Annual report pursuant to Section 13 and 15(d)

ACQUISITIONS

v3.24.0.1
ACQUISITIONS
12 Months Ended
Dec. 31, 2023
ACQUISITIONS  
ACQUISITIONS

4. ACQUISITIONS

2021 Acquisitions

Acquisition of EnvisionTEC

On February 16, 2021, the Company acquired EnvisionTEC, Inc. and its subsidiaries (“EnvisionTEC”) pursuant to a Purchase Agreement and Plan of Merger dated January 15, 2021. This acquisition added a comprehensive portfolio in additive manufacturing across metals, polymers and composites and grew distribution channels both in quantity and through the addition of a vertically-focused channel. The total purchase price was $303.6 million, consisting of $143.8 million paid in cash and 5,036,142 shares of the Company’s Common Stock with a fair value of $159.8 million as of the close of business on the transaction date.

The acquisition is accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s estimates of their fair values on the acquisition date.

The acquisition date fair value of the consideration transferred is as follows (in thousands):

Total Acquisition Date Fair Value

Cash consideration

$

143,795

Equity consideration

159,847

Total consideration transferred

$

303,642

The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed (in thousands):

At February 16, 2021

Assets acquired:

Cash and cash equivalents

$

859

Restricted cash

5,004

Accounts receivable

2,982

Inventory

7,668

Prepaid expenses and other current assets

1,081

Restricted cash - noncurrent

285

Property and equipment

1,540

Intangible assets

137,300

Other noncurrent assets

1,801

Total assets acquired

$

158,520

Liabilities assumed:

Accounts payable

$

1,442

Customer deposits

2,460

Current portion of lease liability

605

Accrued expenses and other current liabilities

13,706

Liability for income taxes

480

Deferred revenue

492

Current portion of long-term debt

898

Long-term debt

285

Deferred tax liability

29,009

Lease liability, net of current portion

1,189

Total liabilities assumed

$

50,566

Net assets acquired

$

107,954

Goodwill

$

195,688

Total net assets acquired

$

303,642

Subsequent to the acquisition date, the Company made certain measurement period adjustments to the preliminary purchase price allocation, which resulted in decrease to goodwill of $3.4 million. The decrease was primarily due to an increase in deferred income tax liabilities of $4.1 million, partially offset by a decrease in deferred revenue of $0.2 million related to the adoption of ASU 2021-08 and a decrease in inventory of $1.0 million related to obsolete inventory. Additionally, the Company recorded a measurement period adjustment of $0.3 million related to certain assets acquired and liabilities assumed due to clarification of information utilized to determine fair value during the measurement period.

The estimated useful lives of the identifiable intangible assets acquired is as follows:

Gross Value

Estimated Life

Acquired technology

$

77,800

7 – 14 years

Trade name

8,600

14 years

Customer relationships

50,900

12 years

Total intangible assets

$

137,300

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries.The $16.4 million of the goodwill recognized is deductible for income tax purposes. The Company incurred $4.8 million of acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the consolidated statements of operations.

EnvisionTEC’s results are included in the Company’s consolidated results for the partial year period from February 16, 2021 to December 31, 2021. For this period, EnvisionTEC’s net revenues were approximately $33.3 million and net loss was approximately $11.1 million.

Acquisition of Adaptive 3D

On May 7, 2021, the Company acquired Adaptive 3D Holdings, Inc. and its affiliates (“Adaptive 3D”) pursuant to a Purchase Agreement and Plan of Merger dated as of May 7, 2021. This acquisition expanded the Company’s materials library to include photopolymer elastomers for use in the production of end use parts. The total purchase price was $61.8 million, consisting of $24.1 million paid in cash and 3,133,276 shares of the Company’s Common Stock with a fair value of $37.7 million as of the close of business on the transaction date.

The acquisition is accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s estimates of their fair values on the acquisition date.

