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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 September 30, 2024

☐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 October 29, 2024, there were 33,341,419 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 (unaudited)		3

Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023		3

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023		4

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023		5

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023		6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023		8

Notes to Condensed Consolidated Financial Statements		10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		32

Item 3. Quantitative and Qualitative Disclosures About Market Risk		48

Item 4. Controls and Procedures		49

Part II. Other Information		49

Item 1. Legal Proceedings		49

Item 1A. Risk Factors		50

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds, and Issuer Purchases of Equity Securities		82

Item 3. Defaults Upon Senior Securities		83

Item 4. Mine Safety Disclosures		83

Item 5. Other Information		83

Item 6. Exhibits		84

Exhibit Index		85

Signatures		86

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,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	30,617	$	83,845
Current portion of restricted cash		220		233
Short‑term investments		—		625
Accounts receivable		22,803		37,690
Inventory		80,853		82,639
Prepaid expenses and other current assets		8,946		11,105
Total current assets		143,439		216,137
Restricted cash, net of current portion		—		612
Property and equipment, net		27,184		35,840
Intangible assets, net		75,297		168,259
Other noncurrent assets		27,773		37,153
Total Assets	$	273,693	$	458,001
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	14,317	$	18,190
Customer deposits		4,403		5,356
Current portion of lease liability		7,936		7,404
Accrued expenses and other current liabilities		23,149		27,085
Current portion of deferred revenue		11,206		11,739
Current portion of long‑term debt, net of deferred financing costs		181		330
Total current liabilities		61,192		70,104
Long-term debt, net of current portion		—		89
Convertible notes		113,113		112,565
Lease liability, net of current portion		18,673		23,566
Deferred revenue, net of current portion		2,052		3,696
Deferred tax liability		3,609		3,523
Other noncurrent liabilities		2,706		2,806
Total liabilities		201,345		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 September 30, 2024 and December 31, 2023, respectively		—		—
Common Stock, $0.0001 par value—500,000,000 shares authorized; 33,310,041 and 32,527,742 shares issued at September 30, 2024 and December 31, 2023, respectively, 33,310,040 and 32,527,167 shares outstanding at September 30, 2024 and December 31, 2023, respectively		4		4
Additional paid‑in capital		1,929,669		1,908,533
Accumulated deficit		(1,823,211)		(1,632,225)
Accumulated other comprehensive loss		(34,114)		(34,660)
Total Stockholders’ Equity		72,348		241,652
Total Liabilities and Stockholders’ Equity	$	273,693	$	458,001

See notes to condensed consolidated financial statements

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,
	2024		2023		2024		2023
Revenues
Products	$	31,939	$	37,502	$	98,981	$	121,597
Services		4,466		5,248		16,956		15,755
Total revenues		36,405		42,750		115,937		137,352
Cost of sales
Products		29,962		37,175		136,190		119,290
Services		3,282		3,651		10,981		11,413
Total cost of sales		33,244		40,826		147,171		130,703
Gross profit (loss)		3,161		1,924		(31,234)		6,649
Operating expenses
Research and development		11,500		20,455		48,456		64,822
Sales and marketing		8,053		8,549		45,008		28,596
General and administrative		17,330		9,528		59,740		50,673
Impairment charges		—		6,062		—		6,062
Goodwill impairment		—		2,450		—		2,450
Total operating expenses		36,883		47,044		153,204		152,603
Loss from operations		(33,722)		(45,120)		(184,438)		(145,954)
Interest expense		(1,690)		(1,045)		(4,871)		(2,965)
Interest and other expense, net		228		(349)		(1,266)		(498)
Loss before income taxes		(35,184)		(46,514)		(190,575)		(149,417)
Income tax benefit (expense)		(264)	$	141	$	(411)	$	675
Net loss	$	(35,448)	$	(46,373)	$	(190,986)	$	(148,742)
Net loss per share—basic and diluted		(1.07)		(1.43)		(5.78)		(4.63)
Weighted average shares outstanding, basic and diluted		33,268,899		32,318,761		33,023,091		32,132,801

See notes to condensed consolidated financial statements.

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,
	2024		2023		2024		2023
Net loss	$	(35,448)	$	(46,373)	$	(190,986)	$	(148,742)
Other comprehensive loss, net of taxes:
Unrealized gain (loss) on available-for-sale marketable securities, net		—		(211)		(451)		126
Foreign currency translation adjustment		2,264		(684)		997		(451)
Total comprehensive loss, net of taxes of $0	$	(33,184)	$	(47,268)	$	(190,440)	$	(149,067)

See notes to condensed consolidated financial statements.

