--12-31falseQ20001816613http://fasb.org/us-gaap/2024#Liabilitieshttp://fasb.org/us-gaap/2024#Liabilities0001816613mkfg:ContingentEarnoutLiabilityMember2023-06-300001816613us-gaap:SoftwareDevelopmentMember2023-12-310001816613mkfg:SharesAvailableForIssuanceUnderThe2021PlanMember2024-06-300001816613us-gaap:RetainedEarningsMember2023-12-310001816613us-gaap:RetainedEarningsMember2024-06-300001816613us-gaap:WarrantMember2023-01-012023-06-300001816613us-gaap:StockOptionMember2023-01-012023-06-300001816613mkfg:PublicWarrantsMember2024-04-012024-06-300001816613us-gaap:WarrantMemberus-gaap:GainLossOnDerivativeInstrumentsMemberus-gaap:PrivatePlacementMember2023-01-012023-06-300001816613mkfg:CashEquivalentsAndShortTermInvestmentsMember2024-06-300001816613srt:MinimumMember2023-04-012023-06-300001816613us-gaap:EmployeeStockOptionMember2023-04-012023-06-300001816613us-gaap:ForeignCurrencyGainLossMember2024-01-012024-06-300001816613mkfg:CompositesCaseMember2024-04-012024-06-300001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001816613us-gaap:FurnitureAndFixturesMember2023-12-310001816613srt:MaximumMember2023-12-310001816613srt:AmericasMember2024-04-012024-06-300001816613mkfg:CompositesCaseMember2023-06-300001816613us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001816613srt:ScenarioForecastMember2024-08-012024-08-310001816613us-gaap:MachineryAndEquipmentMember2024-06-300001816613mkfg:TriggeringEventIEarnoutShareMember2024-01-012024-06-300001816613us-gaap:RestrictedStockUnitsRSUMember2024-06-300001816613mkfg:TotalOtherLiabilitiesMember2023-12-310001816613mkfg:DigitalMetalMember2022-01-012022-12-310001816613us-gaap:ConstructionInProgressMember2024-06-300001816613mkfg:ContingentEarnoutLiabilityMember2023-12-310001816613us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001816613us-gaap:LeaseholdImprovementsMember2024-06-300001816613mkfg:CompositesCaseMember2023-03-310001816613srt:AmericasMember2023-01-012023-06-300001816613mkfg:ContingentlyIssuableEarnoutSharesMember2024-04-012024-06-300001816613us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001816613mkfg:InterestToCoverMember2024-06-300001816613mkfg:DigitalMetalMember2022-12-310001816613us-gaap:SalesRevenueNetMembersrt:MinimumMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-03-310001816613mkfg:HardwareMember2023-04-012023-06-300001816613mkfg:TetonSimulationSoftwareMember2022-04-042022-04-040001816613us-gaap:CommonStockMember2023-04-012023-06-300001816613us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-3000018166132023-11-012023-11-300001816613us-gaap:AdditionalPaidInCapitalMember2024-03-310001816613us-gaap:RetainedEarningsMember2024-03-310001816613mkfg:EmployeeStockPurchasePlanMember2024-06-300001816613us-gaap:SoftwareDevelopmentMember2024-06-300001816613mkfg:TwoThousandAndTwentyOneStockPlanMember2024-06-300001816613us-gaap:CommonStockMember2024-03-310001816613mkfg:StockOptionsAndRestrictedStockUnitsMember2024-01-012024-06-300001816613mkfg:TwoThousandAndTwentyOneStockOptionPlanMember2024-01-012024-06-300001816613mkfg:TetonAcquisitionContingentEarnoutLiabilityMember2022-12-310001816613srt:MinimumMember2023-01-012023-06-300001816613us-gaap:OperatingExpenseMember2024-01-012024-06-300001816613srt:AmericasMember2023-04-012023-06-300001816613us-gaap:TradeNamesMember2024-06-3000018166132023-01-012023-12-310001816613mkfg:ContingentEarnoutLiabilityMember2024-06-300001816613mkfg:PrivatePlacementWarrantLiabilityMember2023-01-012023-06-300001816613mkfg:PublicWarrantMember2021-07-140001816613us-gaap:CostOfSalesMember2024-01-012024-06-300001816613us-gaap:FairValueMeasurementsRecurringMember2024-06-300001816613us-gaap:CustomerRelationshipsMember2024-01-012024-06-3000018166132024-03-310001816613mkfg:TerminationAgreementMemberus-gaap:SubsequentEventMember2024-09-300001816613us-gaap:SubsequentEventMember2024-08-082024-08-080001816613mkfg:MarkforgedEarnoutSharesMember2024-01-012024-06-300001816613us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001816613us-gaap:StockOptionMember2024-04-012024-06-300001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001816613us-gaap:ComputerEquipmentMember2024-06-300001816613mkfg:EarnoutMember2024-06-300001816613srt:AmericasMember2024-01-012024-06-300001816613us-gaap:CommonStockMember2024-04-012024-06-300001816613mkfg:StockOptionsAndRestrictedStockUnitsMember2024-06-300001816613mkfg:TotalOtherLiabilitiesMember2023-06-300001816613us-gaap:ComputerEquipmentMember2023-12-310001816613mkfg:PrivatePlacementWarrantLiabilityMember2024-06-300001816613us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-06-300001816613mkfg:ConsumablesMember2023-04-012023-06-300001816613us-gaap:RetainedEarningsMember2024-01-012024-03-310001816613mkfg:CommonStockWarrantsOutstandingMember2023-12-310001816613us-gaap:WarrantMemberus-gaap:GainLossOnDerivativeInstrumentsMemberus-gaap:PrivatePlacementMember2024-04-012024-06-300001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001816613us-gaap:CommonStockMember2023-01-012023-03-3100018166132024-08-070001816613us-gaap:AdditionalPaidInCapitalMember2024-04-012024-06-300001816613mkfg:EarnoutMembersrt:MaximumMember2024-01-012024-06-300001816613us-gaap:RestrictedStockUnitsRSUMember2023-04-012023-06-300001816613us-gaap:CustomerRelationshipsMember2024-06-300001816613mkfg:AOneMember2024-06-300001816613mkfg:AcquiredTechnologyMembersrt:MaximumMember2024-06-3000018166132023-03-310001816613us-gaap:EmployeeStockOptionMember2024-01-012024-06-3000018166132023-04-012023-06-300001816613us-gaap:RetainedEarningsMember2024-04-012024-06-300001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300001816613mkfg:CompositesCaseMember2023-12-310001816613mkfg:SponsorEarnoutSharesMembermkfg:AOneMember2024-01-012024-06-300001816613mkfg:PrivatePlacementWarrantLiabilityMember2023-12-310001816613mkfg:TriggeringEventIMember2021-07-1400018166132023-07-012023-09-300