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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 March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-38835

DESKTOP METAL, INC.

(Exact name of registrant as specified in its charter)

Delaware

83-2044042

(State of Other Jurisdiction of incorporation or Organization)

(I.R.S. Employer Identification No.)

63 3rd Avenue, Burlington, MA

01803

(Address of principal executive offices)

(Zip code)

Registrant’s telephone number, including area code: (978) 224-1244

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No

Indicate by check mark whether the Registrant has submitted electronically; every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

Accelerated filer ☐

Non-accelerated filer

Smaller reporting company

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Name Of Each Exchange

Title of Each Class

Trading Symbol(s)

On Which Registered

Common Stock, $0.0001 Par Value per Share

DM

New York Stock Exchange

As of May 6, 2022, there were 313,461,320 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

    

Page

PART I

Part I. Financial Information

3

Item 1. Financial Statements

3

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

3

Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021

4

Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2022 and 2021

5

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021

6

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

7

Notes to Condensed Consolidated Financial Statements

9

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

47

Item 3. Quantitative and Qualitative Disclosures About Market Risk

58

Item 4. Controls and Procedures

58

Part II. Other Information

59

Item 1. Legal Proceedings

59

Item 1A. Risk Factors

60

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

88

Item 3. Defaults Upon Senior Securities

88

Item 4. Mine Safety Disclosures

88

Item 5. Other Information

88

Item 6. Exhibits

88

Exhibit Index

89

Signatures

90

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)

    

March 31, 

    

December 31, 

2022

    

2021

Assets

Current assets:

 

  

 

  

Cash and cash equivalents

$

103,590

$

65,017

Current portion of restricted cash

2,166

2,129

Short‑term investments

 

102,895

 

204,569

Accounts receivable

 

36,661

 

46,687

Inventory

 

81,876

 

65,399

Prepaid expenses and other current assets

 

22,446

 

18,208

Total current assets

 

349,634

 

402,009

Restricted cash, net of current portion

 

1,112

 

1,112

Property and equipment, net

 

58,082

 

58,710

Goodwill

 

630,022

 

639,301

Intangible assets, net

 

251,000

 

261,984

Other noncurrent assets

32,143

25,480

Total Assets

$

1,321,993

$

1,388,596

Liabilities and Stockholders’ Equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

30,431

$

31,558

Customer deposits

 

16,911

 

14,137

Current portion of lease liability

 

5,326

 

5,527

Accrued expenses and other current liabilities

 

31,615

 

33,829

Current portion of deferred revenue

 

19,261

 

18,189

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

 

731

 

825

Total current liabilities

 

104,275

 

104,065

Long-term debt, net of current portion

523

548

Warrant liability

Contingent consideration, net of current portion

2,596

4,183

Lease liability, net of current portion

 

19,856

 

13,077

Deferred revenue, net of current portion

4,047

4,508

Deferred tax liability

9,506

10,695

Other noncurrent liabilities

3,165

3,170

Total liabilities

143,968

140,246

Commitments and Contingencies (Note 17)

 

  

 

  

Stockholders’ Equity

 

 

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

Common Stock, $0.0001 par value—500,000,000 shares authorized; 312,999,991 and 311,737,858 shares issued at March 31, 2022 and December 31, 2021, respectively, 312,825,572 and 311,473,950 shares outstanding at March 31, 2022 and December 31, 2021, respectively

 

31

 

31

Additional paid‑in capital

 

1,833,998

 

1,823,344

Accumulated deficit

 

(638,555)

 

(568,611)

Accumulated other comprehensive loss

 

(17,449)

 

(6,414)

Total Stockholders’ Equity

 

1,178,025

 

1,248,350

Total Liabilities and Stockholders’ Equity

$

1,321,993

$

1,388,596

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

March 31, 

    

2022

    

2021

Revenues

 

Products

$

39,476

$

10,311

Services

4,230

1,002

Total revenues

43,706

 

11,313

Cost of sales

  

Products

41,902

10,487

Services

3,132

1,413

Total cost of sales

45,034

 

11,900

Gross profit/(loss)

(1,328)

 

(587)