The acquisition date fair value of the consideration transferred is as follows (in thousands):

Total Acquisition Date Fair Value

Cash consideration

$

24,083

Equity consideration

37,693

Total consideration transferred

$

61,776

The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed (in thousands):

At May 7, 2021

Assets acquired:

Cash and cash equivalents

$

2,852

Accounts receivable

504

Inventory

305

Prepaid expenses and other current assets

462

Property and equipment

558

Intangible assets

27,300

Other noncurrent assets

654

Total assets acquired

$

32,635

Liabilities assumed:

Accounts payable

$

280

Current portion of lease liability

151

Accrued expenses and other current liabilities

100

PPP loan payable

311

Deferred revenue

12

Lease liability, net of current portion

502

Deferred tax liability

4,616

Total liabilities assumed

$

5,972

Net assets acquired

$

26,663

Goodwill

$

35,113

Total net assets acquired

$

61,776

Subsequent to the acquisition date, the Company made a measurement period adjustment to the preliminary purchase price allocation, which resulted in a decrease to goodwill of $0.2 million. The decrease was due to a decrease in deferred income tax liabilities of $0.2 million.

The estimated useful lives of the identifiable intangible assets acquired is as follows:

Gross Value

Estimated Life

Acquired technology

$

27,000

14 years

Trade name

300

5 years

Total intangible assets

$

27,300

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries. The goodwill recognized is not deductible for income tax purposes. The Company incurred $0.3 million of acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the consolidated statements of operations.

Adaptive 3D’s results are included in the Company’s consolidated results for the partial year period from May 7, 2021 to December 31, 2021. For this period, Adaptive 3D’s revenues were approximately $1.1 million, and its net loss was approximately $4.9 million.

Acquisition of Aerosint

On June 24, 2021, the Company acquired all outstanding securities of Aerosint SA and its affiliates (“Aerosint”), which expanded the Company’s portfolio of technologies with the addition of multi-material printing capabilities. The total purchase price was $23.8 million, consisting of $6.2 million paid in cash, 879,922 shares of the Company’s Common Stock with a fair value of $11.5 million as of the close of business on the transaction date, and contingent consideration with a fair value of $6.1 million as of the acquisition date. The Company may be required to pay this contingent consideration based on the achievement of revenue metrics and technical milestones over the three-year period following the transaction date.

The acquisition is accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s estimates of their fair values on the acquisition date.

The 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 a fair value of $2.6 million as of December 31, 2022. The Company will pay up to $5.5 million of contingent consideration based on stated revenue metrics, which had a fair value of $4.6 million as of the date of acquisition. During the year ended December 31, 2022, based on the relevant revenues earned during the first year of the three-year contingent consideration period, the Company paid $1.0 million in cash and $0.5 million in shares to Aerosint shareholders, resulting in a reduction of the contingent consideration liability, which has a remaining fair value of $1.1 million as of December 31, 2022. If Aerosint reaches certain product mass production technical milestones, the Company will pay out a maximum of $2.0 million in contingent consideration, which had a fair value of $1.5 million as of the date of acquisition, and a fair value of $1.5 million as of December 31, 2023. As of the date of acquisition, the fair value of the short-term liability was $1.4 million, and the long-term liability was $4.7 million, which the Company recorded in accrued expenses and other current liabilities and in contingent consideration, net of current portion, on the consolidated balance sheets. As of December 31, 2023, contingent consideration is recorded in accrued expenses and other current liabilities, in the consolidated balance sheets.

The acquisition date fair value of the consideration transferred is as follows (in thousands):

Total Acquisition Date Fair Value

Cash consideration

$

6,220

Equity consideration

11,448

Contingent consideration

6,083

Total consideration transferred

$

23,751

The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed (in thousands):

At June 24, 2021

Assets acquired:

Cash and cash equivalents

$

419

Accounts receivable

34

Inventory

166

Prepaid expenses and other current assets

697

Property and equipment

369

Intangible assets

11,726

Other noncurrent assets

336

Total assets acquired

$

13,747

Liabilities assumed:

Accounts payable

$

58

Customer deposits

283

Current portion of lease liability

100

Accrued expenses and other current liabilities

169

Deferred revenue

810

Lease liability, net of current portion

226

Deferred tax liability

2,931

Total liabilities assumed

$

4,577

Net assets acquired

$

9,170

Goodwill

$

14,581

Total net assets acquired

$

23,751

Subsequent to the acquisition date, the Company made a measurement period adjustment to the preliminary purchase price allocation, which resulted in a decrease to goodwill of $0.6 million. The decrease was due to a decrease in deferred income tax liabilities.

