UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 |
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Accelerated filer |
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Smaller reporting company |
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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
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
As of May 12, 2022, the registrant had
Table of Contents
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Page |
PART I. |
1 |
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Item 1. |
1 |
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1 |
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Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) |
2 |
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Unaudited Statement of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) |
3 |
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4 |
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Unaudited Notes to Condensed Consolidated Financial Statements |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
22 |
Item 3. |
31 |
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Item 4. |
31 |
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PART II. |
33 |
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Item 1. |
33 |
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Item 1A. |
33 |
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Item 2. |
66 |
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Item 3. |
66 |
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Item 4. |
66 |
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Item 5. |
66 |
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Item 6. |
67 |
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68 |
Risk Factors Summary
The risk factors detailed in Item 1A entitled “Risk Factors” in this Quarterly Report on Form 10-Q are the risks that we believe are material to our investors and a reader should carefully consider them. Those risks are not all of the risks we face and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur. The following is a summary of the risk factors detailed in Item 1A:
EXPLANATORY NOTE
On July 14, 2021, we consummated the merger (the "Merger") contemplated by the Agreement and Plan of Merger, dated as of February 23, 2021 (the “Merger Agreement”), by and among one, a Cayman Islands exempted company limited by shares (“one”), Caspian Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of one (“Merger Sub”), and MarkForged, Inc., a Delaware corporation (“Legacy Markforged”). As a result of the Merger, Legacy Markforged merged with and into Merger Sub with Legacy Markforged surviving as our wholly-owned subsidiary and, following one’s filing of a notice of deregistration and necessary accompanying documents with the Cayman Islands Registrar of Companies, and a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which one was domesticated, one changed its name to “Markforged Holding Corporation.”
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for our future operations of Markforged Holding Corporation. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “strive”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
Forward-looking statements in this Quarterly Report on Form 10-Q include, for example, statements about:
These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2022 and December 31, 2021
(In thousands, except share data and par value amounts) (Unaudited)
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March 31, |
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December 31, |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventory |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use assets |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Deferred revenue |
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Lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Long-term deferred revenue |
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Deferred rent |
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Contingent earnout liability |
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Long-term lease liabilities |
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Other liabilities |
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Total liabilities |
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Stockholders’ equity |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See notes to the unaudited condensed consolidated financial statements.
1
MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
For the three months ended March 31, 2022 and 2021
(In thousands, except share data and per share data) (Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Revenue |
$ |
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$ |
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Cost of revenue |
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Gross profit |
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Operating expenses |
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Sales and marketing |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Change in fair value of warrant liabilities |
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( |
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Change in fair value of contingent earnout liability |
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Other expense, net |
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( |
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Interest expense |
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( |
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Interest income |
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Profit (loss) before income taxes |
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Income tax benefit |
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Net profit (loss) and comprehensive income (loss) |
$ |
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$ |
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Weighted average shares outstanding - basic |
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Weighted average shares outstanding - diluted |
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Net profit (loss) per share - basic |
$ |
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$ |
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Net profit (loss) per share - diluted |
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( |
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See notes to the unaudited condensed consolidated financial statements.
2
MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
For the three months ended March 31, 2022 and 2021
(In thousands, except share data) (Unaudited)
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Convertible Preferred Stock |
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Common Stock |
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Additional |
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Treasury Stock |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Shares |
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Amount |
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Deficit |
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Total |
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December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Exercise of common |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock vested under compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock-based |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Earnout stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income and |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Convertible Preferred Stock |
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Common Stock |
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Additional |
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Treasury Stock |
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Accumulated |
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Total |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Shares |
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Amount |
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Deficit |
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Deficit |
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Total |
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December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Exercise of common |
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— |
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— |
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— |
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— |
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Stock-based |
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— |
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— |
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— |
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— |
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Exercise of Series D |
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Net loss and |
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— |
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( |
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( |
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( |
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March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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The shares of the Company’s common and convertible preferred stock, prior to the Merger (as defined in Note 1) have been retroactively restated to reflect the exchange ratio of approximately |
See notes to the unaudited condensed consolidated financial statements.
3
MARKFORGED HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2022 and 2021
(In thousands, except share data) (Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Operating Activities: |
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Net profit (loss) |
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$ |
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$ |
( |
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Adjustments to reconcile net loss to cash used in operating activities |
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Depreciation, amortization, and non-cash lease interest |
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(Recovery) provision for doubtful accounts |
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Reserve for excess and obsolete inventory |
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( |
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Change in fair value of warrant liabilities |
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( |
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Change in fair value of contingent earnout liability |
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Stock-based compensation expense |
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Changes in operating assets and liabilities |
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Accounts receivable |
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Inventory |
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Prepaid expenses |
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( |
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Other current assets |
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Other assets |
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Accounts payable and accrued expenses |
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Other current liabilities |
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Deferred rent |
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— |
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Deferred revenue |
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Other non-current lease liabilities |
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Net cash used in operating activities |
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Investing Activities: |
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Purchases of property and equipment |
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Net cash used in investing activities |
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Financing Activities: |
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Repayment of debt obligations |
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Payment of transaction costs for the Merger |
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Proceeds from exercise of Series D warrants |
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Proceeds from exercise of common stock options |
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Net cash provided by (used in) financing activities |
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Net change in cash and cash equivalents |
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Cash and cash equivalents |
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Beginning of year |
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End of period |
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$ |
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$ |
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Non cash financing and investing activities |
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Purchase of property and equipment in accounts payable and accrued expenses |
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$ |
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$ |
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Deferred transaction costs included in accounts payable and accrued expenses |
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See notes to the unaudited condensed consolidated financial statements.
