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Table of Contents

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 September 30, 2022

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 (§232.0405 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 November 7, 2022, there were 317,577,105 shares of the registrant’s Class A common stock outstanding.

Table of Contents

TABLE OF CONTENTS

    

Page

PART I

Part I. Financial Information

3

Item 1. Financial Statements

3

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

3

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021

4

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021

5

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021

6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021

8

Notes to Condensed Consolidated Financial Statements

10

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

49

Item 3. Quantitative and Qualitative Disclosures About Market Risk

65

Item 4. Controls and Procedures

66

Part II. Other Information

66

Item 1. Legal Proceedings

66

Item 1A. Risk Factors

67

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

96

Item 3. Defaults Upon Senior Securities

96

Item 4. Mine Safety Disclosures

96

Item 5. Other Information

96

Item 6. Exhibits

97

Exhibit Index

98

Signatures

99

2

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share amounts)

    

September 30, 

    

December 31, 

2022

    

2021

Assets

Current assets:

 

  

 

  

Cash and cash equivalents

$

66,987

$

65,017

Current portion of restricted cash

4,072

2,129

Short‑term investments

 

150,268

 

204,569

Accounts receivable

 

41,390

 

46,687

Inventory

 

91,223

 

65,399

Prepaid expenses and other current assets

 

18,781

 

18,208

Total current assets

 

372,721

 

402,009

Restricted cash, net of current portion

 

1,112

 

1,112

Property and equipment, net

 

57,755

 

58,710

Goodwill

 

365,253

 

639,301

Intangible assets, net

 

225,438

 

261,984

Other noncurrent assets

29,073

25,480

Total Assets

$

1,051,352

$

1,388,596

Liabilities and Stockholders’ Equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

29,211

$

31,558

Customer deposits

 

15,491

 

14,137

Current portion of lease liability

 

5,421

 

5,527

Accrued expenses and other current liabilities

 

31,430

 

33,829

Current portion of deferred revenue

 

16,309

 

18,189

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

 

444

 

825

Total current liabilities

 

98,306

 

104,065

Long-term debt, net of current portion

343

548

Convertible notes

111,657

Contingent consideration, net of current portion

1,088

4,183

Lease liability, net of current portion

 

18,788

 

13,077

Deferred revenue, net of current portion

3,778

4,508

Deferred tax liability

7,994

10,695

Other noncurrent liabilities

2,646

3,170

Total liabilities

244,600

140,246

Commitments and Contingencies (Note 17)

 

  

 

  

Stockholders’ Equity

 

 

Preferred Stock, $0.0001 par value—authorized, 50,000,000 shares; no shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Common Stock, $0.0001 par value—500,000,000 shares authorized; 317,193,388 and 311,737,858 shares issued at September 30, 2022 and December 31, 2021, respectively, 317,069,926 and 311,473,950 shares outstanding at September 30, 2022 and December 31, 2021, respectively

 

32

 

31

Additional paid‑in capital

 

1,864,477

 

1,823,344

Accumulated deficit

 

(996,601)

 

(568,611)

Accumulated other comprehensive loss

 

(61,156)

 

(6,414)

Total Stockholders’ Equity

 

806,752

 

1,248,350

Total Liabilities and Stockholders’ Equity

$

1,051,352

$

1,388,596

See notes to condensed consolidated financial statements

3

Table of Contents

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share amounts)

    

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

    

Revenues

 

  

 

  

Products

$

42,937

$

23,949

$

135,085

$

51,820

Services

4,149

1,489

 

13,381

 

3,908

Total revenues

47,086

 

25,438

 

148,466

 

55,728

Cost of sales

  

 

  

 

  

Products

43,639

20,450

 

130,454

 

46,427

Services

3,756

1,033

 

11,252

 

3,561

Total cost of sales

47,395

 

21,483

 

141,706

 

49,988

Gross profit

(309)

 

3,955

 

6,760

 

5,740

Operating expenses

  

 