Operating expenses

  

Research and development

24,605

10,858

Sales and marketing

19,689

5,449

General and administrative

23,857

13,846

Total operating expenses

68,151

 

30,153

Loss from operations

(69,479)

 

(30,740)

Change in fair value of warrant liability

(56,576)

Interest expense

32

(73)

Interest and other (expense) income, net

(1,753)

361

Loss before income taxes

(71,200)

 

(87,028)

Income tax benefit

1,256

27,920

Net loss

$

(69,944)

$

(59,108)

Net loss per share—basic and diluted

$

(0.22)

$

(0.25)

Weighted average shares outstanding, basic and diluted

312,016,627

238,243,779

See notes to condensed consolidated financial statements.

4

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands)

    

Three Months Ended

March 31, 

    

2022

    

2021

Net loss

$

(69,944)

$

(59,108)

Other comprehensive (loss) income, net of taxes:

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

12

1

Foreign currency translation adjustment

(11,047)

(13)

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

$

(80,979)

$

(59,120)

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 March 31, 2022

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

Capital

    

Deficit

    

Income

    

Equity

BALANCE—January 1, 2022

311,473,950

$

31

$

1,823,344

$

(568,611)

$

(6,414)

$

1,248,350

Exercise of Common Stock options

786,693

 

 

900

 

 

 

900

Vesting of restricted Common Stock

 

84,384

 

 

 

 

 

Vesting of restricted stock units

520,265

Repurchase of shares for employee tax withholdings

(39,720)

(158)

(158)

Issuance of Common Stock for acquisitions

Stock‑based compensation expense

 

 

 

9,912

 

 

 

9,912

Vesting of Trine Founder shares

Exercise of warrants

 

 

 

 

 

 

Net loss

 

 

 

 

(69,944)

 

 

(69,944)

Other comprehensive income (loss)

 

 

 

 

 

(11,035)

 

(11,035)

BALANCE—March 31, 2022

 

312,825,572

$

31

$

1,833,998

$

(638,555)

$

(17,449)

$

1,178,025

Three Months Ended March 31, 2021

Accumulated

Other

Common Stock

Additional

Comprehensive

Total

Voting

Paidin

Accumulated

(Loss)

Stockholders’

    

Shares

    

Amount

    

Capital

    

Deficit

    

Income

    

Equity

BALANCE—January 1, 2021

224,626,597

$

23

$

844,188

$

(328,277)

$

(9)

$

515,925

Exercise of Common Stock options

 

163,228

180

 

180

Vesting of restricted Common Stock

 

56,015

 

Vesting of restricted stock units

15,265

Repurchase of shares for employee tax withholdings

(2,241)

(54)

(54)

Issuance of Common Stock for acquisitions

5,036,142

159,847

159,847

Stock‑based compensation expense

 

2,217

 

2,217

Vesting of Trine Founder shares

 

1,850,938

 

Exercise of warrants

20,690,975

2

320,567

320,569

Net loss

 

(59,108)

 

(59,108)

Other comprehensive income (loss)

 

(12)

 

(12)

BALANCE—March 31, 2021

 

252,436,919

$

25

$

1,326,945

$

(387,385)

$

(21)

$

939,564

See notes to condensed consolidated financial statements.

6

DESKTOP METAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Three Months Ended March 31, 

    

2022

    

2021

Cash flows from operating activities:

Net loss

    

$

(69,944)

    

$

(59,108)

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

 

 

Depreciation and amortization

 

12,883

 

3,892

Stock‑based compensation

 

9,912

 

2,217

Change in fair value of warrant liability

56,576

Amortization (accretion) of discount on investments

413

406

Amortization of debt financing cost

4

Provision for bad debt

419

72

Loss on disposal of property and equipment

2

 

Foreign exchange (gains) losses on intercompany transactions, net

185

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

949

(240)

Net unrealized (gain) loss on marketable securities

(25)

Net unrealized (gain) loss on equity investment

1,700

Deferred tax benefit

(1,256)

(27,921)

Change in fair value of contingent consideration

(114)

Foreign currency transaction (gain) loss

10

Changes in operating assets and liabilities:

