0001558370-24-007450.txt : 20240509 0001558370-24-007450.hdr.sgml : 20240509 20240509060212 ACCESSION NUMBER: 0001558370-24-007450 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 114 CONFORMED PERIOD OF REPORT: 20240331 FILED AS OF DATE: 20240509 DATE AS OF CHANGE: 20240509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Desktop Metal, Inc. CENTRAL INDEX KEY: 0001754820 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] ORGANIZATION NAME: 06 Technology IRS NUMBER: 832044042 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38835 FILM NUMBER: 24928315 BUSINESS ADDRESS: STREET 1: 63 3RD AVENUE CITY: BURLINGTON STATE: MA ZIP: 01803 BUSINESS PHONE: 978-224-1244 MAIL ADDRESS: STREET 1: 63 3RD AVENUE CITY: BURLINGTON STATE: MA ZIP: 01803 FORMER COMPANY: FORMER CONFORMED NAME: Trine Acquisition Corp. DATE OF NAME CHANGE: 20181001 10-Q 1 dm-20240331x10q.htm 10-Q
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june

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-38835

DESKTOP METAL, INC.

(Exact name of registrant as specified in its charter)

Delaware

83-2044042

(State of Other Jurisdiction of incorporation or Organization)

(I.R.S. Employer Identification No.)

63 3rd Avenue, Burlington, MA

01803

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: (978) 224-1244

Securities registered pursuant to Section 12(b) of the Act:

Name Of Each Exchange

Title of Each Class

Trading Symbol(s)

On Which Registered

Class A Common Stock, $0.0001 Par Value per Share

DM

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer 

Non-accelerated filer

Smaller reporting company

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 7, 2024, there were 330,395,959 shares of the registrant’s Class A common stock outstanding.

TABLE OF CONTENTS

    

Page

PART I

Part I. Financial Information

3

Item 1. Financial Statements (unaudited)

3

Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023

3

Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023

4

Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2024 and 2023

5

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023

6

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023

7

Notes to Condensed Consolidated Financial Statements

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3. Quantitative and Qualitative Disclosures About Market Risk

40

Item 4. Controls and Procedures

41

Part II. Other Information

41

Item 1. Legal Proceedings

41

Item 1A. Risk Factors

42

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, and Issuer Purchases of Equity Securities

71

Item 3. Defaults Upon Senior Securities

72

Item 4. Mine Safety Disclosures

72

Item 5. Other Information

72

Item 6. Exhibits

72

Exhibit Index

73

Signatures

74

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share amounts)

    

March 31, 

    

December 31, 

2024

    

2023

Assets

Current assets:

 

  

 

  

Cash and cash equivalents

$

65,559

$

83,845

Current portion of restricted cash

216

233

Short‑term investments

 

495

 

625

Accounts receivable

 

35,420

 

37,690

Inventory

 

83,097

 

82,639

Prepaid expenses and other current assets

 

11,008

 

11,105

Assets held for sale

1,528

Total current assets

 

197,323

 

216,137

Restricted cash, net of current portion

 

612

 

612

Property and equipment, net

 

31,651

 

35,840

Intangible assets, net

 

146,545

 

168,259

Other noncurrent assets

35,899

37,153

Total Assets

$

412,030

$

458,001

Liabilities and Stockholders’ Equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

18,332

$

18,190

Customer deposits

 

4,271

 

5,356

Current portion of lease liability

 

7,793

 

7,404

Accrued expenses and other current liabilities

 

24,936

 

27,085

Current portion of deferred revenue

 

14,179

 

11,739

Current portion of long‑term debt, net of deferred financing costs

 

276

 

330

Total current liabilities

 

69,787

 

70,104

Long-term debt, net of current portion

58

89

Convertible notes

112,747

112,565

Lease liability, net of current portion

 

22,563

 

23,566

Deferred revenue, net of current portion

3,564

3,696

Deferred tax liability

3,202

3,523

Other noncurrent liabilities

2,771

2,806

Total liabilities

214,692

216,349

Commitments and Contingencies (Note 17)

