17. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are from time to time subject to various claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business. Some of these claims, lawsuits and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions, or relief. We recognize provisions for claims or pending litigation when we determine that an unfavorable outcome is probable, and the amount of loss can be reasonably estimated. Due to the inherent uncertain nature of litigation, the ultimate outcome or actual cost of settlement may materially vary from estimates. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any current legal proceedings will have a material adverse impact on the Company’s condensed consolidated financial statements.

As previously disclosed, on October 20, 2023, purported stockholder Pietro Campanella filed an amendment to the November 21, 2021 class action complaint in Delaware Court of Chancery against Desktop Metal, Inc., and former directors and officers of The ExOne Company, alleging breach of fiduciary duty and aiding and abetting breach of fiduciary duty claims in connection with the ExOne Merger (Campanella v. Rockwell, et al., Case No. 2021-1013-LWW). In particular, Mr. Campanella alleges that ExOne’s proxy statement and supplemental disclosures did not adequately disclose information related to a whistleblower investigation at one of Desktop Metal’s subsidiaries, EnvisionTEC, and the resignation of EnvisionTEC’s CEO, prior to the ExOne stockholder vote. Defendants filed their motion to dismiss the complaint on January 12, 2024. The parties completed briefing on the motion to dismiss on May 22, 2024, and a hearing on the motion to dismiss was held on October 16, 2024.

As previously disclosed, four alleged shareholders of Desktop Metal stock filed purported securities class action complaints in the United States District Court for the District of Massachusetts, alleging that Desktop Metal and certain of its officers and directors violated Sections 10(b) and 20(a) of the Securities and Exchange Act by making false or misleading statements regarding EnvisionTEC’s manufacturing and product compliance practices and procedures. Plaintiffs filed a Consolidated Complaint on December 19, 2022. The parties completed briefing on the motion to dismiss in May 2023, and Judge Indira Talwani held oral argument on September 13, 2023. The Court issued a decision dismissing the Consolidated Complaint with prejudice and entered Judgment for defendants on September 21, 2023. On October 13, 2023, Lead Plaintiff Sophia Zhou filed a Notice of Appeal. The parties completed briefing on the Zhou Appeal in May 2024, and oral argument before the U.S. Court of Appeals for the First Circuit was held on September 10, 2024. On October 28, 2024, the Court of Appeals affirmed Judge Talwani’s order dismissing the Consolidated Complaint.

On August 12, 2024, a purported stockholder of Desktop Metal filed a complaint in the United States District Court for the Southern District of New York, captioned Bugantev v. Desktop Metal, Inc., No. 1:24-cv-06092 (S.D.N.Y.) (the “Bugantev Complaint”), alleging that Desktop Metal’s August 1, 2024 Preliminary Proxy Statement on Schedule 14A omitted material information with respect to the merger by and among the Company, Nano Dimension Ltd., and Nano US I, Inc. (the “Nano Merger”), rendering the disclosures set forth therein false and misleading in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended. On August 16, 2024, plaintiff voluntarily dismissed the Bugantev Complaint. On September 16 and 17, 2024, two purported stockholders of Desktop Metal filed complaints in the Supreme Court of the State of New York, County of New York, captioned Floyd v. Desktop Metal and Clark v. Desktop Metal, respectively, alleging negligent misrepresentation and concealment claims based on purported disclosure deficiencies in the Company’s Definitive Proxy Statement, filed August 15, 2024.

On September 25, 2024 and October 2, 2024, two purported stockholders of Desktop Metal filed actions in the Court of Chancery of the State of Delaware seeking certain books and records related to the Nano Merger under Section 220 of the Delaware General Corporations Code. The actions are captioned Nyren v. Desktop Metal, et al. and McDonald v. Desktop Metal, respectively.

The Company believes that these complaints are all without merit and intends to defend against them vigorously.

New York Stock Exchange Notice

On November 22, 2023, the Company was notified by the New York Stock Exchange (the “NYSE”) that it was not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of the Company’s common stock was less than $1.00 over a consecutive 30 trading-day period. The notice did not result in the delisting of the Company’s Class A common stock from the NYSE.

On June 10, 2024 after obtaining stockholder approval, the Company effected a 1-for-10 reverse stock split (the “Reverse Stock Split”), and the Company’s Class A common stock began trading on the post-split adjusted basis on June 11, 2024. On July 24, 2024 the Company was notified by the NYSE that the closing bid price of its Class A common stock had been greater than $1.00 per share for 30 consecutive business days, from June 11, 2024 to July 24, 2024. Accordingly, the Company has regained compliance with the requirements of Section 802.01C and this matter is now closed. If average closing price of Company’s Class A common stock again is below $1.00 over a consecutive 30 trading-day period, the Company would again receive another notice of non-compliance with NYSE’s listing standards and face the risk of delisting.

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 Reverse Stock Split has been effected prior to all periods presented.

Commitments

The Company has also entered into licensing and royalty agreements with certain manufacturing and software companies and universities related to the use of patented technology. Under the terms of each agreement, the Company has made initial, immaterial one-time payments and is obligated to pay a set percentage, ranging from 4% - 13%, of all consideration received by the Company for sales of related products and services, until the agreements are terminated. The Company’s aggregate minimum annual commitment under these contracts is $0.6 million. During the three and nine months ended September 30, 2024 and 2023, the Company recorded immaterial licensing and royalty fees.

Within the Company’s normal course of operations, it issues short-term financial guarantees and letters of credit through credit facilities with German banks to third parties in connection with certain commercial transactions requiring security. The credit facility provides a capacity amount of $11.3 million for the issuance of financial guarantees and letters of credit for commercial transactions requiring security. The credit facilities do not require cash collateral for the issuance of financial guarantees and letters of credit for commercial transactions requiring security for amounts up to $3.3 million. Amounts in excess of $3.3 million require cash collateral under the credit facility. As of September 30, 2024, there were no outstanding balances from financial guarantees and letters of credit issued by the Company under the credit facility.

As of September 30, 2024, the Company has a future purchase commitment through 2026 of $6.1 million for equipment that it plans to lease to customers in connection with digital dentistry solution offerings related to its Desktop Labs platform.