june
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
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As of October 29, 2024, there were
TABLE OF CONTENTS
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)
| September 30, |
| December 31, | |||
2024 |
| 2023 | ||||
Assets | ||||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Current portion of restricted cash | | | ||||
Short‑term investments |
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Accounts receivable |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Restricted cash, net of current portion |
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Property and equipment, net |
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Intangible assets, net |
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Other noncurrent assets | | | ||||
Total Assets | $ | | $ | | ||
Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable | $ | | $ | | ||
Customer deposits |
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Current portion of lease liability |
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Accrued expenses and other current liabilities |
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Current portion of deferred revenue |
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Current portion of long‑term debt, net of deferred financing costs |
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Total current liabilities |
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Long-term debt, net of current portion | — | | ||||
Convertible notes | | | ||||
Lease liability, net of current portion |
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Deferred revenue, net of current portion | | | ||||
Deferred tax liability | | | ||||
Other noncurrent liabilities | | | ||||
Total liabilities | | | ||||
Commitments and Contingencies (Note 17) |
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Stockholders’ Equity |
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Preferred Stock, $ | ||||||
Common Stock, $ |
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Additional paid‑in capital |
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Accumulated deficit |
| ( |
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Accumulated other comprehensive loss |
| ( |
| ( | ||
Total Stockholders’ Equity |
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Total Liabilities and Stockholders’ Equity | $ | | $ | |
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 | Nine Months Ended | ||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Revenues |
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Products | $ | | $ | | $ | | $ | | ||||
Services | | |
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Total revenues | |
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Cost of sales |
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Products | | |
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Services | | |
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Total cost of sales | |
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Gross profit (loss) | |
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Operating expenses |
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Research and development | | |
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Sales and marketing | | |
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General and administrative | | |
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Impairment charges | — | | — | | ||||||||
Goodwill impairment | — | | — | | ||||||||
Total operating expenses | |
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Loss from operations | ( | ( |
| ( | ( | |||||||
Interest expense | ( | ( |
| ( | ( | |||||||
Interest and other expense, net | |
| ( |
| ( |
| ( | |||||
Loss before income taxes | ( | ( |
| ( |
| ( | ||||||
Income tax benefit (expense) | ( | $ | | $ | ( | $ | | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per share—basic and diluted | ( | ( | ( | ( | ||||||||
Weighted average shares outstanding, basic and diluted | | | | |
See notes to condensed consolidated financial statements.
4
DESKTOP METAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(in thousands)
| Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive loss, net of taxes: |
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Unrealized gain (loss) on available-for-sale marketable securities, net | — | ( |
| ( |
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Foreign currency translation adjustment | | ( | | ( | ||||||||
Total comprehensive loss, net of taxes of $ | $ | ( | $ | ( | $ | ( | $ | ( |
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 September 30, 2024 | |||||||||||||||||
Accumulated | |||||||||||||||||
Other | |||||||||||||||||
Common Stock | Additional | Comprehensive | Total | ||||||||||||||
Voting | Paid‑in | Accumulated | (Loss) | Stockholders’ | |||||||||||||
| Shares |
| Amount | Capital |
| Deficit |
| Income |
| Equity | |||||||
BALANCE— July 1, 2024 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Vesting of restricted share units | | — | — | — | — | — | |||||||||||
Repurchase of shares for employee tax withholdings | ( | — | ( | — | — | ( | |||||||||||
Stock‑based compensation expense |
| — | — | | — | — | | ||||||||||
Net loss |
| — | — | — | ( | — | ( | ||||||||||
Other comprehensive income (loss) |
| — | — | — | — | | | ||||||||||
BALANCE—September 30, 2024 |
| | | $ | | $ | ( | $ | ( | $ | | ||||||
Nine Months Ended September 30, 2024 | |||||||||||||||||
Accumulated | |||||||||||||||||
Other | |||||||||||||||||
Common Stock | Additional | Comprehensive | Total | ||||||||||||||
Voting | Paid‑in | Accumulated | (Loss) | Stockholders’ | |||||||||||||
| Shares |
| Amount | Capital |
| Deficit |
| Income |
| Equity | |||||||
BALANCE—January 1, 2024 | | | | ( | ( | | |||||||||||
Fractional shares redeemed for cash in lieu of reverse stock split | ( | — | ( | — | — | ( | |||||||||||
Vesting of restricted Common Stock |
| | — | — | — | — | — | ||||||||||
Vesting of restricted stock units | | — | — | — | — | — | |||||||||||
Repurchase of shares for employee tax withholdings | ( | — | ( | — | — | ( | |||||||||||
Issuance of common stock related to share-based liability awards | — | — | | | |||||||||||||
Stock‑based compensation expense |
| — | — | | — | — | | ||||||||||
Net loss |
| — | — | — | ( | — | ( | ||||||||||
Other comprehensive income (loss) |
| — | — | — | — | | | ||||||||||
BALANCE—September 30, 2024 |
| | $ | | $ | | $ | ( | $ | ( | $ | |
6
Three Months Ended September 30, 2023 | |||||||||||||||||
Accumulated | |||||||||||||||||
Other | |||||||||||||||||
