UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
DESKTOP METAL, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee paid previously with preliminary materials. |
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Fee computed on table in exhibit required by Item
25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
SUPPLEMENT TO DEFINITIVE PROXY STATEMENT
This supplement (this “Supplement”)
to the Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission (“SEC”) on August
15, 2024 (the “Definitive Proxy Statement”), by Desktop Metal, Inc., a Delaware corporation (the “Company”
or “Desktop Metal”), is being filed to supplement the Definitive Proxy Statement as described in the Explanatory Note
below. Unless otherwise defined in this Supplement, capitalized terms have the meaning as defined in the Definitive Proxy Statement.
EXPLANATORY NOTE
As previously disclosed,
on July 2, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the
Company, Nano Dimension Ltd., an Israeli company (“Nano”), and Nano US I, Inc., a Delaware corporation and an indirect
wholly owned subsidiary of Nano (“Merger Sub”). The Merger Agreement provides, subject to the terms and conditions
set forth therein, that Merger Sub will merge with and into the Company, with the Company surviving the merger as an indirect wholly owned
subsidiary of Nano (the “Merger”). On August 15, 2024, the Company filed the Definitive Proxy Statement with respect
to the special meeting of the Company’s stockholders scheduled to be held on October 2, 2024.
As of the date of this Supplement,
the Company has received several demand letters from purported Desktop Metal stockholders alleging, among other things, that the Definitive
Proxy Statement, or in some cases, the Preliminary Proxy Statement on Schedule 14A of the Company filed on August 1, 2024 (the “Preliminary
Proxy Statement”), omits material information with respect to the Merger, rendering the disclosures set forth therein false
and misleading in violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended, and seeking Company books
and records pursuant to Section 220 of the Delaware General Corporation Law (collectively, the “Demand Letters”). On
August 12, 2024, a purported stockholder of Desktop Metal filed a complaint in the United States District Court for the Southern District
of New York, captioned Bugantev v. Desktop Metal, Inc., No. 1:24-cv-06092 (S.D.N.Y.) (the “Bugantev Complaint”),
alleging substantially the same claims as the Demand Letters. On August 16, 2024, the plaintiff voluntarily dismissed the Bugantev Complaint.
On September 16, 2024, a purported stockholder of Desktop Metal filed a complaint in the Supreme Court of the State of New York, County
of New York, captioned Floyd v. Desktop Metal, et al. (the “Floyd Complaint”), alleging negligent misrepresentation
and concealment claims based on purported disclosure deficiencies in the Definitive Proxy Statement. On September 17, 2024, a purported
stockholder of Desktop Metal filed a complaint in the Supreme Court of the State of New York, County of New York, captioned Clark v.
Desktop Metal, et al. (the “Clark Complaint” and together with the Floyd Complaint, the “Complaints”),
alleging substantially the same claims as the Floyd Complaint.
The Company believes that no
further disclosure is required to supplement the Definitive Proxy Statement under applicable laws. However, solely to moot the claims
in the Demand Letters and Complaints and minimize the risk, costs, burden, nuisance and uncertainties inherent in litigation, and without
admitting any liability or wrongdoing, the Company hereby supplements the disclosures contained in the Definitive Proxy Statement (the
“Supplemental Disclosures”). Nothing in this Supplement will be deemed an admission of the legal necessity or materiality
under any applicable laws for any of the supplemental disclosures set forth herein. The Supplemental Disclosures are set forth below and
should be read in conjunction with the Definitive Proxy Statement. The Company vigorously denies all allegations in the Demand Letters
and the Complaints, including that any additional disclosure was or is required, and believes that the supplemental disclosures contained
herein are immaterial.
Supplemental Disclosures to the Definitive Proxy
Statement
The information in this
Supplement supplements the Definitive Proxy Statement and should be read in conjunction with the Definitive Proxy Statement, which
should be read in its entirety. Except as described in this Supplement, the information provided in the Definitive Proxy Statement
continues to apply. All section headings, paragraph references and page references used herein refer to the Definitive Proxy
Statement before any additions or deletions resulting from the Supplemental Disclosures. Capitalized terms used herein, but not
otherwise defined, shall have the meanings ascribed to such terms in the Definitive Proxy Statement. The Supplemental Disclosures
are identified below by bold, underlined text. Stricken-through text shows text being deleted from
the referenced disclosure in the Definitive Proxy Statement. If information in the Supplemental Disclosures differs from or updates
information contained in the Definitive Proxy Statement, then the information in the Supplemental Disclosures is more current and
supersedes the information contained in the Definitive Proxy Statement.
