10-Q

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.

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 November 6, 2024, the registrant had 20,620,035 shares of common stock, $0.0001 par value per share, outstanding.

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:

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.”

On September 19, 2024, the Company effected a 10-for-1 reverse stock split of the Common Stock. All shares of Common Stock, stock-based instruments and per-share data included in these unaudited condensed consolidated financial statements have been retroactively adjusted as though the stock split had been effected prior to all periods presented.

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:

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.

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.

Proposed Merger with Nano Dimension Ltd.

On September 25, 2024, the Company entered into an Agreement and Plan of Merger (the “Nano Merger Agreement”) with Nano Dimension Ltd., an Israeli company (“Nano”), and Nano US II, Inc., a Delaware corporation and an indirect, wholly owned subsidiary of Nano (“Nano Merger Sub”), pursuant to which Nano Merger Sub will merge with and into the Company (the “Nano Merger”), with the Company surviving the Nano Merger as an indirect wholly-owned subsidiary of Nano. Following the closing of the Nano Merger (the “Nano Merger Closing”), the Company’s Common Stock (as defined below), will be delisted from the New York Stock Exchange (the “NYSE”) and will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Subject to the terms and conditions set forth in the Nano Merger Agreement, at the effective time of the Nano Merger (the “Effective Time”), each outstanding share of common stock, par value $0.0001 per share, of the Company (“Common Stock”) (other than (i) shares of the Company’s preferred stock, par value $0.0001 per share (“Preferred Stock”), (ii) shares of Common Stock held by the Company as treasury stock or otherwise held directly by a Company subsidiary, Nano or Nano Merger Sub immediately prior to the Effective Time, and (iii) shares of Common Stock held by Company stockholders that are entitled to, and have properly demanded appraisal for such shares, in accordance with, and have complied in all respects with, Section 262 of the Delaware General Corporation Law (such shares, “Dissenting Shares” and together with clauses (i)-(iii), the “Excluded Shares”)), will be converted automatically into the right to receive an amount in cash equal to $5.00 per share, without interest, less any applicable tax withholdings. Immediately prior to the Effective Time, each Excluded Share will be cancelled and cease to exist and no consideration will be paid or payable in respect thereof.

The Nano Merger is subject to approval by Markforged’s stockholders, the receipt of required regulatory approvals and other customary closing conditions.

For further information about the Nano Merger, please refer to the Nano Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Quarterly Report on Form 10-Q, and the Company’s preliminary Proxy Statement filed on Schedule 14A with the SEC on October 21, 2024.

Reverse Stock Split

On September 19, 2024, the Company effected a 10-for-1 reverse stock split of the Company's Common Stock. All shares of Common Stock, stock-based instruments and per-share data included in these unaudited condensed consolidated financial statements have been retroactively adjusted as though the stock split had been effected prior to all periods presented. As a result of the reverse stock split, the Company issued 160,658 additional shares of Common Stock to stockholders who would have otherwise received fractional shares of Common Stock post-reverse stock split.

Regaining Compliance with the NYSE’s Minimum Bid Price Listing Requirement

On October 30, 2024, the NYSE notified the Company that it had regained compliance with the NYSE’s minimum bid price listing requirement pursuant to Section 802.01C of the NYSE Listed Company Manual with respect to its Common Stock because the average closing price of the Common Stock exceeded $1.00 per share over a consecutive 30 trading-day period. The Company had previously been notified by the NYSE that it had fallen out of compliance with the NYSE’s minimum bid price listing requirement on November 17, 2023.

Delisting of Public Warrants

On September 26, 2024, the NYSE notified the Company that the NYSE had determined to delist the Company’s Public Warrants due to “abnormally low” trading price levels pursuant to Section 802.01D of the NYSE Listed Company Manual. The Company did not appeal NYSE’s determination and expects that its Public Warrants will be delisted from the NYSE in the near future.

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 nine months ended September 30, 2024 and 2023 we generated net negative cash flows from operations of $35.9 million and $40.0 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, and the continuing market adoption of The Digital Forge platform. 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 approximate 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 approximate $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 expect to incur $1.8 million of one-time termination costs associated with the cost initiative. During the third quarter of 2024 we incurred $1.7 million of the one-time termination costs, of which $0.3 million is recorded in sales and marketing, $0.9 million in research and development, and $0.5 million in general and administrative expense on the condensed consolidated statement of operations. 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 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

As of September 30, 2024 the Company has accrued $18.0 million in connection with the Continuous Composites settlement discussed further in Note 15 to our unaudited condensed consolidated financial statements. The Company has investments in the amount of $19.4 million on its condensed consolidated balance sheet as restricted cash as of September 30, 2024 for the purpose of funding a surety bond in connection with this liability. The surety bond was terminated on October 30, 2024 in connection with the settlement of the Continuous Composites litigation.

Noncurrent restricted cash as of September 30, 2024 and December 31, 2023 relates to deposits to secure letters of credit totaling $0.8 million and $1.4 million, respectively. 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 September 30,					Nine Months Ended September 30,
(in thousands)	2024			2023		2024			2023
Restricted cash equivalents, beginning of period	$	19,121		$	—	$	—		$	—
Surety bond collateral		—			—		19,075			—
Interest received		250			—		296			—
Balance at end of period	$	19,371		$	—	$	19,371		$	—

Restricted cash in non-current assets, beginning of period		1,430			1,430		1,430			1,430
Cash released from restriction		(625	)		—		(625	)		—
Balance at end of period	$	805		$	1,430	$	805		$	1,430

Short-term Investments

The Company has previously 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 September 30, 2024 or December 31, 2023. Cash equivalents are invested in the following:


	September 30, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Money market funds	$	54,848	$	—	$	—	$	54,848
Total cash equivalents	$	54,848	$	—	$	—	$	54,848

	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 Expected Credit Losses

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.

The following presents the changes in the balance of the Company’s allowance for expected credit losses:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024			2023
Balance at beginning of period	$	438	$	183	$	360		$	1,559
Provision adjustment		23		300		351			(566	)
Write – offs		—		—		(250	)		(510	)
Balance at end of period	$	461	$	483	$	461		$	483

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 September 30, 2024 and December 31, 2023 and indicates the fair value hierarchy of the valuation:


	Fair Value Measurements
	September 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds included in cash and cash equivalents	$	54,848		—		—	$	54,848
Money market funds included in restricted cash		19,371		—		—		19,371
Total assets	$	74,219	$	—	$	—	$	74,219
Liabilities:
Contingent earnout liability	$	7,653	$	—	$	—	$	7,653
Total liabilities	$	7,653	$	—	$	—	$	7,653

	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds included in cash and cash equivalents	$	110,775		—		—	$	110,775
Total cash and cash equivalents	$	110,775	$	—	$	—	$	110,775
Total assets	$	110,775	$	—	$	—	$	110,775
Liabilities:
Contingent earnout liability	$	—	$	—	$	1,379	$	1,379
Private placement warrant liability		—		—		189		189
Teton acquisition contingent earnout liability		—		—		1,500		1,500
Total liabilities	$	—	$	—	$	3,068	$	3,068

The Company historically remeasured its Private Placement Warrants (as defined below) at fair value at each reporting period using Level 3 inputs via the Binomial Lattice Model. The valuation of the earnout shares was historically based on a Monte Carlo simulation. The significant assumptions used in preparing the above models as well as fair value methods used as of September 30. 2024 are disclosed in Note 12 Stock Warrants and Note 11 Earnout. The Teton Software Simulation ("Teton") contingent earnout was related to development and business milestone metrics estimated using a scenario-based approach discussed in Note 2, Contingent Earnout Liability. The Teton development milestone was met and settled in 2022. The Teton business milestone was met in the first

quarter of 2024 and settled in the second quarter of 2024. The fair value level of the contingent earnout liability was transferred from level 3 to level 1 in the third quarter of 2024.


(in thousands)	Contingent Earnout Liability		Private Placement Warrant Liability			Teton Acquisition Contingent Earnout Liability			Total
Fair Value as of December 31, 2022	$	2,415	$	661		$	602		$	3,678
Change in fair value		2,509		(220	)		—			2,289
Fair Value as of September 30, 2023	$	4,924	$	441		$	602		$	5,967

Fair Value as of December 31, 2023	$	1,379	$	189		$	1,500		$	3,068
Change in fair value		6,274		(189	)		—			6,085
Settlement of liability acquired as part of acquisitions		—		—			(1,500	)		(1,500	)
Fair Value as of September 30, 2024	$	7,653	$	—		$	—		$	7,653

Concentration of Credit Risk

Financial instruments which potentially expose the Company to concentrations of credit risk consist primarily of accounts receivable. The Company does not require collateral from customers for amounts owed. As of September 30, 2024 no one customer represented 10% of the accounts receivable balance. As of December 31, 2023 no one customer represented greater than 10% of the accounts receivable balance. No one customer represented 10% of total revenue for the three and nine months ended September 30, 2024. For the three months ended September 30, 2023, one customer represented 11% of total revenue, and no one customer represented 10% of total revenue for the nine months ended September 30, 2023. Historically, the Company has not experienced any significant credit loss related to any individual customer.

Additionally, we have cash and cash equivalents held on deposit at two primary financial institutions.

Impairment of Long-Lived Assets

The Company evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant reassessment or that the carrying value of these assets may not be recoverable. When a triggering event is identified, management assesses the recoverability of the asset group, which is the lowest level where identifiable cash flows are largely independent, by comparing the expected undiscounted cash flows of the asset group to the carrying value. When the carrying value is not recoverable and an impairment is determined to exist, the asset group is written down to fair value.

The Company determined the Continuous Composites litigation judgment discussed in Note 15 was a triggering event as of March 31, 2024. The undiscounted cash flows of the asset groups were determined to exceed carrying value, as such there was not any impairment to long-lived assets as of March 31, 2024.

The Company exited certain leased facilities during fiscal year 2023 and is in the process of seeking subleases for those properties. The Company recorded a non-cash, pre-tax and after-tax impairment charge of $4.0 million during the three months ended June 30, 2023 related to the operating lease right-of-use (“ROU”) asset recorded for our former headquarters at 480 Pleasant Street, Watertown, MA 02472 (“480 Pleasant Street”) within the general and administrative expense caption of the unaudited condensed consolidated statements of operations. The impairment was determined by comparing the fair value of the impacted ROU asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment, using Level 2 inputs. The fair value of the ROU asset was based on the estimated sublease income for certain facilities taking into consideration the time period it will take to obtain a sublessor, the applicable discount rate and the sublease rate.

Sales and Marketing

Advertising costs, a component of sales and marketing expenses, were $0.6 million and $1.7 million during the three and nine months ended September 30, 2024, respectively, compared to $0.6 million and $1.7 million for the three and nine months ended September 30, 2023, respectively.

Warranty Reserves

Substantially all of the Company’s hardware products are covered by a standard assurance warranty of one year. In the event of a failure of a product covered by this warranty, the Company may repair or replace the product, at its option. The Company’s warranty reserve reflects estimated material and labor costs for potential or actual product issues for which the Company expects to incur an obligation. The Company periodically assesses the appropriateness of the warranty reserve and adjusts the amount as necessary. If the data used to calculate the appropriateness of the warranty reserve are not indicative of future requirements, additional or reduced warranty reserves may be necessary.

Warranty reserves are included within accrued expenses on the unaudited condensed consolidated balance sheets. The following table presents changes in the balance of the Company’s warranty reserve:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2024			2023			2024			2023
Balance at beginning of period	$	807		$	556		$	886		$	620
Additions to warranty reserve		110			444			541			975
Claims fulfilled		(164	)		(292	)		(674	)		(887	)
Balance at end of period	$	753		$	708		$	753		$	708

Warranty reserve is recorded through cost of revenue in the unaudited condensed consolidated statements of operations.

Segment Information

The Company determines its chief operating decision maker (“CODM”) based on the person responsible for making resource allocation decisions. Our operating segment is the component of the business for which the CODM regularly reviews discrete financial information.

Common Stock Warrant Liabilities

The Company assumed 5,374,984 publicly-traded warrants (“Public Warrants”) and 3,150,000 private placement warrants originally issued by AONE (“Private Placement Warrants” and, together with the Public Warrants, the “Common Stock Warrants”) upon the Merger, all of which were issued in connection with AONE’s initial public offering and subsequent overallotment and entitle the holder to purchase one share of the Common Stock at an exercise price of $115.00 per share. The Common Stock Warrants became exercisable the later of 30 days after the Company completed the Merger or 12 months from the closing of AONE’s initial public offering, but can be terminated on the earlier of 5 years after the Merger, liquidation of the Company, or the Redemption Date as determined by the Company. During the three and nine months ended September 30, 2024 and 2023, no Public Warrants or Private Placement Warrants were exercised. The Public Warrants are publicly traded and are exercisable for cash unless certain conditions occur which would permit a cashless exercise, such as the failure to have an effective registration statement related to the shares issuable upon exercise or redemption by the Company under certain conditions. The Private Placement Warrants are not redeemable for cash so long as they are held by the initial purchasers or their permitted transferees but may be redeemable for Common Stock if certain other conditions are met. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

The Company evaluated the Public Warrants and Private Placement Warrants and concluded that the Private Placement Warrants do not meet the criteria to be classified within stockholders’ equity. The agreement governing the Common Stock Warrants includes a provision that, if applied, could result in a different settlement value for the Private Placement Warrants depending on their holder. Because the holder of an instrument is not an input into the pricing of a fixed-for-fixed option on the Company’s ordinary shares, the Private Placement Warrants are not considered to be “indexed to the Company’s own stock.” As the Private Placement Warrants meet the definition of a derivative, the Company recorded these warrants as liabilities on the consolidated balance sheet at fair value, with subsequent changes in their respective fair values recognized in the condensed consolidated statements of operations at each reporting date as part of change in fair value of derivative liabilities, as described in Note 12. The provisions referenced above are not applicable to the Public Warrants which do not have differing settlement provisions based on the warrant holder. The Public Warrants are not precluded from being considered indexed to the Company’s stock and were recognized at fair value in stockholders’ equity on the closing of the Merger.

Contingent Earnout Liability

In connection with the Reverse Recapitalization and pursuant to the Merger Agreement, A-Star, the sponsor of AONE (the "Sponsor") surrendered 261,000 shares ("Sponsor Earnout Shares") and eligible Markforged equity holders were entitled to receive as additional merger consideration 1,466,666 shares of the Company’s Common Stock ("Markforged Earnout Shares") upon the Company achieving certain Earnout Triggering Events (as described in the Merger Agreement and Note 11). The contingent obligations to issue Markforged Earnout Shares in respect of Markforged Common Stock and release from lock-up Sponsor Earnout Shares, are accounted for as liability classified instruments in accordance with Accounting Standards Codification Topic 815-40, as the Earnout Triggering Events that determine the number of Sponsor and Markforged Earnout Shares required to be released or issued, as the case may be, include events that are not solely indexed to the fair value of Common Stock of Markforged. The liability was recognized at the reverse recapitalization date and is subsequently remeasured at each reporting date with changes in fair value recorded in the condensed consolidated statements of operations.

Markforged Earnout Shares issuable to employees with vested equity awards and Earnout RSUs (as described in the Merger Agreement) issuable to employees with unvested equity awards are considered a separate unit of account from the Markforged Earnout Shares issuable in respect of Markforged Common Stock and are accounted for as equity classified stock compensation. The Earnout Shares issuable to employees with vested equity awards are fully vested upon issuance, thus there is no requisite service period and the value of these shares is recognized as a one-time stock compensation expense for the grant date fair value. Earnout RSUs are contingent upon an employee completing a service vesting condition, and as such, reflect a transaction in which the Company acquires employee services by offering to issue its shares, the amount of which is based in part on the Company’s share price. Expense related to Earnout RSUs is recognized using graded vesting over the requisite service period for the Earnout RSUs.

The estimated fair values of the Sponsor Earnout Shares, Markforged Earnout Shares, and Earnout RSUs were determined by using a Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis over the five-year Earnout Period as defined in Note 11. The preliminary estimated fair values of Sponsor Earnout Shares, Markforged Earnout Shares, and Earnout RSUs were determined using the most reliable information available, including the current Company Common Stock price, expected volatility, risk-free rate, expected term and dividend rate.

The contingent earnout liability was categorized as a Level 3 fair value measurement (see Fair Value of Financial Instruments accounting policy as described above) because the Company estimated projections during the Earnout Period utilizing unobservable inputs. Contingent earnout payments involve certain assumptions requiring significant judgment and actual results can differ from assumed and estimated amounts.

The consummation of the Nano Merger constitutes an Earnout Triggering Event, and the Markforged Earnout Shares will be issued upon the closing of the Nano Merger. The valuation of the Markforged Earnout Shares and Sponsor Earnout Shares was based on the closing price of Common Stock as of September 30, 2024, as the triggering event of a change in control of the Company was determined to be probable as a result of the pending Nano Merger and reflected in the stock price. As such, the contingent earnout liability was categorized as a Level 1 fair value measurement as of September 30, 2024.

Teton Software Simulation Contingent Earnout

Contingent consideration represents potential future payments that the Company may be required to pay in the event negotiated milestones are met in connection with a business acquisition. Contingent consideration is recorded as a liability at the date of acquisition at fair value. The fair value of contingent consideration related to the development milestone and business milestone metrics is estimated using a scenario-based approach, which is a special case of the income approach that uses several possible future scenarios. Under this approach, the value of the milestone payment is calculated as the probability-weighted payment across all scenarios. Significant increases or decreases in any of the probabilities of success or changes in expected timelines for achievement of any of the milestones could result in a significantly higher or lower fair value of the contingent consideration liability. The development milestone related to product technical milestones was achieved and settled in 2022. The business related contingent consideration, which is based on stated sales or usage metrics, was met in the first quarter of 2024 and settled in the second quarter of 2024.

Leases

The Company accounts for leases in accordance with ASC Topic 842, Leases (“ASC 842”). In accordance with ASC 842, the Company determines whether an arrangement is or contains a lease at inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company classifies leases at the lease commencement date, when control of the underlying asset is transferred from the lessor to the lessee, as operating or finance leases and records a right-of-use (“ROU”) asset and a lease liability on the condensed consolidated balance sheet for all leases

with an initial lease term of greater than 12 months. The Company has elected to not recognize leases with a lease term of 12 months or less on the condensed consolidated balance sheet and will recognize lease payments for such short-term leases as an expense on a straight-line basis over the lease term.

The Company enters into contracts that contain both lease and non-lease components. Non-lease components may include maintenance, utilities, and other operating costs. For leases of real estate, the Company combines the lease and associated non-lease components in its lease arrangements as a single lease component. Variable costs, such as utilities or maintenance costs, are not included in the measurement of right-of-use assets and lease liabilities, but rather are expensed when the event determining the amount of variable consideration to be paid occurs.

Finance and operating lease assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term using the discount rate implicit in the lease if readily determinable. If the rate implicit is not readily determinable, the Company utilizes its incremental borrowing rate based upon the available information at the lease commencement date. ROU assets are further adjusted for initial direct costs, prepaid rent, or incentives received. Operating lease payments are expensed using the straight-line method as an operating expense over the lease term. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Finance lease assets are amortized to depreciation expense using the straight-line method over the shorter of the useful life of the related asset or the lease term. Finance lease payments are bifurcated into (i) a portion that is recorded as interest expense and (ii) a portion that reduces the finance liability associated with the lease. The Company did not have any finance leases during the three and nine months ended September 30, 2024 and 2023.

Business Combinations

The Company allocates the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The Company generally values the identifiable intangible assets acquired using a discounted cash flow model. The significant estimates used in valuing certain of the intangible assets, include, but are not limited to future expected cash flows of the asset, discount rates to determine the present value of the future cash flows and expected technology life cycles. Intangible assets are amortized over their estimated useful life; the period over which the Company anticipates generating economic benefit from the asset. Fair value adjustments subsequent to the acquisition date, that are not measurement period adjustments, are recognized in earnings.

Intangible Assets

Intangible assets consist of identifiable intangible assets acquired, specifically, developed technology, customer relationships, trade names and a mutual patent license with Continuous Composites. The Company evaluates definite-lived intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through future operations. If indicators of impairment are present, the Company then compares the estimated undiscounted cash flows that the specific asset is expected to generate to its carrying value. If such assets are impaired, the impairment recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value.

Capitalized Software

The Company capitalizes qualifying internal-use software development costs, primarily related to its cloud platform. The costs consist of personnel costs that are incurred during the application development stage. Capitalization of costs begins when two criteria are met: (1) the preliminary project stage is completed, and (2) it is probable that the software will be completed and used for its intended function. Capitalization ceases when the software is substantially complete and ready for its intended use, including the completion of all significant testing. Costs related to preliminary project activities and post-implementation operating activities are expensed as incurred. The capitalized costs are amortized on a straight-line basis over the estimated useful life of the asset, which is typically 3 to 7 years.

Foreign Currency Translation

The assets and liabilities of our subsidiary, Digital Metal AB (“Digital Metal”), are translated from its functional currency (Swedish Krona) to U.S. dollars at the exchange rate in effect at the end of the quarter, and the consolidated statements of operations are translated at the average exchange rate each month.

Transactions in foreign currencies are recorded at the approximate rate of exchange at the transaction date. All such differences are recorded in Other expense, net in the consolidated statements of operations. Assets and liabilities resulting from these transactions

Note 4. Revenue

Contract Balances

For the three and nine months ended September 30, 2024, the Company recognized $2.9 million and $8.6 million from the deferred revenue account balances as of June 30, 2024 and December 31, 2023, respectively. For the three and nine months ended September 30, 2023, the Company recognized $2.6 million and $6.0 million from the deferred revenue account balance as of June 30, 2023 and December 31, 2022. respectively.

Deferred revenue is expected to be recognized when the Company provides hardware maintenance services or contractual performance obligations for which the customer has already provided payment with $3.1 million expected to be recognized in the remainder of 2024, $6.3 million expected to be recognized in 2025, $2.6 million expected to be recognized in 2026, and $1.0 million thereafter.

Disaggregation of Revenue

The following table disaggregates the Company’s revenue based on the nature of the products and services:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Hardware	$	11,591	$	12,154	$	35,515	$	43,855
Consumables		5,770		5,162		18,088		18,099
Services		3,123		2,759		9,116		7,660
Total Revenue	$	20,484	$	20,075	$	62,719	$	69,614

Note 5. Property and Equipment, net

Property and equipment consist of the following:


(in thousands)	September 30, 2024			December 31, 2023
Machinery and equipment	$	11,199		$	11,249
Leasehold improvements		12,492			12,613
Computer equipment		3,512			3,481
Furniture and fixtures		302			438
Computer software		258			242
Construction in process		329			523
Property and equipment, gross		28,092			28,546
Less: Accumulated depreciation		(12,228	)		(10,833	)
Property and equipment, net	$	15,864		$	17,713

For the three and nine months ended September 30, 2024, depreciation expense for property and equipment was $1.1 million and $3.2 million, respectively, compared to $1.1 million and $3.1 million, respectively, for the three and nine months ended

Note 7. Goodwill and Intangible Assets

The Company’s intangible assets are related to the acquisitions of Teton Simulation Software in April 2022 and Digital Metal AB in August 2022, as well as the mutual patent licenses that are part of the Continuous Composites Settlement Agreement (see Note 15).

The Company recorded a full goodwill impairment charge of $29.5 million in the condensed consolidated statements of operations during the three months ended September 30, 2023. This impairment was driven by the decline in the Company’s actual and forecasted operating results, as well as a decline in market capitalization.

