Supplemental cash flow information related to the Company’s operating leases were as follows (in thousands): Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 44,051 $ 13,587 Operating cash flows from finance leases 83 92 Financing cash flows from finance leases 1,295 1,237 F-140 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Supplemental balance sheet information related to operating leases were as follows: As of December 31, 2023 2022 Weighted average remaining lease term - operating leases (in years) 10.1 10.3 Weighted average remaining lease term - finance leases (in years) 1.5 2.3 Weighted average discount rate - operating leases 7.1 % 8.1 % Weighted average discount rate - finance leases 3.7 % 3.7 % The following table summarizes the maturity of the Company’s lease liabilities (in thousands): Years Ending December 31, Operating leases Finance leases 2024 $ 43,566 $ 1,082 2025 45,216 455 2026 39,400 20 2027 39,356 — 2028 40,592 — Thereafter 222,910 — Total undiscounted payments 431,040 1,557 Less: imputed interest ( 190,327 ) ( 21 ) Total lease liability 240,713 1,536 L ess: current portion of lease liability ( 18,878 ) ( 1,055 ) L ease liabilities, non-current $ 221,835 $ 481 In addition to the lease liabilities in the table above, as of December 31, 2023, the Company had $ 396.5 million of undiscounted commitments related to an operating real estate lease that was signed but not yet commenced. The lease is expected to commence in 2024 and has a lease term of 15 years. The Company subleases a portion of its office and lab space to certain of its equity method investees, which are considered related parties. These lease agreements generally have lease terms of up to 5 years and may include renewal options. Related party sublease income for the years ended December 31, 2023, 2022 and 2021 was $ 2.1 million, $ 3.5 million and $ 1.1 million, respectively, included within other income (expense), net in the consolidated statements of operations and comprehensive loss. 9. Warrant Liabilities Upon the closing of the SRNG Business Combination, the Company assumed 34.5 million publicly-traded warrants (“Public Warrants”) and 17.3 million private placement warrants (the “Private Placement Warrants”) held by the Sponsor. Both the Public Warrants and the Private Placement Warrants were issued in conjunction with the consummation of SRNG’s initial public offering on February 26, 2021. Each whole warrant entitles the holder to purchase one share of the Company’s Class A common stock at a price of $ 11.50 per share, subject to adjustments. The warrants will expire five years from the completion of the SRNG Business Combination, or earlier upon redemption or liquidation. No Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the issuance of the shares of common stock issuable upon exercise of the Public Warrants. On November 23, 2021, the Company’s registration statement covering such shares became effective. The Company may redeem the outstanding Public Warrants: • in whole and not in part • at a price of $ 0.01 per Public Warrant; • upon not less than 30 days’ prior written notice of redemption to each warrant holder; and F-141 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements • if, and only if, the reported closing price of the ordinary shares equals or exceeds $ 18.00 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period ending three business days before the Company sends the notice of redemption to the warrant holders. If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described above, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. The Private Placement Warrants are identical to the Public Warrants, except that (i) the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees and (ii) the Private Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants were entitled to registration rights, which was satisfied on November 23, 2021 when the Company’s registration statement covering such shares became effective. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. As of December 31, 2023, the aggregate value of the Public Warrants and the Private Placement Warrants was $ 3.8 million and $ 1.9 million, respectively, representing warrants outstanding to purchase 34.5 million shares and 17.3 million shares, respectively, of the Company's Class A common stock. The warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the consolidated balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the consolidated statements of operations and comprehensive loss. See Note 4 for additional information. 10. Supplemental Information Cash, Cash Equivalents and Restricted Cash The reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet to the totals shown within the consolidated statements of cash flows is as follows (in thousands): 2023 2022 2021 Cash and cash equivalents $ 944,073 $ 1,315,792 $ 1,550,004 Restricted cash included in prepaid expenses and other current assets (1) 4,789 8,221 — Restricted cash included in other non-current assets (1) 40,722 45,568 42,924 Total cash, cash equivalents and restricted cash $ 989,584 $ 1,369,581 $ 1,592,928 (1) Includes cash balances collateralizing letters of credit associated with the Company’s facility leases and a customer prepayment requiring segregation and restrictions in its use in accordance with the customer agreement. F-142 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): As of December 31, 2023 2022 Notes receivable (Note 4) $ 12,293 $ — Prepaid expenses 10,360 18,145 Prepaid insurance and insurance recoveries 10,063 16,960 Restricted cash 4,789 8,221 Other receivables 1,546 1,561 Security deposits 318 2,084 Inventory 46 4,364 Other current assets 362 487 Prepaid expenses and other current assets $ 39,777 $ 51,822 Property, Plant and Equipment, net Property, plant and equipment, net consisted of the following (in thousands): As of December 31, 2023 2022 Lab equipment $ 147,185 $ 183,292 Leasehold improvements 71,564 125,307 Buildings and facilities 47,034 46,019 Construction in progress 15,830 23,426 Computer equipment and software 14,780 15,219 Furniture and fixtures 6,458 8,206 Land 6,060 6,060 Total property, plant, and equipment 308,911 407,529 Less: Accumulated depreciation and amortization ( 120,718 ) ( 92,756 ) Property, plant, and equipment, net $ 188,193 $ 314,773 Depreciation and amortization expense for the years ended December 31, 2023, 2022 and 2021 totaled $ 54.8 million, $ 36.9 million and $ 26.9 million, respectively. During the year ended December 31, 2023, the Company identified excess lab equipment at two of its facilities whereby the assets were sold, classified as held for sale or otherwise impaired, resulting in aggregate impairment losses of $ 25.2 million, included in general and administrative expense in the consolidated statement of operations and comprehensive loss. F-143 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Other Non-Current Assets Other non-current assets consisted of the following (in thousands): As of December 31, 2023 2022 Restricted cash $ 40,722 $ 45,568 Notes receivable (Note 4) 13,601 37,660 Finance lease right-of-use assets, net 2,230 3,256 Other assets 1,502 2,241 Other non-current assets $ 58,055 $ 88,725 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): As of December 31, 2023 2022 Professional fees and securities litigation costs $ 27,884 $ 12,178 Operating lease liabilities 18,878 28,032 Contingent consideration liability 18,468 6,378 Employee compensation and benefits 15,678 19,441 Deferred other income 4,009 — Biosecurity costs 3,564 15,401 External research and development expenses 2,739 1,844 Property and equipment 2,667 11,624 Finance lease liabilities 1,055 1,300 Lab supplies 861 3,434 Other current liabilities 14,248 15,062 Accrued expenses and other current liabilities $ 110,051 $ 114,694 F-144 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Supplemental cash flow information The following table presents supplemental cash flow information for each reporting period (in thousands): Year Ended December 31, 2023 2022 2021 Cash paid for interest $ 83 $ 92 $ 2,370 Cash paid for income taxes 670 — 61 Non-cash investing and financing activities: ROU assets obtained in exchange for new operating lease liabilities upon adoption of ASC 842 $ — $ 147,744 $ — ROU assets obtained in exchange for new finance lease liabilities upon adoption of ASC 842 — 3,397 — ROU assets obtained in exchange for new operating lease liabilities 27,668 79,984 — ROU assets obtained in exchange for new finance lease liabilities — 1,729 — Purchase of minority interest in Cooksonia — 7,390 — Purchases of equipment through capital leases — — 1,981 Lease financing obligation for build-to-suit lease — — 6,120 Purchases of property and equipment included in accounts payable and accrued expenses 2,915 12,881 1,815 Equity received in related parties — 8,873 61,554 Convertible financial instruments received for Cell Engineering services 4,542 29,074 — Equity securities and warrants received for Cell Engineering services 17,450 3,423 10,000 Conversion of convertible promissory notes to preferred stock — — 195 Non-cash consideration paid for the acquisition of Zymergen — 231,750 — Common stock issued for acquisitions 6,820 40,382 15,087 Acquisition date fair value of contingent consideration liability — 19,912 8,760 Acquisition date fair value of warrant liabilities — — 194,453 Settlement of contingent consideration liability 8,896 — — Equity issuance costs in accounts payable and accrued expenses — 578 — 11. Commitments and Contingencies Purchase Obligations On August 29, 2023, the Company entered into a five-year strategic cloud and artificial intelligence (“AI”) partnership with Google Cloud, intended to enable the Company to develop and deploy AI tools for biology and biosecurity. The partnership includes minimum annual commitments to purchase cloud hosting services in exchange for various discounts on such services. The minimum annual commitments are as follows: year 1, $ 8.0 million; year 2, $ 28.0 million; year 3, $ 54.0 million; year 4, $ 86.0 million; and year 5, $ 113.0 million. The minimum commitments may be terminated by the Company upon payment of a cancellation fee representing a percentage of the remaining purchase commitment. The Company also entered into an agreement pursuant to which Google Cloud will provide up to $ 56.3 million in cash funding upon the Company’s achievement of certain milestones, which are expected over the next three years . The costs of Google Cloud services are recorded as research and development expenses as incurred in the accompanying consolidated statements of operations and comprehensive loss. Milestone payments received are recognized as a reduction of the associated Google Cloud services costs within research and development expenses when achieved. The first two milestones are initially recognized as liabilities until they become non-refundable upon the Company's achievement of a certain milestone. As of December 31, 2023, the remaining aggregate commitment was $ 286.1 million. On March 31, 2022, the Company entered into a four-year supply agreement with Twist for the purchase of diverse products including synthetic DNA. The agreement is effective as of April 1, 2022 and obligates the Company to spend a minimum of $ 58.0 million over the four-year term with the following minimum annual commitments (each annual year is F-145 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements defined as April 1 to March 31): year 1, $ 10.0 million; year 2, $ 13.0 million; year 3, $ 16.0 million; and year 4, $ 19.0 million. Contingent Consideration Related to Asset Acquisitions On April 5, 2023, the Company entered into an Asset Purchase Agreement (“APA”) with StrideBio to acquire StrideBio's adeno-associated virus capsid discovery and engineering platform assets, with a secondary closing contingent upon the transfer of certain additional in-license agreements to Ginkgo. The secondary closing was finalized in October 2023. The Company accounted for the transaction as an asset acquisition as substantially all of the fair value of the assets acquired was concentrated in a single identifiable asset. The fair value of the consideration transferred totaled $ 7.6 million and consisted of 4.8 million shares of Ginkgo's Class A common stock valued at $ 6.8 million and a $ 0.8 million contingent holdback, all of which was expensed as in-process research and development during the year ended December 31, 2023. The APA, as amended, also provides for royalty payments of up to $ 21.3 million payable in cash or shares of Class A common stock at the Company's election until the earlier of the tenth anniversary date of the initial closing and the date on which the aggregate amount of the royalty payments equals the amount cap. The royalties are calculated based on 10 % of the net licensing revenue and 40 % of all consideration received for a license or sale of a product incorporating the acquired platform assets. No amounts for the royalty payments have been recorded during the year ended December 31, 2023. The Company routinely acquires rights to intellectual property that may provide for payment of future contingent consideration, including royalties, should revenue be generated from the use of such. Legal Proceedings From time to time, the Company may in the ordinary course of business be named as a defendant in lawsuits, indemnity claims and other legal proceedings. The Company accrues for a loss contingency when it concludes that the likelihood of a loss is probable and the amount of loss can be reasonably estimated. The Company adjusts its accruals from time to time as it receives additional information. The Company does not believe any pending litigation to be material, or that the outcome of any such pending litigation, in management’s judgment based on information currently available, would have a material adverse effect on the Company’s results of operations, cash flows or financial condition. Indemnification Agreements The Company enters into standard indemnification agreements and has agreements with indemnification clauses in the ordinary course of business. Under such arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, who are generally the Company’s business partners. The terms of these indemnification arrangements are generally perpetual and effective any time after contract execution. The maximum potential liability resulting from these