 

Accounts receivable

 

9,489

 

(61)

Inventory

 

(15,506)

 

(2,381)

Prepaid expenses and other current assets

 

(4,087)

 

(4,276)

Other assets

(210)

(30)

Accounts payable

 

(1,333)

 

(3,856)

Accrued expenses and other current liabilities

 

(3,391)

 

(5,247)

Customer deposits

 

2,980

 

(1,234)

Current portion of deferred revenue

 

721

 

105

Change in right of use assets and lease liabilities, net

 

(108)

 

(22)

Other liabilities

12

Net cash used in operating activities

 

(56,274)

 

(41,129)

Cash flows from investing activities:

 

 

Purchases of property and equipment

 

(4,074)

 

(262)

Proceeds from sale of property and equipment

6

Purchase of marketable securities

 

(92,386)

Proceeds from sales and maturities of marketable securities

 

98,625

 

48,241

Cash paid for acquisitions, net of cash acquired

 

(23)

 

(137,646)

Net cash provided by (used in) investing activities

 

94,534

 

(182,053)

Cash flows from financing activities:

 

 

  

Proceeds from reverse recapitalization, net of issuance costs

(1,239)

Proceeds from the exercise of stock options

900

 

180

Proceeds from the exercise of stock warrants

158,308

Payment of taxes related to net share settlement upon vesting of restricted stock units

(158)

(54)

Repayment of term loan

(43)

 

Net cash provided by financing activities

 

699

 

157,195

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(349)

26

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

38,610

 

(65,961)

Cash, cash equivalents, and restricted cash at beginning of period

68,258

484,137

Cash, cash equivalents, and restricted cash at end of period

$

106,868

$

418,176

7

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

$

103,590

416,379

Restricted cash included in other current assets

2,166

1,021

Restricted cash included in other noncurrent assets

1,112

776

Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows

$

106,868

$

418,176

Supplemental cash flow information:

 

 

  

Interest paid

$

$

73

Noncash investing and financing activities:

 

 

  

Net unrealized (gain) loss on investments

$

(12)

$

(1)

Exercise of private placement warrants

$

$

149,904

Common Stock issued for acquisitions

$

$

159,847

Additions to right of use assets and lease liabilities

$

7,784

$

364

Purchase of property and equipment included in accounts payable

$

313

$

50

Transfers from property and equipment to inventory

$

1,721

$

Transfers from inventory to property and equipment

$

605

$

Receivable for warrants exercised

$

$

12,357

See notes to condensed consolidated financial statements.

8

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 to a variety of end customers.

On December 9, 2020 (the “Closing Date”), Trine Acquisition Corp. (“Trine”) consummated the previously announced merger pursuant to the Agreement and Plan of Merger, dated August 26, 2020, by and among Trine, Desktop Metal, Inc. and Sparrow Merger Sub, Inc., pursuant to which Sparrow Merger Sub, Inc. merged with and into Desktop Metal, Inc., with Desktop Metal, Inc. becoming our wholly owned subsidiary (the “Business Combination”). Upon the closing of the Business Combination, Trine changed its name to Desktop Metal, Inc. and Desktop Metal, Inc. changed its name to Desktop Metal Operating, Inc.

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.

Legacy Desktop Metal was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification (“ASC”) 805. This determination was primarily based on Legacy Desktop Metal’s stockholders prior to the Business Combination having a majority of the voting power in the combined company, Legacy Desktop Metal having the ability to appoint a majority of the Board of Directors of the combined company, Legacy Desktop Metal’s existing management comprising the senior management of the combined company, Legacy Desktop Metal comprising the ongoing operations of the combined company, Legacy Desktop Metal being the larger entity based on historical revenues and business operations, and the combined company assuming Legacy Desktop Metal’s name. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Desktop Metal issuing stock for the net assets of Trine, accompanied by a recapitalization. The net assets of Trine are stated at historical cost, with no goodwill or other intangible assets recorded.