 

  

 

Stockholders’ Equity

 

 

Preferred Stock, $0.0001 par value—authorized, 50,000,000 shares; no shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Common Stock, $0.0001 par value—500,000,000 shares authorized; 329,705,193 and 325,277,419 shares issued at March 31, 2024 and December 31, 2023, respectively, 329,705,193 and 325,271,670 shares outstanding at March 31, 2024 and December 31, 2023, respectively

 

33

 

33

Additional paid‑in capital

 

1,917,506

 

1,908,504

Accumulated deficit

 

(1,684,323)

 

(1,632,225)

Accumulated other comprehensive loss

 

(35,878)

 

(34,660)

Total Stockholders’ Equity

 

197,338

 

241,652

Total Liabilities and Stockholders’ Equity

$

412,030

$

458,001

See notes to condensed consolidated financial statements

3

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

    

Three Months Ended

March 31, 

    

2024

    

2023

Revenues

 

Products

$

35,631

$

36,697

Services

4,969

4,619

Total revenues

40,600

 

41,316

Cost of sales

  

  

Products

39,019

38,891

Services

3,787

3,789

Total cost of sales

42,806

 

42,680

Gross loss

(2,206)

 

(1,364)

Operating expenses

  

  

Research and development

19,813

23,144

Sales and marketing

11,153

9,607

General and administrative

16,217

18,202

Total operating expenses

47,183

 

50,953

Loss from operations

(49,389)

(52,317)

Interest expense

(1,491)

(811)

Interest and other expense, net

(1,416)

 

(71)

Loss before income taxes

(52,296)

(53,199)

Income tax benefit

198

$

557

Net loss

$

(52,098)

$

(52,642)

Net loss per share—basic and diluted

(0.16)

(0.16)

Weighted average shares outstanding, basic and diluted

327,124,115

319,095,656

See notes to condensed consolidated financial statements.

4

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands)

    

Three Months Ended

March 31, 

    

2024

    

2023

Net loss

$

(52,098)

$

(52,642)

Other comprehensive loss, net of taxes:

Unrealized gain (loss) on available-for-sale marketable securities, net

(451)

189

Foreign currency translation adjustment

(767)

1,549

Total comprehensive loss, net of taxes of $0

$

(53,316)

$

(50,904)

See notes to condensed consolidated financial statements.

5

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share amounts)

Three Months Ended March 31, 2024

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

Capital

    

Deficit

    

Income

    

Equity

BALANCE—January 1, 2024

325,271,670

$

33

$

1,908,504

$

(1,632,225)

$

(34,660)

$

241,652

Exercise of Common Stock options

 

 

 

 

 

Vesting of restricted Common Stock

 

5,749

 

 

 

 

 

Vesting of restricted stock units

4,963,667

Repurchase of shares for employee tax withholdings

(535,893)

(328)

(328)

Issuance of common stock related to share-based liability awards

1,997

1,997

Stock‑based compensation expense

 

 

 

7,333

 

 

 

7,333

Net loss

 

 

 

 

(52,098)

 

 

(52,098)

Other comprehensive income (loss)

 

 

 

 

 

(1,218)

 

(1,218)

BALANCE—March 31, 2024

 

329,705,193

$

33

$

1,917,506

$

(1,684,323)

$

(35,878)

$

197,338

Three Months Ended March 31, 2023

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

    

Capital

    

Deficit

    

Income

    

Equity

BALANCE—January 1, 2023

318,133,434

$

32

$

1,874,792

$

(1,308,954)

$

(38,368)

$

527,502

Exercise of Common Stock options

495,876

 

 

597

 

 

 

597

Vesting of restricted Common Stock

 

25,375

 

 

 

 

 

Vesting of restricted stock units

1,808,422

Repurchase of shares for employee tax withholdings

(61,718)

(99)

(99)

Stock‑based compensation expense

 

 

 

8,474

 

 

 

8,474

Net loss

 

 

 

 

(52,642)

 

 

(52,642)

Other comprehensive income (loss)

 

 

 

 

 

1,738

 

1,738

BALANCE—March 31, 2023

 

320,401,389

$

32

$

1,883,764

$

(1,361,596)

$

(36,630)

$

485,570

See notes to condensed consolidated financial statements.