The following tables summarizes the Company’s intangible assets (in thousands):


		September 30, 2024							December 31, 2023
	Estimated Useful Life	Gross Carrying Value		Accumulated Amortization			Net Book Value		Gross Carrying Value		Accumulated Amortization			Net Book Value
Acquired technology	7 - 20 years	$	16,800	$	(2,026	)	$	14,774	$	16,800	$	(970	)	$	15,830
Customer relationships	9 years		560		(129	)		431		560		(83	)		477
Trade names	1 year		90		(90	)		—		90		(90	)		—
Licenses	23 years		5,457		—			5,457		—		—			—
Foreign currency translation			743		(77	)		666		848		(27	)		821
Intangible Assets, net		$	23,650	$	(2,322	)	$	21,328	$	18,298	$	(1,170	)	$	17,128

The Company recognized the following amortization expense to cost of revenue and operating expense during the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Cost of revenue	$	357	$	214	$	1,065	$	660
Operating expenses		35		35		76		120
Total	$	392	$	249	$	1,141	$	780

number of shares of Common Stock issued and outstanding on the immediately preceding December 31 or (ii) such lesser amount as determined by the Company’s Board of Directors.

The 2021 ESPP allows eligible employees to authorize payroll deductions between 1% and 15% of the base salary or wages, up to $25,000 annually, to be applied toward the purchase of shares of the Company’s Common Stock occurring at offering periods determined by the Company. At each offering period, the eligible employee will have the option to acquire Common Stock at a discount of up to 15% of the lesser of the Company’s Common Stock on (i) the first trading day of the offering period or (ii) the last day of the offering period. The offering periods under the 2021 ESPP are not to exceed 27 months between periods. On January 1 of each subsequent year under the plan, the number of shares available for issuance under the plan will be increased by the lesser of (i) 470,000 shares of Common Stock, (ii) one percent of the number of shares of Common Stock issued and outstanding as of December 31 of the immediately preceding year, or (iii) number of shares of Common Stock determined by the Company. During the nine months ended September 30, 2024 and 2023 the Company did not recognize stock compensation expense related to the 2021 ESPP as there were no grants under the 2021 ESPP. No offering period under the 2021 ESPP may commence following September 25, 2024, the date on which we entered into the Nano Merger Agreement, unless the Nano Merger Agreement is terminated in accordance with its terms and the Nano Merger is not consummated.

Legacy Markforged's 2013 Stock Plan (the “2013 Plan”) was terminated at the Closing and no further awards will be granted thereunder. The 2013 Plan was terminated at Closing and all outstanding awards became outstanding under the 2021 Plan. Option activity under the plan for the year to date period ending September 30, 2024 is as follows:


	Number of Shares			Weighted- Average Exercise Price (Per Share)		Weighted- Average Remaining Contractual Life (in years)
Outstanding at December 31, 2023		1,088,845		$	20.71		6.13
Granted		—			—
Exercised		—			—
Forfeited		(21,201	)		19.42
Outstanding at September 30, 2024		1,067,644		$	20.73		5.38
Options exercisable at September 30, 2024		1,057,402		$	20.72		5.38

The aggregate intrinsic value of stock options outstanding at September 30, 2024 was $8.0 thousand. As of September 30, 2024, the Company had 1,050,710 options vested and expected to vest.

Additional information regarding the exercise of stock options is as follows:


	Nine months ended September 30,
(in thousands, except weighted average)	2024		2023
Intrinsic value of options exercised	$	—	$	501

In the nine months ended September 30, 2024 and 2023, the Company did not grant any options to purchase shares of Common Stock.

Restricted Stock Units

During the nine months ended September 30, 2024, the Company awarded RSUs to newly hired employees and continuing employees. The fair value per share of these awards was determined based on the fair market value of our stock on the date of the

grant and is being recognized as stock-based compensation expense over the requisite service period. The following table summarizes the RSU activity for the nine months ended September 30, 2024:


	Number of Shares			Weighted- Average Grant Date Fair Value (Per Share)
Outstanding at December 31, 2023		1,531,100		$	21.21
Granted		1,239,585			4.10
Vested		(422,057	)		23.49
Forfeited		(242,931	)		19.44
Unvested at September 30, 2024		2,105,697		$	10.89

Stock-Based Compensation Expense

Total unrecognized stock-based compensation expense for the RSUs outstanding was $16.8 million at September 30, 2024, which is expected to be recognized over a weighted-average period of 3.3 years. Total unrecognized stock-based compensation expense for the options outstanding was $0.1 million at September 30, 2024, which is expected to be recognized over a weighted-average period of 0.3 years.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Stock options	$	294	$	684	$	889	$	2,138
Restricted stock units		2,881		3,459		9,031		8,088
Stock-based compensation expense for restricted stock units and options	$	3,175	$	4,143	$	9,920	$	10,226

During the three and nine months ended September 30, 2024, the Company recognized de minimis stock-based compensation expense related to the Markforged Earnout. The unrecognized compensation expense related to the Markforged Earnout was $0.1 million and would be recognized over a remaining period of no more than 0.75 years, dependent on when vesting conditions are met.

The stock-based compensation expense for stock-based awards and earnout shares were recognized in the following captions within the condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Cost of revenue	$	28	$	39	$	112	$	201
Sales and marketing		360		448		1,152		1,423
Research and development		804		1,195		2,913		3,524
General and administrative		1,950		2,430		5,671		5,010
Total stock-based compensation expense	$	3,142	$	4,112	$	9,848	$	10,158

On the date when the VWAP of one share of the Company’s common stock quoted on the NYSE is greater than or equal to $150.00 for any twenty trading days within any thirty consecutive trading day period within the Earnout Period (“Triggering Event II” and together with Triggering Event I, each a "Triggering Event"), the Eligible Markforged Equityholders will receive the remaining 666,666 Markforged Earnout Shares distributed on a pro-rata basis and the remaining 50% of the Sponsor’s surrendered shares will be released from lock-up to the Sponsor.

As discussed in Note 2, Summary of Significant Accounting Policies, there are two units of account within the Markforged Earnout Shares depending on whether the Eligible Markforged Equityholder is entitled to receive Markforged Earnout Shares with respect to a Legacy Markforged equity award, whether vested or unvested, or with respect to Legacy Markforged common stock. Earnout Shares issuable with respect to an unvested Legacy Markforged equity award as Earnout RSUs are subject to forfeiture if the holder does not complete the required service period. From the Closing through the date of a forfeiture of an unvested Legacy Markforged equity award, forfeited Earnout Shares are distributed to the remaining Eligible Markforged Equityholders on a pro-rata basis. The forfeited Earnout Shares are fungible between the two units of account. The following table summarizes the number of Earnout Shares allocated to each unit of account as of September 30, 2024:


	Triggering Event I Earnout Shares		Triggering Event II Earnout Shares
Derivative liability		732,993		610,827
Stock compensation		67,007		55,839
Total Earnout Shares		800,000		666,666

As of the Closing, the estimated value of the Markforged Earnout Shares and surrendered Sponsor shares was $80.40 per share issuable upon Triggering Event I and $76.60 per share issuable upon Triggering Event II. The estimated value of the Markforged Earnout Shares and surrendered Sponsor shares as of September 30, 2024 was $4.77 per share issuable upon Triggering Event I and $4.77 per share issuable upon Triggering Event II. The valuation of the Markforged Earnout Shares and surrendered Sponsor Earnout Shares was based on the closing price of the Common Stock as of September 30, 2024 as the triggering event of a change in control of the Company was determined to be probable as a result of the pending Nano Merger and reflected in the stock price. The valuation of the Markforged Earnout Shares and surrendered Sponsor Earnout Shares was based on a Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis over the Earnout period using the most reliable information available as of December 31, 2023 and September 30, 2023. The following table describes the assumptions used in the valuation:


	December 31,			September 30,
	2023			2023
Current stock price	$	8.20		$	14.50
Expected volatility		85.00	%		80.00	%
Risk-free interest rate		4.07	%		4.79	%
Dividend rate		—	%		—	%
Expected term (years)		2.54			2.79

None of the Earnout Triggering Events have occurred as of September 30, 2024 and therefore no earnout shares were distributed.

Credit in the amount of $0.6 million was returned to us in the third quarter of 2024. The gain of $1.0 million recorded on the lease termination is recorded in other income (expense), net.

Future minimum lease payments under these agreements were as follows as of September 30, 2024:


(in thousands)	Amount
2024 (remaining three months)	$	994
2025		5,955
2026		6,046
2027		6,192
2028		6,338
After 2029		16,441
Total future lease payments	$	41,966
Less: interest		(8,399	)
Present value of lease liabilities	$	33,567


	Nine Months Ended September 30, 2024		Nine Months Ended September 30, 2023
Supplemental cash flow information:
Cash payments for operating leases included in cash flows used in operating activities	$	8,068	$	5,755


	September 30, 2024			September 30, 2023
Other lease information
Weighted-average remaining lease term - Operating leases	6.8 years			7.3 years
Weighted-average discount rate - Operating leases		6.7	%		6.4	%

Note 16. Net (Loss) Profit Per Share

The Company computes basic net (loss) profit per share using net (loss) profit attributable to the Company’s common stockholders and the weighted-average number of common shares outstanding during each period. Diluted earnings per share include shares issuable upon exercise of outstanding stock options and stock-based awards where the conversion of such instruments would be dilutive.


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2024			2023			2024			2023
Numerator:
Net loss	$	(23,370	)	$	(51,362	)	$	(73,714	)	$	(89,369	)
Net loss attributable to common stockholders - Basic & Diluted		(23,370	)		(51,362	)		(73,714	)		(89,369	)
Denominator:
Weighted average shares outstanding - Basic		20,330,917			19,741,014			20,129,099			19,639,131
Add: Weighted average unvested options outstanding		—			—			—			—
Add: Dilutive effect of restricted units issued		—			—			—			—
Weighted average shares outstanding - Diluted		20,330,917			19,741,014			20,129,099			19,639,131
Net loss per common share:
Basic	$	(1.15	)	$	(2.60	)	$	(3.66	)	$	(4.55	)
Diluted		(1.15	)		(2.60	)		(3.66	)		(4.55	)

For the three and nine months ended September 30, 2024 and 2023, the Company was in a net loss position, thus the effect of potentially dilutive securities, including unvested restricted stock units, unvested or unexercised stock options, warrants and earnout shares, was excluded from the denominator for the calculation of diluted net loss per share because the inclusion of such securities would be antidilutive. The following dilutive securities are excluded from the denominator:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Unvested restricted stock units		2,105,697		1,637,365		1,609,687		1,232,995
Unvested or unexercised options		1,067,644		1,113,728		1,070,432		1,118,821
Warrants		852,498		852,498		852,498		852,498
Contingently issuable earnout shares		1,466,666		1,466,666		1,466,666		1,466,666
Total		5,492,505		5,070,257		4,999,283		4,670,980

Asia Pacific (“APAC”) markets. The Company measures revenue based on the physical location of where the customer who is receiving the promised goods or service is located. Disaggregated revenue data for those markets is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2024		2023		2024		2023
Americas	$	10,351	$	10,047	$	30,134	$	32,487
EMEA		6,259		5,713		19,379		21,823
APAC		3,874		4,315		13,206		15,304
Total	$	20,484	$	20,075	$	62,719	$	69,614

The Company’s long-lived assets, inclusive of right-of-use assets, are substantially located in the United States, where the Company’s primary operations are located.

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

Unless otherwise indicated or the context otherwise requires, references in this section to “Markforged,” “Company,” “we,” “us,” “our” and other similar terms refer to Markforged Holding Corporation and its subsidiaries after giving effect to the Merger. The following discussion and analysis summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash flows of our company as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

Our platform, The Digital Forge, is an intuitive additive manufacturing platform powering engineers, designers and manufacturing professionals globally. The Digital Forge combines precise and reliable 3D printers and metal and composite proprietary materials seamlessly with its cloud-based learning software offering to empower manufacturers to create more resilient and agile supply chains. Founded in 2013 by two MIT-educated engineers, Markforged is based in greater Boston, Massachusetts, where we have our own in-house manufacturing facility and where we design all of our industrial 3D printers, software and metal and composite proprietary materials.

Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $62.7 million and $69.6 million for the nine months ended September 30, 2024 and 2023, respectively, and incurred net losses of $73.7 million and $89.4 million, respectively, for those same periods. Net loss for the nine months ended September 30, 2024 was inclusive of a $18.0 million accrual related to the Continuous Composites case. As of September 30, 2024, we had an accumulated deficit of $278.4 million and cash and cash equivalents of $59.3 million. We expect to continue to incur operating losses as we focus on growing commercial sales of our products in both the United States and international markets, scaling our manufacturing operations, continuing research and development efforts to develop new products and further enhance our existing products.

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 MarkForged, Inc. (“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.

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. Upon closing of the Merger (the “Closing”), Legacy Markforged repurchased shares of Common Stock from certain of its stockholders, for a total value of $45.0 million of cash on hand (the “Employee Transactions”). Total net proceeds upon the Closing, net of the Employee Transactions and transaction costs paid at the Closing of $27.1 million, were $288.8 million.

On September 19, 2024, the Company effected a 10-for-1 reverse stock split of the Company’s Common Stock. All shares of the Company’s Common Stock, stock-based instruments and per-share data included in these condensed consolidated financial statements have been retroactively adjusted as though the stock split has been effected prior to all periods presented.

On September 25, 2024, we entered into the Nano Merger Agreement with Nano and Nano Merger Sub to effect the Nano Merger, pursuant to which we will survive the Nano Merger as an indirect wholly-owned subsidiary of Nano. Following the Nano Merger Closing, our Common Stock will be delisted from the NYSE and will be deregistered under the Exchange Act.

Subject to the terms and conditions set forth in the Nano Merger Agreement, at the Effective Time of the Nano Merger, each outstanding share of our Common Stock, other than Excluded Shares, will be converted automatically into the right to receive an amount in cash equal to $5.00 per share, without interest, less any applicable tax withholdings. Immediately prior to the Effective Time, each Excluded Share will be cancelled and cease to exist and no consideration will be paid or payable in respect thereof.

The Nano Merger is subject to approval by our stockholders, the receipt of required regulatory approvals and other customary closing conditions.

For further information about the Nano Merger, refer to the Nano Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Quarterly Report on Form 10-Q, and our preliminary Proxy Statement filed on Schedule 14A with the SEC on October 21, 2024.

On September 20, 2024, we entered into the Settlement Agreement with Continuous Composites to settle outstanding litigation claims and counterclaims, which are further described in Part II, Item 1 – Legal Proceedings of this Current Report on Form 10-Q. We paid the first settlement payment of $18 million required under the Settlement Agreement on October 10, 2024, and are required to make three additional installment payments thereafter of $1 million, $2 million and $4 million in the fourth quarters of fiscal years 2025, 2026 and 2027, respectively. These settlement payments are secured by a security interest granted to Continuous Composites in, among other assets, our patent intellectual property rights pursuant to a Security Agreement entered into with Continuous Composites on September 20, 2024 (the “Security Agreement”). Our inability to make any future settlement payments may result in the forfeiture of our patent intellectual property rights to Continuous Composites under the terms of the Security Agreement.

In consideration of the settlement payments, the Settlement Agreement provides for a dismissal of all claims with prejudice, cross-licenses of the parties’ respective patent portfolios, a mutual release of claims for liabilities arising prior to the effective date of the Settlement Agreement and mutual covenants not to sue. On October 11, 2024, the parties filed a Stipulation of Dismissal with the United States District Court for the District of Delaware, which was granted, and the case was terminated.

As of September 30, 2024 we had accrued $18.0 million in connection with the Continuous Composites litigation. The Company has investments in the amount of $19.4 million on its balance sheet as restricted cash as of September 30, 2024 for the purpose of funding a surety bond in connection with this liability. The surety bond was subsequently terminated on October 30, 2024 following settlement of the Continuous Composites litigation.

Copies of the Settlement Agreement and Security Agreement are filed as Exhibits 10.2 and 10.3, respectively, to this Quarterly Report on Form 10-Q.

On September 26, 2024, the NYSE notified the Company that the NYSE had determined to delist our Public Warrants due to “abnormally low” trading price levels pursuant to Section 802.01D of the NYSE Listed Company Manual. We did not appeal the NYSE’s determination and expect that our Public Warrants will be delisted from the NYSE in the near future.

On July 26, 2024, our wholly-owned subsidiary, MarkForged, Inc., entered into a Lease Termination Agreement (the “Termination Agreement”), with GRE Riverworks, LLC, a Delaware limited liability company (the “Landlord”), in connection with the termination of the Office Lease, dated July 29, 2020, by and between MarkForged, Inc., as tenant, and the Landlord (the “Lease Agreement”). Pursuant to the Termination Agreement, we paid the Landlord a termination fee of $2.75 million and the Letter of Credit in the amount of $0.6 million was returned to us in the third quarter of 2024. The gain of $1.0 million on the lease termination is recorded in other income (expense), net.

A copy of the Termination Agreement is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.

On August 8, 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.

Recent negative macroeconomic factors, such as inflation, high interest rates, and limited credit availability have and could further cause economic uncertainty and volatility, which could harm our business. For more information on operations and risks related to macroeconomic disruptions, please see the section of this Quarterly Report on Form 10-Q titled “Risk Factors — Risks Related to Our Business and Industry”.

We believe that our financial performance has been and in the foreseeable future will continue to be primarily driven by the factors discussed below. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.

Our financial performance has largely been driven by, and in the future will continue to be impacted by, the rate of sales of our hardware. Management focuses on hardware sales as an indicator of current business success and a leading indicator of likely future recurring revenue from consumables and subscriptions. We expect our hardware sales to continue to grow as we increase penetration in our existing markets and expand into new markets.

We regularly assess trends relating to recurring revenue which includes consumables, services, and subscriptions. The consumables revenue stream includes metals, continuous fiber, and chopped fiber materials used by customers as print media. Our services revenue is made up of revenue generated from hardware maintenance contracts (referred to as success plans), software, and additive manufacturing training and education (which we also refer to as “Subscription Plans,” which we have sold as one package since the beginning of the second quarter of 2023). Our service revenue is generally realized over a period of one to three years. Recurring revenue was 43% and 39% of total revenue for the three months ended September 30, 2024 and 2023, respectively. Our recurring revenue as a percentage of total revenue may vary based upon new product placements in the period as well as consumption trends impacted by macroeconomic factors, customer behavior, and the useful life of our hardware. As our cumulative historical hardware sales increase, recurring revenue on an absolute basis is expected to increase and over time should be an increasingly important contributor to our total revenue.

We believe that we are in a strong position within the industry with our accessible solutions that offer users design flexibility and industrial strength parts. Accordingly, we continue to invest in marketing, sales, and operations necessary to scale our business and continue to gain market share and open new market opportunities. We have proven an ability to design, manufacture, and distribute products through channels that provide a high value to customers at gross margins higher than many of our competitors. In addition to our go to market strategy, our integrated platform of hardware, software and consumables has been core to our success and we will continue to drive value through research and development as we introduce smarter and more adaptive technology that is expected to improve our integrated platform and, ultimately, the value provided by our 3D printers. We believe these investments are critical to achieve long-term scalability, but expect the near term impacts will be a muting of our short term profitability.

Historically, the sales of our 3D printers have been subject to seasonality and we have seen higher hardware sales in the third and fourth quarters. We believe this trend is likely driven by available funds in federal capital budgets at the end of the third quarter and commercial budgets at year end which they direct towards the evolution of their manufacturing processes through investments in additive manufacturing.

The majority of our revenue results from the sale of hardware, including our additive manufacturing products, and related consumables. We deliver products and services primarily through our value-added reseller ("VAR") network, who purchase and resell our products to end users. Hardware and consumables revenue is recognized upon transfer of control to the customer, which is typically the VAR, and generally takes place at the point of shipment. We also generate a portion of our revenue from hardware maintenance services and our premium software subscriptions. Revenue related to subscriptions is recognized ratably over the term of the subscription. Our VARs may provide installation services, as needed depending on the product.

Our cost of revenue consists of the cost of product, software subscriptions, maintenance services, personnel costs, third party logistics, freight, warranty fulfillment costs, and overhead.

Cost of products includes the manufacturing cost of our additive manufacturing products and consumables. We primarily utilize third party manufacturers for the production of our additive manufacturing hardware, and we utilize our own manufacturing facilities and personnel for the production of our consumables. The costs of revenue for internally manufactured products include the cost of raw materials, labor conversion costs, and overhead related to our manufacturing operations, including depreciation and amortization. Overhead costs include shipping, storage, and labor. Cost of services includes personnel-related costs associated with our customer success teams’ provision of remote and on-site support services to our customers and the costs of replacement parts, as well as software costs. Our cost of revenue also includes indirect costs of providing our products and services to customers which consist primarily of reserves for excess and obsolete inventory and stock-based compensation.

We expect our cost of revenue to increase in absolute dollars in future periods as we expect our revenues to continue to grow.

Our gross profit is calculated based on the difference between our revenues and cost of revenue. Gross margin is the percentage obtained by dividing gross profit by our revenue. Our gross profit and gross margin are, or may be, influenced by a number of factors, including:

We expect our gross margins to fluctuate over time, depending on the factors described above.

Our research and development expenses represent costs incurred to support activities that advance the development of innovative additive manufacturing technology, new printer products, development of proprietary printing materials, as well as activities that enhance the functionality of our offerings. Our research and development expenses consist primarily of employee-related personnel expenses, prototypes, facilities costs, and engineering services. We believe our research and development department is staffed at a level that enables us to innovate and develop products beyond 2024.

Sales and marketing expenses consist primarily of personnel-related costs for our sales and marketing departments, costs related to sales commissions, trade shows, advertising, facilities costs, and other demand generation services.

General and administrative expenses consist primarily of personnel-related costs for our executive leadership and finance, human resources and IT departments. We believe our general and administrative costs have stabilized as we have completed our investments required to operate as a public company.

In July 2021, Continuous Composites, a company based in Idaho, brought a claim in the United States District Court for the District of Delaware against the Company regarding patent infringement. On April 11, 2024, the jury returned a verdict against the Company in the amount of $17.3 million.

Following post-trial motions relating to the jury verdict, on September 20, 2024, we entered into the Settlement Agreement with Continuous Composites to settle outstanding litigation claims and counterclaims, which are further described in Part II, Item 1 – Legal Proceedings of this Current Report on Form 10-Q. We paid the first settlement payment of $18 million required under the Settlement Agreement on October 10, 2024, and are required to make three additional installment payments thereafter of $1 million, $2 million and $4 million in the fourth quarters of fiscal years 2025, 2026 and 2027, respectively.

As of September 30, 2024, in connection with the settlement, the Company has accrued within the settlement payable caption on the condensed consolidated balance sheet the $17.3 million original jury verdict, the previously accrued interest of $0.4 million recorded in the litigation judgment caption of the condensed consolidated statement of operations during the three months ended September 30, 2024, and a $0.3 million incremental current liability. The incremental amount due under the Settlement Agreement compared to the original verdict is determined to be representative of the amount attributable to the licensing of the patent rights contemplated under the Settlement Agreement and is recognized as an intangible asset of $5.5 million, after discount using a rate of 12%, to be amortized to cost of revenue over the life of the patents of 23 years. The future payments under the Settlement Agreement are secured by the Security Agreement and as such the Company has recorded a long-term settlement payable on the condensed consolidated balance sheet of $5.2 million which will accrete $1.8 million of interest over the payment term recognized as interest expense.

Change in fair value of derivative liabilities primarily includes the change in fair value of the contingent earnout liabilities and private placement warrant liability. All were accounted for as liabilities as of the date of the Merger, or acquisition, and remeasured to fair value at the end of the reporting period.

Interest income includes interest earned on deposits and short-term investments.

We have recorded an immaterial income tax expense (benefit) each year since our inception. We have not realized material income tax benefits from the net operating losses or from the generated research and development tax credits as based upon the weight of available evidence, it is more likely than not that all of our net deferred tax assets will not be realized. We have recorded a valuation allowance against our net deferred tax assets at each balance sheet date.