indemnification arrangements may be unlimited. The Company has never incurred costs to defend lawsuits or settle claims as a result of such indemnifications and the Company is not aware of any indemnification arrangements that could have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations as of December 31, 2023. Registration Rights In connection with the closing of the SRNG Business Combination, the Company entered into an amended and restated registration rights agreement (the “Registration Rights Agreement”) among the Company, SRNG and certain Old Ginkgo stockholders. Pursuant to the Registration Rights Agreement, the Company will be required to register for resale securities held by the stockholders. The Company will have no obligation to facilitate more than two demands per calendar year for each of the SRNG or the Ginkgo Holders (as defined in the Registration Rights Agreement) that the Company register such stockholders’ securities. In addition, the holders have certain “piggyback” registration rights with respect to registrations initiated by the Company. The Company will bear the expenses incurred in connection with the filing of any registration statements pursuant to the Registration Rights Agreement. F-146 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 12. Stockholders' Equity Capitalization The following table presents the Company’s authorized, issued, and outstanding common stock as of the dates indicated (in thousands): Authorized Issued Outstanding Common stock as of December 31, 2023 Class A 10,500,000 1,639,885 1,525,058 Class B 4,500,000 379,108 356,257 Class C 800,000 120,000 120,000 15,800,000 2,138,993 2,001,315 Common stock as of December 31, 2022 Class A 10,500,000 1,448,235 1,337,499 Class B 4,500,000 383,649 354,477 Class C 800,000 200,000 200,000 15,800,000 2,031,884 1,891,976 Shelf Registration Statement On October 4, 2022, the Company filed with the Securities and Exchange Commission (“SEC”) a shelf registration statement on Form S-3 (File No. 333-267743), which was declared effective on October 14, 2022. Under the shelf registration, the Company may offer and sell from time to time, in one or more series or issuances and on terms determined at the time of the offering, any combination of its Class A common stock, preferred stock, warrants and/or units up to an aggregate amount of $ 500 million. As of December 31, 2023, approximately $ 400 million remain available under the shelf registration. Underwritten Public Offering On November 15, 2022, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with BTIG, LLC (the “Underwriter”), pursuant to which the Company agreed to issue and sell to the Underwriter an aggregate of 41.4 million shares at a public offering price of $ 2.4164 per share, representing an underwriting discount of 9 %. Under the terms of the Underwriting Agreement, the Company granted the Underwriter an option exercisable for 30 days to purchase up to an additional 6.2 million shares of its Class A common stock, which expired unexercised. The shares were sold pursuant to an effective shelf registration statement on Form S-3 (File No. 333-267743) and a related prospectus supplement filed with the SEC. The net proceeds to the Company from the offering was approximately $ 98.9 million, after deducting estimated offering expenses. The Company intends to use the net proceeds of this offering to offset the cash used to finance the acquisition of certain of the assets and liabilities of Bayer and for other general corporate purposes. Preferred Stock The Company is authorized to issue 200.0 million shares of preferred stock with a par value $ 0.0001 per share. The Company’s board of directors are authorized, without stockholder approval, to issue such shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designations, powers, voting, and other rights, preferences and privileges of the shares. There were no issued and outstanding shares of preferred stock as of December 31, 2023. Common Stock The Company is authorized to issue 15,800.0 million shares of common stock, including 10,500.0 million shares of Class A common stock, par value $ 0.0001 per share, 4,500.0 million shares of Class B common stock, par value $ 0.0001 per share, and 800.0 million shares of Class C common stock, par value $ 0.0001 per share. F-147 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Voting Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to ten votes per share. Holders of Class C common stock are not entitled to vote except as otherwise expressly provided in the certificate of incorporation or required by applicable law. Dividends Common stockholders are entitled to receive dividends, as may be declared by the board of directors. Different classes of common stock are legally entitled to equal per share distributions whether through dividends or liquidation. No dividends have been declared to date. Conversion Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. Generally, shares of Class B common stock will convert automatically into Class A common stock upon the holder ceasing to be an Eligible Holder (i.e., director, employee, trust or legal entity of Ginkgo), unless otherwise determined by affirmative vote of a majority of independent directors of Ginkgo. Common Stock Reserved for Future Issuances The Company had the following common stock reserved for future issuance as of the date indicated (in thousands): December 31, 2023 Shares available for grant under the 2021 Plan 183,048 Restricted stock units outstanding 152,168 Warrants to purchase Class A common stock 51,825 Shares available for grant under the ESPP 20,000 Shares available for grant under the 2022 Inducement Plan 8,805 Stock options issued and outstanding 7,688 Total common stock reserved for future issuances (1) 423,534 (1) Excludes unvested earnout shares which are restricted shares issued to equity holders of Old Ginkgo as part of the SRNG Business Combination ( Note 3 ) and are recorded in equity as shares outstanding upon satisfying the vesting conditions. 13. Stock-Based Compensation The following table summarizes stock-based compensation expense by financial statement line item in the Company’s consolidated statements of operations and comprehensive loss for the periods presented (in thousands): Year Ended December 31, 2023 2022 2021 Research and development $ 145,879 $ 731,996 $ 926,730 General and administrative 84,005 1,198,645 755,835 Total $ 229,884 $ 1,930,641 $ 1,682,565 2022 Inducement Plan On October 16, 2022, the Company's Board of Directors adopted the Ginkgo Bioworks Holdings, Inc. 2022 Inducement Plan (the “2022 Inducement Plan”), which is a non-shareholder approved equity incentive plan adopted pursuant to the “inducement exception” provided under NYSE Listed Company Manual Section 303A.08. Pursuant to the terms of the 2022 Inducement Plan, the Company may grant nonstatutory stock options, stock appreciation rights, restricted stock units, restricted stock and other stock-based awards as an inducement material to individuals being hired or rehired following a bona fide period of interruption of employment, as an employee of the Company or any of its subsidiaries, including in connection with a merger or acquisition. The terms of the 2022 Inducement Plan are substantially similar to the terms of F-148 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements the Company’s 2021 Incentive Award Plan. The Company has reserved 25.0 million shares of the Company’s common stock (which may be shares of Class A common stock or Class B common stock) for issuance under the 2022 Inducement Plan. As of December 31, 2023, 8.8 million shares are available for future issuance under the 2022 Inducement Plan. 2021 Inc entive Award Plans On September 16, 2021, the 2021 Incentive Award Plan (the “2021 Plan”) became effective. The 2021 Plan provides for the grant of stock options, including incentive stock options (“ISOs”) and nonqualified stock options, stock appreciation rights, restricted stock, dividend equivalents, RSUs and other stock or cash-based awards to employees, consultants and directors of Ginkgo and its subsidiaries. The aggregate number of shares of common stock available for issuance under the 2021 Plan, which may be issued as Class A common stock and/or Class B common stock, was initially 200.4 million shares. As of December 31, 2023, 183.0 million shares are available for future issuance under the 2021 Plan. The number of shares of common stock reserved for issuance under the 2021 Plan will automatically increase for ten years on January 1 of each year in an amount equal to the lesser of (a) 4 % of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as is determined by the Board. The maximum number of shares of common stock that may be issued pursuant to the exercise of incentive stock options granted under the 2021 Plan is 200 million shares. Shares issued under the 2021 Plan may consist of authorized but unissued shares, shares purchased on the open market or treasury shares. 2021 Employee Stock Purchase Plan On September 16, 2021, the 2021 Employee Stock Purchase Plan (the “ESPP”) became effective. The ESPP authorizes (i) the grant of options that are intended to qualify for favorable U.S. federal tax treatment under Section 423 of the Internal Revenue Code of 1986 (the “Section 423 Component”) and (ii) the grant of options that are not intended to be tax-qualified (the “Non-Section 423 Component”). All of the Company’s employees are expected to be eligible to participate in the ESPP. However, with respect to the Section 423 Component, an employee may not be granted rights to purchase stock under the ESPP if the employee, immediately after the grant, would own (directly or through attribution) stock possessing 5 % or more of the total combined voting power or value of all classes of the Company’s common stock. The ESPP permits the Company to deliver up to 20 million shares of common stock pursuant to awards issued under the ESPP, which may be Class A common stock and/or Class B common stock. The number of shares of common stock reserved for issuance under the ESPP will automatically increase each January 1 by an amount equal to the lesser of (a) 1 % of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as is determined by the Board, provided that no more than 100 million shares may be issued under the Section 423 Component. Prior to or in connection with issuing any shares of common stock under the ESPP, the ESPP administrator may convert awards covering shares of Class B common stock to Class A common stock. As of December 31, 2023, no awards have been granted under the ESPP. 2014 Stock Incentive Plan The 2014 Stock Incentive Plan (the “2014 Plan”) provided for the Company to grant options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”) and other stock-based awards. From and after the effective date of the 2021 Incentive Award Plan, the Company ceased granting awards under the 2014 Plan. However, the 2014 Plan continues to govern the terms and conditions of the outstanding awards previously granted thereunder. Shares of common stock underlying any awards that are forfeited, cancelled, repurchased, or otherwise terminated by the Company under the 2014 Plan will be added back to the shares available for issuance under the 2021 Incentive Award Plan. 2008 Stock Incentive Plan The 2008 Stock Incentive Plan (the “2008 Plan”) provided for the Company to grant options and restricted stock awards (“RSAs”). From and after the effective date of the 2014 Stock Incentive Plan, the Company ceased granting awards under the 2008 Plan. However, the 2008 Plan continues to govern the terms and conditions of the outstanding awards previously granted thereunder. Shares of common stock underlying any awards that are forfeited, cancelled, repurchased, or otherwise terminated by the Company under the 2008 Plan will be added back to the shares available for issuance under the 2021 Incentive Award Plan. F-149 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Stock Options Options outstanding under the 2008 Plan and 2014 Plan are fully vested. Options outstanding under the 2021 Plan consist of awards granted to non-employee directors and are of two types: (i) initial awards granted to newly elected or appointed directors, which vest in three equal annual installments, and (ii) subsequent awards, which vest on the earlier of the first anniversary of the grant date or the day prior to the next annual shareholder meeting. All stock options expire no later than ten years after the grant date. The exercise price of each option under the 2021 Plan is equal to the closing price of the Company’s common stock on the date of grant. A summary of stock option activity for the year ended December 31, 2023 is presented below: Number of Shares (1) Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (2) (in thousands) (in years) (in thousands) Outstanding as of December 31, 2022 10,501 $ 0.34 Granted 979 1.90 Exercised ( 5,431 ) 0.02 Outstanding as of December 31, 2023 6,049 0.89 3.24 $ 6,810 Exercisable as of December 31, 2023 4,928 0.60 1.85 6,810 (1) Excludes 1.7 million shares underlying options issued outside the accounting for compensation awards under ASC 718. (2) The aggregate intrinsic value is calculated as the difference between the Company's closing stock price on the last trading day of the year and the exercise prices, multiplied by the number of in-the-money stock options. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2023, 2022 and 2021 was $ 9.1 million, $ 21.5 million and $ 91.0 million, respectively. The weighted-average fair value of options granted during the years ended December 31, 2023, 2022, and 2021 was $ 1.43 , $ 1.92 and $ 8.97 per share, respectively, and was calculated using the following key inputs in the Black-Scholes option-pricing model: Year Ended December 31, 2023 2022 2021 Risk-free interest rate 3.94 % 3.13 % 0.11 % Dividend yield — % — % — % Expected volatility 93.0 % 76.9 % 88.6 % Expected term 5.5 years 5.6 years 0.96 years As of December 31, 2023, there was $ 0.9 million of unrecognized compensation expense related to stock options recognizable over a weighted-average period of 0.8 years. Restricted Stock and Restricted Stock Units RSAs granted under the 2014 Plan are subject to a service-based vesting condition and generally vest in equal monthly installments over four years . RSUs granted under the 2014 Plan are subject to two vesting conditions: (i) a service-based vesting condition that is generally met over four years with 25 % of the shares vesting on the first anniversary of the grant date with monthly vesting thereafter, and (ii) a performance-based vesting condition that is met through a liquidity event in the form of either a change of control or an initial public offering (“the performance condition”). RSUs granted under the 2021 Plan are subject to a service-based vesting condition only that is generally met over four years with 25 % of the shares vesting on the first anniversary of the grant date with monthly vesting thereafter. Prior to the SRNG Business Combination, no stock-based compensation expense had been recognized related to RSUs granted under the 2014 Plan as the performance condition was not probable of being met and the SRNG Business Combination did not meet the definition of a liquidity event as defined in the 2014 Plan. As a result of the SRNG Business Combination, on November 17, 2021 (“Modification Date”) the Board of Directors modified the vesting terms of RSUs F-150 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements granted under the 2014 Plan to allow 10 % of the RSUs that met the service condition as of the closing of the SRNG Business Combination (the “10% RSUs”) to vest with respect to the performance condition, effective as of November 19, 2021, the date on which the Form S-8 registration statement covering such shares became effective. In addition, on November 17, 2021 the Board of Directors modified the vesting terms of the remaining RSUs granted under the 2014 Plan such that they will vest in full with respect to the performance condition on or before March 15, 2022 (the original service-based vesting condition is still applicable). As a result of these modifications, the performance condition for all RSUs granted under the 2014 Plan became probable of being met during the fourth quarter of 2021. As the performance condition was not probable of being met prior to the modification, the RSU awards were remeasured using the price of $ 13.59 per share as of the Modification Date pursuant to ASC 718 and the Company recorded a cumulative-catch up adjustment to reflect the change in the probability assessment. The modification resulted in approximately $ 1,492.2 million of incremental stock-based compensation expense recognized in the fourth quarter of 2021 based on the Modification Date fair value. The Company cash settled the 10 % RSUs for a total cash payment of $ 76.5 million equal to the fair value of the stock on the Form S-8 effective date. Subsequent to the modification, compensation expense for the modified RSUs is recognized using an accelerated attribution method over the requisite service period for each employee award. The Company recognized $ 116.4 million and $ 1,678.4 million of compensation expense related to the modified RSUs in the years ended December 31, 2023 and 2022, respectively. In September 2021, the Board of Directors modified the terms of RSUs granted to non-employee directors by adding a cash settlement feature to the awards which allowed the non-employee directors to elect to settle in cash up to 50 % of their RSUs that were vested with respect to the service condition on or prior to December 31, 2021 (the “50% RSUs”). The director RSUs were subject to the same performance condition as all other RSUs granted under the 2014 Plan. In the fourth quarter of 2021, all directors elected to cash settle the 50 % RSUs. As a result, the 50 % RSUs were classified as liability awards and the liability was measured at fair value at each reporting date. In the first quarter of 2022, the Company cash settled the 50 % RSUs, or approximately 3.2 million RSUs, for a total cash payment of $ 9.8 million. A summary of the RSU and RSA activity for the year ended December 31, 2023 is presented below: Restricted Stock Units Restricted Stock Awards Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value (in thousands) (in thousands) Nonvested as of December 31, 2022 134,437 $ 5.84 4 $ 1.99 Granted 103,811 1.39 — — Vested ( 63,878 ) 5.72 ( 4 ) 1.99 Forfeited ( 22,202 ) 3.79 — — Nonvested as of December 31, 2023 152,168 3.15 — 1.99 The weighted average grant date fair value of RSUs granted during the years ended December 31, 2023, 2022 and 2021 was $ 1.39 , $ 3.19 and $ 13.53 , respectively. The weighted average grant date fair value of RSUs granted during the year ended December 31, 2021 of $ 13.53 per share represents the weighted average of the Modification Date fair value and any post modification grant date fair values. No RSAs were granted during 2023, 2022, and 2021. The aggregate fair value of the RSUs that vested during the years ended December 31, 2023, 2022 and 2021 was $ 365.3 million, $ 1,783.8 million and $ 1,149.5 million, respectively. The aggregate fair value of the RSAs that vested during the years ended December 31, 2023, 2022 and 2021 was de minimis, $ 0.4 million and $ 0.5 million, respectively. As of December 31, 2023, there was $ 316.5 million of unrecognized compensation expense related to RSUs recognizable over a weighted-average period of 3.0 years. Earnouts As described in Note 3 , the holders of Rollover Equity Awards outstanding immediately prior to the effective time of the SRNG Business Combination received a proportional amount of the Earnout Consideration, which is divided into four equal tranches subject to vesting during the five years after the Closing Date (the “Earnout Period”). The earnout shares in respect of the Rollover Equity Awards are subject to the same terms and conditions as the underlying Rollover Equity F-151 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Awards (including with respect to vesting and termination-related provisions). Additionally, the earnout shares in respect of the Rollover Equity Awards are subject to a market condition that will be met when the trading price of the Company's common stock is greater than or equal to $ 12.50 , $ 15.00 , $ 17.50 and $ 20.00 for any 20 trading days within any period of 30 consecutive trading days during the Earnout Period (collectively, the “Earnout Targets”). To the extent that the Earnout Targets are not achieved during the Earnout Period, the portion of the Earnout Consideration that remains subject to vesting and forfeiture at the end of the Earnout Period will be forfeited to Ginkgo for no consideration and cancelled. As described above, the earnout shares related to Old Ginkgo RSUs (“Earnout RSUs”) are subject to the same performance condition as the underlying RSUs. As a result of the November 2021 modification to the RSUs described above, the performance condition became probable of being met in the fourth quarter of 2021. The modification resulted in approximately $ 173.5 million of incremental stock-based compensation expense recognized in the fourth quarter of 2021 related to the Earnout RSUs based on the Modification Date fair value. The first earnout target of $ 12.50 per share was met on November 15, 2021 and the earnout shares related to the first tranche of the Earnout Consideration for which the service condition had also been met became vested and were settled, less shares withheld to cover tax withholding obligations. The Company recognized $ 13.3 million and $ 193.3 million of compensation expense related to the modified Earnout RSUs in the years ended December 31, 2023 and 2022, respectively. The grant date fair value of Earnout RSUs was estimated on the Closing Date and remeasured on the Modification Date using a Monte Carlo simulation model with the following assumptions: Year Ended December 31, 2021 Risk-free interest rate 0.84 % - 1.21 % Expected volatility 53.1 % - 81 % Expected term (in years) 4.83 - 5 Dividend yield — % A summary of activity during the year ended December 31, 2023 for the Earnout RSUs and the earnout shares underlying Old Ginkgo RSAs ("Earnout RSAs") is presented below: Number of Shares Weighted Average Grant Date Fair Value (in thousands) Nonvested as of December 31, 2022 23,520 $ 12.79 Vested ( 571 ) 13.34 Forfeited ( 339 ) 12.44 Nonvested as of December 31, 2023 22,610 12.78 The aggregate fair value of the Earnout RSUs and Earnout RSAs that vested during the year ended December 31, 2023 was $ 7.6 million. As of December 31, 2023, there was $ 4.0 million of unrecognized compensation expense related to earnout shares recognizable over a weighted-average period of 1.3 years. F-152 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 14. Revenue Recognition Disaggregation of Revenue The following table sets forth the percentage of total Cell Engineering revenue by industry: Year Ended December 31, 2023 2022 2021 Pharma and biotech 30 % 22 % 8 % Agriculture 24 8 8 Industrial and environment 16 12 16 Food and nutrition 16 9 25 Consumer and technology 8 45 36 Government and defense 6 4 7 Total Cell Engineering revenue 100 % 100 % 100 % The Company’s revenue is derived from customers located primarily in the United States. For the years ended December 31, 2023, 2022, and 2021, the Company’s revenue from customers within the United States comprised 82 %, 88 % and 86 %, respectively, of total revenue. Contract Balances The Company recognizes a contract asset when the Company transfers goods or services to a customer before the customer pays consideration or before payment is due, excluding any amounts presented as accounts receivable. The Company had no contract asset balances as of December 31, 2023 and 2022. Contract liabilities, or deferred revenue, primarily consist of payments received in advance of performance under the contract or when the Company has an unconditional right to consideration under the terms of the contract before it transfers goods or services to the customer. The Company’s collaborative arrangements with its investees and related parties typically include upfront payments consisting of cash or non-cash consideration for future research and development services and non-cash consideration in the form of convertible financial instruments and equity securities for licenses that will be transferred in the future. The Company records the upfront cash payments and fair value of the convertible financial instruments and equity securities as deferred revenue. The Company also invoices customers based on contractual billing schedules, which results in the recording of deferred revenue to the extent payment is received prior to the Company’s performance of the related services. Contract liabilities are recognized as revenue as (or when) the Company performs under the contract. During the year ended December 31, 2023, the Company recognized $ 65.9 million of revenue that was included in the contract liabilities balance of $ 222.6 million as of December 31, 2022. During the year ended December 31, 2022, the Company recognized $ 45.6 million of revenue that was included in the contract liabilities balance of $ 189.2 million as of December 31, 2021. Performance Obligations The aggregate amount of the transaction price that was allocated to performance obligations that have not yet been satisfied or are partially satisfied as of December 31, 2023 and 2022 was $ 110.0 million and $ 123.5 million, respectively. The Company has elected the practical expedient not to provide the remaining performance obligation disclosures related to contracts for which the Company recognizes revenue on a cost-plus basis in the amount to which it has the right to invoice and for contracts with a term of one year or less. As of December 31, 2023, of the performance obligations not yet satisfied or partially satisfied, nearly all is expected to be recognized as revenue during the years 2024 to 2027. When a milestone subject to the variable consideration constraint is achieved, the Company updates its estimate of the transaction price to include the milestone payment and records a cumulative catch-up in revenue. During the years ended December 31, 2023, 2022 and 2021, the Company recorded $ 2.3 million, $ 10.0 million and $ 6.4 million, respectively, of cumulative catch-up in revenue primarily due to recognition of previously constrained variable consideration related to milestones. F-153 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 15. Segment Information Prior to 2022, the Company operated as a single reportable segment. In the first quarter of 2022, the Company reorganized its operations into two operating and reportable segments: Cell Engineering and Biosecurity. The reorganization reflects changes made to the Company's internal management structure and how the Company's chief operating decision makers (“CODMs”) evaluate operating results and make decisions on how to allocate resources. All prior-period comparative segment information was recast to reflect the current reportable segments in accordance with ASC 280, Segment Reporting . The Company's reportable segments are described as follows: • Cell Engineering consists of research and development services performed under collaboration and license agreements relating to the Company’s cell programming platform. The Company’s cell programming platform includes two core assets: the Foundry, highly efficient biology lab facilities, enabled by investment in proprietary workflows, custom software, robotic automation, and data science and analytics, which is paired with the Company’s Codebase, a collection of biological “parts” and a database of biological data used to program cells. The Cell Engineering segment includes costs incurred for the development, operation, expansion and enhancement of the Foundry and Codebase. Cell Engineering revenue is derived from service fees and downstream value share in the form of milestone payments, royalties or equity interests. • Biosecurity consists of the Company's end-to-end biomonitoring and bioinformatic support services primarily provided to public health authorities. Biosecurity revenue is derived from fees for data, analytics, and services. Before the fourth quarter of 2023, Biosecurity revenue was also derived from sales of test kits. The reportable segments are the segments of the Company for which discrete financial information is available and for which segment results are regularly reviewed by the Company's CODMs, comprised of the Chief Executive Officer and the Chief Operating Officer, for purposes of allocating resources and assessing financial performance. The Company’s CODMs evaluate the financial performance of the Company’s segments based upon segment revenues and operating income. The Company’s measure of segment operating income for management reporting purposes excludes the impact of stock-based compensation expense, depreciation and amortization and changes in fair value of certain contingent liabilities. The Company’s CODMs do not evaluate operating segments using asset information. The accounting policies used in the preparation of reportable segments financial information are the same as those used in the preparation of the Company’s consolidated financial statements. F-154 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements The following table presents summary results of the Company’s reportable segments for the periods indicated (in thousands): Year Ended December 31, 2023 2022 2021 Revenue: Cell Engineering $ 143,531 $ 143,666 $ 112,989 Biosecurity 107,924 334,040 200,848 Total revenue 251,455 477,706 313,837 Segment cost of revenue: Biosecurity 54,005 204,216 129,690 Segment research and development expense: Cell Engineering 353,493 273,356 160,634 Biosecurity 1,599 1,937 31,035 Total segment research and development expense 355,092 275,293 191,669 Segment general and administrative expense: Cell Engineering 215,263 168,586 74,407 Biosecurity 55,514 56,353 31,039 Total segment general and administrative expense 270,777 224,939 105,446 Segment operating (loss) income: Cell Engineering ( 425,225 ) ( 298,276 ) ( 122,052 ) Biosecurity ( 3,194 ) 71,534 9,084 Total segment operating loss ( 428,419 ) ( 226,742 ) ( 112,968 ) Operating expenses not allocated to segments: Stock-based compensation (1) 234,908 1,940,920 1,687,607 Impairment of long-lived assets 121,404 — — Depreciation and amortization 70,507 42,552 28,185 Change in fair value of contingent consideration liability 9,168 ( 1,262 ) ( 293 ) Loss from operations $ ( 864,406 ) $ ( 2,208,952 ) $ ( 1,828,467 ) (1) Includes $ 5.0 million, $ 10.3 million, and $ 5.0 million in related employer payroll taxes for the years ended December 31, 2023, 2022, and 2021, respectively. 