001816613us-gaap:GeneralAndAdministrativeExpenseMember2024-04-012024-06-300001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001816613mkfg:CommitmentsAndContingenciesMember2024-06-300001816613us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001816613us-gaap:WarrantMember2024-01-012024-06-300001816613mkfg:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2023-01-012023-06-300001816613mkfg:ContingentEarnoutLiabilityMember2024-01-012024-06-300001816613mkfg:TwoThousandAndTwentyOneStockOptionPlanMember2024-06-300001816613us-gaap:RetainedEarningsMember2022-12-310001816613us-gaap:CostOfSalesMember2023-04-012023-06-300001816613mkfg:TriggeringEventIMember2024-06-300001816613mkfg:TwoThousandAndThirteenStockPlanMember2024-01-012024-06-300001816613us-gaap:MoneyMarketFundsMember2023-12-310001816613mkfg:CompositesCaseMember2024-03-310001816613us-gaap:EMEAMember2023-01-012023-06-300001816613us-gaap:RestrictedStockUnitsRSUMember2024-04-012024-06-300001816613us-gaap:TradeNamesMember2024-01-012024-06-300001816613mkfg:PrivatePlacementWarrantLiabilityMember2023-06-300001816613us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001816613mkfg:TerminationAgreementMemberus-gaap:SubsequentEventMember2024-08-010001816613us-gaap:RetainedEarningsMember2023-04-012023-06-300001816613us-gaap:FurnitureAndFixturesMember2024-06-300001816613srt:MinimumMember2024-01-012024-06-300001816613us-gaap:CostOfSalesMember2023-01-012023-06-300001816613us-gaap:PrivatePlacementMembermkfg:AOneMember2024-06-300001816613mkfg:PublicWarrantsMember2024-01-012024-06-300001816613mkfg:CompositesCaseMember2023-04-012023-06-300001816613srt:MinimumMembermkfg:AcquiredTechnologyMember2024-06-300001816613mkfg:HardwareMember2024-04-012024-06-300001816613mkfg:AOneMember2024-01-012024-06-300001816613mkfg:TetonAcquisitionContingentEarnoutLiabilityMember2024-01-012024-06-300001816613srt:AsiaPacificMember2024-01-012024-06-300001816613mkfg:TetonSimulationSoftwareMember2024-01-012024-06-300001816613us-gaap:ServiceMember2024-01-012024-06-300001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-300001816613us-gaap:FairValueMeasurementsRecurringMember2023-12-310001816613srt:MinimumMember2024-04-012024-06-300001816613us-gaap:ServiceMember2024-04-012024-06-3000018166132023-01-012023-06-300001816613us-gaap:CommonStockMember2024-06-300001816613mkfg:CommonStockOptionsOutstandingAndUnvestedRestrictedStockUnitsMember2024-06-300001816613mkfg:PublicWarrantsMembermkfg:AOneMember2024-06-300001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001816613us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001816613us-gaap:ResearchAndDevelopmentExpenseMember2024-04-012024-06-300001816613mkfg:CompositesCaseMember2024-01-012024-06-3000018166132024-01-012024-03-310001816613mkfg:AcquiredTechnologyMember2023-01-012023-12-310001816613us-gaap:OtherIntangibleAssetsMember2024-01-012024-06-300001816613us-gaap:SalesRevenueNetMember2024-01-012024-06-300001816613us-gaap:MoneyMarketFundsMember2024-06-300001816613mkfg:ContingentlyIssuableEarnoutSharesMember2023-01-012023-06-300001816613us-gaap:CommonStockMember2023-03-310001816613us-gaap:GeneralAndAdministrativeExpenseMember2023-04-012023-06-300001816613us-gaap:OperatingExpenseMember2023-01-012023-06-300001816613srt:MinimumMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2024-01-012024-06-300001816613us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001816613us-gaap:CommonStockMember2024-01-012024-03-310001816613us-gaap:AdditionalPaidInCapitalMember2024-06-3000018166132024-06-300001816613us-gaap:OperatingExpenseMember2024-04-012024-06-300001816613us-gaap:WarrantMemberus-gaap:GainLossOnDerivativeInstrumentsMemberus-gaap:PrivatePlacementMember2023-04-012023-06-300001816613mkfg:ContingentEarnoutLiabilityMember2023-01-012023-06-3000018166132023-12-310001816613us-gaap:WarrantMemberus-gaap:PrivatePlacementMember2021-07-142021-07-140001816613us-gaap:ForeignCurrencyGainLossMember2023-01-012023-12-310001816613us-gaap:WarrantMemberus-gaap:PrivatePlacementMember2024-06-300001816613us-gaap:WarrantMember2024-04-012024-06-300001816613mkfg:TwoThousandAndTwentyOneStockPlanMember2023-01-012023-12-310001816613us-gaap:ConstructionInProgressMember2023-12-310001816613mkfg:SharesAvailableForIssuanceAsEarnoutRsuMember2024-06-300001816613srt:AsiaPacificMember2023-01-012023-06-300001816613us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001816613us-gaap:ResearchAndDevelopmentExpenseMember2023-04-012023-06-3000018166132024-01-012024-06-300001816613us-gaap:WarrantMemberus-gaap:GainLossOnDerivativeInstrumentsMemberus-gaap:PrivatePlacementMember2024-01-012024-06-300001816613us-gaap:CustomerRelationshipsMember2023-01-012023-12-3100018166132023-01-012023-03-310001816613us-gaap:EmployeeStockOptionMember2023-01-012023-06-300001816613us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-06-300001816613us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-06-300001816613us-gaap:AdditionalPaidInCapitalMember2023-03-310001816613mkfg:CashEquivalentsAndShortTermInvestmentsMember2023-12-310001816613us-gaap:RestrictedStockUnitsRSUMember2023-04-012023-06-300001816613srt:AsiaPacificMember2024-04-012024-06-300001816613mkfg:TriggeringEventIiMember2021-07-140001816613mkfg:ConsumablesMember2023-01-012023-06-300001816613us-gaap:WarrantMemberus-gaap:PrivatePlacementMember2023-06-300001816613us-gaap:CostOfSalesMember2024-04-012024-06-300001816613mkfg:CommonStockWarrantsOutstandingMember2024-06-300001816613us-gaap:SellingAndMarketingExpenseMember2023-04-012023-06-300001816613us-gaap:EmployeeStockOptionMember2024-04-012024-06-300001816613mkfg:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2023-06-300001816613mkfg:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2024-06-300001816613us-gaap:ServiceMember2023-01-012023-06-300001816613us-gaap:StockCompensationPlanMember2024-01-012024-06-300001816613us