6

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Three Months Ended March 31, 

    

2024

    

2023

Cash flows from operating activities:

Net loss

    

$

(52,098)

    

$

(52,642)

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

 

 

Depreciation and amortization

 

24,185

 

13,433

Stock‑based compensation

 

7,838

 

9,313

Amortization (accretion) of discount on investments

(382)

Amortization of deferred costs on convertible notes

182

183

Provision for bad debt

123

179

Loss on disposal of property and equipment

30

 

519

Net decrease in accrued interest related to marketable securities

(8)

Net unrealized loss on equity investment

130

402

Deferred tax benefit

(198)

(557)

Foreign currency transaction loss (gain)

488

(25)

Changes in operating assets and liabilities:

 

Accounts receivable

 

2,001

 

2,792

Inventory

 

(1,763)

 

(6,892)

Prepaid expenses and other current assets

 

9

 

(4,664)

Other assets

2,317

991

Accounts payable

 

87

 

(3,011)

Accrued expenses and other current liabilities

 

(418)

 

878

Customer deposits

 

(1,046)

 

705

Current portion of deferred revenue

 

2,397

 

1,127

Change in right of use assets and lease liabilities, net

 

(1,684)

 

(1,493)

Other liabilities

11

1,806

Net cash used in operating activities

 

(17,409)

 

(37,346)

Cash flows from investing activities:

 

 

Purchases of property and equipment

 

(93)

 

(1,011)

Proceeds from sale of property and equipment

3,071

Purchase of marketable securities

 

(4,973)

Proceeds from sales and maturities of marketable securities

 

 

64,840

Cash paid for acquisitions, net of cash acquired

 

 

(500)

Net cash (used in) provided by investing activities

 

(93)

 

61,427

Cash flows from financing activities:

 

 

  

Proceeds from the exercise of stock options

 

597

Payment of taxes related to net share settlement upon vesting of restricted stock units

(328)

(99)

Repayment of loans

(79)

(250)

Net cash (used in) provided by financing activities

 

(407)

 

248

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(394)

217

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

(18,303)

 

24,546

Cash, cash equivalents, and restricted cash at beginning of period

84,690

81,913

Cash, cash equivalents, and restricted cash at end of period

$

66,387

$

106,459

Supplemental disclosures of cash flow information

Reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total shown in the condensed consolidated statements of cash flows:

Cash and cash equivalents

$

65,559

$

101,252

Restricted cash included in other current assets

216

4,595

Restricted cash included in other noncurrent assets

612

612

Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows

$

66,387

$

106,459

Supplemental cash flow information:

 

 

  

Interest paid

$

$

Taxes paid

$

$

7

Noncash investing and financing activities:

 

 

  

Net unrealized gain on investments

$

$

(189)

Additions to right of use assets and lease liabilities

$

863

$

1,531

Purchase of property and equipment included in accounts payable

$

190

$

183

Purchase of property and equipment included in accrued expense

$

$

32

Transfers from property and equipment to inventory

$

$

275

Transfers from PP&E to Asset Held-For-Sale

$

1,528

6,040

Transfers from inventory to property and equipment

$

772

$

1,067

See notes to condensed consolidated financial statements.

8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION, NATURE OF BUSINESS, AND RISK AND UNCERTAINTIES

Organization and Nature of Business

Desktop Metal, Inc. is a Delaware corporation headquartered in Burlington, Massachusetts. The company was founded in 2015 and is accelerating the transformation of manufacturing with 3D printing solutions for engineers, designers, and manufacturers. The Company designs, produces and markets 3D printing systems and services to a variety of end customers.

Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company” and “Desktop Metal” refer to the consolidated operations of Desktop Metal, Inc., and its subsidiaries. References to “Trine” refer to the company prior to the consummation of the Business Combination and references to “Legacy Desktop Metal” refer to Desktop Metal Operating, Inc. prior to the consummation of the Business Combination.