* * *
THE MERGER¾Background
of the Merger
| 1. | The fourth paragraph in the section entitled “THE MERGER ¾
Background of the Merger” on page 39 of the Definitive Proxy Statement is amended as follows: |
On February 9, 2021, Mr. Fulop
delivered to Stratasys Ltd. (“Stratasys”) a letter containing a non-binding, preliminary indication of interest of
Desktop Metal to acquire Stratasys in a stock-for-stock transaction on the basis of $60.00 per Stratasys ordinary share and stated that
the proposal represented a 27.8% premium to the 15-trading day volume-weighted average price as of the date of the letter. Dr. Zeif and
Mr. Fulop continued to periodically discuss potential collaborations between the two companies. During the period between the beginning
of 2021 and through the second quarter of 2024, Desktop Metal held multiple exploratory discussions at different times with ten parties
(in addition to Nano) about potential combinations. The Company entered into confidentiality agreements with [six] of these ten
parties, including form confidentiality agreements required in connection with onsite visits to Desktop Metal’s offices. Other than
the confidentiality agreement with Nano (as described below), none of the confidentiality agreements contained a standstill provision.
None of these discussions, other than those involving Stratasys described below, resulted in formal offers being made to Desktop
Metal.
| 2. | The fourth full paragraph on page 46 of the Definitive Proxy Statement in the section entitled “THE
MERGER ¾ Background of the Merger” is amended as follows: |
On May 15, 2024, as Mr. Fulop
and Mr. Cole continued exploring restarting discussions regarding the transaction with Mr. Stern, Mr. Pinchas and Mr. Nedivi, Mr. Stern
sent Mr. Fulop a framework of a transaction whereby Nano would pay Desktop Metal $10.50 per share if Desktop Metal held $65,000,000 in
cash at closing. Additionally, for every $2.5 million less than $65 million in cash at the closing of the transaction, the purchase price
would be adjusted down by $0.10. Mr. Stern’s offer also stated that Desktop Metal’s restricted stock units would not be accelerated
but would be replaced in accordance with Nano’s option plan in terms of structure and vesting (the “Ninth Nano Offer”).
The Ninth Nano Offer did not mention, and none of the previous Nano offers mentioned, any offer of post-transaction employment for
Desktop Metal’s executive officers, or any proposal for Desktop Metal’s executive officers to purchase or participate in the
equity of the surviving company.
| 3. | The tenth full paragraph on page 47 of the Definitive Proxy Statement in the section entitled “THE
MERGER ¾ Background of the Merger” is amended as follows: |
On June 25, 2024, Mr.
Nedivi proposed to Mr. Fulop that in light of the ambiguity under the existing Desktop Metal, Inc. Severance Plan with respect to the
definition of “good reason”, certain Desktop Metal executives enter into severance letters described in the section entitled
“¾Treatment of Desktop Metal Equity Awards — Severance Letter
Agreements” waiving certain “good reason” rights in the 12 months following the Merger. On June 26,
2024, Nano started negotiating the severance letters of Desktop Metal executives.
THE MERGER¾
Opinion of Desktop Metal’s Financial Advisor
| 4. | The second through fifth paragraphs under the heading “THE MERGER¾
Opinion of Desktop Metal’s Financial Advisor¾ Selected Public Companies Analysis”
starting on page 55 of the Definitive Proxy Statement are amended as follows: |
Stifel calculated and
compared financial multiples for the selected public companies of enterprise value, which is referred to as EV, which Stifel defined
as fully-diluted equity value using the treasury stock method, plus debt, less cash and cash equivalents, to actual revenue for the
last twelve months (“LTM”) and estimated revenue for each of calendar years 2024 and 2025. Financial data for the
selected public companies were based on publicly available data obtained from SEC filings, Wall Street research analyst consensus
estimates through Refinitiv Eikon and other data sources and closing prices, as of July 1, 2024, the last trading day
prior to the delivery of the Stifel Opinion. LTM metrics were based on last twelve months based on comparable company filings
available as of June 30, 2024, while estimated revenue for 2024 and 2025 presented herein were derived from Wall Street research
analyst estimates.