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001816613mkfg:TriggeringEventIiMember2024-06-300001816613mkfg:TriggeringEventIiMember2024-01-012024-06-300001816613srt:MinimumMemberus-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2023-01-012023-12-310001816613mkfg:SharesAvailableForIssuanceAsEarnoutRsuMember2023-12-310001816613us-gaap:CommonStockMember2022-12-3100018166132024-04-110001816613mkfg:TwoThousandAndThirteenStockPlanMember2024-06-300001816613us-gaap:CommonStockMember2023-06-300001816613mkfg:TetonSimulationSoftwareMember2024-06-300001816613mkfg:HardwareMember2023-01-012023-06-300001816613us-gaap:AdditionalPaidInCapitalMember2023-12-310001816613mkfg:TetonSimulationSoftwareMember2022-01-012022-12-310001816613mkfg:TotalOtherLiabilitiesMember2023-01-012023-06-300001816613us-gaap:OtherIntangibleAssetsMember2023-01-012023-12-310001816613us-gaap:CommonStockMember2024-01-012024-06-300001816613mkfg:MonetaryDamageMember2024-06-300001816613us-gaap:StockOptionMember2024-01-012024-06-300001816613mkfg:TetonAcquisitionContingentEarnoutLiabilityMember2023-06-300001816613mkfg:ContingentlyIssuableEarnoutSharesMember2024-01-012024-06-300001816613us-gaap:RetainedEarningsMember2023-03-310001816613us-gaap:WarrantMember2024-01-012024-06-300001816613mkfg:PrivatePlacementWarrantLiabilityMember2024-01-012024-06-300001816613us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-06-300001816613us-gaap:SalesRevenueNetMember2023-01-012023-03-3100018166132023-06-300001816613us-gaap:MachineryAndEquipmentMember2023-12-310001816613srt:MinimumMember2022-08-162022-08-160001816613mkfg:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMembersrt:MaximumMember2024-01-012024-06-300001816613mkfg:ContingentEarnoutLiabilityMember2022-12-310001816613us-gaap:RetainedEarningsMember2023-06-3000018166132022-08-162022-08-160001816613us-gaap:SellingAndMarketingExpenseMember2024-04-012024-06-300001816613mkfg:CompositesCaseMember2023-01-012023-06-300001816613mkfg:TwoThousandAndTwentyOneStockPlanMember2024-01-012024-06-300001816613us-gaap:EMEAMember2024-04-012024-06-300001816613mkfg:TwoThousandAndTwentyOneStockPlanMember2023-12-310001816613us-gaap:LeaseholdImprovementsMember2023-12-310001816613us-gaap:RestrictedStockUnitsRSUMember2024-04-012024-06-300001816613mkfg:TriggeringEventIiEarnoutShareMember2024-01-012024-06-300001816613us-gaap:OperatingExpenseMember2023-04-012023-06-3000018166132024-04-012024-06-300001816613us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-06-300001816613mkfg:ConsumablesMember2024-04-012024-06-300001816613us-gaap:SalesRevenueNetMembersrt:MinimumMemberus-gaap:CustomerConcentrationRiskMember2024-01-012024-06-300001816613mkfg:SharesAvailableForIssuanceUnderThe2021PlanMember2023-12-310001816613mkfg:TriggeringEventIMember2024-01-012024-06-300001816613us-gaap:SellingAndMarketingExpenseMember2024-01-012024-06-300001816613mkfg:PrivatePlacementWarrantLiabilityMember2022-12-310001816613us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-06-300001816613us-gaap:ServiceMember2023-04-012023-06-300001816613mkfg:CompositesCaseMember2024-06-300001816613us-gaap:CommonClassAMember2024-01-012024-06-300001816613mkfg:TotalOtherLiabilitiesMember2022-12-310001816613srt:MinimumMember2021-10-312021-10-310001816613mkfg:ContingentlyIssuableEarnoutSharesMember2023-04-012023-06-300001816613us-gaap:WarrantMember2023-04-012023-06-300001816613us-gaap:TradeNamesMember2023-01-012023-12-310001816613us-gaap:EMEAMember2023-04-012023-06-300001816613us-gaap:AccountsReceivableMember2024-01-012024-06-300001816613us-gaap:StockCompensationPlanMember2023-01-012023-06-300001816613us-gaap:CommonStockMember2023-12-310001816613us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-06-300001816613us-gaap:AdditionalPaidInCapitalMember2022-12-310001816613mkfg:EmployeeStockPurchasePlanMember2023-12-310001816613us-gaap:WarrantMemberus-gaap:PrivatePlacementMember2024-01-012024-06-300001816613mkfg:CommonStockOptionsOutstandingAndUnvestedRestrictedStockUnitsMember2023-12-310001816613mkfg:RestrictedCashMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001816613us-gaap:StockOptionMember2023-04-012023-06-300001816613mkfg:AcquiredTechnologyMember2024-01-012024-06-300001816613mkfg:CompositesCaseMember2022-12-310001816613us-gaap:RetainedEarningsMember2023-01-012023-03-310001816613mkfg:TwoThousandAndThirteenStockPlanMember2023-01-012023-06-300001816613srt:AsiaPacificMember2023-04-012023-06-300001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001816613us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-04-012024-06-300001816613mkfg:TwoThousandAndTwentyOneEmployeeStockPurchasePlanMember2024-01-012024-06-300001816613mkfg:TotalOtherLiabilitiesMember2024-06-300001816613mkfg:TetonAcquisitionContingentEarnoutLiabilityMember2023-12-310001816613us-gaap:AdditionalPaidInCapitalMember2023-06-300001816613us-gaap:StockCompensationPlanMember2024-04-012024-06-300001816613us-gaap:FairValueInputsLevel1Membermkfg:RestrictedCashMemberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001816613srt:MaximumMember2024-01-012024-06-300001816613mkfg:HardwareMember2024-01-012024-06-300001816613us-gaap:EMEAMember2024-01-012024-06-300001816613mkfg:ConsumablesMember2024-01-012024-06-300001816613mkfg:TotalOtherLiabilitiesMember2024-01-012024-06-300001816613mkfg:EligibleMarkforgedEquityholdersMember2024-06-300001816613us-gaap:SellingAndMarketingExpenseMember2023-01-012023-06-3000018166132022-12-310001816613mkfg:TetonAcquisitionContingentEarnoutLiabilityMember2024-06-300001816613us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-06-300001816613us-gaap:StockCompensationPlanMember2023-04-012023-06-300001816613mkfg:TetonSimulationSoftwareMembersrt:MaximumMember2022-04-042022-04-040001816613us-gaap:RestrictedStockUnitsRSUMember2023-12-31xbrli:puremkfg:TradingDaysxbrli:sharesiso4217:USDxbrli:sharesmkfg:Customeriso4217:USD