  

 

  

Research and development

22,382

19,311

 

78,357

 

45,820

Sales and marketing

16,204

13,224

 

56,299

 

29,567

General and administrative

18,924

19,833

 

62,472

 

46,821

In-process research and development assets acquired

15,181

25,581

Goodwill impairment

229,500

Total operating expenses

57,510

 

67,549

 

426,628

 

147,789

Loss from operations

(57,819)

 

(63,594)

 

(419,868)

 

(142,049)

Change in fair value of warrant liability

(56,576)

Interest expense

(680)

(12)

 

(1,281)

(137)

Interest and other (expense) income, net

(1,677)

(3,796)

 

(8,443)

(3,166)

Loss before income taxes

(60,176)

 

(67,402)

 

(429,592)

 

(201,928)

Income tax (expense) benefit

(598)

523

 

1,602

 

32,761

Net loss

$

(60,774)

$

(66,879)

$

(427,990)

$

(169,167)

Net loss per share—basic and diluted

$

(0.19)

$

(0.26)

$

(1.36)

$

(0.67)

Weighted average shares outstanding, basic and diluted

316,007,716

260,555,655

313,901,704

251,467,644

See notes to condensed consolidated financial statements.

4

Table of Contents

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands)

    

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

    

2022

    

2021

    

2022

    

2021

Net loss

$

(60,774)

$

(66,879)

$

(427,990)

$

(169,167)

Other comprehensive (loss) income, net of taxes:

 

 

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

(389)

(7)

 

(418)

 

(11)

Foreign currency translation adjustment

(15,866)

(1,216)

(54,324)

(1,099)

Total comprehensive (loss) income, net of taxes of $0

$

(77,029)

$

(68,102)

$

(482,732)

$

(170,277)

See notes to condensed consolidated financial statements.

5

Table of Contents

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share amounts)

Three Months Ended September 30, 2022

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

Capital

    

Deficit

    

Income

    

Equity

BALANCE—July 1, 2022

315,147,677

$

32

$

1,851,836

$

(935,827)

$

(44,901)

$

871,140

Exercise of Common Stock options

1,147,289

 

 

1,771

 

 

 

1,771

Vesting of restricted Common Stock

 

21,786

 

 

 

 

 

Vesting of restricted stock units

765,093

Net settlement of shares for employee tax withholdings upon vesting of restricted stock units

(11,919)

(39)

(39)

Issuance of Common Stock related to settlement of contingent consideration

Stock‑based compensation expense

 

 

 

10,909

 

 

 

10,909

Net loss

 

 

 

 

(60,774)

 

 

(60,774)

Other comprehensive income (loss)

 

 

 

 

 

(16,255)

 

(16,255)

BALANCE—September 30, 2022

 

317,069,926

$

32

$

1,864,477

$

(996,601)

$

(61,156)

$

806,752

Nine Months Ended September 30, 2022

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

Capital

    

Deficit

    

Income

    

Equity

BALANCE—January 1, 2022

311,473,950

$

31

$

1,823,344

$

(568,611)

$

(6,414)

$

1,248,350

Exercise of Common Stock options

2,168,289

 

 

3,035

 

 

 

3,035

Vesting of restricted Common Stock

 

135,341

 

 

 

 

 

Vesting of restricted stock units

3,248,204

1

1

Repurchase of shares for employee tax withholdings

(68,060)

(228)

(228)

Issuance of Common Stock related to settlement of contingent consideration

112,202

500

500

Stock‑based compensation expense

 

 

 

37,826

 

 

 

37,826

Net loss

 

 

 

 

(427,990)

 

 

(427,990)

Other comprehensive income (loss)

 

 

 

 

 

(54,742)

 

(54,742)

BALANCE—September 30, 2022

 

317,069,926

$

32

$

1,864,477

$

(996,601)

$

(61,156)

$

806,752

6

Table of Contents

Three Months Ended September 30, 2021

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

    

Capital

    

Deficit

    