Table of Contents

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	33,196,705	$	4	$	1,923,978	$	(1,787,763)	$	(36,378)	$	99,841
Vesting of restricted share units	119,423		—		—		—		—		—
Repurchase of shares for employee tax withholdings	(6,088)		—		(29)		—		—		(29)
Stock‑based compensation expense	—		—		5,720		—		—		5,720
Net loss	—		—		—		(35,448)		—		(35,448)
Other comprehensive income (loss)	—		—		—		—		2,264		2,264
BALANCE—September 30, 2024	33,310,040		4	$	1,929,669	$	(1,823,211)	$	(34,114)	$	72,348


	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	32,527,167		4		1,908,533		(1,632,225)		(34,660)		241,652
Fractional shares redeemed for cash in lieu of reverse stock split	(1,338)		—		(7)		—		—		(7)
Vesting of restricted Common Stock	574		—		—		—		—		—
Vesting of restricted stock units	849,899		—		—		—		—		—
Repurchase of shares for employee tax withholdings	(66,262)		—		(403)		—		—		(403)
Issuance of common stock related to share-based liability awards	—		—		1,997						1,997
Stock‑based compensation expense	—		—		19,549		—		—		19,549
Net loss	—		—		—		(190,986)		—		(190,986)
Other comprehensive income (loss)	—		—		—		—		546		546
BALANCE—September 30, 2024	33,310,040	$	4	$	1,929,669	$	(1,823,211)	$	(34,114)	$	72,348

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	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	32,263,019	$	3	$	1,893,548	$	(1,411,323)	$	(37,798)	$	444,459
Exercise of Common Stock options	3,793		—		46		—		—		46
Vesting of restricted Common Stock	978		—		—		—		—		—
Vesting of restricted stock units	98,692		—		—		—		—		—
Repurchase of shares for employee tax withholdings	(2,236)		—		(39)		—		—		(39)
Stock‑based compensation expense	—		—		8,376		—		—		8,376
Net loss	—		—		—		(46,373)		—		(46,373)
Other comprehensive income (loss)	—		—		—		—		(895)		(895)
BALANCE—September 30, 2023	32,364,246	$	3	$	1,901,931	$	(1,457,696)	$	(38,693)	$	405,574


	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	31,813,343	$	3	$	1,874,792	$	(1,308,954)	$	(38,368)	$	527,502
Exercise of Common Stock options	100,604		—		1,203		—		—		1,203
Vesting of restricted Common Stock	8,537		—		—		—		—		—
Vesting of restricted stock units	406,196		—		—		—		—		—
Repurchase of shares for employee tax withholdings	(8,913)		—		(147)		—		—		(147)
Issuance of Common Stock related to settlement of contingent consideration	44,479				797						797
Stock‑based compensation expense	—		—		25,286		—		—		25,286
Net loss	—		—		—		(148,742)		—		(148,742)
Other comprehensive income (loss)	—		—		—		—		(325)		(325)
BALANCE—September 30, 2023	32,364,246	$	3	$	1,901,931	$	(1,457,696)	$	(38,693)	$	405,574

See notes to condensed consolidated financial statements.

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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	$	(190,986)	$	(148,742)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		103,786		40,322
Stock‑based compensation		18,058		26,699
Goodwill impairment		—		2,450
Amortization (accretion) of discount on investments		—		(490)
Amortization of deferred costs on convertible notes		548		548
Provision for bad debt		1,756		640
Provision for slow-moving, obsolete, and lower of cost or net realizable value inventories, net		(45)		—
Loss (gain) on disposal of property and equipment		(35)		501
Foreign exchange (gains) losses on intercompany transactions, net		(4)		—
Net decrease in accrued interest related to marketable securities		—		238
Net unrealized loss on equity investment		625		286
Deferred tax benefit		305		(675)
Foreign currency transaction loss		486		392
Impairment charges		—		6,062
Changes in operating assets and liabilities:
Accounts receivable		13,267		(2,446)
Inventory		(694)		(16,052)
Prepaid expenses and other current assets		2,264		(8,716)
Other assets		9,967		2,425
Accounts payable		(4,055)		7,397
Accrued expenses and other current liabilities		(415)		1,009
Customer deposits		(1,000)		(4,542)
Deferred revenue		(2,202)		3,590
Change in right of use assets and lease liabilities, net		(5,033)		(4,456)
Other liabilities		8		1,706
Net cash used in operating activities		(53,399)		(91,854)
Cash flows from investing activities:
Purchases of property and equipment		(810)		(2,709)
Proceeds from sale of property and equipment		1,694		9,942
Purchase of marketable securities		—		(4,973)
Proceeds from sales and maturities of marketable securities		—		112,719
Proceeds from disposal of subsidiaries		—		4,089
Cash paid for acquisitions, net of cash acquired		—		(500)
Net cash provided by investing activities		884		118,568
Cash flows from financing activities:
Proceeds from the exercise of stock options		—		1,203
Payment of taxes related to net share settlement upon vesting of restricted stock units		(403)		(147)
Repayment of loans		(237)		(337)
Net cash (used in) provided by financing activities		(640)		719
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(698)		(461)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(53,853)		26,972
Cash, cash equivalents, and restricted cash at beginning of period		84,690		81,913
Cash, cash equivalents, and restricted cash at end of period		30,837		108,885

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	$	30,617	$	107,432
Restricted cash included in other current assets		220		841
Restricted cash included in other noncurrent assets		—		612
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	30,837	$	108,885

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Supplemental cash flow information:
Interest paid	$	3,488	$	—
Taxes paid	$	—	$	—

Non‑cash investing and financing activities:
Net unrealized gain on investments	$	—	$	(339)
Common Stock issued for settlement of contingent consideration	$	—	$	797
Additions to right of use assets and lease liabilities	$	1,600	$	11,443
Purchase of property and equipment included in accounts payable	$	160	$	326
Purchase of property and equipment included in accrued expense	$	—	$	90
Transfers from inventory to property and equipment	$	2,725	$	1,370
Transfers from property and equipment to inventory	$	—	$	1,647

See notes to condensed consolidated financial statements.