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

 

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

 

For the quarterly period ended June 30, 2024

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: 001-39453

Markforged Holding Corporation

(Exact Name of Registrant as Specified in its Charter)

Delaware

92-3037714

(State or other jurisdiction of

incorporation or organization)

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

60 Tower Road

Waltham, MA

02451

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (866) 496-1805

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

Common Stock, par value $0.0001 per share

Redeemable Warrants, each whole warrant exercisable for one share of Common Stock, $0.0001 par value

MKFG

MKFG.WS

New York Stock Exchange

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, 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 August 7, 2024, the registrant had 203,248,837 shares of common stock, $0.0001 par value per share, outstanding.

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Condensed Consolidated Financial Statements

1

Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (Unaudited)

1

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (Unaudited)

2

 

Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2024 and 2023 (Unaudited)

3

 

Statement of Changes in Stockholders' Equity for the three and six months ended June 30, 2024 and 2023 (Unaudited)

4

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited)

5

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

38

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

75

Item 3.

Defaults Upon Senior Securities

75

Item 4.

Mine Safety Disclosures

75

Item 5.

Other Information

75

Item 6.

Exhibits

76

Signatures

77

 

 


 

 

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:

We are, and have been in the recent past, subject to business and intellectual property litigation. In particular, in July 2021, Continuous Composites Inc. (“Continuous Composites”) filed a patent-infringement case against us in the United States District Court of Delaware and on April 11, 2024, the jury returned a verdict against us in the amount of $17.3 million. Continuous Composites has also asserted through post-trial motions claims for additional royalty payments for sales of certain products manufactured and/or sold in the United States after December 31, 2023. In the event that these claims are successful and the District Court awards royalties for sales after December 31, 2023, we expect the remedy to be a fixed-fee assessment of royalty payments for each machine sold or manufactured in the United States that includes our carbon fiber reinforcement technology.
We have a history of net losses and may not be able to achieve profitability for any period in the future or sustain cash flow from operating activities. We have a relatively limited operating history and have experienced rapid growth, which makes evaluating our current business and future prospects difficult and may increase the risk of your investment. Our operating results may fluctuate significantly from period-to-period.
The additive manufacturing industry in which we operate is characterized by rapid technological change, which requires us to continue to develop new products and innovations to meet constantly evolving customer demands and which could adversely affect market adoption of our products.
Declines in the global economy, geopolitical and social uncertainties, global health crises and difficulties in the markets that we serve may adversely impact our business.
Adverse developments affecting the financial services industry or other third parties, such as a liquidity crisis, increased levels of defaults or non-performance by financial institutions or transactional counterparties or the perception that any of these events could occur, could adversely affect our current and projected business operations and our financial condition and results of operations.
We face significant competition in our industry. If we are unable to create new products or meet the demands of our customers, our business could be materially adversely affected.
We depend on our network of value-added resellers and our business could be materially adversely affected if they do not meet our expectations.
We depend heavily on third-party suppliers. If they or their facilities become unavailable or inadequate, our business could be adversely affected. We may experience significant delays in the design, production and launch of our additive manufacturing solutions and enhancements to existing products, and we may be unable to successfully commercialize products on our planned timelines.
We rely on a limited number of third-party logistics providers for distribution of our products, and their failure to effectively distribute our products, including because of delays and disruptions caused by current conditions in global shipping capacity, would adversely affect our sales.
If demand for our products does not grow as expected, or if market adoption of additive manufacturing does not continue to develop, or develops more slowly than expected, our revenues may stagnate or decline, and our business may be adversely affected.
Defects in new products or in enhancements to our existing products that give rise to product returns or warranty or other claims could result in material expenses, diversion of management time and attention, and damage to our reputation.
We may be unable to consistently manufacture our products to the necessary specifications or in quantities necessary to meet demand at an acceptable cost or at an acceptable performance level. As manufacturing becomes a larger part of our operations, we will become exposed to accompanying risks and liabilities. We depend on a limited number of third-party contract manufacturers for a substantial portion of our manufacturing needs and we depend on a number of suppliers for other parts and components; since the second half of 2021, we have increasingly experienced, and expect to continue to experience, price increases, supply shortages and delays and any such delay, disruption or quality control problems in their operations which could cause harm to our operations, including loss of market share, reduced margins and damage to our brand.