The estimated useful lives of the identifiable intangible assets acquired is as follows:

Gross Value

Estimated Life

Acquired technology

$

11,547

11.5 years

Trade name

179

4.5 years

Total intangible assets

$

11,726

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries. The goodwill recognized is not deductible for income tax purposes. The Company incurred $0.9 million of acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the consolidated statements of operations.

Aerosint’s results are included in the Company’s consolidated results for the partial year period from June 24, 2021 to December 31, 2021. For this period, Aerosint’s revenues were $0.6 million and net loss was $0.4 million.

On September 29, 2023, the Company completed the sale of Aerosint SA to Schaeffler AG.

Acquisition of Dental Arts Labs

On July 30, 2021, the Company acquired Dental Arts Laboratories, Inc., (“Dental Arts Labs”), which expanded the Company’s portfolio in additive and conventional manufacturing within the healthcare industry. The purchase price was $26.0 million paid in cash. The Company also issued 1,190,468 restricted stock units with a grant date fair value of $11.0 million, which are subject to a four-year vesting period and continuing employment. The Company will recognize compensation expense for these restricted stock units over the vesting period.

The acquisition is accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s estimates of their fair values on the acquisition date.

The acquisition date fair value of the consideration transferred is as follows (in thousands):

Total Acquisition Date Fair Value

Cash consideration

$

26,042

Total consideration transferred

$

26,042

The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed (in thousands):

At July 30, 2021

Assets acquired:

Cash and cash equivalents

$

858

Accounts receivable

3,707

Inventory

2,438

Prepaid expenses and other current assets

3,853

Property and equipment

8,643

Intangible assets

5,000

Other noncurrent assets

4,636

Total assets acquired

$

29,135

Liabilities assumed:

Accounts payable

$

1,949

Current portion of lease liability

535

Accrued expenses and other current liabilities

1,795

Current portion of long‑term debt

3,888

Long‑term debt

3

Lease liability, net of current portion

3,762

Total liabilities assumed

$

11,932

Net assets acquired

$

17,203

Goodwill

$

8,839

Total net assets acquired

$

26,042

Subsequent to the acquisition date, the Company made a working capital adjustment to the preliminary purchase price allocation, which resulted in decrease to goodwill of $0.3 million.

The estimated useful lives of the identifiable intangible assets acquired is as follows:

Gross Value

Estimated Life

Trade name

$

1,300

8.5 years

Customer relationships

3,700

9.5 years

Total intangible assets

$

5,000

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries. The goodwill recognized is deductible for income tax purposes. The Company incurred $0.6 million of acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the consolidated statements of operations.

Dental Arts Labs’ results are included in the Company’s consolidated results for the partial year period from July 30, 2021 to December 31, 2021. For this period, Dental Arts Labs’ revenues were $14.1 million and net loss was $0.3 million.

Acquisition of A.I.D.R.O.

On September 7, 2021, the Company purchased the entire corporate capital of A.I.D.R.O. Srl (“A.I.D.R.O.”). This acquisition expanded the Company’s parts production capabilities and application expertise in the hydraulics industry. The purchase price for the A.I.D.R.O. acquisition was $5.7 million paid in cash, of which $4.9 million was paid at closing and the remaining $0.8 million was deposited to an escrow account subsequent to December 31, 2022. The Company also issued 364,050 restricted stock units with a grant date fair value of $3.2 million, which are subject to a four-year vesting period and continuing employment. The Company will recognize compensation expense for these restricted stock units over the vesting period.

The acquisition is accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s estimates of their fair values on the acquisition date.