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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 $0.0001 per share, of the Company (“Common Stock”) (other than (i) shares of preferred stock, par value $0.0001 per share (“Preferred Stock”), (ii) shares held by the Company as treasury stock or held directly by a subsidiary of the Company, Nano or Merger Sub and (iii) shares of Common Stock held by stockholders that are entitled to, and have properly demanded appraisal for such shares, in accordance with, and have complied in all respects with, Section 262 of the Delaware General Corporation Law (such shares, “Dissenting Shares”)) will be converted automatically into the right to receive an amount in cash equal to $5.50 (the “Per Share Merger Consideration”), without interest, subject to downward adjustment, by an amount (the “Consideration Adjustment Amount”) equal to the sum of (x) the product of (A) the aggregate principal amount outstanding under the Bridge Loan Facility (as defined below) together with accrued and unpaid interest, as of the closing of the Merger divided by $2.5 million, and (B) $0.10 (provided that in no event will the adjustment pursuant to (x) hereunder be greater than $0.80), plus (y) the product of (A) all unpaid Company Transaction Expenses (as defined in the Merger Agreement) as of the closing of the Merger divided by $2.5 million, and (B) $0.10 (provided that in no event will the adjustment pursuant to (y) hereunder be greater than $0.60), plus (z) $0.0325 if certain executives of the Company do not execute severance letter agreements prior to the closing, in each of the following cases (x), (y) and (z), subject further to any tax withholding. Subject to the terms and conditions set forth in the Merger Agreement, at the Effective Time, each share of Preferred Stock, each Dissenting Share and, when converted into the right to receive the Per Share Merger Consideration, each share of Common Stock, will be cancelled and shall cease to exist, and each certificate formerly representing such shares of Common Stock will thereafter represent only the right to receive the Per Share

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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-10 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 $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.

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 $1.8 billion as of September 30, 2024. The Company expects to continue to incur additional losses and negative cash flows from operations in the near term. The Company will require additional capital investment to fund operating and capital expenditure requirements. The Company may seek additional capital through arrangements with Nano or from other sources, including, but not limited to, equity and debt financings.

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

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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 $13.3 million and $15.4 million as of September 30, 2024 and December 31, 2023, respectively. During the three and nine months ended September 30, 2024, the Company recognized $2.0 million and $8.0 million of existing deferred revenue from 2023. During the three and nine months ended September 30, 2023, the Company recognized $3.6 million and $14.0 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 material as of September 30, 2024 and December 31, 2023.

Remaining Performance Obligations

At September 30, 2024, the Company had $13.3 million of remaining performance obligations, of which approximately $11.2 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

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services to customers. In addition, the Company also had customer deposits of $4.4 million and $6.9 million at September 30, 2024 and 2023, respectively.

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	$	9,043	$	—	$	—	$	9,043
Total cash equivalents		9,043		—		—		9,043
Total cash equivalents and short-term investments	$	9,043	$	—	$	—	$	9,043


	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.

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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):


	September 30, 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	$	9,043	$	—	$	—	$	9,043
Other investments		—		—		2,000		2,000
Total assets	$	9,043	$	—	$	2,000	$	11,043


	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

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 as of September 30, 2024. During the three and nine months ended September 30, 2024, the Company recorded an unrealized loss of $0 and an unrealized loss of $0 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 and nine months ended September 30, 2023, the Company recorded unrealized losses of $0.1 million and $0.3 million, respectively, due to the change in fair value of the equity securities in interest and other (expense) income, 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 and nine months ended September 30, 2024 and 2023, the Company did not recognize any gains or losses on convertible debt instruments.

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 nine months ended September 30, 2024 and 2023. The following table presents information about the Company’s movement in Level 3 assets measured at fair value (in thousands):


	Nine Months Ended September 30,
	2024		2023
Balance at beginning of period	$	2,000	$	2,000
Balance at end of period	$	2,000	$	2,000

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


	Nine Months Ended September 30,
	2024		2023
Balance at beginning of period	$	—	$	2,587
Payment of contingent consideration liability		—		(2,390)
Change in fair value		—		(197)
Balance at end of period	$	—	$	—

6. ACCOUNTS RECEIVABLE

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


	September 30,		December 31,
	2024		2023
Trade receivables	$	27,915	$	41,132
Allowance for doubtful accounts		(5,112)		(3,442)
Total accounts receivable	$	22,803	$	37,690

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


	September 30,		December 31,
	2024		2023
Balance at beginning of period	$	3,442	$	1,640
Provision for uncollectible accounts, net of recoveries		1,711		2,215
Uncollectible accounts written off		(41)		(413)
Balance at end of period	$	5,112	$	3,442

7. INVENTORY

Inventory consists of the following (in thousands):