The enactment of the Tax Cuts and Jobs Act (the “TCJA”) in December 2017 significantly affected U.S. tax law by changing how the United States imposes tax on multinational corporations. For tax years beginning after December 31, 2021, the TCJA requires research and development costs to be capitalized and amortized over five or fifteen years, depending on if the costs are U.S. or foreign, respectively. As of September 30, 2024 and December 31, 2023, we have capitalized research and development costs net of amortization, which are maintained with a valuation allowance.

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q. The following tables set forth our results of operations for the periods presented.

We earn revenue from the sale of hardware, consumables, and services contracts. The hardware revenue stream includes 3D metal printers, metal binder jetting printers, 3D composite printers, and sintering furnaces. The consumables revenue stream includes metals, continuous fiber, and chopped fiber materials used by customers as print media. The services revenue stream primarily consists of hardware maintenance services and software subscriptions.

The following table sets forth the changes in the components of gross margin for the three months ended September 30, 2024 and 2023.

The following table disaggregates the Company’s revenue based on the nature of the products and services:

Consolidated revenue for the three months ended September 30, 2024 was $20.5 million compared with revenue of $20.1 million for the three months ended September 30, 2023, representing an increase of 2%. While we did see an increase in system revenue, our system sales continue to be impacted by a challenging macroeconomic environment.

Hardware revenue decreased 5% during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 as system revenue continues to be impacted by a challenging macroeconomic environment. Consumable revenue increased 12% as a result of incremental hardware sales over the past year. Services revenue increased 13% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase in services revenue was driven by the recurring nature of our services business and the launch of subscription offerings on April 1, 2023, as well as $0.3 million of non-recurring service revenue recorded in the three months ended September 30, 2024.

Consolidated cost of revenue for the three months ended September 30, 2024 was $10.4 million compared with cost of revenue of $10.9 million for the three months ended September 30, 2023 representing a decrease of 4%. Gross profit increased $0.9 million, from $9.2 million for the three months ended September 30, 2023 to $10.0 million for the three months ended September 30, 2024. Gross profit margin for the three months ended September 30, 2024 was 49% while the gross profit margin for the three months ended September 30, 2023 was 46%. The increase in consolidated gross margin is primarily due to continued operational efficiencies and a shift in our product mix.

The following table sets forth the components of operating expenses for the three months ended September 30, 2024 and 2023.

Sales and marketing expense was relatively consistent, decreasing by 1%, or $0.1 million, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. Headcount and contractor related costs decreased by $0.5 million primarily due to the restructuring in the third quarter of 2024, which was partially offset by severance related costs of $0.3 million.

Research and development expenses decreased by 19%, or $1.9 million, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. Headcount and contractor related costs decreased by $2.0 million primarily due to the restructuring in the third quarter of 2024, and prototype research and development decreased $0.8 million due to the phase of development of projects. These decreases were partially offset by severance related costs from the restructuring of $0.9 million.

General and administrative expenses decreased by 9%, or $1.0 million, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. Notable changes period over period included headcount and contractor related costs which decreased by $1.1 million primarily due to the restructuring in the third quarter of 2024, a decrease in legal expenses of $2.2 million, and a decrease in rent expense of $0.3 million. These decreases were partially offset by transaction costs of $2.8 million and severance related costs from the restructuring of $0.5 million.

As of September 30, 2023, we experienced a decline in actual and forecasted operating results prompting impairment assessments of goodwill. As a result of this assessment, goodwill impairment of $29.5 million was recorded in the third quarter of 2023.

Change in fair value of derivative liabilities and contingent earnout liability, other (expense) income, net, interest expense, and interest income

The following table sets forth the change in fair value of derivative liabilities for the three months ended September 30, 2024 and 2023.

The change in the fair value of the derivative and contingent earnout liability in the three month period ended September 30, 2024 compared to September 30, 2023 was primarily driven by the change in the price of our warrants and Common Stock, respectively, during each period.

The change in other income (expense), net is primarily due to the gain of $1.0 million recorded on the termination of the 480 Pleasant Street lease in the third quarter of 2024, partially offset by the $0.4 million loss on disposals of property, plant, and equipment during the three months ended September 30, 2024.

The change in interest income was directly correlated to the interest rates during each period, slightly offset by the decrease in the cash equivalent balance.

We recorded a $0.2 million benefit for income taxes for the three months ended September 30, 2024 and 2023.

The following table sets forth the changes in the components of gross margin for the nine months ended September 30, 2024 and 2023, respectively.

The following table disaggregates the Company’s revenue based on the nature of the products and services:

Consolidated revenue for the nine months ended September 30, 2024 was $62.7 million compared with revenue of $69.6 million for the nine months ended September 30, 2023, representing a decrease of 10%, as system revenue continues to be impacted by a challenging macroeconomic environment.

Hardware revenue decreased 19% during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 as system revenue continues to be impacted by a challenging macroeconomic environment. Services revenue increased approximately 19%, or $1.5 million, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase in services revenue was driven by the recurring nature of our services business and the launch of subscription offerings on April 1, 2023, as well as $0.7 million of non-recurring service revenue recorded in the second quarter of 2024.

Consolidated cost of revenue for the nine months ended September 30, 2024 was $31.7 million compared to $36.9 million for the nine months ended September 30, 2023, representing a decrease of 14%. Gross profit for the nine months ended September 30, 2024 decreased 5% from $32.7 million during the nine months ended September 30, 2023 to $31.1 million. Gross profit margin for the nine months ended September 30, 2024 was 50% while the gross profit margin for the nine months ended September 30, 2023 was 47%. The increase in consolidated gross margin is primarily due to continued operational efficiencies and a shift in our product mix.

The following table sets forth the components of operating expenses for the nine months ended September 30, 2024 and 2023.

Sales and marketing expense decreased 14%, or $3.9 million, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. Headcount and contractor related costs decreased by $3.0 million primarily due to the restructuring in the third quarter of 2024. Events and travel costs decreased $0.9 million due to strategic cost management efforts. These decreases were partially offset by the severance related costs from the restructuring of $0.3 million.

Research and development expenses decreased 12%, or $3.5 million, during the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. The decrease in research and development expense was primarily due to a decrease in headcount related expense of $4.0 million due to the restructuring in the third quarter of 2024. Prototype research and development decreased $1.0 million due to the phase of development of projects. These decreases were partially offset by the severance related costs from the restructuring of $0.9 million.

General and administrative expenses decreased 8%, or $2.8 million, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. Notable changes period over period included the decrease in impairment of long-lived assets of $4.0 million related to the change in the fair value of the lease asset of our former headquarters, 480 Pleasant Street, during the quarter ended June 30, 2023, as well as decrease in headcount of $1.4 million due to the restructuring in the third quarter of 2024. These decreases were partially offset by transaction costs of $2.8 million and severance related costs from the restructuring of $0.5 million.

During the nine-months ended September 30, 2024, we accrued $17.7 million to account for the verdict against us in the Continuous Composites case discussed further in Note 15 to our unaudited condensed consolidated financial statements.

Change in fair value of derivative liabilities and contingent earnout liability, other (expense) income, net, interest expense, and interest income

The following table sets forth the change in fair value of derivative liabilities for the nine months ended September 30, 2024 and 2023.

The change in the fair value of the derivative and contingent earnout liability in the nine months ended September 30, 2024 compared to nine months ended September 30, 2023 was primarily driven by the change in the fair value of the Teton development milestone earnout achievement and Common Stock price, respectively, during each period.

The change in interest income was directly correlated to the interest rates during each period, slightly offset by the decrease in the cash balance in short-term investment accounts.

We recorded a $0.7 million and $0.6 million benefit for income taxes for the nine months ended September 30, 2024 and 2023, respectively.

In addition to our financial results determined in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe that the below non-GAAP net profit (loss) financial measure, that excludes one-time charges and certain non-cash items, is useful in evaluating the performance of our business. We define non-GAAP net profit (loss) as net profit (loss) less stock-based compensation expense, net change in fair value of derivative liabilities and contingent earnout liabilities, and certain non-recurring expenses.

We monitor non-GAAP net profit (loss) as a measure of our overall business performance, which enables us to analyze our past and future performance without the effects of non-cash items and/or one-time charges. While we believe that non-GAAP net profit (loss) is useful in evaluating our business, non-GAAP net profit (loss) is a non-GAAP financial measure that has limitations as an analytical tool. Non-GAAP net profit (loss) can be useful in evaluating our performance by eliminating the effect of financing and non-cash expenses such as stock-based compensation, however, we may incur such expenses in the future which could impact future results. We also believe that the presentation of the non-GAAP financial measures in this Quarterly Report on Form 10-Q provides an additional tool for investors to use in comparing our core business and results of operations over multiple periods with other companies in our industry, many of which present similar non-GAAP financial measures to investors.

In addition, other companies, including companies in our industry, may calculate non-GAAP metrics differently or not at all, which reduces the usefulness of this measure as a tool for comparison.

We recommend that you review the reconciliation of non-GAAP net profit (loss) to net income (loss), the most directly comparable GAAP financial measure, and that you not rely on any single financial measure to evaluate our business.

1Non-recurring costs incurred during the three and nine months ended September 30, 2024 and 2023 relate to litigation, severance costs, transaction expenses, and the gain on lease termination.

We have historically funded our operations primarily through the sale of convertible preferred stock, the proceeds from the Merger and reverse recapitalization including the sale of Common Stock, and the sale of our products. Since inception we have focused on growth, which has required ongoing investment to support scaling of our business, research and development efforts, and day to day operations. We had cash and cash equivalents of $59.3 million as of September 30, 2024. We incurred net losses of $73.7 million and $89.4 million for the nine months ended September 30, 2024 and 2023, respectively. We believe our cash and cash

equivalents of $59.3 million as of September 30, 2024 is sufficient to meet the working capital and capital expenditure needs for the next 12 months following the filing of this Quarterly Report on Form 10-Q. Our estimates are based on the beliefs and assumptions currently available to us, and we could require additional financing or exhaust our available capital resources sooner than we expect.

Pursuant to the Settlement Agreement, we paid the first settlement payment of $18 million to Continuous Composites on October 10, 2024, and are required to make three additional installment payments thereafter of $1 million, $2 million and $4 million in the fourth quarters of fiscal years 2025, 2026 and 2027, respectively, which payments represent substantial ongoing payment obligations

As of September 30, 2024, the Company has restricted cash in the amount of $19.4 million as a result of funding a surety bond to secure liabilities associated with the Continuous Composites case, which amount reflects the original judgment of $17.3 million in monetary damages plus $2.1 million of interest to cover the prejudgment period and duration of the appeal process. The restriction on these funds was removed on October 30, 2024 following the termination of the surety bond. For more information on the Continuous Composites litigation, please reference Part II, Item 1 – “Legal Proceedings” included in this Quarterly Report on Form 10-Q.

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 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.

The following table sets forth a summary of Markforged’s cash flows for the periods indicated:

Net cash used in operating activities for the nine months ended September 30, 2024 and 2023 was $35.9 million and $40.0 million, respectively. Operating cash flows and changes in working capital for comparative periods were as follows:

Net cash used in operating activities decreased by $4.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The third quarter of 2024 includes the one time lease termination payment for the 480 Pleasant St lease of $2.7 million. The decrease in operating cash flow changes is a direct result of the tightening of working capital controls.

Net cash used in (provided by) investing activities for the nine months ended September 30, 2024 and 2023 was $1.9 million and ($14.4) million, respectively. During the first half of 2023 we had short-term investment maturities which resulted in net proceeds from investments of $16.6 million.

Net cash used in financing activities increased $0.7 million during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The change in financing activities was primarily driven by the payment of the Teton acquisition business earnout which resulted in $0.6 million of the financing cash outflow in 2024.

Our discussion and analysis of our financial condition and results of operations are based on the historical consolidated and condensed financial statements included elsewhere herein. We prepared these financial statements in conformity with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. We routinely evaluate these estimates, utilizing historical experience, consultation with experts and other methods we consider reasonable in the particular circumstances. Our results may differ from these estimates, and any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Changes in these estimates could materially affect our financial position, results of operations or cash flows. See the "Critical Accounting Policies and Estimates" section in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 2, "Significant Accounting Policies" in the Notes to Consolidated Financial Statements included within our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 15, 2024.

Refer to Note 2 of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for the recent accounting pronouncements that we have adopted and have not yet adopted.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The JOBS Act permits companies with emerging growth company status to delay adopting new or revised accounting standards until those standards apply to private companies. We intend to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (1) are no longer an emerging growth company or (2) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. Accordingly, our financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.

We intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item. As of September 30, 2024, we had $78.6 million of cash and cash equivalents.

We have not engaged in any hedging activities since our inception and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of September 30, 2024 because of the material weaknesses in internal control over financial reporting described below.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission ("SEC"), and that such information is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

We have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The identified material weaknesses are as follows:

We did not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we lacked a sufficient complement of resources with (i) an appropriate level of accounting knowledge, experience and training to appropriately analyze, record and disclose accounting matters timely and accurately, and (ii) an appropriate level of knowledge and experience to establish effective processes and controls. Additionally, the lack of a sufficient number of professionals resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions. This material weakness contributed to the following additional material weaknesses:

We did not design and maintain effective controls related to the period-end financial reporting process, including designing and maintaining formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures. Additionally, we did not design and maintain controls over the preparation and review of account reconciliations and journal entries, including maintaining appropriate segregation of duties.

We did not design and maintain effective controls related to the identification of and accounting for certain non-routine, unusual or complex transactions, including the proper application of U.S. GAAP of such transactions. Specifically, we did not design and maintain controls to timely identify and account for share repurchase transactions, warrant instruments, and performance based stock awards.

These material weaknesses resulted in audit adjustments to the following financial statement line items in the historical Markforged financial statements: operating expense, other expense, interest expense, other assets, other liabilities, additional paid in capital, treasury stock, retained earnings, note receivable—equity, and series D preferred stock. These adjustments were recorded prior to the issuance of the consolidated financial statements as of and for the years ended December 31, 2020 and 2019. Additionally, the material weakness related to the accounting for performance based stock awards resulted in audit adjustments to additional paid in capital and stock based compensation expense for the quarters ended June 30, 2021, September 30, 2021, December 31, 2021, and December 31, 2022. The material weakness related to accounting for warrant instruments resulted in the restatement of the previously issued financial statements of AONE, the entity we merged with as part of the Merger related to warrant liabilities and equity. Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

We did not design and maintain effective controls over information technology (“IT”) general controls for information systems that are relevant to the preparation of our financial statements. Specifically, we did not design and maintain (i) program change management controls for financial systems to ensure that information technology program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately; (ii) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate Company personnel; (iii) computer operations controls to ensure that critical batch jobs are monitored, privileges are appropriately granted, and data backups are authorized and monitored; and (iv) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements. These IT deficiencies did not result in any misstatements to the financial statements, however, the deficiencies, when aggregated, could impact our ability to maintain effective segregation of duties, as well as the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. Accordingly, management has determined these deficiencies in the aggregate constitute a material weakness.

Management has been actively engaged in remediation efforts to address the material weaknesses during 2021 through 2023 and these efforts have continued into fiscal year 2024. Our remediation efforts include the following measures:

We have hired additional accounting and IT personnel to bolster our reporting, technical accounting and IT capabilities. Additionally, we continue to design and implement controls to formalize roles and review responsibilities to align with our team’s skills and experience and we continue to design and implement controls over segregation of duties.

We continue to design and implement controls related to the period-end financial reporting process, including formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, reporting and disclosures. Additionally, we continue to design and implement controls over the preparation and review of account reconciliations and journal entries.

We continue to design and implement controls to timely identify and account for non-routine, unusual or complex transactions and other technical accounting and financial reporting matters, including controls over the preparation and review of accounting memoranda addressing these matters.

We continue to design and implement IT general controls, including controls over program change management, the review and update of user access rights and privileges, controls over batch jobs and data backups, and program development approvals and testing.

We have engaged third-party specialists to assist with testing the operating effectiveness of controls over financial reporting to gain assurance that such controls are present and operating as designed, as well as to help review and update existing documentation of our internal controls for compliance with the Sarbanes-Oxley Act of 2002.

The material weaknesses will not be considered remediated until management completes the design and implementation of the measures described above and the controls operate for a sufficient period of time and management has concluded, through testing, that these controls are effective.

There have been no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2024 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time we are and have been involved in claims that arise during the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we do not currently believe that the outcome of any of these legal matters has had or will have a material effect on our results of operation or financial condition, other than as discussed below regarding the settlement of the matter involving Continuous Composites Inc. (“Continuous Composites”), which we previously disclosed. Additionally, we may in the future be the target of securities class action and derivative lawsuits as a result of our entry into the Nano Merger Agreement. Regardless of the outcome, litigation can be costly and time consuming, as it can divert management’s attention from important business matters and initiatives, negatively impacting our overall operations.

In July 2021, Continuous Composites Inc. (“Continuous Composites”), a company based in Idaho, brought a claim in the United States District Court for the District of Delaware against the Company regarding patent infringement. On April 11, 2024, the jury returned a verdict against the Company in the amount of $17.3 million. Following post-trial motions relating to the jury verdict, on September 20, 2024, the Company entered into a Settlement and Patent License Agreement with Continuous Composites. The Settlement Agreement resolved all claims and counterclaims in the patent infringement litigation brought by Continuous Composites against the Company in the lawsuit. Under the terms of the Settlement Agreement, the Company made an initial upfront payment of $18 million to Continuous Composites, which payment was made on October 10, 2024, and is required to make three additional installment payments thereafter of $1 million, $2 million and $4 million in the fourth quarters of fiscal years 2025, 2026 and 2027, respectively. In consideration of such payments, the Settlement Agreement provides for a dismissal of all claims with prejudice, cross-licenses of the parties’ respective patent portfolios, a mutual release of claims for liabilities arising prior to the effective date of the Settlement Agreement and mutual covenants not to sue. To secure payment under the Settlement Agreement, the Company granted Continuous Composites a security interest in, among other assets, the Company’s patent intellectual property rights pursuant to the Security Agreement. On October 11, 2024, the parties filed a Stipulation of Dismissal with the United States District Court for the District of Delaware, which was granted, and the case was terminated.

A description of the risks and uncertainties associated with our business and industry is set forth below. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Quarterly Report on Form 10-Q, including our unaudited consolidated financial statements and notes thereto and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of this Quarterly Report on Form 10-Q before deciding whether to purchase shares of our Common Stock. If any of the following risks are realized, our business, financial condition, operating results and prospects could be materially and adversely affected. In that event, the price of our Common Stock could decline, perhaps significantly. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operation.

We may not complete the Nano Merger within the anticipated timeframe, or at all, which could have a material adverse impact on our business, financial condition or results of operations, as well as negatively impact the per share price of our Common Stock.

On September 25, 2024, we entered into the Nano Merger Agreement. Consummation of the Nano Merger is subject to satisfaction or waiver of certain closing conditions, including receipt of required approval by our stockholders and regulatory approvals. For more information, see Note 1, Organization, Nature of the Business, and Risks and Uncertainties, to our Unaudited Condensed Consolidated Financial Statements. The failure to obtain or delay in obtaining required stockholder and/or regulatory approvals could have the effect of delaying completion of the Nano Merger or of imposing additional costs or limitations on us or may result in the failure to close the Nano Merger. We cannot provide any assurance that the conditions to the consummation of the Nano Merger will be satisfied or waived or that, if the Nano Merger is consummated, it will be on the terms specified in the Nano Merger Agreement or within the anticipated timeframe.

Failure to complete the Nano Merger within the anticipated timeframe, or at all, could adversely affect our business and the market price of our Common Stock in a number of ways, including:

In addition, any litigation or enforcement proceeding commenced against us in connection with the Nano Merger may require us to devote significant time and resources and could require us to incur significant costs. This also could result in the Nano Merger being delayed and/or enjoined by a court of competent jurisdiction, which could prevent the Nano Merger from becoming effective.

The occurrence of any of these events individually or in combination could have a material adverse effect on our business, financial condition or results of operations, as well as negatively impact the per share price of our Common Stock.

The announcement and pendency of the Nano Merger could materially adversely affect our business, financial condition or results of operations, as well as negatively impact the per share price of our Common Stock.

Our efforts to complete the Nano Merger could cause substantial disruptions in, and create uncertainty surrounding, our business, which may materially adversely affect our business, financial condition or results of operations, or the per share price of our Common Stock. Uncertainty as to whether the Nano Merger will be completed may affect our ability to recruit prospective employees or to retain and motivate existing employees. Employee retention may be particularly challenging while the transaction is pending because employees may experience uncertainty about their roles following consummation of the Nano Merger. A substantial amount of our management’s and employees’ attention has been and will continue to be directed toward the completion of the Nano Merger and thus is being diverted from our day-to-day operations. Uncertainty as to our future also could adversely affect our business and our relationship with strategic partners, suppliers, existing or prospective customers or regulators. For example, suppliers, existing or prospective customers and other counterparties may defer decisions concerning us, or seek to change existing business relationships with us, whether pursuant to the terms of their existing agreements with us or otherwise. Changes to or termination of existing business relationships could materially adversely affect our financial condition and results of operations, as well as negatively impact the per share price of our Common Stock. The adverse effects during the pendency of the Nano Merger could be exacerbated by any delays in completion of the Nano Merger, changes to the terms of, or termination of, the Nano Merger Agreement.

We have incurred, and will continue to incur, direct and indirect costs as a result of the pending Nano Merger.

We have incurred, and will continue to incur, significant costs and expenses, including legal, financial, accounting and other advisory fees and other transaction costs, in connection with the pending Nano Merger. Any delay in the consummation of the Nano Merger could result in us incurring additional transaction-related costs and expenses. We will be required to pay a substantial portion of these costs and expenses whether or not the Nano Merger is completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses.

While the Nano Merger Agreement is in effect, we are subject to restrictions on our business activities.

While the Nano Merger Agreement is in effect, we are subject to restrictions on our business activities, generally requiring us to conduct our business in the ordinary course, consistent with past practice, in all material respects, and subjecting us to a variety of specified limitations absent Nano’s prior consent, subject to a number of exceptions. These limitations include, among other things, restrictions on our ability to merge or consolidate with, or acquire equity interests in, any other business, enter into any new line of business or discontinue any existing line of business, authorize or make certain capital expenditures, hire, terminate or promote certain employees, grant any cash or equity-based incentive awards to current employees, enter into certain contracts, repurchase or issue securities, pay dividends, amend our organizational documents, and incur indebtedness. These restrictions could prevent us from pursuing other strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively or on a timely basis to competitive pressures and industry developments, and may as a result materially adversely affect our business, financial condition and results of operations.

The Nano Merger Agreement contains provisions that prohibit a third party from proposing an alternative transaction or acquire our company prior to the consummation of the Nano Merger.

The Nano Merger Agreement contains provisions that prohibit our ability to entertain a third-party proposal for an acquisition of our company or an alternative transaction in lieu of the Nano Merger. These provisions include our agreement not to, directly or indirectly, solicit, initiate, facilitate, or knowingly encourage any third-party acquisition proposal of our company, as well as restrictions on our ability to respond to such proposals, even one that may be deemed of greater value to our stockholders than the proposed Nano Merger.

We may be the target of securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the Nano Merger from being completed.

We may in the future be the target of securities class action and derivative lawsuits as a result of our entry into the Nano Merger Agreement. Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. The outcome of litigation is uncertain and we may not be successful in defending against future claims brought against us even if they are without merit. Regardless of the outcome of any lawsuits brought against us, such lawsuits could delay or prevent the Nano Merger, further divert the attention of our management and employees from our day-to-day business, result in substantial costs and otherwise adversely affect us financially. A potential adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Nano Merger, that injunction may delay or prevent the Nano Merger from being completed, or from being completed within the anticipated timeframe, which may adversely affect our business, financial condition or results of operations.