Risks and Uncertainties

The Company is subject to a number of risks similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful development of products, the need for additional funding, competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes in information technology. The Company has financed its operations to date primarily with proceeds from the sale of preferred stock, the Business Combination, and the sale of convertible senior notes due in 2027 (the “2027 Notes”) in May 2022. The Company’s long-term success is dependent upon its ability to successfully market its products and services; generate revenue; maintain or reduce its operating costs and expenses; meet its obligations; obtain additional capital when needed; and, ultimately, achieve profitable operations. Management believes that existing cash and short-term investments as of March 31, 2024 will be sufficient to fund operating and capital expenditure requirements through at least twelve months from the date of issuance of these condensed consolidated financial statements.

Recent Developments

Termination of Merger with Stratasys Ltd.

On May 25, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Stratasys Ltd. (“Stratasys”), Tetris Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of Stratasys (“Merger Sub”), and the Company, pursuant to which Merger Sub was to merge with and into the Company, with the Company surviving the merger as a direct wholly owned subsidiary of Stratasys (the “Merger”).

The Merger was subject to approval by shareholders of Stratasys and Desktop Metal. At an extraordinary general meeting of shareholders of Stratasys held on September 28, 2023, Stratasys shareholders did not approve the proposal related to the Merger Agreement. Accordingly, on September 28, 2023, Stratasys sent Desktop Metal a notice of termination of the Merger Agreement. As a result, and under the terms of the Merger Agreement, Stratasys paid $10.0 million to Desktop Metal for reimbursement of expenses, which is included in general and administrative expenses in the condensed consolidated statements of operations. The termination fee was paid on October 6, 2023.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the regulations of the U.S Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The condensed consolidated financial statements include the Company’s accounts and those of its subsidiaries. In the opinion of the Company’s management, the financial information for the interim periods presented reflects all adjustments, which are of a normal

9

and recurring nature, necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows. The results reported in these condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. In the unaudited condensed consolidated financial statements, certain balances have been reclassified to conform to the current year presentation.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The functional currency of all wholly owned subsidiaries is U.S. Dollars. All intercompany transactions and balances have been eliminated in consolidation.

Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 to the financial statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no other changes to the Company’s significant accounting policies during the first three months of fiscal year 2024.

Assets Held for Sale

The Company classifies long-lived assets or asset groups the Company plans to sell as held for sale on our consolidated balance sheets only after certain criteria have been met including: (i) management has the authority and commits to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and the plan to sell the asset have been initiated, (iv) the sale of the asset is probable within 12 months, (v) the asset is being actively marketed at a reasonable sales price relative to its current fair value, and (vi) it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made. The Company records assets or asset groups held for sale at the lower of their carrying value or fair value less costs to sell.

3. REVENUE RECOGNITION

Contract Balances

The Company’s deferred revenue balance was $17.7 million and $15.4 million as of March 31, 2024 and December 31, 2023, respectively. During the three months ended March 31, 2024, the Company recognized $3.7 million of existing deferred revenue from 2023. During the three months ended March 31, 2023, the Company recognized $3.4 million of existing deferred revenue from 2022. The deferred revenue consists of billed post-installation customer support and maintenance, cloud-based software licenses that are recognized ratably over the term of the agreement, and contracts that have outstanding performance obligations or contracts that have acceptance terms that have not yet been fulfilled.

Contract assets were not significant during the three months ended March 31, 2024 and 2023.

Remaining Performance Obligations

At March 31, 2024, the Company had $17.7 million of remaining performance obligations, of which approximately $14.2 million is expected to be fulfilled over the next 12 months, notwithstanding uncertainty related to customer site readiness and unanticipated economic events, which could have an adverse effect on the timing of delivery and installation of products and/or services to customers. In addition, the Company also had customer deposits of $4.3 million and $12.3 million at March 31, 2024 and 2023, respectively.