	September 30,		December 31,
	2024		2023
Raw materials	$	23,283	$	26,449
Work in process		13,598		16,556
Finished goods:
Deferred cost of sales		995		1,279
Manufactured finished goods		42,977		38,355
Total finished goods		43,972		39,634
Total inventory	$	80,853	$	82,639

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8. PREPAID EXPENSES AND OTHER CURRENT ASSETS

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


	September 30,		December 31,
	2024		2023
Prepaid operating expenses	$	2,436	$	4,618
Prepaid dues and subscriptions		1,720		1,959
Prepaid insurance		962		842
Prepaid taxes		1,372		796
Prepaid rent		—		471
Other		2,456		2,419
Total prepaid expenses and other current assets	$	8,946	$	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 to 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. During the nine months ended September 30, 2024, the Company completed the sale of the St. Clairesville, Ohio facility and the related equipment in the facility for $1.7 million in proceeds. The Company recorded a gain of $0.2 million on the sale of the facility and related equipment in the condensed consolidated statements of operations. As of September 30, 2024, there were no assets held for sale.

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10. PROPERTY AND EQUIPMENT

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


	September 30,		December 31,
	2024		2023
Equipment	$	52,696	$	46,351
Leasehold improvements		23,606		20,303
Land and buildings		3,604		7,840
Construction in process		978		3,374
Furniture and fixtures		2,082		1,950
Software		2,124		1,899
Tooling		2,306		2,287
Computer equipment		2,364		2,166
Automobiles		879		1,032
Property and equipment, gross		90,639		87,202
Less: accumulated depreciation		(63,455)		(51,362)
Total property and equipment, net	$	27,184	$	35,840

Depreciation expense was $1.6 and $10.6 million for the three and nine months ended September 30, 2024. Depreciation expense was $2.9 million and $8.8 million for the three and nine months ended September 30, 2023.

11. GOODWILL & INTANGIBLE ASSETS

There was no goodwill balance at September 30, 2024 and December 31, 2023. The goodwill activity is as follows (in thousands):


	September 30,		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 nine months ended September 30, 2024. During the three and nine months ended September 30, 2023, the Company recorded a goodwill impairment charge of $2.5 million related to the sale of Aerosint.

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. 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 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.

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Intangible assets consisted of the following (in thousands):


		September 30, 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	7.1	$	185,538	$	128,413	$	57,125	$	185,222	$	65,724	$	119,498
Trade name	5.2		12,304		11,254		1,050		12,302		3,952		8,350
Customer relationships	8.2		68,573		51,451		17,122		68,378		27,968		40,410
Capitalized software	—		518		518		—		518		518		—
Total intangible assets		$	266,933	$	191,636	$	75,297	$	266,421	$	98,162	$	168,259

During the three and nine months ended September 30, 2024 and 2023, the Company recognized the following amortization expense (in thousands):


	Statement of	Three Months Ended September 30,				Nine Months Ended September 30,
Category	Operations Line Item	2024		2023		2024		2023
Acquired technology	Cost of Sales	$	5,029	$	6,889	$	62,038	$	20,744
Acquired technology	Research and Development		175		556		525		1,665
Trade name	General and Administrative		121		416		7,301		1,249
Customer relationships	Sales and Marketing		930		2,537		23,369		7,594
Capitalized software	Research and Development		—		0		—		45
		$	6,255	$	10,398	$	93,233	$	31,297

The Company expects to recognize the following amortization expense (in thousands):


	Amortization Expense
2024 (remaining 3 months)	$	6,155
2025		22,040
2026		15,275
2027		10,542
2028		8,103
2029 and after		13,182
Total intangible amortization	$	75,297

12. OTHER NONCURRENT ASSETS

The following table summarizes the Company’s components of other noncurrent assets (in thousands):


	September 30,		December 31,
	2024		2023
Right of use asset	$	21,102	$	29,724
Other investments		2,000		2,000
Long-term deposits		423		491
Cloud computing arrangements		3,015		3,409
Other		1,233		1,529
Total other noncurrent assets	$	27,773	$	37,153

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13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

The following table summarizes the Company’s components of accrued expenses and other current liabilities (in thousands):


	September 30,		December 31,
	2024		2023
Compensation and benefits related	$	5,780	$	9,052
Warranty reserve		4,998		4,602
Current portion of acquisition consideration		—		358
Franchise and royalty fees		2,843		2,267
Inventory purchases		1,561		1,372
Professional services		2,071		890
2027 Notes Interest		2,588		882
Commissions		708		816
Income tax payable		1,236		1,316
Sales and use and Franchise taxes		282		573
Other		1,082		4,957
Total accrued expenses and other current liabilities	$	23,149	$	27,085

The Company recorded warranty reserve as of September 30, 2024 and December 31, 2023, respectively, as follows (in thousands).