 


 

We have experienced, and expect to continue to experience, rapid growth and organizational change since our inception. If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction or attract new employees and customers.
A real or perceived defect, security vulnerability, error or performance failure in our software or technical problems or disruptions caused by our third-party service providers could cause us to lose revenue, damage our reputation and expose us to liability.
Our existing and planned global operations subject us to a variety of risks and uncertainties that could adversely affect our business and operating results. Our business is subject to risks associated with selling machines and other products in non-United States locations. Global economic, political and social conditions and uncertainties in the market that we serve may adversely impact our business.
A significant portion of our business depends on sales to the public sector, and our failure to receive and maintain government contracts or changes in the contracting or fiscal policies of the public sector could have a material adverse effect on our business.
We are, and have been in the recent past, subject to business and intellectual property litigation. We could be subject to personal injury, property damage, product liability, warranty and other claims involving allegedly defective products that we supply. We could face liability if our additive manufacturing solutions are used by our customers to print dangerous objects.
If we are unable to adequately protect our proprietary technology or obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.
If we are unable for any reason to meet the continued listing requirements of the New York Stock Exchange (“NYSE”), such action or inaction could result in a delisting of our securities.
We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or fail to maintain effective internal control over financial reporting, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.

 

 


 

 

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 (“Markforged,” the “Company,” “we,” “us”). 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:

the benefits of the Merger, and other acquisitions and our ability to realize such benefits;
our financial performance;
the effect of uncertainties related to economic downturns and global supply chain disruptions, or any future pandemics;
the expected growth of the additive manufacturing industry;
our anticipated growth and our ability to achieve and maintain profitability in the future;
the impact of the regulatory environment and complexities with compliance related to such environment on us;
the effect of and our ability to respond to general economic, political and business conditions, including recent increases in interest rates, rising inflation, foreign exchange fluctuations and risk of recession;
our ability to access sources of capital, including debt financing and other sources of capital to finance operations and growth;
the success of our marketing efforts and our ability to expand our customer base;
our ability to develop and deliver new products, features and functionality that are competitive and meet market needs;
our ability to maintain an effective system of internal control over financial reporting;
our ability to remediate our material weaknesses in our internal control of financial reporting;
our ability to grow and manage growth profitably and retain key employees;
the expected impact of any cost reduction initiative we may undertake and any estimates of our operating expenses and yearly run rate;
the impact of the reverse stock split on the trading price of our common stock, the liquidity of our common stock, our ability to attract new investors and raise capital, and our ability to regain compliance with the New York Stock Exchange’s minimum bid price listing requirement; and
the outcome of legal or governmental proceedings that have been and may continue to be instituted against us, and the impacts of the outcomes of those legal or governmental proceedings on our business operations, financial condition and results of operations.

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 June 30, 2024 and December 31, 2023

(In thousands, except share data and par value amounts) (Unaudited)

 

 

June 30,
2024

 

 

December 31,
2023

 

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

 

$

73,390

 

 

$

116,854

 

Restricted cash

 

 

19,122

 

 

 

 

Accounts receivable, net of allowance for expected credit losses ($438 and $360, respectively)

 

 

21,605

 

 

 

24,059

 

Inventory

 

 

22,557

 

 

 

26,773

 

Prepaid expenses

 

 

2,052

 

 

 

2,756

 

Other current assets

 

 

1,940

 

 

 

2,022

 

Total current assets

 

 

140,666

 

 

 

172,464

 

Property and equipment, net

 

 

16,945

 

 

 

17,713

 

Intangible assets, net

 

 

15,596

 

 

 

17,128

 

Right-of-use assets

 

 

34,819

 

 

 

36,884

 

Other assets

 

 

3,768

 

 

 

3,763

 

Total assets

 

$

211,794

 

 

$

247,952

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities

 

 

 

Accounts payable

 

$

8,749

 

 

$

13,235

 

Accrued expenses

 

 

11,276

 

 

 

9,840

 

Litigation payable (Note 15)

 

 

17,511

 

 

 

 

Deferred revenue

 

 

8,997

 

 

 

8,779

 

Lease liabilities

 

 

7,361

 

 

 

7,368

 

Other current liabilities

 

 

 

 

 

1,526

 

Total current liabilities

 

 

53,894

 

 

 

40,748

 

Long-term deferred revenue

 

 

5,187

 

 

 

6,083

 

Contingent earnout liability

 

 

245

 

 

 

1,379

 

Long-term lease liabilities

 

 

33,420

 

 

 

35,771

 

Other liabilities

 

 

1,652

 

 

 

2,361

 

Total liabilities

 

 

94,398

 

 

 

86,342

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock, $0.0001 par value; 1,000,000,000 shares authorized at June 30, 2024 and December 31, 2023; 202,549,293 and 198,581,263 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

 

 

19

 

 

 

19

 

Additional paid-in capital

 

 

373,397

 

 

 

366,281

 

Accumulated deficit

 

 

(255,008

)

 

 

(204,664

)

Accumulated other comprehensive (loss) income

 

 

(1,012

)

 

 

(26

)

Total stockholders’ equity

 

 

117,396

 

 

 

161,610

 

Total liabilities and stockholders’ equity

 

$

211,794

 

 

$

247,952

 

 

See notes to the unaudited condensed consolidated financial statements.