Our executive officers and directors may have interests in the proposed Nano Merger that are different from, or in addition to, those of our stockholders generally.

Our executive officers and directors may have interests in the proposed Nano Merger that are different from the interests of our stockholders generally, including, among others, the acceleration of the vesting of equity awards, receipt by certain executive officers of severance payments and benefits upon a qualifying termination within a set time period following the Nano Merger, and continued indemnification following the Nano Merger. These interests, among others, may influence, or appear to influence, our executive officers and directors and cause them to view the Nano Merger differently from how our stockholders generally may view it.

Additional information regarding our executive officers and directors and their interests in the proposed Nano Merger are included in our preliminary Proxy Statement relating to the proposed Nano Merger filed on Schedule 14A with the SEC on October 21, 2024.

If the Nano Merger is consummated, our stockholders will not be able to participate in any further upside to our business.

If the Nano Merger is consummated, each share of Common Stock (other than Excluded Shares) held by our stockholders immediately prior to the effective time of the Nano Merger will be cancelled and automatically cease to exist and will be converted into the right to receive $5.00 per share in cash, without interest, subject to applicable withholding taxes. As a result, even if our business following the Nano Merger performs well, our current stockholders will not receive any additional consideration and will therefore not receive any benefit from any such future performance of our business.

We have been in the recent past, subject to business and intellectual property litigation.

The additive manufacturing industry has been, and may continue to be, litigious, particularly with respect to intellectual property claims. We have been in the recent past involved in litigation, and we could be involved in additional litigation in the future.

In particular, in July 2021, Continuous Composites filed a patent-infringement case against us in the United States District Court of Delaware. On April 11, 2024, the jury returned a verdict against us in the amount of $17.3 million. As discussed in Part II, Item 1 of this Quarterly Report on Form 10-Q, we entered into the Settlement Agreement with Continuous Composite in September 2024 to resolve all outstanding claims and counterclaims, and the case has been dismissed. We paid the first settlement payment of $18 million required under the Settlement Agreement on October 10, 2024, and are required to make three additional installment payments thereafter of $1 million, $2 million and $4 million in the fourth quarters of fiscal years 2025, 2026 and 2027, respectively, which payments represent substantial ongoing payment obligations that could have an adverse impact on our business, financial condition or results of operations. Further, these settlement payments are secured by security interest granted to Continuous Composites in, among other assets, our patent intellectual property rights; our inability to make any future settlement payments may result in the forfeiture of our patent intellectual property rights to Continuous Composites pursuant to the Security Agreement.

In order to protect our intellectual property rights in the Continuous Composites litigation described above, or in any other similar claims in the future, we have spent and may continue to be required to spend significant resources to monitor, protect, and defend these rights, and we may or may not be able to detect infringement by our customers or third parties. Litigation has been and may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Such litigation, regardless of merit, can be costly, time consuming, and distracting to management and key technical personnel, and can result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our platform, impair the functionality of our platform, delay introductions of new features, integrations, and capabilities, result in our substituting inferior or more costly technologies into our platform, or injure our reputation. In addition, we may be required to license or pay royalties on additional technology from third parties to develop and market new features, integrations, and capabilities, and we cannot be certain that we could license that technology on commercially reasonable terms or at all, and our inability to license this technology could harm our ability to compete.

As part of any settlement or other compromise to avoid complex, protracted litigation, including under the terms of the Settlement Agreement, we have and may again in the future agree not to pursue future claims against a third party, including related to alleged infringement of our intellectual property rights. Part of any settlement or other compromise with another party, including the Settlement Agreement, may resolve a potentially costly dispute but may also have future repercussions on our ability to defend and protect our intellectual property rights, which in turn could adversely affect our business. Moreover, our potential liabilities are subject to change over time due to new developments, changes in settlement strategy or the impact of evidentiary requirements. Regardless of the outcome, litigation has resulted in the past, and may result in the future, in significant legal expenses and require significant attention and resources of management. As a result, future litigation that may be brought against us by any third party could result in reputational harm, losses, damages and expenses that may have a significant adverse effect on our financial condition.

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 had a history of operating losses since inception in 2013 through 2023 and funded our cash flow deficits primarily through the issuance of capital stock. As of September 30, 2024, we had an accumulated deficit of $278.4 million, including current year net loss of $73.7 million. We expect to continue to incur operating losses and negative cash flow as we continue to invest significantly in research and development efforts and other aspects of our business.

We cannot make any assurances that these investments will result in increased revenue or growth in our business. Furthermore, we may encounter unforeseen issues that require us to incur additional costs. Any such increased expenditures make it harder for us to achieve and maintain future profitability. Revenue growth and growth in our customer base may not be sustainable, and we may not achieve sufficient revenue to achieve or maintain profitability. While we have a revenue history, we expect to bring new additive manufacturing products to market that we anticipate will generate a substantial portion of our future revenue, and it is difficult for us to predict our future operating results. We may incur significant losses in the future for a number of reasons, including due to the other risks described in this Quarterly Report on Form 10-Q, and we may encounter unforeseen expenses, difficulties, complications and delays and other unknown events. As a result, our losses may exceed forecasts, we may incur significant losses for the foreseeable future, and we may not achieve profitability when expected, or at all, and even if we do, we may not be able to maintain or increase

profitability. Accordingly, if we are not able to achieve or maintain profitability and we incur significant losses in the future, the market price of our Common Stock may decline, and you could lose part or all of your investment.

We have a relatively limited operating history and have experienced rapid growth since our inception, which makes evaluating our current business and future prospects difficult and may increase the risk of your investment.

Our ability to forecast our future operating results is subject to a number of uncertainties, including our ability to plan for and model future growth. We have encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, as we continue to grow our business. If our assumptions regarding these uncertainties, which we use to plan our business, are incorrect or change in reaction to changes in our markets, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, our business could suffer and the trading price of our Common Stock may decline. We intend to derive a substantial portion of our revenues from sales of new and existing hardware products, which sales are non-recurring and subject to significant risk and fluctuation.

It is difficult to predict our future revenues and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business. If actual results differ from our estimates or we adjust our estimates in future periods, our operating results and financial position could be materially affected.

Our operating results have and may continue to fluctuate significantly from period-to-period and may fall below expectations in any particular period, which could adversely affect the market price of our Common Stock.

Our quarterly and annual results of operations have and may continue to fluctuate significantly from period-to-period. Accordingly, the results of any one quarter or year should not be relied upon as an indication of future performance. If our revenue or operating results fall below the expectations of investors or any securities analysts that follow our company in any period, the price of our Common Stock would likely decline. Each of the risks described in this section, as well as other factors, may affect our operating results. For example, factors that may cause our operating results to fluctuate include:

In addition, sales of our products are subject to the adoption and capital expenditure cycles of our customers’ sales cycle, and seasonality among our customers may cause our revenues and operating results to fluctuate from period to period. Accordingly, we typically experience increased sales during the fourth quarter and, to a lesser extent, the third quarter of our fiscal year relative to the first and second quarters. Additionally, for our more complex solutions, which may require additional facilities investment and installation support, potential customers may spend a substantial amount of time performing internal assessments prior to making a purchase decision. This may cause us to devote significant effort in advance of a potential sale without any guarantee of receiving any related revenues. As a result, revenues and operating results for future periods are difficult to predict with any significant degree of certainty, which could lead to adverse effects on our inventory levels and overall financial condition. Accordingly, you should not rely on quarter-over-quarter and year-over-year comparisons of our results as an indicator of our future performance.

Global economic, political and social conditions and uncertainties in the markets that we serve may adversely impact our business.

Our performance depends on the financial health and strength of our customers, which in turn is dependent on the economic conditions of the markets in which we and our customers operate. Declines in the global economy, difficulties in the financial services sector and credit markets, continuing geopolitical uncertainties, global health crises, including COVID-19, and other macroeconomic factors all affect the spending behavior of potential customers. Economic uncertainty in Europe, the United States, India, Japan, China and other countries may cause customers and potential customers to further delay or reduce technology purchases. For example, since the first quarter of 2022, we have experienced reduced demand from European markets.

We also face risks from financial difficulties or other uncertainties experienced by our suppliers, distributors or other third parties on which we rely. If third parties are unable to supply us with required materials or components or otherwise assist us in operating our business, our business could be harmed.

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.

Adverse developments that affect financial institutions, transactional counterparties or other third parties, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. Although we regularly assess and adjust our banking and other financial services relationships as we believe necessary or appropriate, our access to our deposits, investments, funding sources, credit and other arrangements in amounts adequate to maintain our projected business operations could be significantly impaired by factors outside of our control. These factors could include, among others, events such as liquidity constraints or failures, the inability of third parties to meet their obligations under various types of financial arrangements, general disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.

For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. Although a statement by the Department of the Treasury, the Federal Reserve and the FDIC stated all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB, Signature Bank or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder. As of the date of this Quarterly Report on Form 10-Q, our exposure to SVB, Signature and Silvergate is immaterial, however, we regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit. If any of the financial institutions with which we do business were to be placed into receivership, we may be unable to access our capital or adequately fund our business for a prolonged period of time, or at all. In addition, if any of our customers, suppliers or other parties with whom we conduct business are unable to access funds pursuant to their arrangements with such a financial institution, their ability to pay their obligations to us or to enter into new

commercial arrangements requiring additional payments to us could be adversely affected. A customer may fail to make payments when due, default under their agreements with us, become insolvent or declare bankruptcy, or a supplier may determine that it will no longer deal with us as a customer. Any customer or supplier bankruptcy or insolvency, or the failure of any customer to make payments when due, or the loss of any significant supplier relationships, could result in material losses to us and may have material adverse impacts on our business.

In addition, uncertainty remains over liquidity concerns in the broader financial services industry, and there may be additional impacts to our business and our industry that we cannot predict at this time. Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Although the U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediate liquidity may exceed the capacity of such program. There is no guarantee that the U.S. Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.

The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations. These could include, but may not be limited to, the following:

In addition, widespread investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations.

The additive manufacturing industry in which we operate is characterized by rapid technological change, requiring continual innovation and development of new products and innovations to meet constantly evolving customer demands.

Our revenues are derived from the sale of 3D printers, related materials, software, and services. The additive manufacturing market is subject to rapid innovation and technological change and our customers’ needs are rapidly evolving. While we intend to invest substantial resources to remain on the forefront of technological development, continuing advances in additive manufacturing technology, changes in customer requirements and preferences and the emergence of new standards, regulations and certifications could adversely affect adoption of our products. Our ability to compete in the additive manufacturing market depends, in large part, on our success in developing and introducing new 3D printers and technology, in improving our existing products and technology and qualifying new materials which our systems can support. We believe that we must continuously enhance and expand the functionality and features of our products and technologies in order to remain competitive. However, we may not be able to:

Even if we successfully introduce new additive manufacturing products and technologies and enhance our existing products and technologies, it is possible that these will eventually supplant our existing products or that our competitors will develop new products and technologies that will replace our own. As a result, any of our products may be rendered obsolete or uneconomical by our or our competitors’ technological advances, leading to a loss in market share, decline in revenue and adverse effects to our business and prospects.

We face intense and growing competition in the additive manufacturing industry. Our inability to compete effectively with our competitors could affect our ability to achieve our anticipated market penetration and achieve or sustain profitability.

The additive manufacturing industry in which we operate is highly competitive. We compete for customers with a wide variety of producers of additive manufacturing equipment that creates 3D objects and end-use parts, as well as with providers of materials and services for this equipment. Some of our existing and potential competitors are researching, designing, developing and marketing other types of products and services that may render our existing or future products obsolete, uneconomical or less competitive. Existing and potential competitors may also have substantially greater financial, technical, marketing and sales, manufacturing, distribution and other resources than us, including name recognition, as well as experience and expertise in intellectual property rights and operating within certain international markets or industry verticals, any of which may enable them to compete effectively against us. Moreover, many of our competitors have more extensive customer and partner relationships than we do, and may therefore be in a better position to identify and respond to market developments or changes in customer demands, including successfully developing technologies that outperform our technologies. Potential customers may also prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features. For example, a number of companies that have substantial resources have announced that they are beginning production of 3D printers, which will further enhance the competition we face.

In addition, independent suppliers offer non-original supplies (including imitation, refill and remanufactured alternatives), which are often available for lower prices but which can also offer lower print quality and reliability compared to our supplies. If our customers utilize these non-original supplies with our printers, it could adversely impact our operating results and may have a negative impact on our brand.

Future competition may arise from the development of allied or related techniques for equipment, materials, software and services that are not encompassed by our patents, from the issuance of patents to other companies that may inhibit our ability to develop certain products and from improvements to existing technologies.

We intend to continue to follow a strategy of continuing product development, VAR and distribution network expansion to enhance our competitive position to the extent practicable. But we cannot assure you that we will be able to maintain our current position or continue to compete successfully against current and future sources of competition. If we do not keep pace with technological change and introduce new products and technologies, demand for our products may decline, and our operating results may suffer.

Declines in the prices of our products and services, or in our volume of sales, together with our relatively inflexible cost structure, may adversely affect our financial results.

Our business is subject to price competition. Such price competition may adversely affect our results of operation, especially during periods of decreased demand. Decreased demand also adversely impacts the volume of our sales. If our business is not able to offset price reductions resulting from these pressures, or decreased volume of sales due to contractions in the market, by improved operating efficiencies and reduced expenditures, then our operating results will be adversely affected.

Although we generally do not have long-term supply agreements, certain of our operating costs are fixed and cannot readily be reduced, which has an impact on our operating results. To the extent the demand for our products slows, or the additive manufacturing market contracts, we may be faced with excess manufacturing capacity and related costs that cannot readily be reduced, which will adversely impact our financial condition and results of operations. Conversely, because we generally do not have long-term supply agreements, we have recently experienced and expect to continue to be subject to the risk of significant cost increases and parts shortages by our suppliers, or decisions by our suppliers to cease selling certain parts and materials to us.

Increased consolidation among our customers, suppliers and competitors in the additive manufacturing industry may have an adverse effect on our business and results of operations.

Increased consolidation in the additive manufacturing industry among our customers, suppliers and competitors may adversely affect our business and results of operations. Customer consolidation could lead to changes in buying patterns, slowdowns in spending, and impact our distribution channels. Moreover, the significant purchasing power of these large companies can increase pricing and competitive pressures for us, including the potential for decreases in our average selling prices. If one of our customers is acquired by another company that does not rely on us to provide it with products or relies on another provider of similar products, we may lose that customer’s business. Any of the foregoing results will adversely affect our business, financial condition and results of operations.

In addition, supplier consolidation may lead to increased prices of materials for our products, deployment delays and/or a disruption in output. In addition, such consolidation may exacerbate the risks relating to our dependence on a small number of suppliers for certain materials that are required to manufacture our products.

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 have several additive manufacturing solutions and enhancements to existing products that are still under development. There are often delays in the design, testing, manufacture and commercial release of new products, and any delay in the launch of our products could materially damage our brand, business, growth prospects, financial condition and operating results. For example, we experienced production challenges meeting demand for our FX20 printer, including issues procuring materials and production constraints, which limited revenue during 2022, and initial production costs exceeded targets negatively impacting our gross margin. Even if we successfully complete the design, testing and manufacture for one or all of our products or enhancements under development, we may fail to develop a commercially successful product on the timeline we expect for a number of reasons, including:

Our success in the market for the new products we develop will depend in part on our ability to prove our new products’ capabilities in a timely manner. Until demonstration, our customers may not believe that our products and/or technology have the capabilities they were designed to have or that we believe they have. Furthermore, even if we do successfully demonstrate our products’ capabilities, potential customers may be more comfortable doing business with a competitor, including another larger and more established company, may take longer than expected to make the decision to order our products, or may not have the budget or decision-making authority to purchase the product. Significant revenue from new product investments may not be achieved for a number of years, if at all. If the timing of our launch of new products and/or of our customers’ acceptance of such products is different than our assumptions, our revenue and results of operations may be adversely affected.

Changes in our product mix may impact our gross margins and financial performance.

Our financial performance may be affected by the mix of products and services we sell during a given period. We expect to continue to offer products at a variety of price points. Sales of certain of our products have, or are expected to have, higher gross margin contributions than others. If our product mix shifts too far into lower gross margin products, or we are unable to maintain or increase gross margins, and we are not able to sufficiently reduce the engineering, production and other costs associated with those products or substantially increase the sales of our higher gross margin products, our profitability could be reduced. Additionally, the introduction of new products or services may further heighten quarterly fluctuations in gross profit and gross profit margins due to manufacturing ramp-up and start-up costs. Relatedly, if our product mix shifts such that our production rates decrease, our product costs and margins may be negatively impacted. We may experience significant quarterly fluctuations in gross profit margins or operating income or loss due to the impact of the mix of products, channels or geographic areas in which we sell our products from period to period.

Our failure to meet our customers’ price expectations would adversely affect our business and results of operations.

Demand for our product lines is sensitive to price. We believe our competitive pricing has been an important factor in our results to date. Therefore, changes in our pricing strategies can have a significant impact on our business and ability to generate revenue. Many factors, including our production and personnel costs, our competitors’ pricing and marketing strategies, general inflationary pressures, our customers’ budgets, the value our products bring to our customers and our desire to hit revenue goals can significantly impact our pricing strategies. If we fail to meet our customers’ price expectations in any given period, demand for our products and product lines could be negatively impacted and our business, results of operations and brand could suffer.

Our revenue model is evolving and we may introduce new revenue models or avenues that may not be accepted by our customers and as such will not materialize.

We depend on our network of VARs and other distribution partners and if we fail to maintain successful relationships, or if they fail to perform, our ability to market, sell and distribute our products will be limited, and our business, financial position and results of operations will be harmed.

We rely heavily on our global network of VARs and other distribution partners to sell our products and to provide installation and support services to customers in their respective geographic regions. These VARs and other distribution partners may not be as effective in selling our products or installing and supporting our customers as we expect. Moreover, a VAR or other distribution partner may misrepresent the capabilities of our products without our knowledge either intentionally or unintentionally due to the inherent complexity of our products. Further, our VARs and other distribution partners can terminate their contracts with us at any time, and if our contracts with a significant number of VARs and other distribution partners, or with the most effective VARs and other distribution partners, were to terminate or if they would otherwise fail or refuse to sell certain of our products, we may not be able to find replacements that are as qualified or as successful in a timely manner, if at all.

Recruiting and retaining qualified VARs and other distribution partners and training them in our technologies requires significant time and resources. These VARs and other distribution partners may also market, sell and support other technologies in unrelated markets and may devote more resources to the marketing, sales and support of such products.

In addition, if our VARs and other distribution partners do not perform as anticipated, or if we are unable to secure qualified and successful VARs and other distribution partners, our sales will suffer, which would have an adverse effect on our revenues and operating results. Because we also depend upon our VARs and other distribution partners to provide installation and support services for products, if our VAR or distribution partner relationships were terminated or limited to certain products, we may face disruption in providing support for our customers, which would adversely affect our brand, reputation and our results of operations. Any failure to offer high-quality technical support services may adversely affect our relationships with our customers and adversely affect our financial results and brand.

Further, we require that our VARs and other distribution partners adhere to all local laws and regulations, but it is possible that a VAR or other distribution partner could violate such laws or regulations, which could adversely impact our business, reputation and financial results and brand. Our indirect sales and distribution model could subject us to lawsuits, potential liability and brand and reputational harm if, for example, any of our VARs and other distribution partners misrepresent the functionality of our products or services to customers or violate laws or our corporate policies.

Additionally, a default by one or more VARs or other distribution partners with whom we have a significant receivables balance could have an adverse financial impact on our financial results. As of September 30, 2024 no one customer represented greater than 10% of the accounts receivable balance. In the event that this customer or any of our large customers do not continue to purchase our products or purchase fewer of our products, our business, results of operations and financial condition could be adversely affected. We have reviewed our policies that govern credit and collections and will continue to monitor them in light of current payment status and economic conditions. In addition, we try to reduce the credit exposures of our accounts receivable by instituting credit limits and additional checks. However, there can be no assurance that our efforts to identify potential credit risks will be successful. Our inability to timely identify VARs and other distribution partners that are credit risks could result in defaults at a time when such VARs and other distribution partners have high accounts receivable balances with us. Any such default would result in a significant charge against our earnings and adversely affect our results of operations and financial condition.

If our suppliers become unavailable or inadequate, our customer relationships, results of operations and financial condition may be adversely affected.

As a result of supply chain disruptions and the rise of inflation, we have experienced increasing costs and supply shortages. For example, we recently experienced longer lead times and capacity constraints in connection with the raw resources required to manufacture our printing material and we are also facing increased prices in connection with the procurement of the electronic components and custom metal fabricated parts for our printers, including our FX20 printer. We acquire certain of our materials, which are critical to the ongoing operation and future growth of our business, from several third parties. Generally, our third-party contract manufacturers contract directly with component suppliers with our guidance. We rely on our contract manufacturers to manage their supply chains. If one of our contract manufacturers has supply chain disruptions, or our relationship with our contract manufacturer terminates, we could experience delays. We also source some materials directly from suppliers. While most manufacturing equipment and materials for our products are available from multiple suppliers, certain of those items are only available from limited sources. Should any of these suppliers become unavailable or inadequate, or impose terms unacceptable to us, such as increased pricing terms, we could be required to spend a significant amount of time and expense to develop alternate sources of supply, and we may not be successful in doing so on terms acceptable to us, or at all. As a result, the loss of a limited source supplier could adversely affect our brand and relationship with our customers as well as our results of operations and financial condition.

In the case of certain materials, we have specified a certain grade of a product to be used in our manufacturing process. While there are several potential suppliers of most of these component materials that we use, we currently choose to use only one or a limited number of suppliers for several of these components and materials. For those materials, we could be impacted by any changes our suppliers make to such materials, which could include specification changes, lead time or cancellation of the material. If there is not an alternate product available, replacement thereof would require significant engineering and manufacturing efforts by us to qualify a replacement. Additionally, if a supplier of such materials decided to terminate their relationship with us, we may face delays in our production as we seek out a replacement supplier. Our reliance on a single or limited number of vendors involves a number of risks, including:

In addition, we evaluate new suppliers pursuant to our internal procedures. This process involves evaluations of varying durations, which may cause production delays if we were required to qualify a new supplier unexpectedly. We generally assemble our systems and parts based on our internal forecasts and the availability of raw materials, assemblies, components and finished goods that are supplied to us by third parties, which are subject to various lead times. If certain suppliers were to decide to discontinue production of an assembly, component or raw material that we use, the unanticipated change in the availability of supplies, or unanticipated supply limitations, could cause delays in, or loss of, sales, increased production or related costs and consequently reduced margins, and damage to our reputation. If we were unable to find a suitable supplier for a particular component, material or compound, we could be required to modify our existing products or the end-parts that we offer to accommodate substitute components, material or compounds. While we monitor risk internally related to our sourcing (particularly concerning raw materials), there is no guarantee that will sufficiently protect us if we suddenly lose access to supplies unexpectedly.