Income

    

Equity

BALANCE—July 1, 2021

259,545,731

$

26

$

1,387,779

$

(430,565)

$

104

$

957,344

Exercise of Common Stock options

1,615,484

 

 

1,576

 

 

 

1,576

Vesting of restricted Common Stock

 

295,599

 

 

 

 

 

Vesting of restricted stock units

259,735

Net share settlement related to employee tax withholdings upon vesting of restricted stock units

(40,299)

(309)

(309)

Issuance of Common Stock for acquisitions

Issuance of common stock for acquired in-process research and development

Net share settlement related to employee tax withholdings upon vesting of restricted stock awards

(109,150)

(958)

(958)

Stock‑based compensation expense

 

 

 

9,951

 

 

 

9,951

Net loss

 

 

 

 

(66,879)

 

 

(66,879)

Other comprehensive income (loss)

 

 

 

 

 

(1,223)

 

(1,223)

BALANCE—September 30, 2021

 

261,567,100

$

26

$

1,398,039

$

(497,444)

$

(1,119)

$

899,502

Nine Months Ended September 30, 2021

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

    

Capital

    

Deficit

    

Income

    

Equity

BALANCE—January 1, 2021

224,626,597

$

23

$

844,188

$

(328,277)

$

(9)

$

515,925

Exercise of Common Stock options

4,462,218

 

 

5,241

 

 

 

5,241

Vesting of restricted Common Stock

 

407,629

 

 

 

 

 

Vesting of restricted stock units

303,656

Net settlement of shares related to employee tax withholdings upon vesting of restricted stock units

(49,471)

(454)

(454)

Issuance of Common Stock for acquisitions

9,049,338

1

208,988

208,989

Issuance of common stock for acquired in-process research and development

334,370

4,300

4,300

Net share settlement related to employee tax withholdings upon vesting of restricted stock awards

(109,150)

(958)

(958)

Stock‑based compensation expense

 

 

 

16,167

 

 

 

16,167

Vesting of Trine Founder shares

1,850,938

Exercise of warrants

 

20,690,975

 

2

 

320,567

 

 

 

320,569

Net loss

 

 

 

 

(169,167)

 

 

(169,167)

Other comprehensive income (loss)

 

 

 

 

 

(1,110)

 

(1,110)

BALANCE—September 30, 2021

 

261,567,100

$

26

$

1,398,039

$

(497,444)

$

(1,119)

$

899,502

See notes to condensed consolidated financial statements.

7

Table of Contents

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Nine Months Ended September 30, 

    

2022

    

2021

Cash flows from operating activities:

Net loss

    

$

(427,990)

    

$

(169,167)

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

 

 

Depreciation and amortization

 

38,294

 

15,576

Stock‑based compensation

 

37,826

 

16,167

Goodwill impairment

229,500

Change in fair value of warrant liability

56,576

Change in fair value of subscription agreement

2,920

Amortization (accretion) of discount on investments

(305)

2,189

Amortization of debt financing cost

9

Amortization of deferred costs on convertible notes

276

Provision for bad debt

1,038

316

Acquired in-process research and development

25,581

Loss on disposal of property and equipment

209

 

19

Foreign exchange (gains) losses on intercompany transactions, net

1,261

Net increase (decrease) in accrued interest related to marketable securities

771

(414)

Net unrealized (gain) loss on equity investment

6,172

1,880

Net unrealized (gain) loss on other investments

745

(639)

Deferred tax benefit

(1,602)

(32,761)

Change in fair value of contingent consideration

(254)

(166)

Foreign currency transaction (gain) loss

(59)

Changes in operating assets and liabilities:

 

Accounts receivable

 

3,166

 

(8,476)

Inventory

 

(31,195)

 

(11,067)

Prepaid expenses and other current assets

 

(969)

 

(3,096)

Other assets

1,196

(118)

Accounts payable

 

(2,959)

 

4,243

Accrued expenses and other current liabilities

 

(