1


MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended June 30, 2024 and 2023

(In thousands, except share data and per share data) (Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Revenue

 

21,688

 

 

 

25,449

 

 

$

42,235

 

 

$

49,539

 

Cost of revenue

 

10,810

 

 

 

13,476

 

 

 

21,224

 

 

 

25,984

 

Gross profit

 

10,878

 

 

 

11,973

 

 

 

21,011

 

 

 

23,555

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

8,526

 

 

 

9,666

 

 

 

16,370

 

 

 

20,242

 

Research and development

 

9,060

 

 

 

10,286

 

 

 

18,995

 

 

 

20,666

 

General and administrative

 

10,334

 

 

 

12,120

 

 

 

22,499

 

 

 

24,248

 

Litigation judgment

 

 

 

 

 

 

 

17,300

 

 

 

 

Total operating expenses

 

27,920

 

 

 

32,072

 

 

 

75,164

 

 

 

65,156

 

Loss from operations

 

(17,042

)

 

 

(20,099

)

 

 

(54,153

)

 

 

(41,601

)

Change in fair value of derivative liabilities

 

95

 

 

 

125

 

 

 

126

 

 

 

314

 

Change in fair value of contingent earnout liability

 

1,295

 

 

 

(817

)

 

 

1,134

 

 

 

(7

)

Other expense, net

 

(84

)

 

 

(16

)

 

 

(219

)

 

 

(222

)

Interest expense

 

(170

)

 

 

(116

)

 

 

(324

)

 

 

(116

)

Interest income

 

1,230

 

 

 

1,577

 

 

 

2,630

 

 

 

3,268

 

Loss before income taxes

 

(14,676

)

 

 

(19,346

)

 

 

(50,806

)

 

 

(38,364

)

Income tax (benefit) expense

 

(278

)

 

 

(358

)

 

 

(462

)

 

 

(357

)

Net loss

$

(14,398

)

 

$

(18,988

)

 

$

(50,344

)

 

$

(38,007

)

Weighted average shares outstanding - basic and diluted

 

201,252,969

 

 

 

196,372,157

 

 

 

200,273,880

 

 

 

195,873,471

 

Net loss per share - basic and diluted

$

(0.07

)

 

$

(0.10

)

 

$

(0.25

)

 

$

(0.19

)

 

See notes to the unaudited condensed consolidated financial statements.

2


 

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

For the three and six months ended June 30, 2024 and 2023

(In thousands) (Unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net loss

$

(14,398

)

 

$

(18,988

)

 

$

(50,344

)

 

$

(38,007

)

Other comprehensive loss, net of taxes:

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on available-for-sale marketable securities, net

 

 

 

 

25

 

 

 

 

 

 

(25

)

Foreign currency translation adjustment

 

55

 

 

 

(1,704

)

 

 

(986

)

 

 

(1,546

)

Total comprehensive loss

$

(14,343

)

 

$

(20,667

)

 

$

(51,330

)

 

$

(39,578

)

 

See notes to the unaudited condensed consolidated financial statements.

3


 

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

For the three and six months ended June 30, 2024 and 2023

(In thousands, except share data) (Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Accumulated Other Comprehensive

 

 

Total Stockholders’ Equity

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

 

 

December 31, 2022

 

 

194,560,946

 

 

$

19

 

 

$

352,564

 

 

$

(101,097

)

 

$

1,068

 

 

$

252,554

 

Exercise of common stock options

 

 

502,299

 

 

 

 

 

 

180

 

 

 

 

 

 

 

 

 

180

 

Stock vested under compensation plan
   less shares withheld to cover taxes

 

 

580,375

 

 

 

 

 

 

(118

)

 

 

 

 

 

 

 

 

(118

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,144

 

 

 

 

 

 

 

 

 

4,144

 

Earnout stock-based compensation expense

 

 

 

 

 

 

 

 

212

 

 

 

 

 

 

 

 

 

212

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(19,019

)

 

 

 

 

 

(19,019

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

108

 

 

 

108

 

March 31, 2023

 

 

195,643,620

 

 

$

19

 

 

$

356,982

 

 

$

(120,116

)

 

$

1,176

 

 

$

238,061

 

Exercise of common stock options

 

 

952

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Stock vested under compensation plan
   less shares withheld to cover taxes

 

 

1,236,392

 

 

 

 

 

 

(28

)

 

 

 

 

 

 

 

 

(28

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,938

 

 

 

 

 

 

 

 

 

1,938

 

Earnout stock-based compensation expense

 

 

 

 

 

 

 

 

(248

)

 

 

 

 

 

 

 

 

(248

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(18,988

)

 

 

 

 

 

(18,988

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,679

)

 

 

(1,679

)

June 30, 2023

 

 

196,880,964

 

 

$

19

 

 

$

358,645

 

 

$

(139,104

)

 

$

(503

)

 

$

219,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

198,581,263

 

 

$

19

 

 

$

366,281

 

 

$

(204,664

)

 

$

(26

)

 

$

161,610

 

Exercise of common stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock vested under compensation plan
   less shares withheld to cover taxes

 

 

818,240

 

 

 

 

 

 

(181

)

 

 

 

 

 

 

 

 

(181

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,498

 

 

 

 

 

 

 

 

 

3,498

 

Earnout stock-based compensation expense

 

 

 

 

 

 

 

 

(37

)

 

 

 

 

 

 

 

 

(37

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(35,946

)

 

 

 

 

 

(35,946

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,041

)

 

 

(1,041

)

March 31, 2024

 

 

199,399,503

 

 

$

19

 

 

$

369,561

 

 

$

(240,610

)

 

$

(1,067

)

 

$

127,903

 

Exercise of common stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock vested under compensation plan
   less shares withheld to cover taxes

 

 

2,063,654

 

 

 

 

 

 

(159

)

 

 

 

 

 

 

 

 

(159

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,247

 

 

 

 

 

 

 

 

 

3,247

 

Earnout stock-based compensation expense

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

(2

)

Issuance of Common Stock in connection
   with acquisition earnout achievement

 

 

1,086,136

 

 

 

 

 

 

750

 

 

 

 

 

 

 

 

 

750

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(14,398

)

 

 

 

 

 

(14,398

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55

 

 

 

55

 

June 30, 2024

 

 

202,549,293

 

 

$

19

 

 

$

373,397

 

 

$

(255,008

)

 

$

(1,012

)

 

$

117,396

 

 

See notes to the unaudited condensed consolidated financial statements.