Any shortage of a particular component, material or compound could materially and adversely affect our ability to manufacture our products and could lead to increased costs to acquire such resources which could adversely affect our business and financial condition. We have in the past experienced and may in the future experience materials shortages and price fluctuations of certain key components, materials and compounds, and the predictability of the availability and pricing of these components, materials and compounds may be limited. Shortages of components, materials or compounds or pricing fluctuations could be material in the future. In the event of a components, materials or compounds shortage, supply interruption or material pricing change from suppliers of these components, materials or compounds, we may not be able to develop alternate sources in a timely manner or at all in the case of sole or limited sources. Developing alternate sources of supply for these components, materials or compounds may be time-consuming, difficult, and costly and we may not be able to source these components, materials or compounds on terms that are acceptable to us, or at all, which may undermine our ability to meet our requirements or to fill customer orders in a timely manner. Any interruption or delay in the supply of any of these components, materials or compounds, or the inability to obtain these components, materials or compounds from alternate sources at acceptable prices and within a reasonable amount of time, would adversely affect our ability to meet our scheduled product deliveries to our customers. This could adversely affect our relationships with our customers and VARs and could cause delays in shipment of our products and adversely affect our operating results. In addition, increased component, material or compound costs could result in lower gross margins. Even where we are able to pass increased costs along to our customers, there may be a lapse of time before we are able to do so such that we must absorb the increased cost. If we are unable to buy these components, materials or compounds in quantities sufficient to meet our requirements on a timely basis, we will not be able to deliver products to our customers, which may result in such customers using competitive products instead of ours.

We have experienced minor delays on the inbound supply chain at our partners and our own facilities. Additional delays on both inbound and outbound logistics have also created challenges. We have been able to identify alternative solutions such that none of the issues has had a material impact on our ability to fulfill demand. If disruptions to global businesses continue or worsen, our business could face greater supply chain delays and difficulty shipping or receiving products and materials, which could have a material adverse effect on our financial condition and results of operations.

While we believe that, if necessary, we can obtain all the components necessary for our spare parts and materials from other manufacturers, we will need to guide any new manufacturers through evaluation processes of varying durations. Our spare parts and raw materials used in our materials production are subject to various lead times. Any unanticipated change in the sources of our supplies, or unanticipated supply limitations, could increase production or related costs and consequently reduce margins.

If our forecasts exceed actual orders, we may hold inventories of slow-moving or unusable parts, which could have an adverse effect on our cash flow, profitability, and results of operations. Inversely, we may lose orders if our forecast is low and we are unable to meet demand.

Our business model is predicated, in part, on developing or expanding recurring revenues through the sale of our hardware, consumables, and services. If that recurring stream of revenues does not develop as expected, or if our business model changes as the industry evolves, our operating results may be adversely affected.

Our business model is dependent, in part, on our ability to develop, maintain and increase sales of our hardware, consumables, and services as they generate recurring revenues. Existing and future customers of our systems may not purchase our consumables and services at the same rate at which customers currently purchase those offerings. If our current and future customers purchase a lower volume of our consumables and services, resulting overall in lower purchases of consumables and services on average than with our current installed customer base, our recurring revenue stream relative to our total revenues would be reduced and our operating results would be adversely affected.

We rely on a limited number of third-party logistics providers for distribution of our products, and their failure to distribute our products effectively and in a cost effective manner would adversely affect our sales.

We rely on a limited number of third-party logistics providers for shipping our products. Each third-party logistics provider stores our products in a limited number of warehouses where they prepare and ship our products based on digital instructions. The use of a limited number of third-party logistics providers increases the risk that a fire or damage from another type of disaster at any of the warehouses may result in a disruption of our commercialization efforts. Additionally, because we use a limited number of third-party logistics providers, if there is a disruption in the distribution channels of such third-party logistics providers, including but not limited to any disruption caused by global shipping capacity, labor shortages, or if these providers continue to increase their rates, our business and financial condition could be adversely impacted.

If our third-party logistics providers do not fulfill their contractual obligations to us, or refuse or fail to adequately distribute our products, such as by shipping our products to the incorrect recipient, or the agreements are terminated without adequate notice, shipments of our products, and associated revenues, would be adversely affected. In addition, we expect that it may take a significant

amount of time if we were required to change our third-party logistics providers and would require significant efforts to provide the systems support required for a new provider to effectively support our operations.

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.

We believe that the industrial manufacturing market, which today is dominated by conventional manufacturing processes that do not involve additive manufacturing technology, is undergoing a shift towards additive manufacturing for end-use production as well as factory line support. We may not be able to develop effective strategies to raise awareness among potential customers of the benefits of additive manufacturing technologies or our products may not address the specific needs or provide the level of functionality required by potential customers to encourage the continuation of this shift towards additive manufacturing. We must anticipate, sometimes several years in advance, the direction that the additive market is taking. We may not correctly anticipate the direction, which may lead us to invest in the wrong products, which may adversely affect our results of operation and financial condition. If additive manufacturing technology does not continue to gain broader market acceptance as an alternative to conventional manufacturing processes, or if the marketplace adopts additive manufacturing technologies that differ from our technologies, we may not be able to increase or sustain the level of sales of our products, and our operating results would be adversely affected as a result.

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.

Our additive manufacturing solutions are complex and may contain undetected defects or errors when first introduced or as enhancements are released that, despite testing, are not discovered until after a machine has been used. We may not know which products are affected by defects. These defects could be systemic and could affect all of the products we shipped prior to discovery thereof. It may not be economically feasible to identify, replace or repair all affected products. In the event that the defect is severe enough or impacts customer safety, a product recall may be required. This could result in delayed market acceptance of those products or claims from VARs, customers or others, which may result in litigation, increased customer warranty, support and repair or replacement costs, damage to our reputation and business, or significant costs and diversion of support, management and engineering personnel to correct the defect or error. We may from time to time become subject to warranty or product liability claims related to product quality issues that may require us to take remedial action and could, regardless of merit, lead us to incur significant expenses, result in diversion of management time and attention, damage to our business and reputation and brand, and cause us to fail to retain existing customers or fail to attract new customers.

We attempt to include provisions in our agreements with customers that are designed to manage our exposure to potential liability for damages arising from defects or errors in our products. However, it is possible that these provisions may not be effective as a result of unfavorable judicial decisions or laws enacted in the future.

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.

Our products are integrated solutions with many different components that work together. As such, a quality defect in a single component can compromise the performance of the entire solution. As we continue to grow and introduce new products, and as our products incorporate increasingly sophisticated technology, such as our FX20 system, which is the largest and most complex printer we have ever developed, it will be increasingly difficult to ensure our products are produced in the necessary quantities without sacrificing quality. There is no assurance that we or our third-party manufacturers and any component suppliers will be able to continue to manufacture our products so that they consistently achieve the product specifications and quality that our customers expect. Relatedly, certain of our components are sourced by a single supplier and, if the supply were to become disrupted as a result of insufficient quality, service delays or any other factor, our manufacturing efforts could be adversely affected. Any future design issues, unforeseen manufacturing problems, such as contamination of our or such third-party facilities, equipment malfunctions, aging components, component obsolescence, business continuity issues, quality issues with components and materials sourced from third party suppliers, or failures to strictly follow procedures or meet specifications, may have a material adverse effect on our brand, business, financial condition and operating results. Furthermore, we or our third-party manufacturers may not be able to increase manufacturing to meet anticipated demand or may experience downtime.

In order to meet our customers’ needs, we attempt to forecast demand for our products and components used for the manufacture of our products. If we fail to accurately forecast this demand, we could incur additional costs or experience manufacturing delays and may experience lost sales or significant inventory carrying costs.

The risk of manufacturing defects or quality control issues is generally higher for new products, whether produced by us or a third-party manufacturer, products that are transitioned from one manufacturer to another, particularly if manufacturing is transitioned or initiated with a manufacturer we have not worked with in the past, and products that are transferred from one manufacturing facility to another. We cannot assure investors that we and our third-party manufacturers will be able to launch new products on time, transition manufacturing of existing products to new manufacturers, transition our manufacturing capabilities to a new location or transition manufacturing of any additional materials in-house without manufacturing defects. An inability to manufacture products and components that consistently meet specifications, in necessary quantities and at commercially acceptable costs will have a negative impact and may have a material adverse effect on our brand, business, financial condition and results of operations.

Our commercial contracts generally contain product warranties and limitations on liability and we carry liability insurance in amounts that we believe are adequate for our risk exposure and commensurate with industry norms. However, commercial terms and our insurance coverage may not be adequate or available to protect our company in all circumstances, and we might not be able to maintain adequate insurance coverage for our business in the future at an acceptable cost. Any liability claim against us that is not covered by adequate insurance could adversely affect our consolidated results of operations and financial condition. Finally, any liability claim against us may cause harm to our brand, reputation and adversely impact our business.

We are dependent on the continued services and performance of our senior management and other key employees, as well as on our ability to successfully hire, train, manage and retain qualified personnel.

Our future performance depends on the continued services and contributions of our executive team and other key employees to execute on our business plan and to identify and pursue new opportunities and product innovations. Such persons may resign at any time and the loss of their services could delay or prevent the successful implementation of our strategy, commercialization of new applications for our systems or other products, or could otherwise adversely affect our ability to manage our company effectively and carry out our business plan. There is no assurance that if any senior executive or other key employee leaves in the future, we will be able to rapidly replace him or her and transition smoothly towards his or her successor, without any adverse impact on our operations.

Our ability to successfully pursue our growth strategy will also depend on our ability to attract, motivate and retain existing and new personnel. We experience intense competition for qualified senior management and other key personnel (including scientific, technical, manufacturing, engineering, financial and sales personnel) in the additive manufacturing industry, especially in the greater Boston area. In addition, we have experienced increased competition and shortages for skilled labor, particularly for the key roles noted above. Our ability to hire, terminate and promote employees, and offer cash raises and/or equity-based incentive awards to existing or prospective employees is also restricted during the pendency of the Nano Merger, pursuant to the terms of the Nano Merger Agreement, which may inhibit our ability to attract and retain key employees. These risks to attracting and retaining the necessary talent may be exacerbated by recent labor constraints and inflationary pressures on employee wages and benefits. Our personnel are generally employed on an at-will basis, which means that they could terminate their employment with us at any time. There can be no assurance that we will be able to retain our current key personnel or attract new persons to join our organization in the future. Some of our competitors for these employees have greater resources and more experience, making it difficult for us to compete successfully for key personnel. If our stock does not perform as well as other companies' our equity incentive programs may have reduced retentive value. These pressures could result in increased costs in order to provide competitive compensation packages to attract and retain key personnel. Moreover, new employees may not be as productive as we expect since we may face challenges in adequately integrating them into our workforce and culture. If we cannot attract and retain sufficiently qualified technical employees for our research product development activities, as well as experienced sales and marketing personnel, we may be unable to develop and commercialize new products and enhancements to existing products.

As manufacturing becomes a larger part of our operations, we will become exposed to the accompanying risks and liabilities.

In-house and outsourced manufacturing has been and continues to be a significant part of our business. As a result, we expect to continue to be subject to various risks associated with the manufacturing and supply of products, including the following:

Any failure to adequately manage risks associated with the manufacture and supply of materials and products could adversely affect profits from that segment of our business and/or lead to significant liabilities, which would harm our brand, business, operations and financial condition.

Under applicable employment laws, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees.

We generally enter into non-competition agreements with our employees. These agreements prohibit our employees from competing directly with us or working for our competitors or clients for a limited period after they cease working for us. On April 23, 2024 the U.S. Federal Trade Commission (the “FTC”) published a final rule that prohibits post-employment non-compete clauses in agreements between employers and their employees except for existing agreements with senior executives who are paid over a threshold salary amount and are involved in policy decisions for the company. Legal challenges to the FTC’s rule-making authority were successful at the trial court level and the rule did not become effective on September 4, 2024 as originally contemplated. The FTC has appealed to the Fifth Circuit Court of Appeals and a decision is expected sometime in 2025. If the trial court’s decision is reversed and the FTC’s rule is upheld, it will thwart our ability to enforce employment-based non-competition agreements except for existing agreements with senior executives. Even if the rule is invalidated by the courts, we may be unable to enforce these agreements under the laws of the certain jurisdictions in which our employees work and it may be difficult for us to restrict our competitors from benefiting from the expertise that our former employees or consultants developed while working for us.

We expect to continue to experience organizational change. If we fail to manage this change effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction or attract new employees and customers.

We expect to continue to make significant investments in our business, including investments in our infrastructure, software, technology, personnel headcount, facilities, marketing and sales efforts. If our business does not generate the level of revenue required to support our investment, our net sales and profitability will be adversely affected.

To manage our operations and personnel, we will need to continue to scale and improve our operational, financial, and management controls, and our reporting systems and procedures, which will require significant capital expenditures, increasing our cost of operations and the reallocation of valuable management resources. As we scale, it may become more difficult and will require additional capital expenditures to maintain and increase the productivity of our employees, expand production, to address the needs of our actual and prospective customers, to further develop and enhance our products, and remain competitive against our competitors’ products. These enhancements and improvements will require significant capital expenditures, investments in additional headcount and other operating expenditures and allocation of valuable management and employee resources, including but not limited to investments related to our facilities. Our future financial performance and our ability to execute on our business plan will depend, in part, on our ability to effectively manage any future growth and expansion. There are no guarantees we will be able to do so in an efficient or timely manner, or at all.

As we acquire and invest in companies or technologies, we may not realize expected business, technological or financial benefits and the acquisitions or investments could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our business, results of operations, and financial condition.

As part of our business strategy, we may evaluate and make investments in, or acquisitions of, complementary companies, products, software and technologies, to further grow and augment our business and product offerings. The success of any attempts to grow our business through acquisitions to complement our business depends in part on the availability of, our ability to identify, and our ability to engage and pursue suitable acquisition candidates. We may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. Further, our ability to merge, consolidate with, or acquire any equity interests in, other companies is restricted during the pendency of the Nano Merger pursuant to the terms of the Nano Merger Agreement.

If we do complete future acquisitions, we cannot assure you that they will ultimately strengthen our competitive position or that they will be viewed positively by customers, financial markets or investors. Furthermore, future acquisitions could pose numerous additional risks to our operations, including:

We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.

We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges and opportunities, including the need to develop new features or enhance our products, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds if our existing sources of cash and any funds generated from operations do not provide us with sufficient capital. Current capital market conditions, including the impact of inflation, have increased borrowing rates and can be expected to significantly increase our cost of capital as compared to prior periods should we seek additional funding. Moreover, global

capital markets have undergone periods of significant volatility and uncertainty in the past, and there can be no assurance that such financing alternatives will be available to us on favorable terms or at all, should we determine it necessary or advisable to seek additional capital. Further, our ability to raise capital through an equity or debt financing is restricted during the pendency of the Nano Merger pursuant to the terms of the Nano Merger Agreement. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our Common Stock. Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions, and any new or refinanced debt may be subject to substantially higher interest rates, which could adversely affect our financial condition and impact our business. Recent quantitative tightening by the U.S. Federal Reserve, along with other central banks around the world, may further negatively affect our short-term ability or desire to incur debt. We may not be able to obtain additional financing on terms favorable to us, for example, if interest rates continue to rise and make debt financing prohibitively expensive, or such financing may not be available at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges and opportunities could be significantly impaired, and our business may be adversely affected.

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 hardware products rely upon our complementary software products which are inherently complex and, despite extensive testing and quality control, have in the past and may in the future contain defects, vulnerabilities, or errors, especially when first introduced, or otherwise not perform as contemplated. As the use of our products, including products that were recently acquired or developed, expands to more sensitive, secure or mission critical uses by our customers, we may be subject to increased scrutiny, potential reputational risk or potential liability should our software fail to perform as contemplated in such deployments. We have in the past and may in the future need to issue corrective releases of our software to fix these defects, vulnerabilities, errors or performance failures and we may encounter technical problems when we attempt to perform routine maintenance or enhance our software, internal applications, and systems, which could require us to allocate significant research and development and customer support resources to address these problems and divert the focus of our management and research and development teams. In addition, our platform may be negatively impacted by technical or security issues experienced by our third-party service providers.

Our business, brands, reputation and ability to attract and retain customers depend upon the satisfactory performance, reliability and availability and security of our software products, which in turn, with respect to our planned software as a service (“SaaS”) offerings depend upon the availability and security of the internet and our third-party service providers. For example, for our SaaS offerings we outsource our cloud infrastructure to Amazon Web Services (“AWS”), our hosting provider, which hosts our software products. Our hosting provider runs its own platforms upon which our products depend, and we are, therefore, vulnerable to service interruptions at the hosting provider level. We do not control the operation of any of AWS’ data center hosting facilities, and they may be subject to damage, compromise, or interruption from earthquakes, floods, fires, power loss, telecommunications failures, terrorist attacks and similar events. They may also be subject to damage, compromise, or interruptions due to system failures, cybersecurity incidents, compromises, or vulnerabilities (including system-encrypting ransomware), software errors or subject to breaches of computer hardware and software security, break-ins, sabotage, intentional acts of vandalism and similar misconduct. And while we rely on service level agreements with our hosting provider, if they do not properly maintain their infrastructure or if they incur unplanned outages, our customers may experience performance issues or unexpected interruptions and we may not meet our service level agreement terms with our customers. We have experienced, and expect that in the future we may experience interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints.

Any inefficiencies, security vulnerabilities, errors, defects, technical problems or performance failures with our software, internal applications, systems or infrastructure, or those of our third-party providers, could reduce the quality of our products or interfere with our customers’ (and their users’) use of our products, which could negatively impact our brand and reputation, reduce demand, lead to a loss of customers or revenue, adversely affect our results of operations and financial condition, increase our costs to resolve such issues and subject us to financial penalties and liabilities under our service level agreements. Any limitation of liability provisions that may be contained in our customer agreements may not be effective as a result of existing or future applicable law or unfavorable judicial decisions. The sale and support of our products entail the risk of liability claims, which could be substantial in light of the use of our products in enterprise-wide environments. In addition, our insurance against this liability may not be adequate to cover a potential claim.

We depend on a limited number of third-party contract manufacturers for a substantial portion of all of our manufacturing needs and any delay, disruption or quality control problems in their operations, could cause harm to our operations, including loss of market share and damage to our brand.

We depend on third-party contract manufacturers for the production of our 3D printers and on third-party suppliers for the components and raw materials used in our products. While there are several potential manufacturers for most of these products, all of our products are manufactured, assembled, tested and generally packaged by a limited number of third-party manufacturers and several single source providers of certain supplies. In most cases, we rely on these manufacturers to procure components and, in some cases, subcontract engineering work. Our reliance on a limited number of contract manufacturers involves a number of risks, including:

If any of our third-party contract manufacturers experience a delay, disruption or quality control problems in their operations, including due to global supply chain disruptions, or if a primary third-party contract manufacturer does not renew its agreement with us, our operations could be significantly disrupted and our product shipments could be delayed. Qualifying a new manufacturer and commencing volume production is expensive and time consuming. Ensuring that a contract manufacturer is qualified to manufacture our products to our standards is time consuming. In addition, there is no assurance that a contract manufacturer can scale its production of our products at the volumes and in the quality that we require. If a contract manufacturer is unable to do these things, we may have to move production for the products to a new or existing third-party manufacturer, which would take significant effort and our brand, business, results of operations and financial condition could be materially adversely affected. Finally, if a contract manufacturer producing a highly specified product changes its materials or is unable to meet our production demands, it could lead to specification changes, increased lead time or cancellation of the product.

As we contemplate moving manufacturing into different jurisdictions, we may be subject to additional significant challenges in ensuring that quality, processes, and costs, among other issues, are consistent with our expectations. If such jurisdictions are outside the U.S., we may also face significant challenges regarding compliance with law in such jurisdictions as well as export control laws of such jurisdictions and the U.S., as more fully described in the section “Risk Factors – Risks Related to International Operations” as well as risks associated with quality control, currency exchange rates, foreign laws and customs, timing and loss risks associated with international transportation and potential adverse changes in the political, legal and social environment in the jurisdiction, including the outbreak of war or sustained armed conflict in such jurisdiction or geographic region.

In addition, because we use a limited number of third-party contract manufacturers, increases in the prices charged may have an adverse effect on our results of operations, as we may be unable to find a contract manufacturer who can supply us at a lower price. As a result, the loss of a limited source supplier could adversely affect our relationships with our customers and our results of operations and financial condition.

All of our products must satisfy safety and regulatory standards and some of our products must also receive government certifications. We rely on third-party providers to conduct the tests that support our applications for most regulatory approvals for our products. As part of the certification process, our third-party contract manufacturers are subject to audit and must receive approvals from third-parties providing such certifications. Failure to meet these certifications by our third-party contract manufacturers could adversely impact our business. Moreover, if our third-party contract manufacturers fail to timely and accurately conduct the tests supporting our applications for regulatory approvals, we may be unable to obtain the necessary domestic or foreign regulatory approvals or certifications to sell our products in certain jurisdictions. As a result, we would be unable to sell our products and our sales and profitability could be reduced, our relationships with our sales channel could be harmed and our reputation and brand would suffer.

Our manufacturing facility and those of our third-party contract manufacturers and suppliers, as well as our customers’ facilities and our third-party logistics providers, are vulnerable to disruption due to natural or other disasters, strikes and other events beyond our control.

A major earthquake, fire, tsunami, hurricane, cyclone or other disaster, such as a major flood, seasonal storms, nuclear event, war, sustained armed conflict, such as Russia’s invasion of Ukraine, the armed conflict in Israel, Gaza and the Middle East generally or terrorist attack affecting our facilities or the areas in which they are located, or affecting those of our customers or third-party manufacturers, suppliers or fulfillment centers, could significantly disrupt our or their operations and delay or prevent product shipment or installation during the time required to repair, rebuild or replace our or their damaged manufacturing facilities. These delays could be lengthy and costly. In order to maintain our production timelines and supply chains throughout the world, including with our recently added third party manufacturer in Israel, we may be required to develop alternative infrastructure and we may not be able to avoid interruptions or additional costs. If any of our facilities, or those of our third-party contract manufacturers, suppliers, third-party logistics providers or customers are negatively impacted by such a disaster, production, shipment and installation of our additive manufacturing machines could be delayed, which can impact the period in which we recognize the revenue related to that additive manufacturing machine sale. Additionally, customers may delay purchases of our products until operations return to normal. Even if we are able to respond quickly to a disaster, the continued effects of the disaster could create uncertainty in our business operations. We have no way to predict the progress or outcome of these situations, including any impact on the rest of the world, as the conflicts and government reactions are rapidly developing. In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil, labor strikes, war or the outbreak of epidemic or pandemic diseases could have a negative effect on our operations and sales.

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.

Our products and services are distributed across the world, and we derive a substantial percentage of our sales from these international markets. Accordingly, we face significant operational risks from doing business internationally.

Our operating results may be affected by volatility in currency exchange rates and our ability to effectively manage our currency transaction risks. Although we currently invoice customers in United States dollars, increases in the value of the dollar relative to foreign currencies may make our products less attractive to foreign customers. We may also incur currency transaction risks if we were to enter into either a purchase or a sale transaction using a different currency from the currency in which we report revenues. In such cases we may suffer an exchange loss because we do not currently engage in currency swaps or other currency hedging strategies to address this risk. As we realize our strategy to expand internationally, our exposure to currency risks may increase. Given the volatility of exchange rates, we can give no assurance that we will be able to effectively manage our currency transaction risks or that any volatility in currency exchange rates will not have an adverse effect on our results of operations.

The shipments of our products to foreign customers and/or end-users may be subject to tariffs and other restrictions imposed by the destination countries. As we procure equipment and materials from foreign suppliers, we may be required to pay import duties and comply with regulations imposed by the U.S. Customs and Border Protection. Both the U.S. and foreign tariff rates and import restrictions may change from time to time, which could adversely impact our global operations, for example, by decreasing the price competitiveness of our products in foreign markets and/or by increasing our manufacturing costs.

In addition, additive manufacturing has been identified by the U.S. government as an emerging technology, and additional regulatory changes were recently implemented to impose increased and/or new export controls related to additive manufacturing technologies, components and related software. These changes may result in our being required to obtain additional approvals and/or licenses to sell 3D printers in the global market.

Our failure to effectively manage the risks and uncertainties associated with our global operations could limit the future growth of our business and adversely affect our business and operating results.

The effects of regulations relating to foreign trade, manufacturing, development and investment may adversely impact our business.