Common Stock | Additional | Comprehensive | Total | ||||||||||||||
Voting | Paid‑in | Accumulated | (Loss) | Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Capital |
| Deficit |
| Income |
| Equity | ||||||
BALANCE—July 1, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Exercise of Common Stock options | |
| — |
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| — |
| — |
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Vesting of restricted Common Stock |
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| — |
| — |
| — |
| — |
| — | |||||
Vesting of restricted stock units | | — | — | — | — | — | |||||||||||
Repurchase of shares for employee tax withholdings | ( | — | ( | — | — | ( | |||||||||||
Stock‑based compensation expense |
| — |
| — |
| |
| — |
| — |
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Net loss |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Other comprehensive income (loss) |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
BALANCE—September 30, 2023 |
| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Nine Months Ended September 30, 2023 | |||||||||||||||||
Accumulated | |||||||||||||||||
Other | |||||||||||||||||
Common Stock | Additional | Comprehensive | Total | ||||||||||||||
Voting | Paid‑in | Accumulated | (Loss) | Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Capital |
| Deficit |
| Income |
| Equity | ||||||
BALANCE—January 1, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Exercise of Common Stock options | |
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Vesting of restricted Common Stock |
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Vesting of restricted stock units | | — | — | — | — | — | |||||||||||
Repurchase of shares for employee tax withholdings | ( | — | ( | — | — | ( | |||||||||||
Issuance of Common Stock related to settlement of contingent consideration | | | | ||||||||||||||
Stock‑based compensation expense |
| — |
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| — |
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Net loss |
| — |
| — |
| — |
| ( |
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Other comprehensive income (loss) |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
BALANCE—September 30, 2023 |
| | $ | | $ | | $ | ( | $ | ( | $ | |
See notes to condensed consolidated financial statements.
7
DESKTOP METAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Nine Months Ended September 30, | ||||||
| 2024 |
| 2023 | |||
Cash flows from operating activities: | ||||||
Net loss |
| $ | ( |
| $ | ( |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock‑based compensation |
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Goodwill impairment | — | | ||||
Amortization (accretion) of discount on investments | — | ( | ||||
Amortization of deferred costs on convertible notes | | | ||||
Provision for bad debt | | | ||||
Provision for slow-moving, obsolete, and lower of cost or net realizable value inventories, net | ( | — | ||||
Loss (gain) on disposal of property and equipment | ( |
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Foreign exchange (gains) losses on intercompany transactions, net | ( | — | ||||
Net decrease in accrued interest related to marketable securities | — | | ||||
Net unrealized loss on equity investment | | | ||||
Deferred tax benefit | | ( | ||||
Foreign currency transaction loss | | | ||||
Impairment charges | — | | ||||
Changes in operating assets and liabilities: |
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Accounts receivable |
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Inventory |
| ( |
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Prepaid expenses and other current assets |
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Other assets | | | ||||
Accounts payable |
| ( |
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Accrued expenses and other current liabilities |
| ( |
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Customer deposits |
| ( |
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Deferred revenue | ( | | ||||
Change in right of use assets and lease liabilities, net |
| ( |
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Other liabilities | | | ||||
Net cash used in operating activities |
| ( |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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Proceeds from sale of property and equipment | | | ||||
Purchase of marketable securities | — |
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Proceeds from sales and maturities of marketable securities |
| — |
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Proceeds from disposal of subsidiaries | — | | ||||
Cash paid for acquisitions, net of cash acquired |
| — |
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Net cash provided by investing activities |
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Cash flows from financing activities: |
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Proceeds from the exercise of stock options | — |
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Payment of taxes related to net share settlement upon vesting of restricted stock units | ( | ( | ||||
Repayment of loans | ( | ( | ||||
Net cash (used in) provided by financing activities |
| ( |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ( | ||||
Net increase (decrease) in cash, cash equivalents, and restricted cash | ( | | ||||
Cash, cash equivalents, and restricted cash at beginning of period | | | ||||
Cash, cash equivalents, and restricted cash at end of period | | | ||||
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 | $ | | $ | | ||
Restricted cash included in other current assets | | | ||||
Restricted cash included in other noncurrent assets | — | | ||||
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows | $ | | $ | | ||
8
Supplemental cash flow information: |
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Interest paid | $ | | $ | — | ||
Taxes paid | $ | — | $ | — | ||
Non‑cash investing and financing activities: |
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Net unrealized gain on investments | $ | — | $ | ( | ||
Common Stock issued for settlement of contingent consideration | $ | — | $ | | ||
Additions to right of use assets and lease liabilities | $ | | $ | | ||
Purchase of property and equipment included in accounts payable | $ | | $ | | ||
Purchase of property and equipment included in accrued expense | $ | — | $ | | ||
Transfers from inventory to property and equipment | $ | | $ | | ||
Transfers from property and equipment to inventory | $ | — | $ | |
See notes to condensed consolidated financial statements.