4


 

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2024 and 2023

(In thousands) (Unaudited)

 

 

 

For the Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

Operating Activities:

 

 

 

 

 

 

Net loss

 

$

(50,344

)

 

$

(38,007

)

Adjustments to reconcile net loss to cash used in operating activities

 

 

 

 

 

 

Depreciation, amortization, and non-cash lease interest

 

 

6,244

 

 

 

6,677

 

Provision for doubtful accounts

 

 

328

 

 

 

(866

)

Provision for excess and obsolete inventory

 

 

718

 

 

 

140

 

Change in fair value of derivative liabilities

 

 

(126

)

 

 

(314

)

Change in fair value of contingent earnout liability

 

 

(1,134

)

 

 

7

 

Amortization (accretion) of (discounts) premiums on available-for-sale securities

 

 

 

 

 

(1,304

)

Stock-based compensation expense

 

 

6,706

 

 

 

6,046

 

Long-lived asset impairment

 

 

 

 

 

4,015

 

Other

 

 

6

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

 

2,051

 

 

 

3,017

 

Inventory

 

 

3,312

 

 

 

(3,429

)

Prepaid expenses

 

 

688

 

 

 

1,862

 

Other current assets

 

 

69

 

 

 

35

 

Other assets

 

 

(7

)

 

 

(212

)

Accounts payable and accrued expenses

 

 

14,585

 

 

 

(4,235

)

Other current liabilities

 

 

(190

)

 

 

(352

)

Deferred revenue

 

 

(655

)

 

 

330

 

Other long term liabilities

 

 

(477

)

 

 

(368

)

Other non-current lease liabilities

 

 

(3,696

)

 

 

(3,742

)

Net cash provided by (used in) operating activities

 

 

(21,922

)

 

 

(30,700

)

Investing Activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,491

)

 

 

(2,157

)

Purchases of available-for-sale securities

 

 

 

 

 

(18,950

)

Proceeds from sales and maturities of marketable securities

 

 

 

 

 

13,500

 

Net cash provided by (used in) investing activities

 

 

(1,491

)

 

 

(7,607

)

Financing Activities:

 

 

 

 

 

 

Payment of acquisition-related contingent liabilities

 

 

(582

)

 

 

 

Acquisition holdback payment

 

 

 

 

 

(250

)

Proceeds from exercise of common stock options

 

 

 

 

 

181

 

Taxes paid related to net share settlement of equity awards

 

 

(340

)

 

 

(146

)

Net cash provided by (used in) provided by financing activities

 

 

(922

)

 

 

(215

)

Effect of exchange rate changes on cash

 

 

(7

)

 

 

(62

)

Net change in cash, cash equivalents, and restricted cash

 

 

(24,342

)

 

 

(38,584

)

Cash, cash equivalents, and restricted cash

 

 

 

 

 

 

Beginning of year

 

 

118,284

 

 

 

125,672

 

End of period

 

$

93,942

 

 

$

87,088

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information

 

 

 

 

 

 

Cash and cash equivalents

 

$

73,390

 

 

$

85,658

 

Restricted cash

 

 

19,122

 

 

 

 

Restricted cash in other non-current assets

 

 

1,430

 

 

 

1,430

 

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

 

$

93,942

 

 

$

87,088

 

Non cash operating activities

 

 

 

 

 

 

Common stock issued in connection with acquisition earnout achievement

 

$

750

 

 

$

 

Non cash investing and financing activities

 

 

 

 

 

 

Purchase of property and equipment in accounts payable and accrued expenses

 

$

56

 

 

$

133

 

Common stock disbursed to settle acquisition holdback

 

 

 

 

 

250

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to the unaudited condensed consolidated financial statements.

5


 

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 $132.5 million of cash held in trust (after redemptions of $64.2 million) and an aggregate of $210.0 million in fully committed common stock transactions at $10.00 per share. Immediately prior to the Closing, Legacy Markforged repurchased shares of common stock from certain of its stockholders, for a total value of $45.0 million, referred to as the “Employee Transactions”. Total net proceeds upon Closing, net of the Employee Transactions and transaction costs paid at Closing of $27.1 million, were $288.8 million.

Liquidity

The Company has funded its operations to date primarily through the sale of convertible preferred stock, the proceeds from the Merger, including the sale of common stock, and the sale of its products. Management believes that existing cash will be sufficient to fund operating and capital expenditure requirements through at least one year after the date these condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business.

Currently we generate negative operating cash flows and may continue to do so as we focus on pursuing commercialization and product development. During the six months ended June 30, 2024 and 2023 we generated net negative cash flows from operations of $21.9 million and $30.7 million, respectively. Our future capital requirements will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from customers, the timing and extent of spending to support development efforts, expenses associated with our international expansion, the introduction of platform enhancements, the continuing market adoption of The Digital Forge platform, and the outcome of litigation. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition.

We have enacted, and intend to continue to enact, cost savings measures to preserve capital. In November 2023, we announced a cost restructuring initiative that included an approximately 10% workforce reduction and other operational savings measures expected to deliver operating costs savings of approximately $9 - $12 million in 2024. Further, in August 2024, we announced an approximately $25 million cost reduction initiative that is expected to reduce the Company’s operating expenses to a yearly run rate of approximately $70 million. We expect that most of these cost reduction initiatives will be completed in the second half of fiscal year 2024. We are currently evaluating other potential initiatives we may undertake to reduce our operating expenses and manage our cash flows. These initiatives could include rationalizing our product portfolio, workforce adjustments based on changes to the business, improving our supply chain and logistics, and improving our inventory management. These initiatives may not be successful, and they

6


 

may not generate the cost savings we expect. Certain future events, such as a global recession, a material supply chain disruption or other events outside our control, may occur and could negatively impact our operating results and cash position and may require us to use our existing capital resources more quickly than we currently anticipate. These events may cause us to undertake additional cost savings measures or seek additional sources of financing.