Changes in U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment could also adversely affect our business. In particular, on June 23, 2016, the U.K. held a referendum in which a majority of the eligible members of the electorate voted to leave the EU, commonly referred to as Brexit. Pursuant to Article 50 of the Treaty on EU, the U.K. ceased being a member state of the EU on January 31, 2020. The implementation period began February 1, 2020 and continued until December 31, 2020, during which the U.K. continued to follow all of the EU’s rules, and the U.K.’s trading relationship remained the same. The U.K. and the EU have signed an EU-UK Trade and Cooperation Agreement, or TCA, which became provisionally applicable on January 1, 2021 and then formally entered into force on May 1, 2021 after being ratified by both the U.K. and the EU. This agreement provides details on how some aspects of the U.K. and EU’s relationship will operate going forwards however there are still many uncertainties and how the TCA will take effect in practice is still largely unknown. Additionally, there is a risk that other countries may decide to leave the European Union. This uncertainty surrounding this transition not only potentially affects our business in the United Kingdom and the European Union, but also may have an effect on global economic conditions and the stability of global financial markets, which in turn could have a material adverse effect on our business, financial condition and results of operations. In extreme cases, we could experience interruptions in production due to the processing of customs formalities or reduced customer spending in the wake of weaker economic performance. If global economic conditions remain volatile for a prolonged period or if European economies experience further disruptions, our results of operations could be adversely affected. In addition, the armed conflicts involving Russia and Ukraine may have direct and indirect effects on global economic conditions and the stability of global financial markets, which could also have a material adverse effect on our business, financial condition and results of operations.

Rising inflation rates could negatively impact our revenues and profitability if increases in the prices of our services or a decrease in consumer spending results in lower sales. In addition, if our costs increase and we are not able to pass along these price increases to our customers, our net profit (loss) would be adversely affected, and the adverse impact may be material.

Inflation rates, particularly in the United States, have increased recently to levels not seen in years. Increased inflation may result in decreased demand for our products and services, increased operating costs (including our labor costs), reduced liquidity, and limitations on our ability to access credit or otherwise raise debt and equity capital. In addition, the United States Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty and heightening these risks. In an inflationary environment, we may be unable to raise the sales prices of our products and services at or above the rate at which our costs increase, which could reduce our profit margins and have a material adverse effect on our financial results and net profit (loss). We also may experience lower than expected sales and potential adverse impacts on our competitive position if there is a decrease in consumer spending or a negative reaction to our pricing. A reduction in our revenue would be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth.

The effects of regulations relating to conflict minerals may adversely affect our business.

Pursuant to Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted requirements for companies that use certain minerals and metals, known as conflict minerals, in their products, whether or not these products are manufactured by third parties. These requirements require companies to research, disclose and report whether or not such minerals originate from the Democratic Republic of Congo and adjoining countries. The implementation of these requirements could adversely affect the sourcing, availability and pricing of such minerals if they are found to be used in the manufacture of our products, including our 3D printers or materials. In addition, we expect to continue to incur additional costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals and metals used in our products. Since our supply chain is complex, we may not be able to sufficiently verify the origins for these minerals and metals used in our products through the due diligence procedures that we implement, which may harm our reputation. In such event, we may also face difficulties in satisfying customers who require that all of the components of our products are certified as conflict mineral free.

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 derive a significant portion of our revenue from contracts that we have, either directly or through distribution partners and VARs, with federal, state, local and foreign governments and government agencies, and we believe that the success and growth of our business will continue to depend on our successful procurement of government contracts. For example, we have historically derived, and expect to continue to derive, a significant portion of our revenue from sales to agencies of the U.S. federal government and governments of other nations, either directly by us or through other distribution partners. Sales to such governments and their agencies are subject to a number of challenges and risks. The procurement process for governments and their agencies is highly competitive, time-consuming, and may, in certain circumstances, be subject to political influence. We incur significant up-front time and expense, which subjects us to additional compliance risks and costs, without any assurance that we (or a third-party distributor or reseller) will win a contract.

Accordingly, our business, financial condition, results of operations, and prospects may be adversely affected by certain events or activities, including, but not limited to:

Any such event or activity, among others, could cause governments and governmental agencies to delay or refrain from purchasing our products and services in the future, reduce the size or payment amounts of purchases from existing or new government customers, or otherwise have an adverse effect on our business, results of operations, financial condition and prospects.

Government programs are limited by budgetary constraints and political considerations and are subject to uncertain future funding levels that could result in the termination of programs.

Government agency and department purchases are often strategic in nature and large in size. Therefore, reductions in funding levels that impact our customers could negatively affect the size of our customers’ orders or lead to cancellation of orders. Government contracts are often subject to more extensive scrutiny and publicity than commercial contracts. The number and terms of new government contracts signed can be affected significantly by political and economic factors, such as pending elections and revisions to government tax policies. Negative publicity related to our government contracts, regardless of its accuracy, may damage our business by affecting our ability to compete for new contracts. A decline in security-related government spending for any reason, or a shift away from programs that we address, could hurt our sales, put pressure on our prices and reduce our revenue and margins. Relatedly, the use of our products by militaries or other government agencies or departments in a way that is perceived negatively by the public could adversely affect our business and reputation.

A multi-year U.S. government program may be implemented through the award of many different individual contracts, grants, cooperative agreements and subcontracts or other subawards. For U.S. government programs, program funding is subject to congressional appropriations. Congress generally appropriates funds on a fiscal year basis even though a program may continue for several years. Government programs are often only partially funded initially, and additional funds are committed only as Congress makes further appropriations. The termination of a program or failure to commit funds to a program would result in a loss of anticipated future revenue attributable to that program, which could materially harm our business.

We are subject to audits by the U.S. government which could adversely affect our business.

U.S. government agencies routinely audit and investigate government contractors to monitor performance, cost allocations, cost accounting and compliance with applicable laws, regulations and standards. Since some of our contracts provide for cost reimbursement, the U.S. government has the right to audit our costs even after job completion and after we have billed and recognized the corresponding revenue. The U.S. government also may review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. Any costs found to be improperly allowed or improperly allocated to a specific contract will not be reimbursed, and any such costs that have already been reimbursed must be refunded, which would affect associated revenue that had already been recognized. While we intend to implement uniform procurement and compliance programs for all of our business, we may be subject to more risks from these audits until we are able to implement such a program effectively.

Responding to governmental audits, inquiries or investigations may involve significant expense and divert the attention of our management. If a government review or investigation uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, damages, fines and suspension or debarment from doing business with U.S. government agencies. In addition, our reputation could be seriously harmed by allegations of impropriety, even if unfounded. Our internal controls may not prevent or detect all improper or illegal activities.

Our business is subject to laws and regulations that are more restrictive because we are a contractor and subcontractor to the U.S. government.

As a contractor and subcontractor to the U.S. government, we are subject to various laws and regulations that are more restrictive than those applicable to non-government contractors, including the Federal Acquisition Regulations and its supplements, which comprehensively regulate the formation, administration and performance of U.S. government contracts, and the Truth in

Negotiations Act and various other laws, which require certain certifications and disclosures. These laws and regulations, among other things:

In addition, we may be subject to industrial security regulations of the U.S. Department of Defense and other federal agencies that are designed to safeguard against unauthorized access by foreigners and others to classified and other sensitive U.S. government information. If we were to come under foreign ownership, control or influence, our U.S. government customers could terminate, or decide not to renew, our contracts, or we may be subjected to burdensome industrial security compliance measures. Such a situation could impair our ability to obtain new contracts and subcontracts. The government may also change its procurement practices or adopt new contracting rules and regulations that could be costly to satisfy or that could impair our ability to obtain new contracts.

Our contracts and those of our VARs with governments may impose requirements that may be unfavorable to us and that may have a material adverse effect on our growth prospects and operating results.

Most of our sales to government entities have been made indirectly through our VARs and other distribution partners. In some cases, we have entered contracts directly with government customers. There are inherent risks in contracting with governments and their agencies. Government customers can typically terminate, reduce orders under or otherwise modify any of its contracts with us or our VARs for its convenience (i.e., without cause) whether or not we have failed to perform under the terms of the applicable contract. In such case, the government would not be required to pay our VARs or us for the lost profits for the unperformed work. A termination arising out of our VARs or our default could expose our VARs or us to liability and harm our VARs or our ability to compete for future contracts and orders. In addition to unfavorable termination provisions, our VARs or our U.S. government contracts and related regulations contain provisions that allow the U.S. government to unilaterally suspend our VARs or us from receiving new contracts pending resolution of alleged violations of procurement laws or regulations, reduce the value of existing contracts, issue modifications to a contract and potentially restrict exports of our products, services and associated materials.

Our VARs or our contracts with government agencies may subject our VARs or us to other risks and give the government additional rights and remedies not typically found in commercial contracts, including rights that allow the government to, for example:

These rights and remedies have the potential to limit our VARs or our sales to, and increase our VARs or our costs of, doing business with both government and commercial customers, which could materially adversely affect our growth prospects and operating results.

Additionally, we sometimes rely on our VARs and other distribution partners to satisfy certain regulatory obligations that we would otherwise have to satisfy if we sold directly to the government entities, and our VARs and other distribution partners may be unable or unwilling to satisfy these obligations in the future. In the event of such termination or change, it may be difficult for us to arrange for another VAR or other distribution partner to sell our solutions to these government entities in a timely manner, and we could lose sales opportunities during the transition.

We could be subject to personal injury, property damage, product liability, warranty and other claims involving allegedly defective products that we supply.

The products we supply are sometimes used in potentially hazardous or critical applications, such as the assembled parts of an aircraft, medical device or automobile. The sale of our products and the provision of related services in general, and to customers in the foregoing industries in particular, exposes us to possible claims for property damage and personal injury or death, which may result from the use of these end-use parts.

While we have not experienced any such claims to date, actual or claimed defects in the products we supply could result in our being named as a defendant in lawsuits asserting potentially large claims. We may be potentially liable, in significant amounts, and face significant harm to our reputation if an aircraft, medical or automotive part, component or accessory or any other aviation, medical or automotive product that we have sold, produced or repaired fails due to our fault, in whole or in part, or if an aircraft or automobile for which we have provided services or in which their parts are installed crashes, and the cause can be linked to those parts or cannot be determined. A similar risk arises in connection with sales of our products to customers in the aerospace industry to the extent that the parts produced by those products do not function properly and are responsible for damages. Our commercial contracts generally contain product warranties and limitations on liability and we carry liability insurance in amounts that we believe are adequate for our risk exposure and commensurate with industry norms. While we intend to monitor our insurance coverage as our business continues to grow, claims may arise in the future, and that insurance coverage may not be adequate or available to protect our consolidated company in all circumstances. Additionally, we might not be able to maintain adequate insurance coverage for our business in the future at an acceptable cost. Any liability claim against us that is not covered by adequate insurance could adversely affect our consolidated results of operations and financial condition. Finally, any liability claim against us may cause harm to our brand, reputation and adversely impact our business.

We could face liability if our additive manufacturing solutions are used by our customers to print dangerous objects.

Customers may use our 3D printers to print parts that could be used in a harmful way or could otherwise be dangerous. For example, there have been news reports that additive manufacturing machines were used to print guns or other weapons. We have little, if any, control over what objects our customers print using our products, and it may be difficult, if not impossible, for us to monitor and prevent customers from printing weapons with our products. Additionally, individuals or entities unaffiliated with us could disseminate plans or digital files that could be used with our products to produce parts and items that could be deemed illegal or harmful. While we have never printed weapons on any printers in our offices, there can be no assurance that we will not be held liable if someone were injured or killed by a weapon printed by a third party using one of our products. Additionally, association of such an incident with our products may cause harm to our brand reputation and adversely impact our business.

Third parties may produce or sell counterfeit or imitation versions of our materials or components.

Third parties may sell counterfeit or imitation versions of our materials or components that are inferior or pose safety risks. If consumers confuse these counterfeit products or materials for our products or materials or have a bad experience with the counterfeit products or materials, they might refrain from purchasing our products or materials in the future, which could harm our reputation and sales. Further, if third parties develop materials that compete favorably on price, and/or meet or exceed the quality and performance of our own materials, we may lose recurring revenue from lost sales of our materials. If we do not maintain favorable perceptions of our products and materials, and if we are unable to compete successfully with third party manufacturers of materials, our brand, business, financial condition, results of operations and cash flows could be adversely impacted.

Failure of our global operations to comply with anti-corruption laws and various trade restrictions, such as sanctions and export controls, could have an adverse effect on our business.

We operate in a number of countries throughout the world, including countries known to have a reputation for corruption. Doing business on a global basis requires us to comply with anti-corruption laws and regulations imposed by governments around the world

with jurisdiction over our operations, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010, as well as the laws of the countries where we do business.

We are also subject to various trade restrictions, including trade and economic sanctions and export controls, imposed by governments around the world with jurisdiction over our operations. For example, in accordance with trade sanctions administered by the Office of Foreign Assets Control and the U.S. Department of Commerce, we are prohibited from engaging in transactions involving certain persons and certain designated countries or territories, including Cuba, Iran, Syria, North Korea and the Crimea Region of Ukraine. In light of the conflicts between Russia and Ukraine, we are also prohibited from engaging in transactions involving persons and entities located or headquartered in the so-called Donetsk and Luhansk People’s Republics (DNR and LNR). In addition, our products are subject to export regulations that can involve significant compliance time and may add additional overhead cost to our products. In recent years the United States government has a renewed focus on export matters. For example, the Export Control Reform Act of 2018 and regulatory guidance thereunder have imposed additional controls, and may result in the imposition of further additional controls, on the export of certain “emerging and foundational technologies.” Our current and future products may be subject to these heightened regulations, which could increase our compliance costs. For instance, recent amendments to the U.S. Export Administration Regulations (“EAR”) increased restrictions on exports to certain “military end-users” and for “military end-uses” by certain persons in Belarus, Burma, Cambodia, China, Iraq, Nicaragua, Russia, or Venezuela, which requires us to perform due diligence on customers and end-users in those countries for potential military connections. Recently, proposed changes to the EAR may further expand the restrictions on export transactions involving end users and end uses with military connections in more countries, thereby increasing the burden and cost of pre-sale due diligence.

We also need to monitor the changes in export-related laws and regulations, such as International Traffic in Arms Regulations (“ITAR”), and their applicability to our products and services. If our products or services become subject to the ITAR, we will be required to implement ITAR compliance policies and procedures and we may also be required to obtain licenses, clearances, or authorizations from various regulatory entities. Even in the absence of changes in the ITAR, some of our products, services, or activities may become subject to the ITAR if, for example, we customize them for certain customers in the defense and aerospace industries or if we receive ITAR-controlled information from customers or other parties. If we are not allowed to export our products or services or to engage in certain controlled activities, or if the clearance process is burdensome, our ability to generate revenue would be adversely affected and our operating costs could increase.

In addition, international sales of certain of our products may be subject to local laws and regulations in foreign jurisdictions which we may not be familiar with. We may not be allowed to ship our products to certain countries without meeting their local laws and regulations. The failure to comply with any of these laws or regulations could adversely affect our ability to conduct our business and generate revenues.

We are committed to doing business in accordance with applicable anti-corruption laws and regulations and with applicable trade restrictions. We are subject, however, to the risk that our affiliated entities or our and our affiliates’ respective officers, directors, employees and agents (including distributors and VARs of our products) may take action determined to be in violation of such laws and regulations. Any violation by us or by any of these persons could result in substantial fines, sanctions, civil and/or criminal penalties, or curtailment of operations in certain jurisdictions, and might adversely affect our operating results. In addition, actual or alleged violations could damage our reputation and ability to do business.

Although we take precautions to prevent violations of applicable anti-corruption laws and regulations and applicable trade restrictions, we may have exported products in the past in apparent violation of the EAR. If we are found to be in violation of U.S. export control or sanctions laws, it could result in substantial fines and penalties for us and for the individuals working for us. We may also be adversely affected through other penalties, reputational harm, loss of access to certain markets or otherwise.

We are subject to environmental, health and safety laws and regulations related to our operations and the use of our 3D printers and materials, which could subject us to compliance costs and/or potential liability.

We are subject to domestic and foreign environmental, health and safety laws and regulations governing our operations. A certain risk of environmental liability is inherent in our production activities. These laws and regulations govern, among other things, the generation, use, storage, registration, handling, transport and disposal of chemicals and waste materials, the presence of specified substances in electrical products; the emission and discharge of hazardous materials into the ground, air or water; the investigation and cleanup of contaminated sites, including any contamination that results from spills due to our failure to properly dispose of chemicals and other waste materials and the health and safety of our employees. As such, our operations, including our production activities, carry an inherent risk of environmental, health and safety liabilities. Under these laws and regulations, we could be subject to liability for improper disposal of chemicals and waste materials, including those resulting from the use of our systems and accompanying materials by end-users. Accidents or other incidents that occur at our facilities or involve our personnel or operations could result in claims for damages against us. In the event we are found to be financially responsible, as a result of environmental or other laws or by

court order, for environmental damages alleged to have been caused by us or occurring on our premises, we could be required to pay substantial monetary damages or undertake expensive remedial obligations. If our operations fail to comply with such laws or regulations, we may be subject to fines and other civil, administrative or criminal sanctions, including the revocation of permits and licenses necessary to continue our business activities, or may be required to make significant expenditures to achieve compliance. In addition, we may be required to pay damages or civil judgments in respect of third-party claims, including those relating to personal injury (including exposure to hazardous substances that we generate, use, store, handle, transport, manufacture or dispose of), property damage or contribution claims. Some environmental laws allow for strict, joint and several liabilities for remediation costs, regardless of fault. We may be identified as a potentially responsible party under such laws. The amount of any costs, including fines or damages payments that we might incur under such circumstances could substantially exceed any insurance we have to cover such losses. Any of these events, alone or in combination, could have a material adverse effect on our business, financial condition and results of operations and could adversely affect our reputation.

We may be subject to environmental laws and regulations including, without limitation, the United States Toxic Substances Control Act (“TSCA”) and the Registration, Evaluation, Authorization and Restriction of Chemical Substances (“REACH”) concerning the use, import and export of chemicals and hazardous substances, such as chlorinated solvents. Other countries may have more stringent requirements that lead to increased costs, which could have material adverse effect on our business, financial conditions, and results of operations. These laws and regulations require the testing and registration of some chemicals that we ship along with, or that form a part of, our systems and other products. If we fail to comply with these or similar laws and regulations, we may be required to make significant expenditures to reformulate the chemicals that we use in our products and materials or incur costs to register such chemicals to gain and/or regain compliance. We could also be subject to significant fines or other civil and criminal penalties should we not achieve such compliance. Additionally, customer sentiment regarding the use of certain chemicals and hazardous substances could negatively impact our ability to sell certain products.

The cost of complying with current and future environmental, health and safety laws applicable to our operations, or the liabilities arising from releases of, or exposure to, hazardous substances, may result in future expenditures. Any of these developments, alone or in combination, could have an adverse effect on our business, financial condition and results of operations.

Aspects of our business are subject to laws and regulations governing privacy and data security. Changes in laws, regulations, and public perception concerning data protection and privacy, or changes in the interpretation or patterns of enforcement of existing laws and regulations, could impair our efforts to maintain and expand our customer base or the ability of our customers to use our services. Breaches of laws and regulations concerning data protection and privacy could expose us to significant fines and other penalties.

We hold personal information about a variety of individuals, such as our employees, prospects, and our customers. Processing of personal information is increasingly subject to legislation and regulation in numerous jurisdictions around the world.

For example, relevant applicable laws and regulations governing the collection, use, disclosure or other processing of personal information include, in the United States, rules and regulations promulgated under the authority of the Federal Trade Commission, the California Consumer Privacy Act of 2018 (the “CCPA”) and similar state privacy laws, and state breach notification laws. In particular, the CCPA, among other things, establishes comprehensive data privacy rights for California consumers and imposes certain requirements on how businesses can collect and use personal information about such individuals. The CCPA provides for civil penalties for violations, as well as a private right of action for certain data breaches that result in the loss of personal information. This private right of action may increase the likelihood of, and risks associated with, data breach litigation.

The California Privacy Rights Act (“CPRA”), which became effective on January 1, 2023, significantly modified the CCPA, including by expanding consumers’ rights concerning their personal information, introducing data minimization and retention requirements, and establishing a state agency vested with the authority to enforce the CCPA. It is not yet fully clear how the CCPA (as amended by the CPRA) will be enforced and how it will be interpreted. The evolving nature of the CCPA may require us to modify our data collection or processing practices and policies and to incur substantial costs and expenses in an effort to comply.

Similar laws have been passed in numerous other states and other states have proposed similar new privacy laws, and it is possible that certain of these proposals will pass. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies. The existence of privacy laws in different states in the country would make our compliance obligations more complex and costly and may increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance. Other states have also proposed and/or passed legislation that regulates the privacy and/or security of certain specific types of information. For example, a small number of states have passed laws that regulate biometric data specifically. The costs associated with these various privacy and security laws may impede our development and could limit the adoption of our services. Further, any failure by our vendors to comply with applicable law or regulations could result in proceedings against us by

governmental entities or others. State laws are changing rapidly and there is discussion in the U.S. Congress of a new comprehensive federal data privacy law to which we may likely become subject, if enacted.

Moreover, we maintain offices in the European Union (“EU”), specifically, Ireland, and we have customers located in various countries throughout the EU and the United Kingdom (“UK”). Accordingly, in the EU, we are subject to the General Data Protection Regulation (EU) 2016/679 (the “EU GDPR”), and related member state implementing legislation. The EU GDPR governs the collection, use, disclosure, transfer or other processing of personal data of individuals in the EU. Among other things, the EU GDPR imposes strict requirements regarding the security of personal data and notification of data breaches to the competent national data protection authorities, imposes limitations on retention of personal data, imposes stringent requirements relating to the consent of data subjects or ensuring another appropriate legal basis applies to the processing of personal data, requires us to maintain records of our processing activities and to document data protection impact assessments where there is high risk processing, ensuring certain measures are in place with third-party processors. The EU GDPR is also explicitly extraterritorial in its application, and could affect our business activities in jurisdictions outside the EU. The EU GDPR imposes sanctions for violations up to the greater of €20 million and 4% of worldwide gross annual revenue. Further, the EU GDPR enables individuals to claim damages for violations and introduces the right for non-profit organizations to bring claims on behalf of data subjects. Noncompliance could also result in the imposition of orders to stop data processing activities. Compliance with the EU GDPR is a rigorous and time-intensive process and requires us to allocate substantial legal costs to the development of necessary policies and procedures and overall compliance efforts. We expect to incur continued costs associated with maintaining compliance with EU GDPR into the future.

Additionally, the EU GDPR imposes strict rules on the transfer of personal data outside of the EU to countries that do not ensure an adequate level of protection, like the United States. These transfers are prohibited unless a valid transfer mechanism is implemented, such as the Standard Contractual Clauses (SCCs) published by the EU Commission or binding corporate rules. Transfers made pursuant to the SCCs need to be assessed on a case-by-case basis to ensure the law in the recipient country provides “essentially equivalent” protections to safeguard the transferred data. If the standard is not met, businesses will be required to adopt supplementary measures. Further, the EU and United States have adopted its adequacy decision for the EU-U.S. Data Privacy Framework ("Framework"), which entered into force on July 11, 2023. This Framework provides that the protection of personal data transferred between the EU and the United States is comparable to that offered in the EU. This provides a further avenue to ensuring transfers to the United States are carried out in line with EU GDPR.