	September 30,		December 31,
	2024		2023
Warranty reserve, at the beginning of the period	$	4,602	$	4,301
Warranty reserve assumed in acquisition		—		—
Additions to warranty reserve		930		4,174
Claims fulfilled		(534)		(3,873)
Warranty reserve, at the end of the period	$	4,998	$	4,602

14. DEBT

2027 Convertible Notes—In May 2022, the Company issued an aggregate of $115.0 million principal amount of convertible senior notes due in 2027 in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2027 Notes consisted of $100.0 million initial placement and an over-allotment option that provided the initial purchasers of the 2027 Notes with the option to purchase an additional $15.0 million aggregate principal amount of the 2027 Notes, which was fully exercised. The 2027 Notes were issued pursuant to an indenture dated May 13, 2022. The net proceeds from the issuance of the 2027 Notes were $111.4 million, after deducting the initial purchasers’ discounts and commissions and our estimated offering expenses. The issuance costs are treated as a debt discount for accounting purposes, which will be amortized into interest expense over the term of the 2027 Notes.

The 2027 Notes are senior unsecured obligations. The 2027 Notes accrue interest at a rate of 6.0% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2022. The 2027 Notes will mature on May 15, 2027, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date.

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Before November 15, 2026, holders of the 2027 Notes will have the right to convert their 2027 Notes only upon the occurrence of certain events and during specified periods, including:

●

if the last reported sale price per share of the Company’s Common Stock, par value $0.0001 per share exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

●

if during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of 2027 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s Common Stock on such trading day and the conversion rate on such trading day;

●

upon the occurrence of certain corporate events or distributions on the Company’s Class A common stock; or

●

if the Company calls the 2027 Notes for redemption.

From and after November 15, 2026, holders of the 2027 Notes may convert their 2027 Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering cash and, if applicable, shares of its Class A common stock.

The initial conversion rate is 60.15038 shares of Class A common stock per $1,000 principal amount of 2027 Notes, which represents an initial conversion price of approximately $16.60 per share of Class A common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2027 Notes. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the indenture governing the 2027 Notes) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Company may redeem for cash all or any portion of the 2027 Notes, at the Company’s option, on or after May 20, 2025, and on or before the 40^th scheduled trading day immediately before the maturity date, but only if certain liquidity conditions are satisfied and the last reported sales price of the Company’s Class A common stock exceeds 130% of the conversion price then in effect on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice and (ii) the trading day immediately before the date the Company sends such notice.

However, the Company may not redeem less than all of the outstanding 2027 Notes unless at least $100.0 million aggregate principal amount of 2027 Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice. The redemption price will be a cash amount equal to the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, calling any 2027 Note for redemption will constitute a Make-Whole Fundamental Change with respect to that 2027 Note, in which case the conversion rate applicable to the conversion of that 2027 Note will be increased in certain circumstances if it is converted after it is called for redemption.

If certain corporate events that constitute a “Fundamental Change” (as defined in the indenture governing the 2027 Notes) occur, then, subject to a limited exception for certain cash mergers, holders of the 2027 Notes may require the Company to repurchase their 2027 Notes at a cash repurchase price equal to the principal amount of the 2027 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s Class A common stock.

The Merger with Nano is expected to result in a Fundamental Change. If the Merger is completed, the 2027 Notes will only be convertible into cash in an amount, per $1,000 principal amount of the 2027 Notes being converted, equal to the product of (i) the conversion rate (as defined under the indenture governing the 2027 Notes) then in effect and (ii) the per share merger consideration. If the Merger is completed, following the closing, the combined company must offer to repurchase all outstanding 2027 Notes at a cash purchase price equal to the 100% of the principal amount of the 2027 Notes, plus accrued and unpaid interest to the date of repurchase.

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The 2027 Notes are valued as a single liability measured at amortized cost, which approximates fair value, as no other features require bifurcation and recognition as derivatives. The following table presents the outstanding principal amount and carrying value of the 2027 Notes as of the date indicated (in thousands):


	September 30,		December 31,
	2024		2023
Principal	$	115,000	$	115,000
Unamortized debt discount		(1,698)		(1,924)
Unamortized debt issuance costs		(189)		(511)
Net carrying value	$	113,113	$	112,565

The annual effective interest rate for the 2027 Notes was approximately 6.1%. Interest expense related to the 2027 Notes for the periods presented below are as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Coupon interest	$	1,169	$	1,763	$	2,913	$	5,232
Amortization of debt discount		144		144		288		432
Amortization of transaction costs		38		38		76		114
Total interest expense	$	1,351	$	1,945	$	3,277	$	5,778

Bank Debt—In connection with the acquisition of A.I.D.R.O., the Company acquired three loans (“Bank Loans”) totaling $1.1 million in aggregate. The Bank Loans have term of 4.5 years and mature from September 2024 through September 2025, with interest rates ranging from 1.70% to 2.10%. Payments of principal and interest are made quarterly. During the year ended December 31, 2023, the Company paid $0.3 million and $0.3 million remains outstanding, and as of December 31, 2023, $0.2 million of the outstanding debt is recorded within current portion of long-term debt, net of deferred financing costs, and $0.1 million is recorded within long-term debt, net of current portion, in the condensed consolidated balance sheets. During the nine months ended September 30, 2024, the Company paid $0.2 million and $0.1 million remains outstanding. As of September 30, 2024, $0.1 million of the outstanding debt is recorded within current portion of long-term debt, net of deferred financing costs in the condensed consolidated balance sheets.