16. Significant Collaboration Transactions BiomEdit, LLC In April 2022, the Company, along with one of its investors and third-party investors, including Elanco Animal Health Inc. (“Elanco”), launched BiomEdit, LLC (“BiomEdit”), a microbiome innovation company that intends to discover, design and develop novel probiotics, microbiome derived bioactives and engineered microbial medicines in the field of animal health. Concurrently with the launch, the Company entered into (i) an Intellectual Property Contribution Agreement (“BiomEdit IP Agreement”) that granted BiomEdit a license to certain of the Company’s intellectual property, (ii) a Technical Development Agreement (“BiomEdit TDA”) that establishes the terms under which the Company will provide technical research and development services, and (iii) a Common Unit Issuance Agreement (“BiomEdit CUIA”) which compensates the Company for its intellectual property contribution. Contemporaneous with these agreements, BiomEdit entered into a Series A Preferred Unit Purchase Agreement under which it sold 6.7 million Series A preferred units to one of the Company’s investors and a third-party investor, for aggregate proceeds of approximately $ 32.5 million. After the initial closing, BiomEdit may issue up to an additional 1.5 million Series A preferred units (the “Additional Units”) to one or more purchasers reasonably acceptable to the existing holders of Series A preferred units. In a subsequent closing during the first quarter of 2023, BiomEdit sold 0.8 million Additional Units for aggregate proceeds of $ 4.0 million and closed its Series A preferred unit financing. F-155 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Under the BiomEdit IP Agreement, the Company licensed certain intellectual property to BiomEdit for use in the development or production of BiomEdit’s products that the parties will subsequently agree to research and develop under technical development plans (“TDP”). The license rights provide BiomEdit with the ability to commercialize the specified products from the corresponding TDP under the BiomEdit TDA. In return for the license to the intellectual property, BiomEdit issued the Company 3.9 million common units upon execution of the BiomEdit CUIA, with 0.7 million of those units subject to forfeiture in the event BiomEdit does not sell all of the Additional Units. Under the BiomEdit TDA, the parties jointly agree on TDPs, through equal representation on a joint steering committee, under which the Company will perform agreed-upon research and development services in return for consideration on a fixed fee or cost-plus basis for all services provided. Accounting Analysis The common unit investment in BiomEdit is considered an equity method investment as a result of the Company’s ability to exercise significant influence over BiomEdit’s financial and operating policies through its ownership of common units. The initial carrying value of the equity method investment in BiomEdit is the fair value of the nonforfeitable common units of $ 8.9 million received in exchange for the BiomEdit IP Agreement which, as discussed below, is being accounted for as non-cash consideration under ASC 606. The Company determined that the 0.7 million common units held by Ginkgo subject to forfeiture are considered variable consideration that is fully constrained at contract inception until the contingencies related to the issuance of the additional shares are resolved. Upon the closing of BiomEdit's Series A preferred unit financing in 2023, Ginkgo forfeited 0.3 million common units and retained 0.4 million common units for total consideration of $ 1.1 million. The fair value of BiomEdit’s common units was determined at inception of the agreements using the option pricing method. The option pricing method used a back-solve methodology to infer the total equity value based on the pricing of the Series A preferred unit financing, which was contemporaneous with the BiomEdit IP Agreement. The Series A preferred units issued by BiomEdit receive a liquidation preference prior to common units. As such, the Company concluded that this represents a substantive profit-sharing arrangement, and the Company is recognizing earnings and losses on the equity method investment using the HLBV method. The Company recorded a $ 1.5 million loss on its equity method investment in BiomEdit during the year ended December 31, 2023, which reduced the carrying value of the equity method investment in BiomEdit to zero . There is no commitment for the Company to provide further financial support to BiomEdit, and therefore the carrying value of the equity method investment will not be reduced below zero . The relationship with BiomEdit is a vendor-customer relationship and is within the scope of ASC 606, as the provision of services and corresponding license rights are considered a part of the Company’s ordinary activities. The common units issued to the Company represent non-cash consideration. While the BiomEdit TDA has been executed by the parties and provides the payment terms for future services, the BiomEdit TDA does not provide for any transfer of goods or services between the parties. However, the Company will provide licenses and services upon execution of the contemplated TDPs. Accordingly, the Company concluded that the BiomEdit TDA, in combination with the BiomEdit CUIA, met the definition of a contract under ASC 606. Each TDP executed under the BiomEdit TDA will be accounted for in accordance with ASC 606. The Company’s performance obligations under the BiomEdit TDA consist of four material rights to future technical research and development services and commercial licenses under individual TDPs that the Company expects to execute. The material rights represent an advance payment for the license rights, which will be granted upon the execution of future TDPs. As there is no additional payment for these license rights when future TDPs are executed, the Company has determined that there is a material right associated with each of the contemplated TDPs under the BiomEdit TDA. The Company has allocated approximately $ 2.2 million of the upfront non-cash consideration to each of the four material rights based on the estimated standalone selling price of the performance obligations. In 2023, the additional $ 1.1 million of non-cash consideration, which represents previously constrained variable consideration, was allocated to each of the four performance obligations under the arrangement with BiomEdit of $ 0.3 million each consistent with the initial relative selling price allocation. Upon the execution of a TDP underlying a material right, the Company is obligated to provide technical research and development services under the TDP and a license to applicable patents and other intellectual property designed and developed under the TDP. The technical research and development services and license provided under a TDP are highly interdependent and interrelated with one another. Without the Company’s knowledge, expertise, and platform, there would not be a licensable strain or other commercializable product to transfer to BiomEdit. Further, BiomEdit has rights to intellectual property created as part of each TDP, irrespective of the result of the development. Therefore, each executed F-156 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements TDP underlying a material right consists of one combined performance obligation for the technical research and development services and license to be provided by the Company. For each TDP underlying a material right, the transaction price consists of (i) either a fixed fee or, if a cost-plus arrangement, variable consideration for the most likely amount of estimated consideration to be received and (ii) non-cash consideration allocated to the material rights. As the services performed by the Company under a TDP create or enhance an asset that BiomEdit controls as the asset is created or enhanced, the Company satisfies the performance obligation and recognizes revenue over time. The Company uses an input method that compares total costs incurred relative to total estimated cost to complete to estimate progress under the contract. Any revisions to the estimated total budgeted costs to complete, and the resulting impact on revenue recognition, are reflected in the period of the change through a cumulative catch-up adjustment. As of December 31, 2023 and 2022, the Company had a deferred revenue balance of $ 7.7 million and $ 8.1 million, respectively, with BiomEdit. During the years ended December 31, 2023 and 2022, the Company recognized revenue of $ 2.2 million and $ 1.0 million, respectively, from services provided to BiomEdit. Arcaea, LLC Summary of Arrangement Arcaea was formed in March 2021 to focus on the application of synthetic biology in the personal care products industry. In March 2021, the Company entered into (i) an Intellectual Property Contribution Agreement (“Arcaea IP Agreement”) that granted Arcaea a license to certain of the Company’s intellectual property, (ii) a Technical Development Agreement (“Arcaea TDA”) that establishes the terms under which the Company will provide technical research and development services, and (iii) a Common Unit Issuance Agreement (“Arcaea CUIA”) which compensates the Company for its intellectual property contribution. Contemporaneous with these transactions, Arcaea entered into a Series A Preferred Unit Purchase Agreement under which it sold 1.8 million Series A preferred units to certain of the Company’s investors, for aggregate proceeds of approximately $ 19.5 million. The Series A Preferred Unit Purchase Agreement provided for the sale and issuance of up to an additional 7.2 million Series A preferred units subsequent to the initial closing. In subsequent closings during 2021, Arcaea issued an additional 5.1 million Series A preferred units to existing and third-party investors for aggregate proceeds of approximately $ 57.1 million and closed its Series A preferred unit financing. As a result, the Company received an additional 5.2 million common units in Arcaea for total consideration of $ 35.5 million. Under the Arcaea IP Agreement, the Company licensed certain intellectual property to Arcaea for use in the development or production of Arcaea’s products that the parties will subsequently agree to research and develop under TDPs. The license rights provide Arcaea with the ability to commercialize the specified products from the corresponding TDP under the Arcaea TDA. In return for the license to the intellectual property, Arcaea has agreed to issue the Company up to 9.0 million common units in accordance with certain terms and conditions set forth within the agreements. The Company received 1.8 million common units upon execution of the Arcaea CUIA and an additional 5.2 million common units upon subsequent closings of the Series A preferred unit financing in 2021 (as discussed above). No additional common units are expected to be issued to the Company. Under the Arcaea TDA, the parties jointly agree on TDPs, through equal representation on a joint steering committee, under which the Company will perform agreed-upon research and development services in return for consideration on a fixed fee or cost-plus basis for all services provided. Accounting Analysis The common unit investment in Arcaea is considered an equity method investment as a result of the Company’s ability to exercise significant influence over Arcaea’s financial and operating policies through its ownership of common units. The initial carrying value of the equity method investment in Arcaea is the fair value of the common units of $ 11.9 million received in exchange for the Arcaea IP Agreement which, as discussed below, was accounted for as deferred revenue at inception. The fair value of Arcaea’s common units was determined at inception of the agreements using the option pricing method. The option pricing method used a back-solve methodology to infer the total equity value based on the pricing of the Series A preferred unit financing, which was contemporaneous with the Arcaea IP Agreement. Further, the Company determined the rights to up to an additional 7.2 million common units did not meet the definition of a freestanding financial instrument and are not representative of a derivative. The right to the additional common units is considered variable F-157 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements consideration that is fully constrained at inception and until the contingencies related to the issuance of the additional shares are resolved. The Series A preferred units issued by Arcaea receive a liquidation preference prior to common units. As such, the Company concluded that this represents a substantive profit-sharing arrangement, and the Company is recognizing earnings and losses on the equity method investment using the HLBV method. The Company recorded a $ 11.9 million loss on its equity method investment in Arcaea in 2021. The loss allocated to the Company primarily relates to Arcaea’s accounting for the non-cash consideration related to the Arcaea IP Agreement as in-process research and development, which resulted in the full value of the Company’s intellectual property contribution being expensed in 2021. As of December 31, 2021, the carrying value of the equity method investment in Arcaea has been reduced to zero . There is no commitment for the Company to provide further financial support to Arcaea, and therefore the carrying value of the equity method investment will not be reduced below zero. The relationship with Arcaea is a vendor-customer relationship and is within the scope of ASC 606, as the provision of services and corresponding license rights are considered a part of the Company’s ordinary activities. The common units issued to the Company represent non-cash consideration. While the Arcaea TDA has been executed by the parties and provides the payment terms for future services, the Arcaea TDA does not provide for any transfer of goods or services between the parties. However, the Company will provide licenses and services upon execution of the contemplated TDPs. Accordingly, the Company concluded that the Arcaea TDA, in combination with the Arcaea CUIA, met the definition of a contract under ASC 606. Each TDP executed under the Arcaea TDA will be accounted for in accordance with ASC 606. The Company’s performance obligations under the contract consist of ten material rights to future technical research and development services and commercial licenses under individual TDPs that the Company expects to execute under the Arcaea TDA. The material rights represent an advance payment for the license rights, which will be granted upon the execution of future TDPs. As there is no additional payment for these license rights when future TDPs are executed, the Company has determined that there is a material right associated with each of the contemplated additional TDPs under the Arcaea TDA. The Company has allocated approximately $ 1.2 million of the upfront non-cash consideration to each of the ten material rights based on the estimated standalone selling price of the performance obligations. During the year ended December 31, 2021, the additional $ 35.5 million of non-cash consideration, which represents previously constrained variable consideration, was allocated to each of the ten performance obligations under the arrangement with Arcaea of $ 3.6 million each consistent with the initial relative selling price allocation. Unexercised material rights are recorded as non-current deferred revenue until such time as the parties execute a TDP conveying a commercial license. Upon the execution of a TDP underlying a material right, the Company is obligated to provide technical research and development services under the TDP and a license to applicable patents and other intellectual property designed and developed under the TDP. The technical research and development services and license provided under a TDP are highly interdependent and interrelated with one another. Without the Company’s knowledge, expertise, and platform, there would not be a licensable strain or other commercializable product to transfer to Arcaea. Further, Arcaea has rights to intellectual property created as part of each TDP, irrespective of the result of the development. Therefore, each executed TDP underlying a material right consists of one combined performance obligation for the technical research and development services and license to be provided by the Company. For each TDP underlying a material right, the transaction price consists of variable consideration for the most likely amount of estimated consideration to be received under the cost-plus arrangement and non-cash consideration allocated to the material rights. As the services performed by the Company under a TDP create or enhance an asset that Arcaea controls as the asset is created or enhanced, the Company satisfies the performance obligation and recognizes revenue over time. The Company uses an input method that compares total costs incurred relative to total estimated cost to complete to estimate progress under the contract. Any revisions to the estimated total budgeted costs to complete, and the resulting impact to revenue recognition, are reflected in the period of the change through a cumulative catch-up adjustment. As of December 31, 2023 and 2022, the Company had a deferred revenue balance of $ 33.1 million and $ 38.3 million, respectively, with Arcaea. During the years ended December 31, 2023, 2022 and 2021, the Company recognized revenue of $ 6.0 million, $ 13.5 million and $ 3.7 million, respectively, from services provided to Arcaea. F-158 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Allonnia, LLC Summary of Arrangement In December 2019, the Company entered into (i) an Intellectual Property Contribution Agreement (“Allonnia IP Agreement”) that granted Allonnia a license to certain of the Company’s intellectual property, (ii) a Technical Development Agreement (“Allonnia TDA”) that establishes the terms under which the Company is providing technical development services, and (iii) a Common Unit Issuance Agreement which provides for the issuance of common units of Allonnia to the Company in exchange for the license rights granted under the Allonnia IP Agreement. Contemporaneous with these agreements, Allonnia entered into a Series A Preferred Unit Purchase Agreement under which Allonnia sold 3.0 million Series A Preferred Units to certain of the Company’s investors, as well as a third-party investor, for aggregate proceeds of approximately $ 33.0 million. Allonnia also agreed to issue an additional 0.6 million Series A Preferred Units to a strategic partner as compensation for the delivery of future services to Allonnia. The Series A Preferred Unit Purchase Agreement also provided for the sale and issuance of up to an additional 5.4 million Series A Preferred Units subsequent to the initial closing. In 2020, Allonnia issued an additional 1.8 million Series A Preferred Units, 1.7 million of which were sold for aggregate proceeds of $ 18.5 million and 180,000 of which were issued in exchange for the rights to certain intellectual property which will vest based on the achievement of milestones associated with the development of the intellectual property received. In 2021, Allonnia issued an additional amount of less than 0.1 million Series A Preferred Units for aggregate proceeds of $ 0.2 million and closed its Series A Preferred Unit financing. In 2023, Allonnia raised an additional $ 30 million through a Series A extension. Under the Allonnia IP Agreement, the Company licensed intellectual property to Allonnia for use in the development or production of its products that the parties will subsequently agree to develop under TDPs. The license rights provide Allonnia with the ability to commercialize the specified products from the corresponding strain or enzyme, which can only be developed by the Company under the Allonnia TDA. The Company received 3.6 million common units as consideration for the license upon execution of the Allonnia IP Agreement and an additional 1.9 million common units during the year ended December 31, 2021 in connection with the closing of the Series A preferred unit financing. Under the Allonnia TDA, the parties jointly agree, through equal representation on a joint steering committee, on TDPs for specific strains and enzymes, in which the Company will perform agreed upon development services in return for consideration on a fixed fee or cost-plus basis for all services provided. Accounting Analysis The common unit investment in Allonnia is considered an equity method investment as a result of the Company’s ability to exercise significant influence over Allonnia's financial and operating policies through its ownership of common units. The initial carrying value of the equity method investment in Allonnia is the fair value of the common units of $ 24.5 million received in exchange for the Allonnia IP Agreement which, as discussed below, was accounted for as deferred revenue at inception. The fair value of Allonnia’s common units was determined at inception of the agreements using the option pricing method. The option pricing method used a back-solve methodology to infer the total equity value based on the pricing of the Series A Preferred Unit financing, which was contemporaneous with the Allonnia IP Agreement. Further, the Company determined the rights to up to an additional 5.4 million common units did not meet the definition of a freestanding financial instrument and are not representative of a derivative. The right to the additional common units is considered variable consideration that is fully constrained at inception and until the contingencies related to the issuance of the additional shares are resolved. This contingency was resolved in 2021 when the Company received an additional 1.9 million common units in connection with the closing of the Series A preferred unit financing. The Series A Preferred Units issued by Allonnia receive a liquidation preference prior to common units. As such, the Company concluded that this represents a substantive profit-sharing arrangement and the Company is recognizing earnings and losses on the equity method investment using the HLBV method. The Company recorded a loss on equity method investment of $ 24.5 million in 2019 and $ 12.7 million in 2021 as a result of the application of the HLBV method. The loss allocated to the Company primarily relates to Allonnia’s accounting for the non-cash consideration related to the Allonnia IP Agreement as in-process research and development, which resulted in the full value of the Company’s intellectual property contribution being expensed in the year that the shares were issued. As of December 31, 2021, the carrying value of the equity method investment in Allonnia has been reduced to 0 . There is no commitment for the Company to provide further financial support to Allonnia and therefore the carrying value of the equity method investment will not be reduced below zero. F-159 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements The relationship with Allonnia is a vendor-customer relationship and is within the scope of ASC 606 as the provision of services and corresponding license rights are considered a part of the Company’s ordinary activities and the common units represent non-cash consideration. While the Allonnia TDA has been executed by the parties and provides the payment terms for future services, the Allonnia TDA does not provide for any transfer of goods or services between the parties. However, the Company will provide licenses and services upon execution of the contemplated TDPs. Accordingly, the Company concluded that the Allonnia TDA met the definition of a contract under ASC 606 and each TDP executed under the Allonnia TDA will be accounted for in accordance with ASC 606. The Company’s performance obligations under the contract consist of ten material rights related to the estimated number of TDPs the parties expect to execute under the Allonnia TDA. The material rights represent an advance payment for the license rights which will be granted upon the execution of each TDP. As there is no additional payment for these license rights upon execution of a TDP, the Company has determined that there is a material right associated with each of the contemplated future TDPs. The Company has allocated $ 2.5 million of the upfront non-cash consideration to each of the 10 performance obligations under the contract based on the estimated standalone selling price of the performance obligations. Unexercised material rights are recorded as non-current deferred revenue until such time as the parties execute a TDP. Upon the execution of each TDP, the Company is obligated to provide development services under the TDP and a license to applicable patents and other intellectual property to the ingredient developed under the plan. The license and research and development services under a TDP are highly interdependent and interrelated with one another. Without the Company’s knowledge, expertise, and platform, there would not be a licensable strain or other commercializable product to transfer to Allonnia. Further, Allonnia has rights to all development intellectual property created as part of each TDP, irrespective of the result of the development. Therefore, each executed TDP consists of one combined performance obligation for the license and research and development services to be performed by the Company. For each TDP, the transaction price consists of variable consideration for the most likely amount of estimated consideration to be received under the cost-plus arrangement and the $ 2.5 million allocation of the fixed non-cash consideration. As the services performed by the Company create or enhance an asset that Allonnia controls as the asset is created or enhanced, the Company satisfies the performance obligation and recognizes revenue over time. The Company uses an input method that compares total costs incurred relative to total estimated cost to complete to estimate progress under the contract. Any revisions to the estimated total budgeted costs to complete, and the resulting impact to revenue recognition, are reflected in the period of the change through a cumulative catch-up adjustment. In 2022, the additional non-cash consideration of $ 12.7 million, which represents previously constrained variable consideration, was allocated to all of the performance obligations consistent with the initial relative selling price allocation and a cumulative catch up was recognized for the TDPs in process. As of December 31, 2023 and 2022, the Company had a deferred revenue balance of $ 36.1 million and $ 35.9 million, respectively, with Allonnia. During the years ended December 31, 2023, 2022 and 2021, the