9
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.
Recent Developments
Proposed Merger with Nano Dimension Ltd.
On July 2, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Nano Dimension Ltd., an Israeli company (“Nano”), and Nano US I, Inc., a Delaware corporation and an indirect wholly owned subsidiary of Nano (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company, with the Company surviving the merger as an indirect wholly owned subsidiary of Nano (the “Merger”). Following the closing of the Merger, the Company’s Common Stock (as defined below), will be delisted from the New York Stock Exchange and will be deregistered under the Exchange Act of 1934, as amended.
Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of Class A common stock, par value $
10
Merger Consideration.
The Company’s stockholders approved the Merger at a special meeting of stockholders held on October 2, 2024. The Merger is subject to the receipt of required regulatory approvals and other customary closing conditions.
For further information about the Merger Agreement, refer to the Merger Agreement, a copy of which was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 3, 2024.
Reverse Stock Split
On June 10, 2024 after obtaining stockholder approval, the Company effected a 1-for- reverse stock split, and the Company’s Class A common stock began trading on the post-split adjusted basis on June 11, 2024. All shares of the Company’s common stock, stock-based instruments and per-share data included in these condensed consolidated financial statements have been retroactively adjusted as though the stock split has been effected prior to all periods presented.
Termination of Merger with Stratasys Ltd.
On May 25, 2023, the Company entered into an Agreement and Plan of Merger (the “Stratasys Merger Agreement”), by and among Stratasys Ltd. (“Stratasys”), Tetris Sub Inc., a Delaware corporation and a direct wholly owned subsidiary of Stratasys (“Stratasys Merger Sub”), and the Company, pursuant to which Stratasys 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 “Stratasys Merger”).
The Stratasys 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 Stratasys Merger Agreement. Accordingly, on September 28, 2023, Stratasys sent Desktop Metal a notice of termination of the Stratasys Merger Agreement. As a result, and under the terms of the Stratasys Merger Agreement, Stratasys paid $
Going concern
Pursuant to the Financial Accounting Standards Board (the “FASB”) codification Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements, the Company is required to assess its ability to continue as a going concern for a period of one year from the date of the issuance of the condensed consolidated financial statements.
Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year from the date the condensed consolidated financial statements are available to be issued.
These condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company has incurred net losses since inception and has an accumulated deficit of $
Additional equity financing may not be available, and if it is available, it may not be on terms favorable to the Company and could be dilutive to current stockholders. Debt financing, if available, may involve restrictive covenants and dilutive financing instruments. Similarly, arrangements with Nano or from other sources may not be on terms favorable to the Company, and could be dilutive to current stockholders.
The Company’s ability to access capital when needed is not assured. If the merger is not completed and if capital is not available to the Company when, and in the amounts needed, the Company could be required to delay, scale back or abandon some or all its
11
operations, which could materially harm the Company’s business, financial condition, and results of operations. Because of this uncertainty, there is substantial doubt about the Company’s ability to continue as a going concern for at least one year from the date that these condensed consolidated financial statements are available to be issued. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty, nor do they include adjustments to reflect the future effects of the recoverability or classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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 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. Certain prior year amounts have been reclassified to conform to the current year presentation related to the reverse stock split.
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 nine months of fiscal year 2024.
3. REVENUE RECOGNITION
Contract Balances
The Company’s deferred revenue balance was $
Contract assets were not material as of September 30, 2024 and December 31, 2023.
Remaining Performance Obligations
At September 30, 2024, the Company had $
12
services to customers. In addition, the Company also had customer deposits of $
4. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company’s cash equivalents and short-term investments are invested in the following (in thousands):
| September 30, 2024 | |||||||||||
| Amortized Cost |
| Unrealized Gains |
| Unrealized Losses |
| Fair Value | |||||
Money market funds | $ | | $ | — | $ | — | $ | | ||||
Total cash equivalents | | — | — | | ||||||||
Total cash equivalents and short-term investments | $ | | $ | — | $ | — | $ | |
| December 31, 2023 | |||||||||||
| Amortized Cost |
| Unrealized Gains |
| Unrealized Losses |
| Fair Value | |||||
Money market funds | $ | | $ | — | $ | — | $ | | ||||
Total cash equivalents | | — |