The acquisition date fair value of the consideration transferred is as follows (in thousands):

Total Acquisition Date Fair Value

Cash consideration

$

5,683

Total consideration transferred

$

5,683

The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed (in thousands):

At September 7, 2021

Assets acquired:

Cash and cash equivalents

$

855

Accounts receivable

966

Inventory

906

Prepaid expenses and other current assets

412

Property and equipment

691

Intangible assets

1,080

Other noncurrent assets

1,100

Total assets acquired

$

6,010

Liabilities assumed:

Accounts payable

$

1,307

Current portion of lease liability

72

Accrued expenses and other current liabilities

508

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

138

Long‑term debt

764

Lease liability, net of current portion

750

Deferred tax liability

75

Other noncurrent liabilities

228

Total liabilities assumed

$

3,842

Net assets acquired

$

2,168

Goodwill

$

3,515

Total net assets acquired

$

5,683

Subsequent to the acquisition date, the Company made a working capital adjustment to the preliminary purchase price allocation, which resulted in an immaterial decrease to goodwill.

The estimated useful lives of the identifiable intangible assets acquired is as follows:

Gross Value

Estimated Life

Trade name

$

142

4 years

Customer relationships

938

15 years

Total intangible assets

$

1,080

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries. The goodwill recognized is not deductible for income tax purposes. The Company incurred $0.4 million of acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the consolidated statements of operations.

A.I.D.R.O.’s results are included in the Company’s consolidated results for the partial year period from September 7, 2021 to December 31, 2021. For this period, A.I.D.R.O.’s revenues were $1.7 million and net loss was $0.2 million.

Acquisition of Brewer Dental

On October 14, 2021, the Company acquired Larry Brewer Dental Lab, Inc. (“Brewer Dental”), which expanded the Company’s portfolio in additive manufacturing within the healthcare and dental industry. The purchase price was $7.6 million paid in cash, of which $7.0 million was paid at closing and the remaining $0.5 million will be paid 24 months after closing. The Company also issued 252,096 restricted stock units with a grant date fair value of $1.8 million, which are subject to a four-year vesting period and continuing employment. The Company will recognize compensation expense for these restricted stock units over the vesting period.

The acquisition is accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s estimates of their fair values on the acquisition date.

The acquisition date fair value of the consideration transferred is as follows (in thousands):

Total Acquisition Date Fair Value

Cash consideration

$

7,613

Total consideration transferred

$

7,613

The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed (in thousands):

At October 14, 2021

Assets acquired:

Cash and cash equivalents

$

1,574

Accounts receivable

524

Inventory

226

Property and equipment

375

Intangible assets

2,630

Other noncurrent assets

706

Total assets acquired

$

6,035

Liabilities assumed:

Accounts payable

$

34

Current portion of lease liability

87

Accrued expenses and other current liabilities

145

Lease liability, net of current portion

619

Total liabilities assumed

$

885

Net assets acquired

$

5,150

Goodwill

$

2,463

Total net assets acquired

$

7,613

The estimated useful lives of the identifiable intangible assets acquired is as follows:

Gross Value

Estimated Life

Trade name

$

230

8 years

Customer relationships

2,400

8 years

Total intangible assets

$

2,630

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries. The goodwill recognized is deductible for income tax purposes. The Company incurred immaterial acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the consolidated statements of operations.

Brewer Dental’s results are included in the Company’s consolidated results for the partial year period from October 14, 2021 to December 31, 2021. For this period, Brewer Dental’s revenues were $1.4 million and net income was $0.1 million.

Acquisition of May Dental

On October 29, 2021, the Company acquired May Dental Lab, Inc. (“May Dental”), which expanded the Company’s portfolio in additive manufacturing within the healthcare and dental industry. The aggregate purchase price was $12.5 million paid in cash, of which $11.8 million was paid at closing and the remaining $0.8 million will be paid 24 months after closing, subject to the Limited Liability Interest Purchase Agreement. The Company also issued 357,642 restricted stock units with a grant date fair value of $2.5 million, which are subject to a four-year vesting period and continuing employment. The Company will recognize compensation expense for these restricted stock units over the vesting period.

The acquisition is accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s estimates of their fair values on the acquisition date.