Following the withdrawal of the UK from the EU (“Brexit”), the EU GDPR has been incorporated into UK laws (“UK GDPR”). Non-compliance with the UK GDPR may result in monetary penalties of up to £17.5 million or 4% of worldwide revenue, whichever is higher. Despite Brexit, the EU and UK GDPR remain largely aligned. Currently, the most impactful point of divergence relates to transfer mechanisms (i.e., the ability for companies in the EU or the UK to transfer personal information to third countries, including the United States). Like the EU GDPR, the UK GDPR restricts personal data transfers outside the UK to countries not regarded by the UK as providing adequate protection. The UK government has confirmed that personal data transfers from the UK to the EU remain free flowing. The new SCCs do not apply to the UK, but the UK Information Commissioner’s Office has published its own transfer mechanism, the International Data Transfer Agreement (“UK IDTA”), which entered into force on 21 March 2022, and enables data transfers originating from the UK. It requires a similar assessment of the data protection provided in the importer’s country. In addition, there has been an extension to the Framework to cover UK transfers to the United States. The Framework could be challenged like its predecessor frameworks. There may be further divergence in the future, including with regard to administrative burdens. The UK has announced plans to reform the country’s data protection legal framework in its Data Use and Access Bill, which will introduce changes to the UK GDPR. This may lead to additional compliance costs and could increase our overall risk exposure as we may no longer be able to take a unified approach across the EU and the UK.

We publicly post documentation regarding our privacy practices as needed to address state, federal and foreign privacy laws. Although we endeavor to comply with our published policies and documentation, we may at times fail to do so or be alleged to have failed to do so. Any failure or perceived failure by us to comply with our privacy policies could expose us to costly litigation, significant awards, fines or judgments, civil and/or criminal penalties or negative publicity, and could materially and adversely affect our business, financial condition and results of operations. The publication of our privacy policy and other documentation that provide promises and assurances about privacy and security can subject us to potential state and federal action if they are found to be deceptive, unfair, or misrepresentative of our actual practices, which could, individually or in the aggregate, materially and adversely affect our business, financial condition and results of operations.

The regulatory framework governing the collection, processing, storage, use and sharing of personal information is rapidly evolving and is likely to continue to be subject to uncertainty and varying interpretations at both the domestic and international level. It is possible that these laws, rules and regulations may be interpreted and applied in a manner that is inconsistent with our practices or the features of our services and platform capabilities, and may not be consistent with one another. The lack of a unified approach to data privacy and protection laws in the U.S. and internationally could lead to complicated and potentially conflicting compliance requirements. Complying with these evolving compliance and operational requirements may impose significant costs, such as costs related to organizational changes, implementing additional protection technologies, modifying our data processing practices and policies, training employees and engaging consultants and legal advisors, which are likely to increase over time and may require that

we utilize management’s time and/ or divert resources from other initiatives and projects. We cannot yet fully determine the impact these or future laws, rules, regulations and industry standards may have on our business or operations. Additionally, our customers may be subject to differing privacy laws, rules and legislation, which may mean that they require us to be bound by varying contractual requirements applicable to certain other jurisdictions. Adherence to such contractual requirements may impact our collection, use, processing, storage, sharing and disclosure of personal information and may mean we become bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters that may further change as laws, rules and regulations evolve.

We have incurred, and may continue to incur, significant expenses to comply with evolving mandatory privacy and security standards and protocols imposed by law, regulation, industry standards, shifting merchant and customer expectations, or contractual obligations, and we may not be able to respond quickly or effectively to regulatory, legislative and other developments. These changes may in turn impair our ability to offer our existing or planned features, products and services and/or increase our cost of doing business. Any failure or perceived failure by us to comply with any applicable federal, state or foreign laws and regulations relating to data privacy and security could result in damage to our reputation, as well as proceedings or litigation by governmental agencies or other third parties, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, injunctions, penalties or judgments. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

The use of new and evolving technologies, such as artificial intelligence, in our offerings may result in spending material resources and presents risks and challenges that can impact our business including by posing security and other risks to our confidential information, proprietary information and personal information, and as a result we may be exposed to reputational harm and liability.

We continue to build and integrate artificial intelligence into our offerings, and this innovation presents risks and challenges that could affect its adoption, and therefore our business. If we enable or offer solutions that draw controversy due to perceived or actual negative societal impact, we may experience brand or reputational harm, competitive harm or legal liability. The use of certain artificial intelligence technology can give rise to intellectual property risks, including compromises to proprietary intellectual property and intellectual property infringement. Additionally, we expect to see increasing government and supranational regulation related to artificial intelligence use and ethics, which may also significantly increase the burden and cost of research, development and compliance in this area. For example, the EU’s Artificial Intelligence Act (“AI Act”) — the world’s first comprehensive AI law — entered into force in August 2024 and, with some exceptions, will begin to apply as of August 2, 2026. This legislation imposes significant obligations on providers and deployers of high risk artificial intelligence systems, and encourages providers and deployers of artificial intelligence systems to account for EU ethical principles in their development and use of these systems. If we develop or use AI systems that are governed by the AI Act, it may necessitate ensuring higher standards of data quality, transparency, and human oversight, as well as adhering to specific and potentially burdensome and costly ethical, accountability, and administrative requirements. The rapid evolution of artificial intelligence will require the application of significant resources to design, develop, test and maintain our products and services to help ensure that artificial intelligence is implemented in accordance with applicable law and regulation and in a socially responsible manner and to minimize any real or perceived unintended harmful impacts. Our vendors may in turn incorporate artificial intelligence tools into their own offerings, and the providers of these artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards, including with respect to privacy and data security. Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property. Any of these effects could damage our reputation, result in the loss of valuable property and information, cause us to breach applicable laws and regulations, and adversely impact our business.

We rely on our software and information technology systems to manage numerous aspects of our business and a disruption of these systems could adversely affect our business.

We rely on our information technology systems to manage numerous aspects of our business, including to efficiently purchase products from our suppliers, provide procurement and logistic services, ship products to our customers, receive orders from our customers, manage our accounting and financial functions, including our internal controls, and maintain our research and development data. Our information technology systems are an essential component of our business and any disruption or compromise could significantly limit our ability to manage and operate our business efficiently. A failure of our information technology systems to perform properly could disrupt our supply chain, product development and customer experience, which may lead to increased overhead costs and decreased sales and have an adverse effect on our reputation and our financial condition. In particular, our integrated software platform is an essential system that virtually all of our customers depend on for their design needs. If our integrated software platform were to fail, we could face adverse consequences to our results of operations, financial condition and business reputation.

We have in the past experienced threats and security incidents related to our data and systems, and we may in the future experience other threats, compromises, breaches, or incidents. Although we take steps and incur significant costs to secure our

information technology systems, including our computer systems, intranet and internet sites, email and other telecommunications and data networks, our security measures may not be effective and our systems may be vulnerable to damage, compromise, or interruption. Disruption to or compromise of our information technology systems could result from power outages, computer and telecommunications failures, computer viruses, cyber-attack or other security compromises or breaches (including ransomware), catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war, terrorism and usage errors by our employees, wrongful conduct by employees, vendors, or other third parties, hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud or cyber-attacks. Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized groups and individuals with a wide range of motives and expertise. Such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and business email compromises, and other means to affect service reliability and threaten or compromise the security, confidentiality, integrity, and availability of systems and information.

Our reputation and financial condition could be adversely affected if, as a result of a significant cyber-event or otherwise:

In addition, any unauthorized access, disclosure or other loss, compromise, or unauthorized use of information or data could result in legal claims or proceedings, regulatory investigations or actions, and other types of liability under laws that protect the privacy and security of protected information, including personal information, including federal, state and foreign data protection and privacy regulations, violations of which could result in significant penalties and fines. In addition, although we seek to prevent and detect all data security incidents, security compromises or breaches and other malicious cyber activities can be difficult to detect and any delay in identifying or remediating them may lead to increased harm and legal exposure.

The cost of investigating, mitigating and responding to potential data security compromises or breaches and complying with applicable legal obligations, including breach notification obligations to individuals, regulators, partners and others can be significant. Our insurance policies may not be adequate to compensate us for the potential costs and other losses arising from such disruptions, failures or security compromises or breaches. In addition, such insurance may not be available to us in the future on economically reasonable terms, or at all. Further, defending a suit or regulatory inquiry or investigation, regardless of its merit, could be costly, divert management attention and harm our reputation.

If our computer or technology systems are damaged or cease to function properly, or, if we do not replace or upgrade certain systems, we may incur substantial costs to repair or replace them and may experience an interruption of our normal business activities, security compromise, or loss of critical data. Any such disruption or compromise could adversely affect our reputation and financial condition.

We also rely on information technology systems maintained by third parties, including third-party cloud computing services and the computer systems of our suppliers for both our internal operations and our customer-facing infrastructure related to our additive manufacturing solutions. These systems are also vulnerable to the types of interruption, compromise, and damage described above, but we have less ability to take measures to protect against such disruptions or compromises or to resolve them if they were to occur. Information technology problems or security compromises faced by third parties on which we rely could adversely impact our business and financial condition as well as negatively impact our brand reputation.

Any unauthorized control or manipulation of our products’ systems could result in loss of confidence in us and our products and harm our business.

Our products contain complex information technology systems and software. For example, our additive manufacturing machines are designed with built-in data connectivity to accept and install periodic remote updates from us to monitor, improve and update their functionality. We have designed, implemented and tested security measures intended to prevent and detect unauthorized access to our information technology networks, our products and their systems. However, hackers may attempt to gain unauthorized access to modify, alter and use such networks, products and systems to gain control of, or to change, our products’ functionality, user interface

and performance characteristics, or to gain access to data stored in or generated by our products. We encourage reporting of potential vulnerabilities in the security of our products and we aim to remedy any reported and verified vulnerability. We have received reports of potential vulnerabilities, threats, and security incidents related to our data and systems in the past and have attempted to remedy them. There can be no assurance that vulnerabilities will not be exploited in the future before they can be identified, or that our remediation efforts are or will be successful.

Any unauthorized access to or control of our products or their systems or any loss of data could result in legal claims or proceedings. In addition, regardless of their veracity, reports of unauthorized access to our products, their systems or data, as well as other factors that may result in the perception that our products, their systems or data are capable of being “hacked,” could negatively affect our brand and harm our business, prospects, financial condition and operating results.

Our business has risks that may not be adequately covered by insurance or indemnity.

We may face unanticipated risks of legal liability for damages caused by the actual or alleged failure of our products. While we have attempted to secure liability insurance coverage at an appropriate cost, it is impossible to adequately insure against all risks inherent in our industry, nor can we assure you that our insurers will pay a particular claim, or that we will be able to maintain coverage at reasonable rates in the future. Our insurance policies also contain deductibles, limitations and exclusions, which increase our costs in the event of a claim. Even a partially uninsured claim of significant size, if successful, could have an adverse effect on our financial condition. In addition, we may not be able to continue to obtain insurance coverage on commercially reasonable terms, or at all, and our existing policies may be cancelled or otherwise terminated by the insurer. Maintaining adequate insurance and successfully accessing insurance coverage that may be due for a claim can require a significant amount of our management’s time, and we may be forced to spend a substantial amount of money in that process. Substantial claims in excess of or not otherwise covered by indemnity or insurance could harm our financial condition and operating results.

We may not be able to adequately protect our proprietary and intellectual property rights in our data or technology.

Our success is dependent, in part, upon protecting our proprietary information and technology. Our intellectual property portfolio primarily consists of patents, patent applications, registered and unregistered trademarks, unregistered copyrights, domain names, know-how, and trade secrets. We may be unsuccessful in adequately protecting our intellectual property.

Our trade secrets, know-how and other unregistered proprietary rights are a key aspect of our intellectual property portfolio. While we take reasonable steps to protect our trade secrets and confidential information and enter into confidentiality and invention assignment agreements intended to protect such rights, such agreements can be difficult and costly to enforce or may not provide adequate remedies if violated, and we may not have entered into such agreements with all relevant parties. Such agreements may be breached and trade secrets or confidential information may be willfully or unintentionally disclosed, including by employees who may leave our company and join our competitors, or our competitors or other parties may learn of the information in some other way. Additionally, certain unauthorized use of our intellectual property may go undetected, or we may face legal or practical barriers to enforcing our legal rights even where unauthorized use is detected. The disclosure to, or independent development by, a competitor of any of our trade secrets, know-how or other technology not protected by a patent or other intellectual property system could materially reduce or eliminate any competitive advantage that we may have over such competitor. This concern could manifest itself in particular with respect to our proprietary materials that are used with our systems. Portions of our proprietary materials may not be afforded patent protection. Our pending patent applications may not be granted, and we may not be able to obtain foreign patents or pending applications corresponding to our U.S. patents. Even if foreign patents are granted, effective enforcement in foreign countries may not be available. If our patents and other intellectual property do not adequately protect our technology, our competitors may be able to offer products similar to ours. Our competitors may also be able to develop similar technology independently or design around our patents and other intellectual property. Any of the foregoing events would lead to increased competition and reduce our revenue or gross margin, which would adversely affect our operating results.

Current laws may not provide for adequate protection of our products, especially in foreign jurisdictions which may have laws that provide insufficient protections to companies. In addition, legal standards relating to the validity, enforceability, and scope of protection of proprietary rights in internet-related businesses are uncertain and evolving, and changes in these standards may adversely impact the viability or value of our proprietary rights. Some license provisions protecting against unauthorized use, copying, transfer, and disclosure of our products, or certain aspects of our products may be unenforceable under the laws of certain jurisdictions. Further, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States, and the laws and mechanisms for protection and enforcement of intellectual property rights in some foreign countries may be inadequate. As we continue to operate in foreign countries and expand our international activities, we have encountered and may in the future encounter challenges in navigating the laws of foreign countries, which may adversely affect our ability to protect our proprietary rights. Further,

competitors, foreign governments, foreign government-backed actors, criminals, or other third parties may gain unauthorized access to our proprietary information and technology. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our technology and intellectual property or claiming that we infringe upon or misappropriate their technology and intellectual property.

To protect our intellectual property rights, we may be required to spend significant resources to monitor, protect, and defend these rights, and we may or may not be able to detect infringement by our customers or third parties. Litigation has been and may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Such litigation, regardless of merit, could be costly, time consuming, and distracting to management and key technical personnel, and could result in the impairment or loss of portions of our intellectual property. In particular, in July 2021, Continuous Composites brought a claim in the United States District Court for the District of Delaware against us regarding patent infringement which we recently settled pursuant to the Settlement Agreement. For more information on the Continuous Composites litigation, please reference the Risk Factor section entitled “Risks Related to Our Business and Industry – We have been in the recent past, subject to business and intellectual property litigation.”

Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our platform, impair the functionality of our platform, delay introductions of new features, integrations, and capabilities, result in our substituting inferior or more costly technologies into our platform, or injure our reputation. In addition, we may be required to license or pay royalties on additional technology from third parties to develop and market new features, integrations, and capabilities, and we cannot be certain that we could license that technology on commercially reasonable terms or at all, and our inability to license this technology could harm our ability to compete.

As part of any settlement or other compromise to avoid complex, protracted litigation, we have and may again in the future agree not to pursue future claims against a third party, including related to alleged infringement of our intellectual property rights. Part of any settlement or other compromise, including the Settlement Agreement, with another party may resolve a potentially costly dispute but may also have future repercussions on our ability to defend and protect our intellectual property rights, which in turn could adversely affect our business.

If third parties claim that we infringe upon or otherwise violate their intellectual property rights, our business could be adversely affected.

We have in the recent past and may in the future be subject to claims that we have infringed or otherwise violated third parties’ intellectual property rights. There is patent, copyright and other intellectual property development and enforcement activity in our industry and relating to the additive manufacturing technology we use in our business. Our future success depends in part on not infringing upon or otherwise violating the intellectual property rights of others. Our competitors or other third parties (including non-practicing entities and patent holding companies) have and may from time to time continue to claim that we are infringing upon or otherwise violating their intellectual property rights and we may be found to be infringing upon or otherwise violating such rights. As discussed elsewhere in this Quarterly Report on Form 10-Q, we recently settled a patent infringement lawsuit brought against us by Continuous Composites. For more information on the Continuous Composites litigation, please reference the Risk Factor section entitled “Risks Related to Our Business and Industry – We have been in the recent past, subject to business and intellectual property litigation.” Further, we may be unaware of the intellectual property rights of others that may cover some or all of our current or future technology or conflict with our rights, and the patent, copyright, and other intellectual property rights of others may limit our ability to improve our technology and compete effectively. Any claims of intellectual property infringement or other intellectual property violations, even those without merit, could:

Any royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. A successful claim of infringement against us could result in our being required to pay significant damages, enter into costly settlement agreements, or prevent us from offering our platform or products, any of which could have a negative impact on our operating profits and harm our future prospects. We may also be obligated to indemnify our customers or business partners in connection with any such litigation and

to obtain licenses, modify our platform or products, or refund premium subscription fees, which could further exhaust our resources. Such disputes could also disrupt our platform or products, adversely affecting our customer satisfaction and ability to attract customers.

Our additive manufacturing technology contains third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to commercialize our products.

Our additive manufacturing technology contains components that are licensed under so-called “open source,” “free” or other similar licenses. Open source software is made available to the general public on an “as-is” basis under the terms of a non-negotiable license. We currently combine our proprietary software with open source software and intend to continue doing so in the future. Additionally, we make some of our source code available under open source licenses, which may limit our ability to protect our intellectual property rights in our source code and prevent our competitors or others from using such source code. Our use and distribution of open source software may entail greater risks than use of third-party commercial software because open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. In addition, if we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to disclose or make available the source code of our proprietary software to third parties. We may also face claims alleging noncompliance with open source license terms or infringement or misappropriation of third-party intellectual property rights in open source software. These claims could result in litigation, require us to purchase a costly license or remove the software. In addition, if the license terms for open source software that we use change, we may be forced to re-engineer our solutions, incur additional costs or discontinue the sale of our offerings if re-engineering could not be accomplished on a timely basis. Although we monitor our use of open source software to avoid subjecting our offerings to unintended conditions, there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our offerings. We cannot guarantee that we have incorporated open source software in our software in a manner that will not subject us to liability or in a manner that is consistent with our current policies and procedures.

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 Common Stock and/or Public Warrants.

On November 17, 2023, we were notified by the NYSE that we were not in compliance with Section 802.01C of the NYSE Listed Company Manual because the average closing price of our Common Stock was less than $1.00 per share over a consecutive 30 trading-day period. The notice had no immediate impact on the listing of our Common Stock .We submitted a reverse stock split proposal to our stockholders at our 2024 annual meeting to increase the trading price of our Common Stock and regain compliance. The reverse stock split proposal was approved by the stockholders at the 2024 annual meeting and, following approval by our board of directors, we implemented a 10-for-1 reverse stock split of our Common Stock on September 19, 2024. On October 30, 2024, we were notified by the NYSE that we had regained compliance with the NYSE’s minimum bid price listing requirement pursuant to Section 802.01C of the NYSE Listed Company Manual with respect to our Common Stock.

The reverse stock split and the subsequent public announcement of our entry into the Nano Merger Agreement on September 25, 2024 resulted in increases to the per share trading price of our Common Stock. There can be no assurance that the stock price increases resulting from the reverse stock split and public announcement of our entry into the Nano Merger Agreement will be maintained. For example, if the Nano Merger Agreement were to be terminated and the Nano Merger was not consummated, the per share price of our Common Stock may decrease, which may result in us falling out of compliance with the NYSE’s minimum bid price listing requirements in the future. Further, the liquidity of the shares of our Common Stock may be affected adversely by the reverse stock split given the reduced number of shares of our Common Stock that are outstanding following the reverse stock split. Furthermore, the market price of our split-adjusted Common Stock may not attract new investors and may not satisfy the investing requirements of those investors.

In addition, on September 26, 2024, the NYSE notified us it had determined to commence proceedings to delist our Public Warrants due to “abnormally low” trading price levels pursuant to Section 802.01D of the NYSE Listed Company Manual. We did not appeal the NYSE’s determination and expect that our Public Warrants will be delisted from the NYSE in the near future.

The delisting of our Common Stock and Public Warrants from the NYSE could make it more difficult for us to raise capital on favorable terms in the future. Such a delisting would likely have a negative effect on the price of our securities and would impair your ability to sell or purchase our securities when you wish to do so. In the event of a delisting, actions taken by us to restore compliance with listing requirements may not allow our securities to become listed again, stabilize the market price or improve the liquidity of our

securities, prevent such securities from dropping below any minimum bid price requirement or prevent future non-compliance with the NYSE listing requirements.

Changes in accounting rules and regulations, or interpretations thereof, could result in unfavorable accounting charges or require us to change our compensation policies.

Accounting methods and policies for public companies are subject to review, interpretation and guidance from our independent registered accounting firm and relevant accounting authorities, including the SEC. Changes to accounting methods or policies, or interpretations thereof, may require us to reclassify, restate or otherwise change or revise our consolidated financial statements.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

We designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls.

Our management team has limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws, rules and regulations that govern public companies. As a public company, we are subject to significant obligations relating to reporting, procedures and internal controls, and our management team may not successfully or efficiently manage such obligations. These obligations and scrutiny require significant attention from our management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition and results of operations.

Our internal controls over financial reporting currently do not meet all of the standards contemplated by Section 404 of the Sarbanes Oxley Act, and failure to achieve and maintain effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes Oxley Act could impair our ability to produce timely and accurate financial statements or comply with applicable regulations and have a material adverse effect on our business.

We operated as a private company until July 2021. Our management has significant requirements for enhanced financial reporting and internal controls as a public company. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis or result in material misstatements in our consolidated financial statements, which could harm our operating results. In addition, we are required, pursuant to Section 404 of the Sarbanes Oxley Act of 2002 (the “Sarbanes Oxley Act”), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment needs to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing, and possible remediation. Testing and maintaining internal controls may divert management’s attention from other matters that are important to our business. Our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting on an annual basis. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. If we are not able to complete our initial assessment of our internal controls and otherwise implement the requirements of Section 404 of the Sarbanes Oxley Act in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to the adequacy of our internal control over financial reporting.

In addition to our results determined in accordance with GAAP, we believe certain non-GAAP measures may be useful in evaluating our operating performance. We present certain non-GAAP financial measures in this Quarterly Report on Form 10-Q and intend to continue to present certain non-GAAP financial measures in future filings with the SEC and other public statements. Any

failure to accurately report and present our non-GAAP financial measures could cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our Common Stock.

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.

These material weaknesses resulted in audit adjustments to the following financial statement line items in the historical Markforged financial statements: operating expense, other expense, interest expense, other assets, other liabilities, additional paid in capital, treasury stock, retained earnings, note receivable—equity, and series D preferred stock. These adjustments were recorded prior to the issuance of the consolidated financial statements as of and for the years ended December 31, 2020 and 2019. Additionally, these material weaknesses resulted in audit adjustments to additional paid in capital and stock-based compensation expense for the quarters ended June 30, 2021, September 30, 2021, December 31, 2021, June 30, 2022, and December 31, 2022. The material weakness related to accounting for warrant instruments resulted in the restatement of the previously issued financial statements of AONE, the entity we merged with as part of the Merger related to warrant liabilities and equity. Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

We are in the process of designing and implementing controls and taking other actions to remediate the material weaknesses described above, including the following:

We have engaged third-party specialists to assist with testing and validating the operating effectiveness of certain controls over financial reporting to gain assurance that such controls are present and operating as designed, as well as to help review and update existing documentation of our internal controls for compliance with the Sarbanes-Oxley Act of 2002.

We are working to remediate the material weaknesses as efficiently and effectively as possible and expect full remediation could potentially go beyond December 31, 2024. At this time, we cannot provide an estimate of costs expected to be incurred in connection with implementing this remediation plan; however, these remediation measures will be time consuming, will result in us incurring significant costs, and will place significant demands on our financial and operational resources.

Our ability to use net operating loss (“NOL”) carryforwards and other tax attributes may be limited.