While Trine was the legal acquirer in the Business Combination, because Legacy Desktop Metal was deemed the accounting acquirer, the historical financial statements of Legacy Desktop Metal became the historical financial statements of the combined company upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of Legacy Desktop Metal prior to the Business Combination; (ii) the combined results of Trine and Legacy Desktop Metal following the close of the Business Combination; (iii) the assets and liabilities of Legacy Desktop Metal at their historical cost; and (iv) the Company’s equity structure for all periods presented.

In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods up to the Closing Date to reflect the number of shares of the Company’s common stock, $0.0001 par value per share, issued to Legacy Desktop Metal’s stockholders in connection with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Desktop Metal convertible preferred stock and Legacy Desktop Metal common stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio of 1.22122 established in the Business Combination. Legacy Desktop Metal’s convertible preferred stock previously classified as mezzanine was retroactively adjusted, converted into Common Stock, and reclassified to permanent as a result of the reverse recapitalization.

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 and the Business Combination. 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. Management believes that existing cash and

9

investments as of March 31, 2022 will be sufficient to fund operating and capital expenditure requirements through at least twelve months from the date of issuance of these consolidated financial statements.

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.

Principles of Consolidation

The accompanying 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.

COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of a disease caused by a novel strain of the coronavirus (“COVID-19”) to be a pandemic. As of March 31, 2022, the impact of the COVID-19 pandemic continues to unfold and there has been uncertainty and disruption in the global economy and financial markets. The Company has considered the COVID-19 pandemic related impacts on its estimates, as appropriate, within its consolidated financial statements and there may be changes to those estimates in future periods.

The COVID-19 pandemic, as well as the response to mitigate the spread and effects of COVID-19, may impact the Company and its customers, as well as the demand for its products and services. The impact of COVID-19 on the Company’s operational results in subsequent periods will largely depend on future developments, and cannot be accurately predicted. These developments may include, but are not limited to, new information concerning the severity of COVID-19, the degree of success of actions take to contain or treat COVID-19 and the reactions by consumers, companies, governmental entities, and capital markets to such actions.

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, 2021. There have been no material changes to the significant accounting policies from the Annual Report on Form 10-K for the year ended December 31, 2021.

Recently Issued Accounting Standards

Recently Adopted Accounting Guidance

In October 2021, the FASB issued Accounting Standards Update (“ASU”) 2021-08, Business Combinations (Topic 805)Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, to require that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. This standard is effective for calendar-year public business entities in 2023 and interim periods within that year, and early adoption is permitted. The Company has adopted this ASU as of January 1, 2021 and has retrospectively adjusted purchase accounting for the acquisition of EnvisionTEC, which is described in Note 4 to these condensed

10

consolidated financial statements, where deferred revenue was fair valued. As a practical expedient, the Company elected to estimate the standalone selling price for allocation purposes at the acquisition date. Upon the application of this practical expedient, the Company recognized deferred revenue as part of purchase accounting in the amount of $0.2 million and $12.5 million for the acquisitions of EnvisionTEC and ExOne, which is described in Note 4 to the financial statements, respectively.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes by eliminating some exceptions to the general approach in Accounting Standards Codification 740, Income Taxes. It also clarifies certain aspects of the existing guidance to promote more consistent application. This standard is effective for calendar-year public business entities in 2021 and interim periods within that year, and early adoption is permitted. The Company adopted the ASU as of January 1, 2021, which did not have a material effect on the Company’s condensed consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates the performance of Step 2 from the goodwill impairment test. In performing its annual or interim impairment testing, an entity will instead compare the fair value of the reporting unit with its carrying amount and recognize any impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss. The Company adopted the ASU as of January 1, 2021, which did not have a material effect on the Company’s condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses. This ASU added a new impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. The company adopted the ASU as of January 1, 2022, which did not have a material effect on the Company’s condensed consolidated financial statements.

3. REVENUE RECOGNITION

Contract Balances

The Company’s deferred revenue balance was $23.3 million and $22.7 million as of March 31, 2022 and December 31, 2021, respectively. During the three months ended March 31, 2022, the Company recognized $6.9 million of existing deferred revenue from 2021. 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 significant during the three months ended March 31, 2022 and 2021.