10

4. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

The Company’s cash equivalents and short-term investments are invested in the following (in thousands):

    

March 31, 2024

    

Amortized Cost

    

Unrealized Gains

    

Unrealized Losses

    

Fair Value

Money market funds

$

26,822

$

$

$

26,822

Total cash equivalents

26,822

26,822

Total cash equivalents and short-term investments

$

26,822

$

$

$

26,822

    

December 31, 2023

    

Amortized Cost

    

Unrealized Gains

    

Unrealized Losses

    

Fair Value

Money market funds

$

40,799

$

$

$

40,799

Total cash equivalents

40,799

40,799

Total cash equivalents and short-term investments

$

40,799

$

$

$

40,799

5. FAIR VALUE MEASUREMENTS

The Company uses the following three-tier fair value hierarchy, which prioritizes the inputs used in measuring the fair values for certain of its assets and liabilities:

Level 1 is based on observable inputs, such as quoted prices in active markets;

Level 2 is based on inputs other than the quoted prices in active markets that are observable either directly or indirectly; and

Level 3 is based on unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Items measured at fair value on a recurring basis include money market funds.

11

The following fair value hierarchy table presents information about the Company’s financial assets measured at fair value on a recurring basis and indicates the fair value hierarchy of the inputs the Company utilized to determine such fair value (in thousands):

March 31, 2024

Quoted Prices in

Significant

Active Markets

Other

Significant

 

for Identical

Observable

Unobservable

 

Items

Inputs

Inputs

 

    

(Level 1)

    

(Level 2)

    

(Level 3)

    

Total

Assets:

Money market funds

$

26,822

$

$

$

26,822

Equity securities

495

495

Other investments

2,000

2,000

Total assets

$

27,317

$

$

2,000

$

29,317

December 31, 2023

Quoted Prices in

Significant 

 Active Markets

Other

Significant

 for Identical

 Observable 

 Unobservable 

 Items

Inputs

Inputs

    

 (Level 1)

    

 (Level 2)

    

 (Level 3)

    

Total

Assets:

 

  

 

  

 

  

 

  

Money market funds

$

40,799

$

$

$

40,799

Equity securities

625

625

Other investments

2,000

2,000

Total assets

$

41,424

$

$

2,000

$

43,424

The Company has determined that the estimated fair value of its commercial paper, corporate bonds, U.S. Treasury securities, government bonds, and asset-backed securities are reported as Level 2 financial assets as they are based on model-driven valuations in which all significant inputs are observable, or can be derived from or corroborated by observable market data for substantially the full term of the asset.

Equity securities include investments made via publicly-traded securities. The Company has determined that the estimated fair value of its equity securities is reported as Level 1 financial assets as they are based on quoted market prices in active markets for identical assets. During the year ended December 31, 2021, the Company made a $20.0 million investment in equity securities of a publicly-traded company. The Company records this investment at fair value within short-term investments, which was $0.5 million as of March 31, 2024. During the three months ended March 31, 2024, the Company recorded an unrealized loss of $0.1 million due to the change in fair value of the equity securities in interest and other expense, net in the condensed consolidated statements of operations. During the three months ended March 31, 2023, the Company recorded an unrealized loss due to the change in fair value of the equity securities of $0.4 million in interest and other expense, net in the condensed consolidated statements of operations.

Other investments include investments made via convertible debt instruments totaling $2.0 million which is recorded in other noncurrent assets in the condensed consolidated balance sheets. The other investments are reported as a Level 3 financial asset because the methodology used to develop the estimated fair values includes significant unobservable inputs reflecting management’s own assumptions. Assumptions used in fair valuing convertible debt instruments include the rights and obligations of the notes the Company holds as well as the probability of a qualified financing event, acquisition, or change in control. During the three months ended March 31, 2024 and 2023, the Company did not recognize any gains or losses on convertible debt instruments..