Company recognized revenue of $ 0.5 million, $ 4.3 million and $ 5.1 million, respectively, from services provided to Allonnia. Motif FoodWorks, Inc. Summary of Arrangement In September 2018, the Company entered into (i) an Intellectual Property Contribution Agreement (“Motif IP Agreement”) with Motif that granted Motif a license to certain of the Company’s intellectual property and (ii) a Technical Development Agreement (“Motif TDA”) that establishes the terms under which the Company is providing technical development services. Under the Motif IP Agreement, the Company licensed intellectual property to Motif for use in strain development to produce ingredients that the parties will subsequently agree to develop under TDPs. The license rights provide Motif with the ability to commercialize the specified ingredients from the corresponding strain, which can only be developed by the Company under the Motif TDA. In return for the license to the intellectual property, Motif granted the Company 9.0 million shares of common stock. Concurrent with the Motif IP Agreement, Motif also sold 8.1 million shares of Series A preferred stock to certain of the Company’s investors, as well as third-party investors, for aggregate proceeds of approximately $ 90.0 million. The Motif TDA governs the procurement of the Company’s expertise and technical development services to collaborate in the research, development, and commercialization of specified ingredients. Under the Motif TDA, the parties jointly agree F-160 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements on TDPs for specific ingredients, in which the Company will perform agreed upon development services in return for consideration on a fixed fee or cost-plus fixed margin basis for all services provided. At inception, the Company estimated that it would execute ten TDPs with Motif. Accounting Analysis The investment in Motif common stock is considered an equity method investment as a result of the Company’s ability to exercise significant influence over the financial and operating policies through its common stock ownership. The initial carrying value of the equity method investment in Motif is the fair value of the common stock received in exchange for the Motif IP Agreement of $ 65.1 million which, as discussed below, is being accounted for as non-cash consideration under ASC 606. As Motif’s Series A preferred stockholders receive a liquidation preference prior to common stock, the Company concluded that this represents a substantive profit-sharing arrangement. Accordingly, the Company is recognizing earnings and losses on the equity method investment using the HLBV method. The Company recorded a loss on equity method investment of $ 65.1 million from inception through December 31, 2018 which reduced the carrying value to zero. The loss allocated to the Company primarily relates to Motif’s accounting for the non-cash consideration related to the Motif IP Agreement as in-process research and development, which resulted in the full value of Company’s intellectual property contribution being expensed in the period ended December 31, 2018, at which time the carrying value of the equity method investment in Motif had been reduced to zero. There is no commitment for the Company to provide further financial support to Motif and therefore the carrying value of the equity method investment will not be reduced below zero. As a result, no loss was recognized during the years ended December 31, 2023, 2022 and 2021 on the equity method investment. The overall arrangement with Motif is a vendor-customer relationship and is within the scope of ASC 606 as the provision of development services and corresponding license rights are considered a part of the Company’s ordinary activities. The licenses contemplated under the Motif IP Agreement are contingent upon a TDP being agreed to by the parties under the Motif TDA and only relate to strains that are developed under a TDP. While the TDPs require approval by the parties, the parties initially estimated that ten TDPs would be negotiated under the arrangement. The Company’s performance obligations under the Motif IP Agreement consist of ten material rights, related to the initial set of ingredients that the parties desired to develop in the first two years . The material rights represent an advance payment for the license rights which will be granted upon the execution of each TDP. As there is no additional payment for these license rights upon execution of a TDP, the Company has determined that there is a material right associated with each of the contemplated TDPs. The common stock received under the Motif IP Agreement is considered non-cash consideration and has been recognized at fair value. The Company determined the fair value of the common stock was $ 65.1 million at inception of the agreement with the assistance of a third-party valuation specialist, which was initially recorded as non-current deferred revenue. The option pricing model used a back-solve methodology to determine the total equity value based on the pricing of the Series A financing, which was contemporaneous with the Motif IP Agreement. The Company has allocated $ 6.5 million to each of the ten material rights. The Company allocated the transaction price based on the estimated standalone selling price of the material rights which is, in turn, based on the intrinsic value of the right and the probability of exercise. Upon the execution of each TDP, the Company is obligated to provide development services under the TDP and a license to applicable patents and other intellectual property to the ingredient developed under the plan. The license and research and development services under a TDP are highly interdependent and interrelated with one another. Without the Company’s knowledge, expertise and platform, there would not be a licensable strain or other commercializable product to transfer to Motif. Further, Motif has rights to all development intellectual property created as part of each TDP, irrespective of the result of the development. Therefore, each executed TDP consists of one combined performance obligation for the license and research and development services to be performed by the Company. For each TDP, the transaction price consists of variable consideration for the most likely amount of estimated consideration to be received under the fixed fee or cost-plus arrangement and the $ 6.5 million which was allocated to the associated material right under the Motif IP Agreement. As the services performed by the Company create or enhance an asset (i.e., the specified ingredient) that Motif controls as the asset is created or enhanced, the Company satisfies the performance obligation and recognizes revenue over time. The Company uses an input method that compares total costs incurred relative to total estimated cost to complete to estimate progress under the contract. Any revisions to the estimated total budgeted costs to complete, and the resulting impact to revenue recognition, are reflected in the period of the change through a cumulative catch-up adjustment. F-161 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements As of December 31, 2023 and 2022, the Company had a deferred revenue balance of $ 45.4 million and $ 52.0 million, respectively, with Motif. During the years ended December 31, 2023, 2022 and 2021, the Company recognized revenue of $ 6.7 million, $ 1.9 million and $ 20.2 million, respectively, from services provided to Motif. Genomatica, Inc. 2016 Genomatica Agreement In 2016, the Company purchased Series A preferred stock of Genomatica, Inc. (“Genomatica”), a biotechnology company specializing in the development and manufacturing of intermediate and specialty chemicals from both sugar and alternative feedstocks. The Company also entered into a Collaboration Agreement with Genomatica (“Genomatica Collaboration”) in connection with the financing. The Genomatica Collaboration was entered into to share expertise on biotechnology solutions. Specifically, Genomatica provided the Company with scale-up and process optimization functions, and the Company has provided Genomatica with certain technology development functions generally centered on high throughput strain engineering capabilities. The Genomatica Collaboration’s focus was on obtaining new customers for either party that could benefit from the combined expertise of both parties, and the agreement provides for profit-sharing allocations between Genomatica and the Company depending on the category of the potential product. Each party is responsible for their own costs incurred under an agreed upon TDP. 2018 Genomatica Agreement In September 2018, the Company entered into a stock purchase agreement with Genomatica under which it received $ 40.0 million of Series B preferred stock from Genomatica. In lieu of cash consideration, the Company entered into a Foundry Terms of Service Agreement (“Genomatica FSA”) with Genomatica in which the Company would provide up to $ 40.0 million in services at no charge to Genomatica (“Initial Prepayment”). The Genomatica FSA terminated the Genomatica Collaboration and changed the pricing terms for work performed under TDPs to a cost-plus fixed margin agreement. Genomatica can apply a portion of the $ 40.0 million in prepaid services to outstanding invoices under the Genomatica FSA, subject to certain limitations that require cash payment for services over certain monthly thresholds. Further, while the Genomatica FSA replaced the Genomatica Collaboration, any fees that would have been paid to or by the Company under contracts previously governed by the Genomatica Collaboration continued to be shared between the parties. These amounts are either (i) added to, if payable to the Company, or (ii) reduced from, if payable to Genomatica, the balance of the prepaid services over the term of the arrangement, with certain restrictions. As of December 31, 2021 and 2020, the Company has received $ 8.3 million and $ 6.9 million, respectively, under the Genomatica FSA. All contracts previously governed by the Genomatica Collaboration have ended as of December 31, 2021, therefore, no additional payments are expected. Accounting Analysis The Company concluded the preferred stock investment was not in-substance common stock and therefore did not qualify for accounting as an equity method investment. Rather, the Company concluded the preferred stock investment should be accounted for as an equity security as it represents an ownership interest in Genomatica that is not mandatorily redeemable nor does the Company have the unilateral right to redeem the preferred stock. Genomatica’s preferred stock is not exchange-traded and does not have a readily determinable fair value. Therefore, the Company accounts for the Genomatica preferred stock under the measurement alternative for equity investments that do not have a readily determinable fair value, which in this case is at historical cost. As of December 31, 2023 and 2022, the cost of the investment in Genomatica preferred stock was $ 11.9 million and $ 44.9 million, respectively, and is included in investments on the consolidated balance sheet. Under the Genomatica Collaboration, the Company was entitled to receive a portion of fees earned from third party customers of Genomatica that were within the scope of the agreement. The Company accounted for the collaboration under ASC 808, however the Company applied ASC 606 by analogy for measurement and recognition purposes. Under the Genomatica Collaboration, the Company’s promises consisted of (i) licenses to the Company’s intellectual property, related to the specified development work, and (ii) research and development services. The Company determined that there was a single, combined performance obligation consisting of research services and licenses to certain intellectual property. The Company recognized the revenue for the combined performance obligation using an over-time input method, as the Company’s performance under the contract created or enhanced the target product or strain as such product or strain was developed. The Company measured progress based on the cost incurred relative to total forecasted cost. F-162 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements The Genomatica FSA represents a modification to the Genomatica Collaboration that resulted in a change in transaction price from milestones to a cost-plus fixed margin structure. The Genomatica FSA did not result in the addition of any distinct promised goods or services, and the Company’s remaining obligation post-modification was to finish the partially satisfied development work that had commenced under the Genomatica Collaboration. This performance obligation was satisfied during the year ended December 31, 2019 and the parties have entered into subsequent TDPs under the Genomatica FSA. As of December 31, 2023 and 2022, the Company had a deferred revenue balance of $ 2.0 million and $ 6.3 million, respectively, with Genomatica. During the years ended December 31, 2023, 2022 and 2021, the Company recognized revenue of $ 4.2 million, $ 10.9 million and $ 12.9 million, respectively, from services provided to Genomatica. Joyn Bio, LLC Summary of Arrangement In September 2017, the Company and certain other investors formed Cooksonia for the purposes of holding the Company’s investment in Joyn Bio. Concurrently, Cooksonia entered into a commitment agreement with Bayer CropScience LP (“Bayer”) to form Joyn Bio. The purpose of Joyn Bio was to research, develop, discover, and commercialize engineered microbes for use in agriculture. The initial program used advanced techniques in biology to study and engineer naturally occurring soil microbes and their nitrogen-fixing genes to enable crops to produce their own fixed nitrogen and reduce the nitrogen fertilizer required. The Company contributed $ 5.0 million in cash and certain intellectual property to Cooksonia in exchange for a 70 % equity interest in Cooksonia (“Class A Units”). Cooksonia received $ 20.0 million in cash from another investor, who is a related party of the Company, for a 20 % equity interest in Cooksonia (“Class B Units”). Cooksonia also received certain intellectual property from Genomatica and issued Genomatica a 10 % equity interest in Cooksonia (“Cooksonia Class C Units”) and paid Genomatica $ 5.0 million in cash. Subsequently, Cooksonia contributed $ 20.0 million and all intellectual property received from