15. OTHER NONCURRENT LIABILITIES

The following table summarizes the Company’s components of other noncurrent liabilities (in thousands):


	September 30,		December 31,
	2024		2023
Taxes payable	$	776	$	776
Other		1,930		2,030
Total other noncurrent liabilities	$	2,706	$	2,806

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16. LEASES

Lessee

At September 30, 2024, the Company recorded $21.1 million as a right of use asset and $26.6 million as a lease liability. At December 31, 2023, the Company recorded $29.7 million as a right of use asset and $31.0 million as a lease liability. The Company assesses its right of use asset and other lease-related assets for impairment. There were no impairments recorded related to these assets during the three and nine months ended September 30, 2024 and the year ended December 31, 2023. The right of use asset is included in Other noncurrent assets in the condensed consolidated balance sheets.

The Company reviews all supplier, vendor, and service provider contracts to determine whether any service arrangements contain a lease component. The Company identified two service agreements that contain an embedded lease. The agreements do not contain fixed or minimum payments, and the variable lease expense was immaterial during the three and nine months ended September 30, 2024 and 2023.

Information about other lease-related balances is as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Lease cost
Operating lease cost	$	4,944		$	1,403		$	14,969		$	4,474
Short‑term lease cost		—			80			86			174
Variable lease cost		—			36			21			106
Finance lease cost		27			45			80			91
Total lease cost	$	4,971		$	1,564		$	15,156		$	4,845
Other Information
Operating cash flows used in operating leases	$	2,318		$	1,388		$	7,055		$	4,859
Operating cash flows used in finance leases		23			39			71			81
Weighted‑average remaining lease term—operating leases (years)		3.7			4.6			3.7			4.6
Weighted‑average remaining lease term—finance leases (years)		5.6			6.6			5.6			6.6
Weighted‑average discount rate—operating leases		6.2	%		5.8	%		6.2	%		5.8	%
Weighted‑average discount rate—finance leases		3.1	%		3.1	%		3.1	%		3.1	%

The rate implicit in the lease is not readily determinable in most of the Company’s leases, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease.

Future minimum lease payments under noncancelable operating leases, including immaterial future minimum lease payments under finance leases, at September 30, 2024, are as follows (in thousands):


	Operating Leases		Finance Leases
2024 (remaining 3 months)	$	2,332	$	—
2025		9,152		20
2026		7,322		79
2027		5,246		79
2028		3,388		79
2029 and after		1,679		325
Total lease payments		29,119		582
Less amount representing interest		(3,034)		(58)
Total lease liability		26,085		524
Less current portion of lease liability		(7,872)		(64)
Lease liability, net of current portion	$	18,213	$	460

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In June 2023, the Company amended its existing facility lease for the headquarters and operating facility in Burlington, MA, extending the lease term set to expire in April 2024 through April 2029. The rent is not fixed and increases each year of the lease extension.

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.

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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.

18. INCOME TAXES

The Company’s provision for interim periods is determined using an estimate of the annual effective tax rate, adjusted for discrete items arising in that quarter. The Company’s effective tax rate differs from the U.S. statutory tax rate primarily due to valuation allowances on its deferred tax assets as it is more likely than not that some or all of the Company’s deferred tax assets will not be realized. During the three and nine months ended September 30, 2024, the Company recorded a tax expense of $0.3 million and $0.4 million, respectively. During the three and nine months ended September 30, 2023, the Company recorded an income tax expense benefit of $0.1 million and $0.7 million, respectively.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s condensed consolidated financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the condensed consolidated financial statements carrying amounts and the tax bases of existing assets and liabilities and for loss and credit carryforwards, using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. As a result of the fact that the Company has incurred tax losses from inception, the

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Company maintains that it is more likely than not that the Company would not realize the benefits of federal and state net deferred tax assets nor the benefits of deferred tax assets in certain non-U.S. jurisdictions.

The Company provides reserves for potential payments of taxes to various tax authorities related to uncertain tax positions. Amounts recognized are based on a determination of whether a tax benefit taken by the Company in its tax filings or positions is “more likely than not” to be sustained on audit. The amount associated with uncertain tax positions are recorded as a component of income tax expense. As of September 30, 2024, the Company has accrued uncertain tax positions of approximately $0.8 million related to the EnvisionTEC acquisition. The amounts relate to U.S. state and foreign tax positions. Included in the balance of unrecognized tax benefits as of September 30, 2024 are amounts that, if recognized, would impact the effective tax rate. As of December 31, 2023, the Company recorded a liability of $0.8 million for uncertain tax positions acquired in various acquisitions during 2021. As of December 31, 2023, the Company had a balance in accrued interest and penalties related to uncertain tax positions of $0.1 million.

19. STOCKHOLDERS’ EQUITY

The Company’s authorized shares consist of 500,000,000 shares of Class A Common Stock, $0.0001 par value per share (the “Common Stock”) and 50,000,000 shares of Preferred Stock, $0.0001 par value per share (the “Preferred Stock”).

On February 14, 2024, the Company entered into an Open Market Sale Agreement with Cantor Fitzgerald & Co. pursuant to which the Company may from time to time sell, through at-the-market offerings, shares of the Company’s Common Stock for an aggregate offering price of up to $75.0 million. There can be no assurance as to whether or, if so, how many or when, any shares will be issued and sold under the Open Market Sale Agreement.