We have incurred substantial losses during our history and our ability to become profitable in the near future is uncertain. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire (if at all). As of December 31, 2023, we had federal NOL carryforwards of approximately $171.6 million, of which $15.0 million are subject to expire at various times beginning in 2033, and $156.6 million that have no expiration date and will be carried forward indefinitely. We also had state NOL carryforwards of approximately $89.9 million that will begin to expire in 2026, unless previously utilized. On December 31, 2023, we had federal and state research and development credit carryforwards of approximately $11.0 million and $5.6 million, respectively. The research and development credit carryforwards will begin expiring in 2033, unless previously utilized.

Federal NOLs incurred in tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five tax years preceding such loss, and NOLs arising in tax years beginning after December 31, 2020 may not be carried back. Because we have had no taxable income in prior years, we do not anticipate carrying back any of our net operating losses. Moreover, federal NOLs generated in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of our taxable income annually for tax years beginning after December 31, 2020. Our NOL carryforwards are subject to review and possible adjustment by the IRS, and state tax authorities. In addition, in general, under Sections 382 and 383 of the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs or tax credits to offset future taxable income or taxes. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who own at least 5% of a corporation’s stock increases their ownership by more than 50 percentage points over their lowest ownership percentage within a specified testing period. Our existing NOLs or credits may be subject to limitations arising from previous ownership changes, and future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code. Our NOLs or credits may also be impaired under state law. Accordingly, we may not be able to utilize a material portion of our NOLs or credits. If we determine that an ownership change has occurred and our ability to use our historical NOLs or credits is materially limited, it will harm our future operating results by effectively increasing our future tax obligations. Section 382 and 383 of the Code would apply to all net operating loss and tax credit carryforwards, whether the carryforward period is indefinite or not. If we earn taxable income, such limitations could result in increased future tax liability to us and our future cash flows could be adversely affected. We have recorded a full valuation allowance related to our NOLs and other deferred tax assets due to the uncertainty of the ultimate realization of the future benefits of those assets.

Comprehensive tax reform legislation could adversely affect our business and financial condition.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service, or IRS, and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our Common Stock. In recent years, many changes have been made and changes are likely to continue to occur in the future.

Additional changes to U.S. federal income tax law are currently being contemplated. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations. It cannot be predicted whether, when, in what form, or with what effective dates, new tax laws may be enacted, or regulations and rulings may be enacted, promulgated or issued under existing or new tax laws, which could result in an increase in our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law or in the interpretation thereof.

Additional Risks Related to Ownership of Our Common Stock and Us Operating as a Public Company

We will continue to incur increased costs as a result of operating as a public company, and our management are required to devote substantial time to new compliance initiatives.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes Oxley Act of 2002 and rules subsequently implemented by the Securities and Exchange Commission and the NYSE have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance.

Pursuant to the Sarbanes Oxley Act, we are required to furnish a report by our management on our internal control over financial reporting, including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, while we remain an emerging growth company, we are not required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 of the Sarbanes Oxley Act within the prescribed period, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404 of the Sarbanes Oxley Act. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, if we are not able to continue to meet these requirements, we may not be able to remain listed on NYSE.

The price of our Common Stock and Common Stock Warrants has been, and may continue to, be volatile.

The price of our Common Stock as well as our Common Stock Warrants may fluctuate due to a variety of factors, including:

These market and industry factors may materially impact the market price of our Common Stock and Common Stock Warrants regardless of our operating performance. Stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. If the stock prices for technology companies or the broader stock market continue to experience a loss of investor confidence, the trading price of our Common Stock could decline for reasons unrelated to our business, financial condition or results of operations.

We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in future agreements and financing instruments, business prospects and such other factors as its board of directors deems relevant. In addition, our ability to pay cash dividends is restricted during the pendency of the Nano Merger pursuant to the terms of the Nano Merger Agreement.

If analysts do not continue to publish research about our business or if they publish inaccurate or unfavorable research, our stock price and trading volume could decline.

The trading market for our Common Stock depends in part on the research and reports that analysts publish about our business. We do not have any control over these analysts. We currently have limited research coverage by securities and industry analysts. If other securities or industry analysts do not commence coverage of our company, the trading price for our stock could be negatively impacted. If one or more of the analysts who cover us downgrade our Common Stock or publish inaccurate or unfavorable research about our business, the price of our Common Stock would likely decline. If few analysts cover us, demand for our Common Stock could decrease and our Common Stock price and trading volume may decline. Similar results may occur if one or more of these analysts stop covering us in the future or fail to publish reports on us regularly.

We may be subject to securities litigation, which is expensive and could divert management attention.

The market price of our Common Stock may be volatile and, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future, including in connection with the Nano Merger. Securities litigation against us could result in substantial costs and divert management’s attention from other business concerns, which could seriously harm our business.

Future issuances and/or resales of our Common Stock may increase the volatility of and/or cause the market price of our securities to drop significantly, even if our business is doing well.

1,466,666 shares of our Common Stock may be issued (the “Markforged Earnout Shares”) upon our achievement of certain Earnout Triggering Events (as described in the Merger Agreement and Note 11 to our condensed consolidated financial statements), and additional shares may be issued upon exercise of the outstanding warrants to purchase shares of our Common Stock. Consummation of the proposed Nano Merger would constitute an Earnout Triggering Event. To the extent such additional shares of our Common Stock are issued, it will result in dilution to the holders of our Common Stock and an increase to the number of shares eligible for resale in the public market. Sales, or the potential for sales, of substantial numbers of such shares in the public market could increase the volatility of and/or adversely affect the market price of our Common Stock.

The obligations associated with being a public company involve significant expenses and require significant resources and management attention, which may divert from our business operations.

As a public company, we are subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. The Exchange Act requires the filing of annual, quarterly and current reports with respect to a public company’s business and financial condition. The Sarbanes-Oxley Act requires, among other things, that a public company establish and maintain effective internal control over financial reporting. As a result, we incur significant legal, accounting and other expenses that we did not previously incur. Our entire management team and many of our other employees will need to devote substantial time to compliance.

These rules and regulations result in us incurring substantial legal and financial compliance costs and make some activities more time-consuming and costly. For example, these rules and regulations will likely continue to make it more difficult and more expensive for us to obtain director and officer liability insurance, and it may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as executive officers.

We are currently an emerging growth company within the meaning of the Securities Act, and to the extent we have taken advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

We are currently an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company, which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

When we cease to be an emerging growth company, we will no longer be able to take advantage of certain exemptions from reporting, and, absent other exemptions or relief available from the SEC, we will also be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will incur additional expenses in connection with such compliance and our management will need to devote additional time and effort to implement and comply with such requirements.

Delaware law and our certificate of incorporation and bylaws contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.

The DGCL and our certificate of incorporation and bylaws contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our Common Stock, and therefore depress the trading price of our Common Stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of our board of directors or taking other corporate actions, including effecting changes in our management. Among other things, our certificate of incorporation and bylaws include provisions regarding:

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our board of directors or management.

The provisions of our bylaws requiring exclusive forum in the Court of Chancery of the State of Delaware and the federal district courts of the United States for certain types of lawsuits may have the effect of discouraging certain lawsuits, including derivative lawsuits and lawsuits against the directors and officers of us, by limiting plaintiffs’ ability to bring a claim in a judicial forum that they find favorable.

Our bylaws provide that, to the fullest extent permitted by law, and unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, in the event that such court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) will be the sole and exclusive forum for any state law claims for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim for or based on a breach of a fiduciary duty owed by any current or former director, officer or other employee of us to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or the Bylaws or Certificate of Incorporation (as either may be amended from time to time) (including the interpretation, validity and enforceability thereof), (iv) any action asserting a claim related to or involving us that is governed by the internal affairs doctrine, and (v) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL (the “Delaware Forum Provision”). The Delaware Forum Provision, however, does not apply to actions or claims arising under the Exchange Act. The Bylaws also provide that, unless we consent in writing to the selection of an alternate forum, the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, and the rules and regulations promulgated thereunder, will be the Federal District Courts of the United States (the “Federal Forum Provision,” and with the Delaware Forum Provision, the “Exclusive Forum Provisions”). In addition, the Bylaws provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the Delaware Forum Provision and the Federal Forum Provision, provided, however, that stockholders cannot and will not be deemed to have waived compliance with the U.S. federal securities laws and the rules and regulations thereunder.

These provisions may impose additional litigation costs on stockholders in pursuing any such claims and have the effect of discouraging certain lawsuits, including derivative lawsuits and lawsuits against our directors and officers, by limiting plaintiffs’ ability to bring a claim in a judicial forum that they find favorable. In addition, while the Delaware Supreme Court and other state courts have upheld the validity of federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court, there is uncertainty as to whether other courts will enforce our Federal Forum Provision. The Federal Forum Provision may also impose additional litigation costs on stockholders who assert that the provision is not enforceable or invalid, and if the Federal Forum Provision is found to be unenforceable, we may incur additional costs associated with resolving such matters. The Court of Chancery of the State of Delaware and the Federal District Courts of the United States may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.

The private placement warrants issued to the Sponsor, and the Markforged Earnout Shares, are accounted for as liabilities recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our Common Stock.

Under U.S. GAAP, we are required to evaluate our warrants to determine whether they should be accounted for as a warrant liability or as equity. We have concluded that the warrants contain provisions requiring liability classification. Therefore, we are accounting for the warrants as a warrant liability and recorded that liability at fair value upon issuance. We will record any subsequent changes in fair value as of the end of each period for which earnings are reported. The impact of changes in fair value on earnings may have an adverse effect on the market price of our Common Stock and may cause fluctuations in our results of operations based on factors that are outside of our control.

Additionally, the Markforged Earnout Shares are also accounted for as a liability because the triggering events that determine the number of shares to be earned included events that were not indexed to our Common Stock. These liabilities are subject to re-measurement at each balance sheet date. With each such re-measurement, the earnout liability will be adjusted to fair value, with a resulting non-cash gain or loss related to the change in the fair value being recognized in our earnings in the statement of operations. The impact of changes in fair value on earnings may have an adverse effect on the market price of our Common Stock. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses for each future reporting period and that the amount of such gains or losses could be material.

During the three months ended September 30, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

+ These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

* All schedules to the Nano Merger Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Markforged Holding Corporation agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request.

# Certain confidential information contained in this exhibit has been omitted because it is both (i) not material and (ii) is the type that Markforged Holding Corporation treats as private or confidential.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


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)


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 (Unaudited)	1
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	2
	Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	3
	Statement of Changes in Stockholders' Equity for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 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	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	39
PART II.	OTHER INFORMATION	41
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	80
Item 3.	Defaults Upon Senior Securities	80
Item 4.	Mine Safety Disclosures	80
Item 5.	Other Information	80
Item 6.	Exhibits	81
Signatures		82


	September 30, 2024			December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	59,279		$	116,854
Restricted cash		19,371			—
Accounts receivable, net of allowance for expected credit losses ($461 and $360, respectively)		19,899			24,059
Inventory		21,672			26,773
Prepaid expenses		3,141			2,756
Other current assets		2,218			2,022
Total current assets		125,580			172,464
Property and equipment, net		15,864			17,713
Intangible assets, net		21,328			17,128
Right-of-use assets		31,496			36,884
Other assets		2,976			3,763
Total assets	$	197,244		$	247,952
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	10,319		$	13,235
Accrued expenses		10,061			9,840
Settlement payable (Note 15)		18,000			—
Deferred revenue		8,343			8,779
Lease liabilities		5,758			7,368
Other current liabilities		—			1,526
Total current liabilities		52,481			40,748
Long-term settlement payable (Note 15)		5,181			—
Long-term deferred revenue		4,686			6,083
Contingent earnout liability		7,653			1,379
Long-term lease liabilities		27,809			35,771
Other liabilities		1,476			2,361
Total liabilities		99,286			86,342
Commitments and contingencies (Note 15)
Stockholders’ equity
Common stock, $0.0001 par value; 100,000,000 shares authorized at September 30, 2024 and December 31, 2023; 20,495,979 and 19,858,127 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively		19			19
Additional paid-in capital		376,435			366,281
Accumulated deficit		(278,378	)		(204,664	)
Accumulated other comprehensive income (loss)		(118	)		(26	)
Total stockholders’ equity		97,958			161,610
Total liabilities and stockholders’ equity	$	197,244		$	247,952


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Revenue	$	20,484		$	20,075		$	62,719		$	69,614
Cost of revenue		10,441			10,907			31,665			36,891
Gross profit		10,043			9,168			31,054			32,723
Operating expenses
Sales and marketing		8,144			8,194			24,514			28,436
Research and development		7,850			9,724			26,845			30,390
General and administrative		11,162			12,202			33,661			36,450
Goodwill impairment		—			29,467			—			29,467
Litigation judgment		423			—			17,723			—
Total operating expenses		27,579			59,587			102,743			124,743
Loss from operations		(17,536	)		(50,419	)		(71,689	)		(92,020	)
Change in fair value of derivative liabilities		63			(94	)		189			220
Change in fair value of contingent earnout liability		(7,408	)		(2,502	)		(6,274	)		(2,509	)
Other income (expense), net		471			(55	)		252			(277	)
Interest expense		(169	)		(127	)		(493	)		(243	)
Interest income		1,021			1,602			3,651			4,870
Loss before income taxes		(23,558	)		(51,595	)		(74,364	)		(89,959	)
Income tax (benefit) expense		(188	)		(233	)		(650	)		(590	)
Net loss	$	(23,370	)	$	(51,362	)	$	(73,714	)	$	(89,369	)
Weighted average shares outstanding - basic and diluted		20,330,917			19,741,014			20,129,099			19,639,131
Net loss per share - basic and diluted	$	(1.15	)	$	(2.60	)	$	(3.66	)	$	(4.55	)


	For the Nine Months Ended September 30,
	2024			2023
Operating Activities:
Net loss	$	(73,714	)	$	(89,369	)
Adjustments to reconcile net loss to cash used in operating activities
Depreciation, amortization, and non-cash lease interest		9,339			9,543
Allowance for expected credit losses		351			(566	)
Provision for excess and obsolete inventory		1,183			331
Change in fair value of derivative liabilities		(189	)		(220	)
Change in fair value of contingent earnout liability		6,274			2,509
Amortization (accretion) of (discounts) premiums on available-for-sale securities		—			(725	)
Stock-based compensation expense		9,848			10,158
Loss on disposal of fixed assets		539			—
Gain on operating lease termination		(973	)		—
Long-lived asset impairment		—			4,015
Goodwill impairment		—			29,467
Other		2			—
Changes in operating assets and liabilities
Accounts receivable		3,795			7,497
Inventory		3,879			(2,764	)
Prepaid expenses		(397	)		671
Other current assets		(198	)		25
Other assets		162			(392	)
Accounts payable and accrued expenses		15,182			(3,809	)
Other current liabilities		(190	)		44
Deferred revenue		(1,821	)		(72	)
Other long term liabilities		(953	)		(612	)
Other non-current lease liabilities		(8,068	)		(5,755	)
Net cash provided by (used in) operating activities		(35,949	)		(40,024	)
Investing Activities:
Purchases of property and equipment		(1,911	)		(2,176	)
Purchases of available-for-sale securities		—			(18,950	)
Proceeds from sales and maturities of marketable securities		—			35,500
Net cash provided by (used in) investing activities		(1,911	)		14,374
Financing Activities:
Payment of acquisition-related contingent liabilities		(582	)		—
Acquisition holdback payment		—			(250	)
Proceeds from exercise of common stock options		—			187
Taxes paid related to net share settlement of equity awards		(444	)		(305	)
Net cash provided by (used in) provided by financing activities		(1,026	)		(368	)
Effect of exchange rate changes on cash		57			(58	)
Net change in cash, cash equivalents, and restricted cash		(38,829	)		(26,076	)
Cash, cash equivalents, and restricted cash
Beginning of year		118,284			125,672
End of period	$	79,455		$	99,596

Supplemental disclosures of cash flow information
Cash and cash equivalents	$	59,279		$	98,166
Restricted cash		19,371			—
Restricted cash in other non-current assets		805			1,430
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	79,455		$	99,596
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	$	52		$	133
Common stock disbursed to settle acquisition holdback		—			250
Acquisition of cross license (Note 15)		5,474			—


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


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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒


	Common Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Stockholders’ Equity
	Shares		Amount		Capital			Deficit			Income (Loss)
December 31, 2022		19,456,095	$	19	$	352,564		$	(101,097	)	$	1,068		$	252,554
Exercise of common stock options		50,230		—		180			—			—			180
Stock vested under compensation plan less shares withheld to cover taxes		58,038		—		(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		19,564,363	$	19	$	356,982		$	(120,116	)	$	1,176		$	238,061
Exercise of common stock options		96		—		1			—			—			1
Stock vested under compensation plan less shares withheld to cover taxes		123,640		—		(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		19,688,099	$	19	$	358,645		$	(139,104	)	$	(503	)	$	219,057
Exercise of common stock options		705		—		6			—			—			6
Stock vested under compensation plan less shares withheld to cover taxes		71,766		—		(159	)		—			—			(159	)
Stock-based compensation expense		—		—		4,143			—			—			4,143
Earnout stock-based compensation expense		—		—		(31	)		—			—			(31	)
Net loss		—		—		—			(51,362	)		—			(51,362	)
Other comprehensive income (loss)		—		—		—			—			(1,010	)		(1,010	)
September 30, 2023		19,760,570		19		362,604			(190,466	)		(1,513	)	$	170,644

December 31, 2023		19,858,127	$	19	$	366,281		$	(204,664	)	$	(26	)	$	161,610
Stock vested under compensation plan less shares withheld to cover taxes		81,824		—		(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		19,939,951	$	19	$	369,561		$	(240,610	)	$	(1,067	)	$	127,903
Stock vested under compensation plan less shares withheld to cover taxes		206,366		—		(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		108,614		—		750			—			—			750
Net loss		—		—		—			(14,398	)		—			(14,398	)
Other comprehensive income (loss)		—		—		—			—			55			55
June 30, 2024		20,254,931	$	19	$	373,397		$	(255,008	)	$	(1,012	)	$	117,396
Stock vested under compensation plan less shares withheld to cover taxes		80,390		—		(104	)		—			—			(104	)
Stock-based compensation expense		—		—		3,175			—			—			3,175
Earnout stock-based compensation expense		—		—		(33	)		—			—			(33	)
Issuance of Common Stock in connection with the reverse split		160,658		—		—			—			—			—
Net loss		—		—		—			(23,370	)		—			(23,370	)
Other comprehensive income (loss)		—		—		—			—			894			894
September 30, 2024		20,495,979	$	19	$	376,435		$	(278,378	)	$	(118	)	$	97,958


2024 (remaining three months)	$	394
2025		2,294
2026		2,506
2027		2,257
2028		1,878
Thereafter		11,999
Total	$	21,328


	September 30, 2024		December 31, 2023
Common stock options outstanding and unvested RSUs		3,173,341		2,619,944
Shares available for issuance under the 2021 Plan		2,772,332		2,702,849
Common stock warrants outstanding		852,500		852,500
Shares available for issuance as Earnout RSUs		140,000		140,000
Employee stock purchase plan		1,049,136		850,553
Total shares of authorized common stock reserved for future issuance		7,987,309		7,165,846


	Three Months Ended September 30,
(dollars in thousands)	2024			2023			$ Change			% Change
Revenue	$	20,484		$	20,075			409			2	%
Cost of revenue		10,441			10,907			(466	)		(4	)%
Gross profit		10,043			9,168			875			10	%
Operating expenses
Sales and marketing		8,144			8,194			(50	)		(1	)%
Research and development		7,850			9,724			(1,874	)		(19	)%
General and administrative		11,162			12,202			(1,040	)		(9	)%
Goodwill impairment		—			29,467			(29,467	)		(100	)%
Litigation judgment		423			—			423			100	%
Total operating expense		27,579			59,587			(32,008	)
Loss from operations		(17,536	)		(50,419	)		32,883
Change in fair value of warrant liabilities		63			(94	)		157			(167	)%
Change in fair value of contingent earnout liability		(7,408	)		(2,502	)		(4,906	)		196	%
Other income (expense), net		471			(55	)		526			(956	)%
Interest expense		(169	)		(127	)		(42	)		33	%
Interest income		1,021			1,602			(581	)		(36	)%
Loss before income taxes		(23,558	)		(51,595	)		28,037
Income tax (benefit) expense		(188	)		(233	)		45			(19	)%
Net loss	$	(23,370	)	$	(51,362	)	$	27,992


	Nine Months Ended September 30,						Change
(dollars in thousands)	2024			2023			$			%
Net cash used in operating activities	$	(35,949	)	$	(40,024	)	$	4,075			10	%
Net cash provided by (used in) investing activities		(1,911	)		14,374			(16,285	)		113	%
Net cash provided by (used in) financing activities		(1,026	)		(368	)		(658	)		179	%
Effect of exchange rate changes on cash		57			(58	)		115			(198	)%
Net change in cash and cash equivalents	$	(38,829	)	$	(26,076	)	$	(12,753	)		(49	)%


Exhibit Number	Description

2.1*	Agreement and Plan of Merger, by and among Nano Dimension Ltd., Nano US II, Inc. and Markforged Holding Corporation, dated September 25, 2024 (incorporated by reference to Exhibit 2.1 to Markforged Holding Corporation’s Current Report on Form 8-K filed September 26, 2024).

3.1	Certificate of Incorporation of Markforged Holding Corporation (incorporated by reference to Exhibit 3.1 to Markforged Holding Corporation’s Current Report on Form 8-K filed July 20, 2021).

3.2	Bylaws of Markforged Holding Corporation (incorporated by reference to Exhibit 3.2 to Markforged Holding Corporation’s Current Report on Form 8-K filed July 20, 2021).

3.3	Certificate of Amendment to the Certificate of Incorporation of Markforged Holding Corporation (incorporated by reference to Exhibit 3.1 to Markforged Holding Corporation’s Current Report on Form 8-K filed June 18, 2024).

3.4	Certificate of Amendment to the Certificate of Incorporation of Markforged Holding Corporation (incorporated by reference to Exhibit 3.1 to Markforged Holding Corporation’s Current Report on Form 8-K filed September 19, 2024).

10.1	Termination Agreement, dated July 24, 2024, by and between Markforged, Inc. and GRE Riverworks, LLC (incorporated by reference to Exhibit 10.1 to Markforged Holding Corporation’s Current Report on Form 8-K filed July 30, 2024).

10.2#	Settlement and Patent License Agreement, dated September 20, 2024, by and between MarkForged, Inc. and Continuous Composites Inc. (incorporated by reference to Exhibit 10.1 to Markforged Holding Corporation’s Current Report on Form 8-K filed September 23, 2024).

10.3#	Security Agreement, dated September 20, 2024, by and between MarkForged, Inc. and Continuous Composites Inc. (incorporated by reference to Exhibit 10.2 to Markforged Holding Corporation’s Current Report on Form 8-K filed September 23, 2024).

10.4	Form of Voting and Support Agreement, by and among Nano Dimension Ltd., Nano US II, Inc. and certain stockholders of Markforged Holding Corporation, dated September 25, 2024 (incorporated by reference to Exhibit 10.1 to Markforged Holding Corporation’s Current Report on Form 8-K filed September 26, 2024).

31.1**	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**+	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**+	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**	Inline XBRL Instance Document

101.SCH**	Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Documents

104**	Cover Page Interactive Data File (embedded within the Inline XBRL document)



	Markforged Holding Corporation

Date: November 7, 2024	By:	/s/ Shai Terem
		Shai Terem
		Chief Executive Officer (Principal Executive Officer)

Date: November 7, 2024	By:	/s/ Assaf Zipori
		Assaf Zipori
		Chief Financial Officer (Principal Financial and Accounting Officer)