The acquisition date fair value of the consideration transferred is as follows (in thousands):

Total Acquisition Date Fair Value

Cash consideration

$

12,522

Total consideration transferred

$

12,522

The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed (in thousands):

At October 29, 2021

Assets acquired:

Cash and cash equivalents

$

230

Accounts receivable

677

Inventory

343

Prepaid expenses and other current assets

98

Property and equipment

495

Intangible assets

4,340

Other noncurrent assets

1,416

Total assets acquired

$

7,599

Liabilities assumed:

Accounts payable

$

209

Current portion of lease liability

201

Accrued expenses and other current liabilities

255

Lease liability, net of current portion

1,216

Total liabilities assumed

$

1,881

Net assets acquired

$

5,718

Goodwill

$

6,804

Total net assets acquired

$

12,522

The estimated useful lives of the identifiable intangible assets acquired is as follows:

Gross Value

Estimated Life

Trade name

$

3,900

9 years

Customer relationships

440

10 years

Total intangible assets

$

4,340

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries. The goodwill recognized is deductible for income tax purposes. The Company incurred immaterial acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the consolidated statements of operations.

May Dental’s results are included in the Company’s consolidated results for the partial year period from October 29, 2021 to December 31, 2021. For this period, May Dental’s revenues were $1.3 million and net loss was $0.1 million.

Acquisition of ExOne

On November 12, 2021, the Company acquired The ExOne Company and its affiliates (“ExOne”). The acquisition of ExOne extended the Company’s product platforms with complementary solutions to create a comprehensive portfolio combining throughput, flexibility, and materials breadth while allowing customers to optimize production based on their specific application needs. The Company acquired all of ExOne’s outstanding common stock for an aggregate purchase price of $613.0 million, consisting of $201.4 paid in cash and 48,218,063 shares of Common Stock with a fair value of $411.6 million as of the close of business on the transaction date. The Company also granted 86,020 incentive stock options with a weighted-average exercise price of $4.47 to certain employees of ExOne in exchange for unvested ExOne stock options.

The acquisition is accounted for as a business combination using the acquisition method of accounting. The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s estimates of their fair values on the acquisition date.

The acquisition date fair value of the consideration transferred is as follows (in thousands):

Total Acquisition Date Fair Value

Cash consideration

$

201,399

Equity consideration

411,603

Total consideration transferred

$

613,002

The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed (in thousands):

At November 12, 2021

Assets acquired:

Cash and cash equivalents

$

119,068

Restricted cash - current

3,007

Accounts receivable

13,611

Inventory

27,200

Prepaid expenses and other current assets

5,165

Property and equipment

33,991

Intangible assets

82,100

Other noncurrent assets

2,734

Total assets acquired

$

286,876

Liabilities assumed:

Accounts payable

$

5,830

Accrued expenses and other current liabilities

10,368

Current portion of deferred revenue

15,331

Customer deposits

10,168

Current portion of operating lease liability

1,919

Deferred tax liability

3,465

Lease liability, net of current portion

332

Deferred revenue, net of current portion

147

Other noncurrent liabilities

321

Total liabilities assumed

$

47,881

Net assets acquired

$

238,995

Goodwill

$

374,007

Total net assets acquired

$

613,002

The estimated useful lives of the identifiable intangible assets acquired is as follows:

Gross Value

Estimated Life

Developed Technology

$

72,900

8 years

Trade name

1,300

4 years

Customer relationships

7,900

12 years

Total intangible assets

$

82,100

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries. The goodwill recognized is not deductible for income tax purposes. The Company incurred $8.5 million of acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the consolidated statements of operations.

ExOne’s results are included in the Company’s consolidated results for the partial year period from November 12, 2021 to December 31, 2021. For this period, ExOne’s revenues were $15.5 million and net loss was $6.9 million.

Pro Forma Information (unaudited)

The following unaudited pro forma financial information is based on the historical financial statements of the Company and presents the Company’s results as if the acquisitions of EnvisionTEC, Adaptive 3D, Aerosint, Dental Arts Labs, A.I.D.R.O., Brewer Dental, May Dental, and ExOne had occurred on January 1,

(in thousands):

Year Ended December 31,

2021

    

2020

(unaudited)

(unaudited)

Net revenues

$

207,688

$

164,947

Net income (loss)

$

(273,319)

$

(138,346)

The unaudited pro forma financial information was computed by combining the historical financial information of the Company and EnvisionTEC, Adaptive 3D, Aerosint, Dental Arts, A.I.D.R.O., Brewer Dental, May Dental, and ExOne along with the effects of the acquisition method of accounting for business combinations as though the companies were combined on January 1, 2020. The unaudited pro forma information does not reflect the potential benefits of cost and funding synergies, opportunities to earn additional revenues, or other factors, and therefore does not represent what the actual net revenues and net loss would have been had the companies been combined as of this date.