The Aerosint acquisition included contingent consideration related to revenue metrics and technical milestones, with a fair value of $6.1 million as of the date of acquisition and no remaining fair value as of March 31, 2024. The contingent consideration liability was valued using a Monte Carlo simulation in a risk-neutral framework as well as a scenario-based approach (both special cases of the income approach), based on key inputs that are not all observable in the market and is classified as a Level 3 liability. The Company assesses the fair value of the contingent consideration liability at each reporting period, with any subsequent changes to the fair value of the liability reflected in the condensed consolidated statement of operations until the liability is settled. During the three months ended March 31, 2023, the Company did not recognize a gain or loss in fair value of contingent consideration. During the three months ended March 31, 2023, the Company paid $0.8 million of contingent consideration in connection with the achievement of

12

technical milestones. During the year ended December 31, 2023, the Company derecognized the remaining contingent consideration of $0.2 million upon the sale of Aerosint. As of December 31, 2023, no contingent consideration was recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

The 2027 Notes are valued as a single liability measured at amortized cost, as no other features require bifurcation and recognition as derivatives.

There were no transfers between fair value measure levels during the three months ended March 31, 2024 and 2023. The following table presents information about the Company’s movement in Level 3 assets measured at fair value (in thousands):

Three Months Ended March 31, 

2024

    

2023

Balance at beginning of period

$

2,000

$

2,000

Balance at end of period

$

2,000

$

2,000

The following table presents information about the Company’s movement in Level 3 liabilities measured at fair value (in thousands):

Three Months Ended March 31, 

2024

    

2023

Balance at beginning of period

$

$

2,587

Payment of contingent consideration liability

(833)

Balance at end of period

$

$

1,754

6. ACCOUNTS RECEIVABLE

The components of accounts receivable are as follows (in thousands):

March 31, 

December 31, 

2024

2023

Trade receivables

$

38,900

$

41,132

Allowance for doubtful accounts

(3,480)

(3,442)

Total accounts receivable

$

35,420

$

37,690

The following table summarizes activity in the allowance for doubtful accounts (in thousands):

March 31, 

December 31, 

2024

2023

Balance at beginning of period

$

3,442

$

1,640

Provision for uncollectible accounts, net of recoveries

123

2,215

Uncollectible accounts written off

(85)

(413)

Balance at end of period

$

3,480

$

3,442

13

7. INVENTORY

Inventory consists of the following (in thousands):

    

March 31, 

December 31, 

    

2024

2023

Raw materials

$

23,606

$

26,449

Work in process

17,207

16,556

Finished goods:

 

 

Deferred cost of sales

3,092

1,279

Manufactured finished goods

39,192

38,355

Total finished goods

42,284

39,634

Total inventory

$

83,097

$

82,639

8. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consists of the following (in thousands):

March 31, 

December 31, 

2024

2023

Prepaid operating expenses

$

3,570

$

4,618

Prepaid dues and subscriptions

2,720

1,959

Prepaid insurance

2,029

Prepaid taxes

993

842

Prepaid rent

112

Government grants receivable

796

Termination fee receivable

471

Other

1,584

2,419

Total prepaid expenses and other current assets

$

11,008

$

11,105

9. DIVESTITURES

On September 29, 2023, the Company entered into a Stock Purchase Agreement with Industriewerk Shaeffler INA-Ingenieurdienst-, Gesellshaft mit beschrankter Haftung. (“Shaeffler”) related to the sale of Aerosint SA (“Aerosint”), a wholly owned subsidiary of the Company, for a $4.1 million all in cash selling price, net of cost of sell. The transaction was completed on September 29, 2023.

Before measuring the fair value less costs to sell of the disposal group as a whole, the Company first reviewed individual assets and liabilities to determine if any fair value adjustments were required and concluded no individual asset impairments were required. Then, based on the purchase and sale agreement entered into by the Company and the Buyer, the Company determined the fair value of the disposal group to be equal to the selling price, less costs to sell. Based on this review, the Company recorded a non-cash goodwill impairment charge of $2.5 million reflected in the third quarter of 2023 as the sale was considered to be a triggering event to evaluate goodwill impairment. Additionally, the Company, recorded an impairment charge of $6.9 million related to the asset group value, which includes $2.6 million of cumulative foreign currency translation adjustment. The sale of Aerosint did not represent a strategic shift that would have a major effect on the Company’s operations or financial results, therefore it is not presented as a discontinued operation.