the Company and Genomatica in exchange for a 50 % equity interest in Joyn Bio. Bayer contributed $ 20.0 million in cash funding plus specified intellectual property. In addition, Bayer committed to contribute up to an additional $ 60.0 million to be paid subject to certain funding procedures. In return, Bayer obtained a 50 % equity interest in Joyn Bio. The agreements may be terminated by mutual agreement, following a change in control, and for breach. Joyn Bio was governed by a Board of Managers (“Joyn Bio Board”) comprised of equal representation of the Company and Bayer. The Joyn Bio Board had all the rights, powers, obligations, and authority to manage the business and affairs of Joyn Bio. The Company also entered into a Foundry Services Agreement (“Joyn Bio FSA”) with Joyn Bio under which the Company will provide Joyn Bio with technical services and preferred access to the Company’s facilities. Joyn Bio paid the Company a nonrefundable $ 20.0 million prepayment for services to be provided under the Joyn Bio FSA (“Joyn Bio Prepaid Services”). The Joyn Bio Prepaid Services can be utilized for technical services performed by the Company, its subcontractors, and third parties involved in the performance of the overall technical services. Amounts due to the Company are applied to the balance of Joyn Bio Prepaid Services as earned. During the year ended December 31, 2019, Joyn Bio made an additional $ 15.0 million prepayment for services (“Joyn Bio Additional Prepaid Services”). Under certain Joyn Bio termination scenarios, any amount of unused Joyn Bio Additional Prepaid Services shall be repaid by the Company to Joyn Bio. Accounting Analysis From inception, the Company’s investment in Cooksonia has represented a controlling financial interest, resulting in consolidation of Cooksonia within the Company’s consolidated financial statements (see Note 6 ). The initial cash and in-kind contributions the Company made to Cooksonia have been recorded at carrying value as the transaction was with entities under common control. All assets of Cooksonia after the initial investments, net of the amounts paid to Genomatica, were contributed to Joyn Bio for a 50 % equity interest in Joyn Bio. The initial carrying value of the Company’s equity interest in Cooksonia was $ 13.1 million, comprised of the initial $ 5.0 million cash investment and an $ 8.1 million adjustment for Cooksonia’s claim on net assets in accordance with ASC 810, Consolidation, recognized to reflect a certain investor’s liquidation preference in a termination event that represents a substantive profit-sharing agreement. The initial carrying value of the non-controlling interest was comprised of cash and intellectual property contributions from the other investors of $ 29.7 million, less the $ 8.1 million adjustment for the non-controlling interest holders’ claim on the net assets of Cooksonia. F-163 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Cooksonia accounted for its 50 % equity interest in Joyn Bio as an equity method investment based on the size of its equity interest and its influence on the board of directors. The equity method investment in Joyn Bio was recorded at an initial carrying value of $ 97.9 million, which was the fair value of Cooksonia’s interest in Joyn Bio. The fair value was determined by management with the assistance of a third-party valuation specialist. The option pricing model used a back-solve methodology to determine the total equity value based on the pricing of the Class B Units which were exchanged for cash. The license of intellectual property to Joyn Bio has been accounted for under ASC 606 as described below. Upon liquidation, the net assets of Joyn Bio are not distributed in accordance with each party’s respective ownership interest. Depending on the circumstances or type of liquidation event, Bayer or Cooksonia may receive certain preference payments or priority in the assets that are distributed. These preferences represent a substantive profit-sharing arrangement and, accordingly, Cooksonia recognized earnings and losses on its equity method investment using the HLBV method. Refer to Note 6 for additional details on Cooksonia's investment in Joyn Bio. The Company accounted separately under ASC 606 for Cooksonia’s contribution of its intellectual property and the services performed by the Company under technical project plans governed by the Joyn Bio FSA. The Company accounted for the intellectual property sale and the technical services separately as the two agreements were not negotiated with a single commercial objective, the consideration under each agreement was not interdependent, and the intellectual property contribution from Cooksonia was separate and distinct from the research and development services performed under the Joyn Bio FSA. The Company considers the granting of licenses to the Company’s intellectual property as part of its ordinary business activities, and therefore Cooksonia’s contribution of intellectual property to Joyn Bio represented a contract with a customer. The intellectual property contained multiple licenses for which control transferred at inception and all revenue associated with the licenses was recognized during the year ended December 31, 2017. The Joyn Bio FSA functioned as a master services agreement that provided a framework for the research and development services relationship between the Company and Joyn Bio. The Joyn Bio FSA did not create a contract under ASC 606 as it did not identify goods or services to be performed nor did it define consideration under the contract. Upon the execution of a technical project plan under the Joyn Bio FSA, the arrangement qualified as a contract under ASC 606. The Company accounted for each technical project separately. Each technical project plan provided for distinct services in the context of the contract, was separately negotiated with Joyn Bio, focused on different specified strains with separate scopes of work, and had its own budget. The sole performance obligation under each individual technical project plan consisted of the research and development services as the requisite licenses were transferred prior to the execution of the technical project plans. The transaction price for each technical project plan was determined at plan inception based on the consideration that the Company negotiated in exchange for the services to be provided. The Company’s performance under each technical project plan created or enhanced assets under Joyn Bio’s control. Joyn Bio received the benefits of the output of the research and development services which allowed Joyn Bio to make strategic business decisions on the direction of each product candidate. Therefore, the Company satisfied the respective performance obligations and recognized revenue over time. On October 17, 2022, Bayer and Ginkgo entered into the JV Termination Agreement, which initiated the dissolution of Joyn Bio (see Note 3 ). Upon dissolution, the Company's deferred revenue balance with Joyn Bio was applied to Bayer’s Technical Development Agreement with the Company. During the years ended December 31, 2022 and 2021, the Company recognized revenue of $ 2.9 million and $ 5.3 million, respectively, from services provided to Joyn Bio for which the balance was applied against deferred revenue. Amyris, Inc. During 2017, the Company terminated its collaborative relationship with Amyris, Inc. (“Amyris”) as provided in the Amyris Collaboration Agreement and executed a settlement arrangement (“Partnership Agreement”) under which the Company is entitled to receive (i) value share payments owed to the Company under the Amyris Collaboration Agreement, (ii) payments of $ 0.8 million each quarter commencing on December 31, 2018 through the quarter ended September 30, 2022, and (iii) payments due under an interest bearing $ 12.0 million promissory note. The parties amended the agreements during the year ended December 31, 2020 to defer certain payments and provide Amyris waivers for noncompliance with certain covenants. As of December 31, 2020, the Company was owed (i) the $ 12.0 million principal balance on the promissory note which matures on October 19, 2022 and (ii) payments under the F-164 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Partnership Agreement, as amended, which includes quarterly payments of $ 0.2 million to $ 0.3 million through September 2022 and an end of term payment of $ 9.8 million on October 19, 2022. The Company concluded that all amounts due are a settlement for accounting purposes as the payments are being made without any obligation from the Company to Amyris. The balance due on the promissory note and right to payments due under the Partnership Agreement are not recognized in the Company’s financial statements until the gain is realized. The Company recognizes any payments made under the Partnership Agreement and promissory note, including interest, when the cash is received as a component of other income (expense). On November 15, 2021, the Company received a $ 22.8 million payment from Amyris in full settlement of all amounts due under the Partnership Agreement including (i) the $ 12.0 million principal balance on the promissory note and all interest due, (ii) all quarterly payments due under the Partnership Agreement through September 2022 and (iii) an end of term payment of $ 9.8 million. Payments received from Amyris are recorded as gain on settlement of partnership agreement in the consolidated statements of operations and comprehensive loss. Synlogic, Inc. Summary of Arrangement In June 2019, the Company entered into several agreements with Synlogic, a publicly traded clinical-stage biopharmaceutical company focused on advancing drug discovery and development for synthetic biology-derived medicines. The Company entered into a Subscription Agreement with Synlogic whereby it purchased 6.3 million shares of common stock at $ 9.00 per share for a total purchase price of $ 57.1 million, which represented a 19.9 % equity interest in Synlogic. The Company also entered into a Warrant Agreement whereby it received the right to purchase 2.5 million shares of common stock of Synlogic at an exercise price of $ 9.00 per share. The Company made a nonrefundable prepayment related to the exercise price of the warrant equal to $ 8.99 per share for a total payment of $ 22.9 million. The warrant is only exercisable to the extent the Company’s interest in Synlogic does not exceed 19.99 %. The Company also entered into a Foundry Services Agreement (“Synlogic FSA”) whereby Synlogic provided $ 30.0 million in cash as a nonrefundable prepayment for Cell Engineering services. The prepaid Cell Engineering services can be utilized for development of collaboration strains. Services performed under the services agreement will be applied to the prepaid amount based on the contractual rates included in the contract, based on costs incurred plus a fixed margin. Work will be performed under the Synlogic FSA pursuant to TDPs. Each TDP will pursue the development of a specific collaboration strain and/or production protocol. The Synlogic FSA will terminate upon the earlier of the exhaustion of the prepayment amount in full or the fifth anniversary of the effective date of the agreement and may be extended in certain circumstances. On February 8, 2024, Synlogic announced its decision to cease operations and evaluate strategic options for the company. Accounting Analysis The overall arrangement with Synlogic includes the Subscription Agreement whereby the Company purchased shares of Synlogic common stock, the Warrant Agreement whereby the Company prepaid a significant portion of the exercise price of the warrant to purchase Synlogic common stock, which is nonrefundable, and the Synlogic FSA whereby the Company will perform services for Synlogic. The Company concluded that these agreements should be considered one arrangement for accounting purposes as they were entered into at the same time and negotiated as a package with a single commercial objective. At inception, the common stock investment in Synlogic was considered an equity method investment as the Company did not have a controlling financial interest in Synlogic but did have the ability to influence the financial and operating policies through its ownership of common stock. The Company elected to apply the fair value option to account for the equity method investment as the fair value of Synlogic’s common stock is objectively determinable based on quoted market prices in an active market for the identical securities. At inception, the fair value of the equity method investment in Synlogic was recorded at $ 35.8 million as a component of equity method investments on the consolidated balance sheet. In 2021, due to a decrease in the level of ownership, the investment no longer qualifies for the equity method and was reclassified from equity method investments to investments in the consolidated balance sheet, and from loss on equity method investments to loss on investments in the consolidated statements of operations and comprehensive loss for all periods presented. However, the Company continues to apply the fair value option to account for its investments in Synlogic. The Company has also elected to apply the fair value option to account for the warrant to purchase Synlogic common stock, which at inception was recorded at $ 14.4 million as a component of investments on the consolidated balance sheet. See Note 4 for additional information related to the fair value measurements of Synlogic common stock and the Synlogic warrants and F-165 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Note 5 for additional information related to the net gains and losses recognized during the periods presented related to these securities. The Company concluded that the TDPs represent contracts with a customer and will be accounted for under ASC 606. At inception, Synlogic prepaid $ 30.0 million for services under the Synlogic FSA. The prepaid services were reduced by $ 29.8 million, which represents the excess of the aggregate $ 80.0 million the Company paid to purchase Synlogic’s common stock and warrant over the respective fair values of those instruments. This resulted in a deferred revenue balance of $ 0.2 million at inception, which is being recognized over the period in which the Company will provide services to Synlogic. The Company recognized nominal amounts of revenue during each of the years ended December 31, 2023, 2022 and 2021 from services provided to Synlogic. As of December 31, 2023 and 2022, the Company had a deferred revenue balance of less than $ 0.1 million with Synlogic. 