2021 Asset Acquisitions

Acquisition of Beacon Bio

On June 10, 2021, the Company acquired Beacon Bio, Inc. (“Beacon Bio”) pursuant to a Stock Purchase Agreement. The purchase price consisted of cash consideration of $6.1 million, including transaction costs of $0.2 million, and 334,370 shares of Common Stock with a fair value of $4.3 million as of the close of business on the transaction date. The cash consideration includes a simple agreement for future equity investment of $1.0 million made by the Company in advance of the acquisition that was settled in the acquisition. Beacon Bio is engaged in research and development of PhonoGraft technology. The Company concluded the arrangement did not result in the acquisition of a business, as substantially all of the fair value of the gross assets acquired was concentrated in in-process research and development for which there was no alternative future use. Therefore, the Company accounted for the arrangement as an asset acquisition. In connection with the acquisition, the Company issued additional restricted stock units to retain research and development employees and contractors of Beacon Bio through the expected term to complete the development, which vest over a service period of 3 years and are accounted for as post-combination expense.

The acquired in-process research and development asset consists of a license to commercialize the PhonoGraft technology. At the date of the acquisition, significant research, development, and risk related to the license remained, and it was deemed not yet probable that there was future economic benefit from this asset. Absent successful clinical results and regulatory approval for this asset, there was no alternative future use associated with this asset. Accordingly, the value of the asset was expensed in the consolidated statements of operations and no deferred tax liability has been recorded.

Acquisition of Meta Additive

On September 9, 2021, the Company acquired Meta Additive Ltd (“Meta Additive”), pursuant to a Stock Purchase Agreement of the same date. Meta Additive is engaged in research and development of binder jet printing. The purchase price consisted of cash consideration of $15.2 million, including transaction costs of $0.2 million. The Company concluded the arrangement did not result in the acquisition of a business, as substantially all of the fair value of the gross assets acquired was concentrated in in-process research and development for which there was no alternative future use. The Company accounted for the arrangement as an asset acquisition. In connection with the acquisition, the Company issued 1,101,592 restricted stock units with a fair value of $9.0 million as of the acquisition date to retain key employees of Meta Additive through the expected term to complete the development, which vest over a service period of 4 years and are accounted for as post-combination expense. In June 2022, per the terms of the acquisition agreement, the Company accelerated 895,044 RSUs for certain key employees in connection with the 2022 Initiative described in Note 24. Restructuring Charges.

The acquired in-process research and development asset consists of the development of novel functional binders to provide advanced additive manufacturing solutions. Due to the stage of development of this technology at the date of the acquisition, significant research, development, and risk remained, and it was not yet probable that there was future economic benefit from this asset. Absent successful commercialization of this asset, there was no associated alternative future use. Accordingly, the value of the assets was expensed in the consolidated statements of operations and no deferred tax liability has been recorded.

2020 Acquisitions

Business Combination

On December 9, 2020, the Company and Trine consummated the Business Combination, with Legacy Desktop Metal surviving the merger as a wholly-owned subsidiary of Trine. Upon the consummation of the Business Combination, each share of Legacy Desktop Metal capital stock issued and outstanding was converted into the right to receive 1.22122 shares (the “Exchange Ratio”) of the Company’s common stock (the “Per Share Merger Consideration”).

Upon the closing of the Business Combination, Trine’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 550,000,000 shares, of which 500,000,000 shares were designated common stock; $0.0001 par value per share, and of which 50,000,000 shares were designated preferred stock, $0.0001 par value per share.