Remaining Performance Obligations

At March 31, 2022, the Company had $23.3 million of remaining performance obligations, also referred to as backlog, of which approximately $19.3 million is expected to be fulfilled over the next 12 months, notwithstanding uncertainty related to the impact of COVID-19, including, but not limited to, international shipping and travel restrictions brought about by COVID-19, which could have an adverse effect on the timing of delivery and installation of products and/or services to customers. In addition, the Company also had customer deposits of $16.9 million at March 31, 2022.

11

4. ACQUISITIONS

2021 Acquisitions

Acquisition of EnvisionTEC

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

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

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

Total Acquisition Date Fair Value

Cash consideration

$

143,795

Equity consideration

159,847

Total consideration transferred

$

303,642

12

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

At February 16, 2021

Assets acquired:

Cash and cash equivalents

$

859

Restricted cash

5,004

Accounts receivable

2,982

Inventory

7,668

Prepaid expenses and other current assets

1,081

Restricted cash - noncurrent

285

Property and equipment

1,540

Intangible assets

137,300

Other noncurrent assets

1,801

Total assets acquired

$

158,520

Liabilities assumed:

Accounts payable

$

1,442

Customer deposits

2,460

Current portion of lease liability

605

Accrued expenses and other current liabilities

13,706

Liability for income taxes

480

Deferred revenue

492

Current portion of long-term debt

898

Long-term debt

285

Deferred tax liability

29,009

Lease liability, net of current portion

1,189

Total liabilities assumed

$

50,566

Net assets acquired

$

107,954

Goodwill

$

195,688

Total net assets acquired

$

303,642

Subsequent to the ,acquisition date, the Company made certain measurement period adjustments to the preliminary purchase price allocation, which resulted in decrease to goodwill of $3.4 million. The decrease was primarily due to an decrease in deferred income tax liabilities of $4.1 million and a decrease in deferred revenue of $0.2 million related to the adoption of ASU 2021-08 and a decrease in inventory of $1.0 million related to obsolete inventory. Additionally, the Company recorded a measurement period adjustment of $0.3 million related to certain assets acquired and liabilities assumed due to clarification of information utilized to determine fair value during the measurement period. As of December 31, 2021, the measurement period is completed.

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

Gross Value

Estimated Life

Acquired technology

$

77,800

7 – 14 years

Trade name

8,600

14 years

Customer relationships

50,900

12 years

Total intangible assets

$

137,300

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries. $16.4 million of the goodwill recognized is deductible for income tax purposes. During 2021, the Company incurred $4.8 million of acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the condensed consolidated statements of operations.

13

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

Acquisition of Adaptive 3D

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

The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s preliminary estimates of their fair values on the acquisition date. The fair values assigned to Adaptive 3D’s tangible and intangible assets and liabilities assumed, and the related deferred tax assets and liabilities, are considered preliminary and are based on the information available at the date of the acquisition. The Company is in the process of finalizing its purchase price allocation, and the tax basis of the assets and liabilities acquired. This may result in potential adjustments to the carrying value of the respective recorded assets and liabilities, establishment of certain intangible assets, revisions of useful lives of intangible assets, establishment of potential acquisition contingencies, and the determination of any residual amount that will be allocated to goodwill. Adjustments that impact the deferred tax liability recorded in the business combination could result in an increase or decrease in the Company’s recorded valuation allowance that will be recognized in the accompanying statement of operations.

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

Total Acquisition Date Fair Value

Cash consideration

$

24,083

Equity consideration

37,693

Total consideration transferred

$

61,776

14

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

At May 7, 2021

Assets acquired:

Cash and cash equivalents

$

2,852

Accounts receivable

504

Inventory

305

Prepaid expenses and other current assets

462

Property and equipment

558

Intangible assets

27,300

Other noncurrent assets

654

Total assets acquired

$

32,635

Liabilities assumed:

Accounts payable

$

280

Current portion of lease liability

151

Accrued expenses and other current liabilities

100

PPP loan payable

311

Deferred revenue

12

Lease liability, net of current portion

502

Deferred tax liability

4,616

Total liabilities assumed

$

5,972

Net assets acquired

$

26,663

Goodwill

$

35,113

Total net assets acquired

$

61,776

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

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

Gross Value

Estimated Life

Acquired technology

$

27,000

14 years

Trade name

300

5 years

Total intangible assets

$

27,300

The goodwill resulting from the purchase price allocation is attributable to the workforce of the acquired business (which is not eligible for separate recognition as an identifiable intangible asset) and the expected synergistic benefits of expanding the combined companies’ target markets both geographically and across industries. The goodwill recognized is not deductible for income tax purposes. During 2021, the Company incurred $0.3 million of acquisition-related and other transactional charges related to this acquisition, which are included in general and administrative expenses in the consolidated statements of operations.

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

Acquisition of Aerosint

On June 24, 2021, the Company acquired all outstanding securities of Aerosint SA and its affiliates (“Aerosint”), which expanded the Company’s portfolio of technologies with the addition of multi-material printing capabilities. The total purchase price was $23.8 million, consisting of $6.2 million paid in cash, 879,922 shares of the Company’s Common Stock with a fair value of $11.5 million as of the close of business on the transaction date, and contingent consideration with a fair value of $6.1 million as of the acquisition

15

date. The Company may be required to pay this contingent consideration based on the achievement of revenue metrics and technical milestones over the three-year period following the transaction date.

The total purchase price was allocated to the identifiable assets acquired and liabilities assumed based on the Company’s preliminary estimates of their fair values on the acquisition date. The fair values assigned to Aerosint’s tangible and intangible assets and liabilities assumed, and the related deferred tax assets and liabilities, are considered preliminary and are based on the information available at the date of the acquisition. The Company is in the process of finalizing its purchase price allocation, and the tax basis of the assets and liabilities acquired. This may result in potential adjustments to the carrying value of the respective recorded assets and liabilities, establishment of certain intangible assets, revisions of useful lives of intangible assets, establishment of potential acquisition contingencies, and the determination of any residual amount that will be allocated to goodwill. Adjustments that impact the deferred tax liability recorded in the business combination could result in an increase or decrease in the Company’s recorded valuation allowance that will be recognized in the accompanying statement of operations.

The acquisition included contingent consideration related to revenue metrics and technical milestones, with a fair value of $6.1 million as of the date of acquisition and a fair value of $5.5 million as of March 31, 2022. The Company will pay up to $5.5 million of contingent consideration based on stated revenue metrics, which had a fair value of $4.6 million as of the date of acquisition, and a fair value of $4.0 million as of March 31, 2022. If Aerosint reaches certain product mass production technical milestones, the Company will pay out a maximum of $2.0 million in contingent consideration, which had a fair value of $1.5 million as of the date of acquisition, and a fair value of $1.5 million as of March 31, 2022. As of the date of acquisition, the fair value of the short-term liability was $1.4 million, and the long-term liability was $4.7 million, which the Company recorded in accrued expenses and other current liabilities and contingent consideration, net of current portion, on the condensed consolidated balance sheets. As of March 31, 2022, $2.9 million of contingent consideration is recorded in accrued expenses and other current liabilities and $2.6 million is recorded in contingent consideration, net of current portion, in the condensed consolidated balance sheets.

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

Total Acquisition Date Fair Value

Cash consideration

$

6,220

Equity consideration

11,448

Contingent consideration

6,083

Total consideration transferred

$

23,751

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

At June 24, 2021

Assets acquired:

Cash and cash equivalents

$

419

Accounts receivable

34

Inventory

166

Prepaid expenses and other current assets

697

Property and equipment

369

Intangible assets

11,726

Other noncurrent assets

336

Total assets acquired

$

13,747

Liabilities assumed:

Accounts payable

$

58

Customer deposits

283

Current portion of lease liability

100

Accrued expenses and other current liabilities

169

Deferred revenue

810

Lease liability, net of current portion

226

Deferred tax liability

2,931

Total liabilities assumed

$

4,577

Net assets acquired

$

9,170

Goodwill

$

14,581

Total net assets acquired

$

23,751

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

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

Gross Value

Estimated Life

Acquired technology

$

11,547

11.5 years

Trade name

179

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