4
MARKFORGED HOLDING CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Organization, Nature of the Business, and Risks and Uncertainties
Organization and Nature of Business
Unless otherwise indicated or the context otherwise requires, references to the “Company” and “Markforged” refer to the consolidated operations of Markforged Holding Corporation and its subsidiaries. References to “AONE” refer to the company prior to the consummation of the Merger and references to “Legacy Markforged” refer to MarkForged, Inc. and its consolidated subsidiaries prior to the consummation of the Merger.
Legacy Markforged was founded in 2013 to transform the manufacturing industry with high strength, cost effective parts using additive manufacturing. Markforged produces and sells 3D printers, materials, software, and other related services worldwide to customers who can build parts strong enough for the factory floor with significantly reduced lead time and cost. The printers print in plastic, nylon, metal, and the parts can be reinforced with carbon fiber for industry leading strength at an affordable price point.
On February 23, 2021, one, a Cayman Islands exempted company (“AONE”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Caspian Merger Sub Inc., a wholly owned subsidiary of AONE (“Merger Sub”), and Legacy Markforged, pursuant to which (i) AONE would deregister as a Cayman Islands company and domesticate as a corporation in the State of Delaware and would be renamed “Markforged Holding Corporation” (the “Domestication”) and (ii) Merger Sub would merge with and into Legacy Markforged with Legacy Markforged surviving as a wholly owned subsidiary of Markforged Holding Corporation (the “Merger”). AONE's shareholders approved the transactions contemplated by the Merger Agreement on July 13, 2021, and the Domestication and the Merger were completed on July 14, 2021 (the "Closing").
Cash proceeds of the merger were funded through a combination of AONE’s $
Risks and Uncertainties
COVID-19 has had an impact on the Company’s results, since the second quarter of 2020, and the Company is unable to predict the ultimate impact that the virus may have on the business, future results of operations, financial position or cash flows. Further, the COVID-19 impact on the Company is largely dependent on future developments and subsequent government responses. The Company identified potential risks to the business to include certain accounting estimates around its supply chain, accounts receivable, inventory and related reserves, and long-lived assets. As of and for the three months ended March 31, 2022, these risks were assessed and had no material impact on the realizability of accounts receivables, inventories, long- lived assets or the related estimates used in the Company’s condensed consolidated financial statements. There may be changes to those estimates in future periods, and actual results could differ from those estimates.
Note 2. Merger and Reverse Recapitalization
Immediately prior to the Closing the following transactions occurred (prior to the Exchange Ratio discussed below):
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At the Closing, eligible Legacy Markforged equity holders received or had the right to receive shares of the Company's Common Stock, par value $
In connection with the execution of the Merger Agreement, AONE entered into separate subscription agreements (each a “Subscription Agreement”) with a number of investors (each a “New PIPE Investor”), pursuant to which the New PIPE Investors agreed to purchase, and AONE agreed to sell to the New PIPE Investors, an aggregate of
In connection with the Closing, and under the terms of the Sponsor Support Agreement entered into in connection with the execution of the Merger Agreement,
The number of shares of Common Stock issued immediately following the consummation of the Merger was as follows:
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Shares |
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Common stock of one, outstanding prior to Merger (1) |
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Less redemption of one Class A shares subject to possible redemption |
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( |
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Common stock of one |
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Shares issued in PIPE |
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Merger and PIPE financing shares (2) |
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Legacy Markforged shares (3) |
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Total shares of common stock immediately after Merger |
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(1) |
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The Merger is accounted for as a reverse recapitalization under accounting principles generally accepted in the United States ("'GAAP"). This determination is primarily based on Legacy Markforged stockholders comprising a relative majority of the voting power of Markforged and having the ability to nominate the members of the Board, Legacy Markforged’s operations prior to the acquisition comprising the only ongoing operations of Markforged, and Legacy Markforged’s senior management comprising a majority of the senior management of Markforged. Under this method of accounting, AONE is treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Markforged represent a continuation of the financial statements of Legacy Markforged with the Merger being treated as the equivalent of Markforged issuing stock for the net assets of AONE, accompanied by a recapitalization. The net assets of AONE are stated at historical costs, with no goodwill or other intangible assets recorded. Operations prior to the Merger are presented as those of Markforged. All periods prior to the Merger have
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been retrospectively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Merger to effect the reverse recapitalization. Additionally, upon the consummation of the Merger, the Company issued
In connection with the Merger, the Company raised $