20. STOCK BASED COMPENSATION

The 2020 Incentive Award Plan (the “2020 Plan”) allows for the award of incentive and nonqualified stock options, restricted stock, and other stock-based awards to employees, officers, directors, consultants, and advisers of the Company. As of December 31, 2023, the number of shares available for future issuance is 2,821,050 under the 2020 Plan. In addition, the number of shares of common stock available for issuance under the 2020 Plan is subject to an annual increase on the first day of each calendar year beginning on January 1, 2021 and ending on and including January 1, 2030 equal to the lesser of (i) 5% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by the Board of Directors. On January 1, 2024, 1,626,358 shares were added as available for issuance to the 2020 Plan.

Stock Options

The option activity of the Plans for the nine months ended September 30, 2024, is as follows (shares in thousands):


				Weighted-Average
		Weighted-Average		Remaining	Aggregate
	Number of	Exercise Price		Contractual Term	Intrinsic Value
	Shares	per Share		(in years)	(in thousands)
Outstanding at January 1, 2024	616	$	18.30	4.97	$	140
Forfeited/expired	(59)	$	16.76
Outstanding at September 30, 2024	557	$	18.50	4.19		70
Options vested at September 30, 2024	557	$	18.50	4.19		70
Options vested or expected to vest at September 30, 2024	557	$	18.50	4.19		70

There were no options exercised during the three and nine months ended September 30, 2024, as such, there is no aggregate intrinsic value of options exercised during the three and nine months ended September 30, 2024. The aggregate intrinsic value of options exercised during the nine months ended September 30, 2023 was $0.9 million.

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The total stock-based compensation expense related to stock options was $0.1 and $0.7 million during the three and nine months ended September 30, 2024, respectively, and $0.3 million and $1.0 million during the three and nine months ended September 30, 2023, respectively. At September 30, 2024, the stock options were fully vested.

Restricted Stock Awards

In connection with acquisitions, the Company has granted restricted stock awards (“RSAs”) that are considered post-combination expense and accounted for as stock-based compensation as the shares vest.

There was an immaterial amount of stock-based compensation expense related to RSAs during the three and nine months ended September 30, 2024 and $0.1 million and $0.7 million during the three and nine months ended September 30, 2023, respectively. At September 30, 2024, the RSAs were fully vested.

Restricted Stock Units

Restricted Stock Units (“RSUs”) awarded to employees and non-employees generally vest over four years from the anniversary date of the grant, with one-year cliff vesting and quarterly vesting thereafter, provided service with the Company is not terminated. The fair value of RSUs is equal to the estimated fair market value of the Company’s Common Stock on the date of grant.

RSU activity under the 2020 Plan for the nine months ended September 30, 2024, is as follows (shares in thousands):


	Shares Subject	Weighted-Average
	to Vesting	Grant Date Fair Value
Balance of unvested shares as of January 1, 2024	2,305	$ 28.44
Granted	1,497	$ 6.73
Vested	(847)	$ 23.65
Cancelled/Forfeited	(256)	$ 32.01
Balance of unvested shares as of September 30, 2024	2,699

The total stock-based compensation expense related to RSUs was $5.6 million and $19.4 million during the three and nine months ended September 30, 2024, and $7.3 million and $25.0 million during the three and nine months ended September 30, 2023. Total unrecognized compensation costs related to unvested RSUs at September 30, 2024 is $30.2 million and is expected to be recognized over a period of 2.1 years.

RSUs include awards that vest subject to certain performance and market-based criteria.

Performance-Based Restricted Stock Units (included above)

During the year ended December 31, 2021, 67,000 performance-based RSUs were granted to key employees of the Company. These awards vest upon the achievement of certain performance milestones by the Company and prescribed service milestones by the employee. During the three and nine months ended September 30, 2024, no performance-based RSUs vested or were forfeited. As of September 30, 2024, 15,000 performance-based RSUs remain outstanding.

During the year ended December 31, 2020, 12,430 performance-based RSUs were granted to a key employee of the Company. This award vests upon the achievement of certain performance milestones by the Company and prescribed service milestones by the employee. During the year ended December 31, 2023, 12,430 performance-based RSUs were forfeited. As of December 31, 2023, no performance-based RSUs remain outstanding.

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Market-Based Restricted Stock Units (included above)

In October 2021 the Compensation Committee of the Company’s Board of Directors awarded certain executive officers a total of up to 907,026 market-based RSUs. These RSUs will vest and result in the issuance of shares of Common Stock based on continuing employment and the achievement of certain market conditions set by the Company.

During the year ended December 31, 2021, one of the executive officers resigned from the Company, forfeiting his market-based RSUs. As the service condition was not met prior to his resignation, no stock-based compensation expense was recorded for this award. No market-based RSUs vested or were forfeited during the year ended December 31, 2023 or during the three and nine months ended September 30, 2024. As of September 30, 2024, 680,270 market-based RSUs remain outstanding.

Bonus Program

The Company’s bonus program allows the bonus to be paid out in RSUs, cash, or a combination.