17. Employee Benefit Plan The Company has a 401(k) retirement plan covering substantially all employees. Under the retirement plan, employees make voluntary contributions and the Company makes a 5 % non-elective contribution for all employees based on compensation, subject to Internal Revenue Service contribution limits. For the years ended December 31, 2023, 2022 and 2021, the Company contributed $ 8.2 million, $ 6.1 million and $ 3.7 million, respectively, to the retirement plan. 18. Income Taxes For the years ended December 31, 2023, 2022 and 2021, the loss before income taxes consisted of the following (in thousands): Year Ended December 31, 2023 2022 2021 Domestic $ ( 890,986 ) $ ( 2,118,095 ) $ ( 1,837,497 ) Foreign ( 1,954 ) ( 3,304 ) ( 625 ) Total $ ( 892,940 ) $ ( 2,121,399 ) $ ( 1,838,122 ) For the years ended December 31, 2023, 2022 and 2021, the Company recorded the following income tax benefit (in thousands): Year Ended December 31, 2023 2022 2021 Current: State $ 690 $ 271 $ 1 Foreign 123 159 — Total current 813 430 1 Deferred: Federal — ( 10,500 ) ( 413 ) State — ( 3,943 ) ( 912 ) Foreign ( 884 ) ( 1,014 ) ( 156 ) Total deferred ( 884 ) ( 15,457 ) ( 1,481 ) Income tax benefit $ ( 71 ) $ ( 15,027 ) $ ( 1,480 ) F-166 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements A reconciliation of income tax benefit computed at the statutory corporate income tax rate to the effective income tax rate for the years ended December 31, 2023, 2022 and 2021 is as follows: Year Ended December 31, 2023 2022 2021 Federal income tax at statutory rate 21.0 % 21.0 % 21.0 % State income tax 1.3 — 4.5 Change in valuation allowance 13.6 0.8 ( 23.9 ) Stock-based compensation ( 14.2 ) ( 16.7 ) ( 0.2 ) Executive compensation 8.1 ( 5.3 ) ( 2.0 ) Tax credits 0.8 0.6 0.9 Investments in subsidiaries and other ( 29.0 ) — — Other ( 1.6 ) 0.3 ( 0.2 ) Effective tax rate — % 0.7 % 0.1 % The Company’s deferred tax assets and liabilities consist of the following (in thousands): Year Ended December 31, 2023 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 277,559 $ 434,020 $ 174,127 Tax credit carryforwards 64,157 74,336 37,455 Capitalized research and development costs 185,462 162,601 — Accrued expenses 616 1,330 2,690 Deferred revenue 36,225 46,798 45,928 Stock-based compensation 83,037 124,126 318,049 Amortizable intangibles 5,505 6,010 3,834 Lease liabilities 60,197 113,665 — Investments in subsidiaries 58,447 — — Tenant allowance — — 2,927 Other 952 863 — Deferred tax assets before valuation allowance 772,157 963,749 585,010 Valuation allowance ( 711,778 ) ( 833,086 ) ( 583,107 ) Deferred tax assets, net of valuation allowance 60,379 130,663 1,903 Deferred tax liabilities: Amortizable intangibles ( 16,873 ) ( 23,583 ) ( 4,722 ) Property, plant, and equipment ( 410 ) ( 13,405 ) ( 830 ) Lease right-of-use assets ( 52,409 ) ( 103,357 ) — Basis differences — — ( 1,522 ) Deferred tax liabilities ( 69,692 ) ( 140,345 ) ( 7,074 ) Net deferred taxes $ ( 9,313 ) $ ( 9,682 ) $ ( 5,171 ) F-167 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements Activity in the deferred tax assets valuation allowance is summarized as follows (in thousands): Beginning of Period Additions (Subtractions) End of Period Deferred tax assets valuation allowance: Year Ended December 31, 2023 $ 833,086 $ ( 121,308 ) $ 711,778 Year Ended December 31, 2022 $ 583,107 $ 249,979 $ 833,086 The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. The Company considered its history of cumulative net losses incurred since inception and has concluded that it is more likely than not that it will not realize the benefits of the deferred tax assets. Accordingly, a valuation allowance has been established against the deferred tax assets as of December 31, 2023 and 2022 that are not expected to be realized. The Company reevaluates the positive and negative evidence at each reporting period. The valuation allowance decreased on a net basis by approximately $ 121.3 million during the year ended December 31, 2023 primarily due to the deconsolidation of Zymergen which impacted deferred tax positions related to net operating loss and tax credit carryforwards, lease liabilities and right of use assets, and investments in subsidiaries, partially offset by an increase in the deferred tax asset related to capitalized research and development costs, as required by the Tax Cuts and Jobs Act of 2017. As of December 31, 2023, the Company had federal net operating loss carryforwards of approximately $ 1.0 billion, of which $ 139.2 million will begin to expire in 2029 and $ 884.1 million can be carried forward indefinitely. As of December 31, 2023, the Company had state net operating loss carryforwards of approximately $ 998.2 million, of which $ 869.2 million will begin to expire in 2030 and $ 129.0 million can be carried forward indefinitely. As of December 31, 2023, the Company had foreign net operating losses of approximately $ 1.7 million, which can be carried forward indefinitely. As of December 31, 2023, the Company had federal research and development tax credit carryforwards of approximately $ 40.4 million, which will begin to expire in 2029. As of December 31, 2023, the Company also had state research and development and investment tax credit carryforwards of approximately $ 30.1 million, which will begin to expire in 2030. Under Sections 382 and 383 of the U.S. Internal Revenue Code, if a corporation undergoes an ownership change, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an ownership change generally occurs if there is a cumulative change in its ownership by 5% stockholders that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under U.S. state tax laws. The Company may have experienced an ownership change in the past and may experience ownership changes in the future as a result of future transactions in its share capital, some of which may be outside of the Company’s control. As a result, if the Company earns net taxable income, the Company's ability to use its pre-change net operating loss carryforwards, or other pre-change tax attributes, to offset U.S. federal and state taxable income and taxes may be subject to significant limitations. We assess the impact of various tax reform proposals and modifications to existing tax treaties in all jurisdictions where we have operations to determine the potential effect on our business and any assumptions we have made about our future taxable income. We cannot predict whether any specific proposals will be enacted, the terms of any such proposals or what effect, if any, such proposals would have on our business if they were to be enacted. There was no major tax legislation enacted during 2023, in the jurisdictions in which we operate, that will have a material impact on the Company’s consolidated financial statements. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which the Company operates. In the normal course of business, the Company is subject to examination by U.S. federal, state, local, and foreign taxing authorities, where applicable. There are currently no tax examinations in progress. As of December 31, 2023, with few exceptions, the Company is no longer subject to U.S. federal, state, local, or foreign examinations by tax authorities for tax years before 2014. 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 taxing authorities to the extent utilized in a future period. The Company accounts for uncertain tax positions using a more likely than not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company F-168 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements evaluates uncertain tax positions on an annual basis and adjusts the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes. As of December 31, 2023 and 2022, the Company had no recorded liabilities for uncertain tax positions and had no accrued interest or penalties related to uncertain tax positions. The Company does not expect a material change in unrecognized tax benefits in the next twelve months. 19. Net Loss per Share The Company computes net loss per share of Class A common stock and Class B common stock using the two-class method required for participating securities. The earnings per share amounts are the same for the different classes of common stock because the holders of each class are legally entitled to equal per share distributions whether through dividends or liquidation. The calculation of basic and diluted earnings per common share is as follows (in thousands, except per share amounts): Year Ended December 31, 2023 2022 2021 Numerator: Net loss attributable to Ginkgo Bioworks Holdings, Inc. stockholders, basic $ ( 892,869 ) $ ( 2,104,929 ) $ ( 1,830,047 ) Less: change in fair value of warrant liabilities — — 58,615 Less: change in fair value of contingent consideration common shares liability — 3,143 — Net loss attributable to Ginkgo Bioworks Holdings, Inc. stockholders, diluted $ ( 892,869 ) $ ( 2,108,072 ) $ ( 1,888,662 ) Denominator Weighted average common shares outstanding, basic 1,944,420 1,679,061 1,359,849 Effect of dilutive securities: Warrants — — 525 Contingent consideration common shares — 777 — Weighted average common shares outstanding, diluted 1,944,420 1,679,839 1,360,373 Basic net loss per share $ ( 0.46 ) $ ( 1.25 ) $ ( 1.35 ) Diluted net loss per share $ ( 0.46 ) $ ( 1.25 ) $ ( 1.39 ) The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to Ginkgo Bioworks Holdings, Inc. common stockholders for the periods presented because including them would have been anti-dilutive (in thousands): As of December 31, 2023 2022 2021 Unvested RSUs 152,168 134,436 168,322 Ginkgo and Sponsor earnout shares (1) 152,122 156,781 160,995 Warrants to purchase Class A common stock 51,825 51,825 — Outstanding stock options 7,688 12,711 25,229 Unvested RSAs — 4 183 363,803 355,757 354,729 (1) Represents earnout shares for which the service-based and/or market-based vesting conditions have not been satisfied. F-169 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements 20. Related Parties The Company’s significant transactions with its related parties are primarily comprised of revenue generating activities under collaboration and license agreements. Significant related party transactions included in the consolidated balance sheet, excluding the Company’s investments and equity method investments, are summarized below (in thousands): As of December 31, 2023 2022 Accounts receivable: Allonnia $ 322 $ 140 Ayana 233 403 Arcaea 126 335 Verb 61 361 BiomEdit — 288 Other equity investees — 31 $ 742 $ 1,558 Deferred revenue, current and non-current: Motif FoodWorks $ 45,426 $ 52,018 Allonnia 36,062 35,876 Arcaea 33,066 38,334 BiomEdit 7,712 8,144 Genomatica 2,018 6,250 Ayana 56 — Other equity investees 139 875 $ 124,479 $ 141,497 Significant related party transactions included in the consolidated statements of operations and comprehensive loss, excluding the losses on the Company’s investments and equity method investments, are summarized below (in thousands): Year Ended December 31, 2023 2022 2021 Cell Engineering revenue: Motif FoodWorks $ 6,660 $ 1,937 $ 20,224 Arcaea 6,024 13,490 3,676 Genomatica 4,232 10,861 12,868 BiomEdit 2,171 1,016 — Ayana 1,323 1,266 — Verb 584 2,359 — Allonnia 523 4,332 5,126 Joyn Bio — 2,896 5,254 Other equity investees 705 656 13 $ 22,222 $ 38,813 $ 47,161 Refer to Notes 5 and 16 for additional details on the Company’s investments and equity method investments held in its related parties. Beginning in April 2022, the Company purchased a series of convertible promissory notes from its then equity method investee, Joyn Bio, in the aggregate principal amount of $ 10.0 million for the purpose of financing Joyn Bio's working F-170 Table of Contents Ginkgo Bioworks Holdings, Inc. Notes to Consolidated Financial Statements capital needs. Each convertible promissory note was unsecured, had a maturity date of March 31, 2023 and an interest rate of 4.5 % per annum. The notes were automatically convertible into equity at a 20 % discount upon a qualifying equity financing. Additionally, the Company could elect to convert the notes into equity at a 20 % discount upon a non-qualifying equity financing, at maturity, or elect to be repaid in cash upon a change in control or initial public offering. The Company evaluated the notes’ conversion and redemption features for embedded derivatives and determined that there is no embedded derivative to record. The Company also determined that the convertible notes are not in-substance common stock and therefore are not considered an additional investment in the equity method investee. During the year ended December 31, 2022, the carrying amount of the notes was reduced by $ 5.3 million, which represents the excess loss on the equity method investment in Joyn Bio over the carrying value of the investment, which has been reduced to zero during the year ended December 31, 2022. The outstanding balance of the notes receivable was effectively settled as part of the business combination transaction with Bayer and Joyn Bio described in Note 3 and was included as part of the consideration paid for the business combination. 21. Subsequent Events On January 18, 2024, the Company, through certain of its affiliates, completed its acquisition of substantially all of Zymergen’s assets, and on February 5, 2024, Zymergen’s plan of liquidation was confirmed by the Bankruptcy Court. All of the Company’s interests in the Zymergen entities were extinguished and terminated as of February 23, 2024. Refer to Note 3 for additional details on the Company’s acquisition of Zymergen's assets. On February 27, 2024 the Company entered into a land and building development and lease agreement whereby the landlord will secure the site and fund the construction and fit out of a biotechnology facility in the Qatar Free Zones. Once the fit out of the space is complete, Ginkgo will lease the space for an 18 year term and pay an annual fixed rent component comprised of 9.5 % of the total facility development costs, which are estimated to be $ 25.0 million, and a variable rent component of 3.5 % of any future annual net revenue generated at the facility. The agreement also contains a $ 5.0 million minimum commitment on capital expenditures due prior to the rent commencement date. F-171