In connection with the Company’s 2024 Initiative, as discussed in Note 24. Restructuring Charges, the Company approved a plan to sell a facility in St. Clairesville, Ohio as well as related equipment in the facility. The Company ceased recording depreciation on these assets upon meeting the held for sale criteria. As of March 31, 2024, the total carrying value of assets held for sale was $1.5 million.

14

10. PROPERTY AND EQUIPMENT

Property and equipment, net consists of the following (in thousands):

    

March 31, 

December 31, 

    

2024

2023

Equipment

$

47,419

$

46,351

Leasehold improvements

 

22,780

 

20,303

Land and buildings

3,604

7,840

Construction in process

 

3,530

 

3,374

Furniture and fixtures

 

2,054

 

1,950

Software

 

2,103

 

1,899

Tooling

 

2,286

 

2,287

Computer equipment

 

2,344

 

2,166

Automobiles

946

1,032

Property and equipment, gross

 

87,066

 

87,202

Less: accumulated depreciation

 

(55,415)

 

(51,362)

Total property and equipment, net

$

31,651

$

35,840

Depreciation expense was $3.1 million and $3.0 million for the three months ended March 31, 2024 and 2023.

11. GOODWILL & INTANGIBLE ASSETS

There was no goodwill balance at March 31, 2024 and December 31, 2023. The goodwill activity is as follows (in thousands):

March 31, 

December 31, 

2024

2023

Balance, beginning of year

$

$

112,955

Goodwill impairment

(112,911)

Foreign currency translation adjustment

(44)

Balance, end of period

$

$

Goodwill was fully impaired as of December 31, 2023. No impairment of goodwill has been recorded for the three months ended March 31, 2024 and 2023.

The Company performed a quantitative assessment during its annual impairment review for 2023 as of October 1, 2023 and concluded that the fair value of the Company’s single reporting unit was not less than its carrying amount. Due to sustained declines in Company’s stock price and the stock prices of comparable companies, we performed a quantitative assessment as of December 31, 2023, utilizing a combination of the income and market approaches. The results of the quantitative analysis performed indicated that the carrying value of the reporting unit exceeded the fair value. As such, a goodwill impairment charge of $110.4 million was recorded. Additionally, during the year ended December 31, 2023, the Company recorded a goodwill impairment charge of $2.5 million related to the sale of Aerosint. The Company recorded a total of $112.9 million in goodwill impairment charges during the year ended December 31, 2023.

The Company estimated the fair value using a weighted average of the income and market approaches. Specifically, the discounted cash flow method was used under the income approach and the guideline public company and guideline merged and acquired company methods were used under the market approach. The significant assumptions used under the income approach include management’s forecasts of future revenues and EBITDA margins used to calculate projected future cash flows, discount rates, and the terminal growth rate. The terminal value is based on an exit revenue multiple which requires significant assumptions regarding the selections of appropriate multiples that consider relevant market trading data. The Company bases its estimates and assumptions on its knowledge of the additive manufacturing industry, recent performance, expectations of future performance and other assumptions the Company believes to be reasonable. The significant assumptions used under the market approach include the control

15

premium and selection of comparable companies and comparable transactions. Comparable companies and transactions are chosen based on factors including industry classification, geographic region, product offerings, earnings growth and profitability.

Intangible assets consisted of the following (in thousands):

March 31, 2024

 

December 31, 2023

Weighted Average

Gross

Net

    

Gross

Net

Remaining Useful

Carrying

Accumulated

Carrying

Carrying

Accumulated

Carrying

 

Lives (in years)

 

Amount

 

Amortization

 

Amount

 

Amount

 

Amortization

 

Amount

Acquired technology

4.6

$

184,597

$

79,981

$

104,616

 

$

185,222

$

65,724

$

119,498

Trade name

1.1

12,299

5,365

6,934

12,302

3,952

8,350

Customer relationships

4.3

67,896

32,901

34,995