Risks and Uncertainties

We continue to monitor, analyze, and respond to evolving developments regarding supply chain disruptions and the economic downturn. The Company is unable to predict the ultimate impact that these factors will have on the business, future results of operations, financial position or cash flows. The potential risks to the Company including certain accounting estimates around its supply chain, accounts receivable, inventory and related reserves, and intangible assets, were assessed and had no material impact as of and for the three and six months ended June 30, 2024. There may be changes to those estimates in future periods, and actual results could differ from those estimates.

 

Note 2. Summary of Significant Accounting Policies

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s fiscal year end is December 31 and, unless otherwise stated, all years and dates refer to the fiscal year.

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 rules and regulations of the United States Securities and Exchange Commission (“SEC”), the instructions to Form 10-Q and the provisions of Regulation S-X pertaining to interim financial statements. 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 unaudited condensed consolidated financial statements include the Company’s accounts and those of its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. 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 statement of the Company’s financial position, results of operations, and cash flows. The results reported in these unaudited condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 15, 2024.

Reporting Currency

The Company’s reporting currency is the U.S. Dollar, while the functional currencies of its foreign subsidiaries are the currencies of the primary economic environment in which each of them operate.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s significant estimates include allowance for doubtful accounts, reserve for excess and obsolete inventory, fair value of contingent earnout liability, fair value of earnout share awards, fair value of the private placement warrant liability, assumptions in revenue recognition, and valuation of intangibles and goodwill. The Company evaluates its estimates based on historical experience, current conditions, and various other assumptions that it believes are reasonable under the circumstances.

7


 

Cash and Cash Equivalents

The Company considers all highly liquid investments including money market funds, treasury securities, and commercial paper with original maturities of 90 days or less to be cash equivalents.

Restricted Cash

Restricted cash represents cash and cash equivalents that are restricted to withdrawal or use as of the reporting date.

As of June 30, 2024 the Company has accrued $17.5 million in connection with the Continuous Composites case discussed further in Note 15 to our unaudited condensed consolidated financial statements. The Company has investments in the amount of $19.1 million on its balance sheet as restricted cash as of June 30, 2024 for the purpose of funding a surety bond in connection with this liability.

Noncurrent restricted cash as of June 30, 2024 and December 31, 2023 relates to deposits to secure letters of credit totaling $1.4 million. The deposits are related to contracts that have a remaining term greater than twelve months, and thus this cash is included in other noncurrent assets.

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Restricted cash equivalents, beginning of period

 

$

 

 

$

 

 

$

 

 

$

 

Surety bond collateral

 

 

19,075

 

 

 

 

 

 

19,075

 

 

 

 

Interest received

 

 

46

 

 

 

 

 

 

46

 

 

 

 

Balance at end of period

 

$

19,121

 

 

$

 

 

$

19,121

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted cash in non-current assets, beginning of period

 

 

1,430

 

 

 

1,430

 

 

 

1,430

 

 

 

1,430

 

Balance at end of period

 

$

1,430

 

 

$

1,430

 

 

$

1,430

 

 

$

1,430

 

Short-term Investments

The Company has invested its excess cash in fixed income instruments denominated and payable in U.S. dollars including U.S. treasury securities, commercial paper, corporate bonds and asset-backed securities in accordance with the Company’s investment policy that primarily seeks to maintain adequate liquidity and preserve capital. Investments in marketable securities are recorded at fair value, and unrealized gains and losses are reported within accumulated other comprehensive income (loss) as a separate component of stockholders’ equity until realized or until a determination is made that an other-than-temporary decline in market value has occurred. We consider impairments to be other than temporary if they are related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis. When such reductions occur, the cost of the investment is adjusted to fair value through recording a loss on investments in the consolidated statements of operations. Realized gains and losses and declines in the value of securities attributable to actual or expected losses are included in other income (expense), net in the consolidated statements of operations. All investments in marketable securities mature within one year.

The Company did not hold any short term investments as of June 30, 2024 or December 31, 2023. Cash equivalents are invested in the following:

 

 

June 30, 2024

 

(in thousands)

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Money market funds

 

$

69,328

 

 

$

 

 

$

 

 

$

69,328

 

Total cash equivalents

 

$

69,328

 

 

$

 

 

$

 

 

$

69,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

(in thousands)

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Money market funds

 

$

110,775

 

 

$

 

 

$

 

 

$

110,775

 

Total cash equivalents

 

$

110,775

 

 

 

 

 

 

 

 

$

110,775

 

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Credit losses are estimated for accounts receivable considered to be uncollectible based on management’s assessment of collectability, which considers specific customers’ abilities to meet their financial obligations, the length of time receivables are past due, and historical collection experience. If circumstances related to specific customers change, or economic conditions deteriorate such that past collection experience is no longer relevant, the Company’s estimate of the recoverability of accounts receivable could be further reduced from the levels provided for in the unaudited consolidated financial statements.

8


 

The following presents the changes in the balance of the Company’s allowance for doubtful accounts:

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Balance at beginning of period

 

$

271

 

 

$

786

 

 

$

360

 

 

$

1,559

 

Provision adjustment

 

 

167

 

 

 

(343

)

 

 

328

 

 

 

(866

)

Write – offs

 

 

 

 

 

(260

)

 

 

(250

)

 

 

(510

)

Balance at end of period

 

$

438

 

 

$

183

 

 

$

438

 

 

$

183

 

Fair Value of Financial Instruments

The Company is required to provide information according to the fair value hierarchy based on the observability of the inputs used in the valuation techniques. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:

 

 

Level 1

Quoted prices in active markets for identical assets or liabilities

 

Level 2

Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

 

Level 3

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities

 

The following table presents information about the Company’s assets and liabilities that are measured at fair value as of June 30, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation:

 

 

Fair Value Measurements

 

 

 

June 30, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds included in cash and cash equivalents

 

$

69,328