In connection with the execution of the definitive agreement for the Business Combination, Trine entered into separate subscription agreements (each, a “Subscription Agreement”) with a number of investors (each, a “Subscriber”), pursuant to which the Subscribers agreed to purchase, and Trine agreed to sell to the Subscribers, an aggregate of 27,497,500 shares of the Company’s Common Stock, for a purchase price of $10.00 per share and an aggregate purchase price of $275 million, in a private placement pursuant to the subscription agreements (the “PIPE financing”). The PIPE financing closed simultaneously with the consummation of the Business Combination.

The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Trine was treated as the “acquired” company for financial reporting purposes. See Note 1 “Organization and Nature of Business” for further details. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Desktop Metal issuing stock for the net assets of Trine, accompanied by a recapitalization. The net assets of Trine are stated at historical cost, with no goodwill or other intangible assets recorded.

Prior to the Business Combination, Legacy Desktop Metal and Trine filed separate standalone federal, state and local income tax returns. As a result of the Business Combination, structured as a reverse recapitalization for tax purposes, Desktop Metal, Inc. (f/k/a Trine Acquisition Corp.), became the parent of the consolidated filing group, with Desktop Metal Operating, Inc. (f/k/a Desktop Metal, Inc.) as a subsidiary.

The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows and the consolidated statement of changes in equity for the year ended December 31, 2020:

Recapitalization

Cash – Trine's trust and cash (net of redemptions)

$

305,084,695

Cash – PIPE financing

 

274,975,000

Less: transaction costs and advisory fees paid

 

(45,463,074)

Net proceeds from reverse recapitalization

 

534,596,621

Plus: non-cash net liabilities assumed1

 

(152,394,714)

Less: accrued transaction costs and advisory fees

 

(1,900,793)

Net contributions from reverse recapitalization

$

380,301,114

The number of shares of common stock issued immediately following the consummation of the Business Combination:

Number of Shares

Common stock, outstanding prior to Business Combination

30,015,000

Less: redemption of Trine shares

 

(26,049)

Common stock of Trine

 

29,988,951

Trine Founder Shares

 

5,552,812

Trine Director Shares

 

100,000

Shares issued in PIPE financing

27,497,500

Business Combination and PIPE financing shares

63,139,263

Legacy Desktop Metal shares (1)

 

161,487,334

Total shares of common stock immediately after Business Combination

 

224,626,597

(1) The number of Legacy Desktop Metal shares was determined from the shares of Legacy Desktop Metal shares outstanding immediately prior to the closing of the Business Combination converted at the Exchange Ratio of 1.22122. All fractional shares were rounded down.

In connection with the Business Combination, 7,403,750 Trine Founder Shares were issued. Pursuant to the Business Combination agreement, 75% of the Founder shares, or 5,552,812 shares, vested at the close of the Business Combination, with the remaining 25%, or 1,850,938 shares, vesting if the Company trades at $12.50 per share or higher for any 20 trading days within a 30-day window by the fifth anniversary of the Business Combination. As of December 31, 2020, 20 trading days had not yet passed since the date of the Business Combination, and the shares remained unvested and held in escrow. The vesting criteria was met on January 8, 2021.

Divestitures

During the year ended December 31, 2022, in connection with the Company’s strategic integration and cost optimization initiative (the “2022 Initiative”), as discussed in Note 24. Restructuring Charges, the Company approved a plan to sell a facility in Troy, Michigan, as well as related equipment in the facility. On March 31, 2023, in connection with the 2022 Initiative, the Company approved a plan to sell a facility in North Huntingdon, Pennsylvania.

The Company ceased recording depreciation on these assets upon meeting the held for sale criteria. As of December 31, 2022, the total carrying value of assets held for sale was $0.8 million.

During the year ended December 31, 2023, the Company completed the sales of the Troy, Michigan and the North Huntington, Pennsylvania facilities for a combined $6.9 million in proceeds. The Company recorded an immaterial loss on the sale of the facilities in the consolidated statements of operations.

On September 29, 2023, the Company entered into a Stock Purchase Agreement with Industriewerk Shaeffler INA-Ingenieurdienst-, Gesellshaft mit beschrankter Haftung. (“Shaeffler”), (the “Buyer”), related to the sale of 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.