The Company’s 2023 bonus program ("2023 Bonus Program") was granted in dollar bonus amounts, which were paid out in RSUs during the three months ended March 31, 2024. The number of RSUs awarded was determined using the closing price of the Company's Common Stock on the date of the Board's final certification of the Company's performance attainment and awards to be issued to each employee. The Company accounted for these awards as liability-based awards until the awards were achieved, at which point the Company accounted for these awards as equity-based awards. During the three and nine months ended September 30, 2023, the Company recognized $(0.7) and $2.2 million of stock-based compensation expense associated with liability classified awards related to the 2023 Bonus Program.

The Company’s 2024 bonus program (“2024 Bonus Program”) is expected to be paid out in RSUs determined using the closing price of the Company's Common Stock on the date of the Board's final certification of the Company's performance attainment and awards to be issued to each employee. The Company has accounted for these awards as liability-based awards, since the monetary value of the obligation associated with the award is based predominantly on a fixed monetary amount known at inception, and it has an unconditional obligation that it must or may settle by issuing a variable number of its equity shares. The Company will recognize stock-based compensation expense over the employees’ requisite service period, based on the expected attainment of the Company-wide targets. As of September 30, 2024, the Company has accrued $0.5 million associated with these awards, which is recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

Stock-Based Compensation Expense

Total stock-based compensation expense related to all of the Company’s stock-based awards granted is reported in the condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	1,896	$	3,662	$	7,783	$	12,612
General and administrative expense		2,837		2,802		9,122		10,419
Sales and marketing expense		527		702		1,647		1,881
Cost of sales		459		517		1,502		1,787
Total stock-based compensation expense	$	5,719	$	7,683	$	20,054	$	26,699

There were 3,249,055 shares available for award under the 2020 Plan at September 30, 2024.

21. RELATED PARTY TRANSACTIONS

As a result of acquisitions, the Company assumed lease agreements with related parties for facilities across the United States which extend through 2029. As of September 30, 2024, the Company recorded $3.5 million of right of use asset and lease liability related to these agreements. During the three and nine months ended September 30, 2024, the Company incurred lease expense of $0.2 million and $0.6 million to the related party, respectively. During the three and nine months ended September 30, 2023, the Company incurred lease expense of $0.2 million and $0.6 million to the related party, respectively. The Company’s annual commitment related to these lease agreements is $0.8 million.

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The Company sells products to Lightforce Orthodontics which is affiliated with a member of the Company’s Board of Directors. Management believes the sales were conducted on terms equivalent to those prevailing in an arm’s-length transaction. During the three and nine months ended September 30, 2024, the Company recognized $0.3 million and $0.8 million, respectively of revenue from Lightforce Orthodontics. During the three and nine months ended September 30, 2023, the Company recognized $0.2 million and $0.9 million, respectively, of revenue. As of September 30, 2024, the Company has an account receivable balance of $0.1 million with Lightforce Orthodontics. As of December 31, 2023, the Company had an account receivable balance of $0.2 million with Lightforce Orthodontics.

The Company sells products to Bloom Energy which is affiliated with a member of the Company’s Board of Directors. Management believes the sales were conducted on terms equivalent to those prevailing in an arm’s-length transaction. During the three and nine months ended September 30, 2024, the Company did not recognize any revenue from Bloom Energy. During the three and nine months ended September 30, 2023, the Company recognized $0.5 million of revenue from Bloom Energy. As of September 30, 2024, the Company had no account receivable balance with Bloom Energy. As of December 31, 2023, the Company had an immaterial account receivable balance with Bloom Energy.

The Company sells products to Viewray Systems which is an entity controlled by a shareholder. Management believes the sales were conducted on terms equivalent to those prevailing in an arm’s-length transaction. During the three and nine months ended September 30, 2024, the Company recognized an immaterial amount and $3.4 million of revenue, respectively, from Viewray Systems. During the three and nine months ended September 30, 2023, the Company did not recognize revenue from Viewray Systems.

22. SEGMENT INFORMATION

In its operation of the business, management, including the Company’s chief operating decision maker, who is also Chief Executive Officer, reviews the business as one segment. The Company currently ships its product to markets in the Americas, Europe Middle East and Africa (“EMEA”), and Asia Pacific (“APAC”). Disaggregated revenue data for those markets is as follows (in thousands):

Revenue for the three months ended September 30, 2024


	Americas		EMEA		APAC		Total
Products	$	20,820		6,968		4,151	$	31,939
Services		2,565		1,688		213		4,466
Total	$	23,385	$	8,656	$	4,364	$	36,405

Revenue for the three months ended September 30, 2023


	Americas		EMEA		APAC		Total
Products	$	25,630	$	7,980	$	3,892	$	37,502
Services		2,826		2,081		341		5,248
Total	$	28,456	$	10,061	$	4,233	$	42,750

Revenue for the nine months ended September 30, 2024


	Americas		EMEA		APAC		Total
Products	$	65,286		22,915		10,780	$	98,981
Services		10,562		5,621		773		16,956
Total	$	75,848	$	28,536	$	11,553	$	115,937

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Revenue for the nine months ended September 30, 2023

Americas

EMEA

APAC

Total

Products

Desktop Metal, Inc. 10-Q