The results of this selected
public companies analysis are summarized below:
| Additive Manufacturing Comparable
Companies: | |
EV (As
of 7/1/24) | | |
EV / LTM
(6/30/24)
Revenue | | |
EV
/ Revenue 2024E | | |
EV
/ Revenue 2025E | |
| Kornit
Digital Ltd. | |
$ | 168 | | |
| 0.8 | x | |
| 0.8 | x | |
| 0.7 | x |
| 3D Systems Corporation | |
| 458 | | |
| 1.0 | x | |
| 1.0 | x | |
| 0.9 | x |
| Velo3D, Inc. | |
| 55 | | |
| 0.9 | x | |
| N.A. | | |
| N.A. | |
| Markforged Holding
Corporation | |
| (18 | ) | |
| N.M. | | |
| N.M. | | |
| N.M. | |
| Prodways Group
SA | |
| 32 | | |
| 0.4 | x | |
| 0.5 | x | |
| 0.4 | x |
| Stratasys Ltd. | |
| 455 | | |
| 0.7 | x | |
| 0.7 | x | |
| 0.7 | x |
| Multiple: | |
1st Quartile | | |
Median | | |
Mean | | |
3rd Quartile | |
| EV/LTM (6/30/24) Revenue | |
| 0.7 | x | |
| 0.8 | x | |
| 0.8 | x | |
| 0.9 | x |
| EV/CY 2024E Revenue | |
| 0.7 | x | |
| 0.8 | x | |
| 0.7 | x | |
| 0.8 | x |
| EV/CY 2025E Revenue | |
| 0.6 | x | |
| 0.7 | x | |
| 0.7 | x | |
| 0.8 | x |
Stifel applied the ranges of
the first and third quartile multiples of the selected public companies to the corresponding LTM, estimated calendar year 2024 and estimated
calendar year 2025 revenue of Desktop Metal per the Desktop Metal Projections to calculate a range of implied enterprise values.
Stifel then calculated the implied equity value by subtracting Desktop Metal’s total debt of approximately $116 million, consisting
of Desktop Metal’s convertible notes outstanding, bank debt and financial leases, as of June 30, 2024 as provided by Desktop Metal
management, and then adding $47 million of Desktop Metal’s cash, cash equivalents and short-term investments as of June 30, 2024,
as provided by Desktop Metal management. The range of implied equity values was then divided by Desktop Metal’s fully diluted shares
outstanding to arrive at the following ranges of implied prices per share of Desktop Metal Class A Common Stock.
| Multiple: |
|
Range of
Multiples |
|
Implied Value Per Share of Class A
Common Stock |
| EV/LTM (6/30/24) Revenue |
|
0.7x – 0.9x |
|
$1.75 - $2.63 |
| EV/CY 2024E Revenue |
|
0.7x – 0.8x |
|
$1.31 - $2.26 |
| EV/CY 2025E Revenue |
|
0.6x – 0.8x |
|
$1.48 - $2.37 |
No company utilized in the selected
public companies analysis is identical to Desktop Metal. In evaluating the selected companies, Stifel made judgments and assumptions with
regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond
Desktop Metal’s control, such as the impact of competition on its business and the industry generally, industry growth and the absence
of any adverse material change in Desktop Metal’s financial condition and prospects or the industry or in the financial markets
in general. Mathematical analysis (such as determining the 1st and 3rd quartiles) is not in itself a meaningful method of using peer group
data.
| 5. | The disclosure under the heading “THE MERGER¾ Opinion
of Desktop Metal’s Financial Advisor¾ Selected Transaction Analysis” on page
56 of the Definitive Proxy statement is amended as follows: |
Based on publicly available
data and other information available to Stifel, Stifel calculated the multiples of EV to LTM and next twelve months’ (“NTM”)
revenue implied in the following 8 selected acquisitions of public companies that have been announced since January 1, 2018 in technology
and tech-adjacent businesses with profitability and growth profiles Stifel believed to be relevant to Desktop Metal:
| Announce Date | |
Closing Date | |
Acquirer | |
Target | |
EV | | |
EV / LTM Rev | | |
EV / NTM Rev | |
| 2/6/24 | |
5/13/24 | |
Haveli Investments | |
ZeroFox Holdings | |
$ | 323.1 | | |
| 1.5 | x | |
| 1.4 | x |
| 11/27/23 | |
5/22/24 | |
CORE Industrial | |
Fathom Digital Manufacturing | |
$ | 309.5 | | |
| 2.2 | x | |
| 2.4 | x |
| 4/12/23 | |
7/13/23 | |
Lee Equity Partners; Twin Point Capital | |
TESSCO Technologies | |
$ | 158.8 | | |
| 0.4 | x | |
| 0.3 | x |
| 9/27/21 | |
9/15/22 | |
Bain Capital | |
Industria de Turbo Propulsores (ITP Aero) | |
$ | 2,106.3 | | |
| 2.5 | x | |
| N.A. | |
| 2/20/20 | |
6/29/20 | |
Dialog Semiconductor | |
Adesto Technologies | |
$ | 497.0 | | |
| 4.2 | x | |
| 3.6 | x |
| 11/1/19 | |
1/14/21 | |
Google | |
Fitbit | |
$ | 1,686.0 | | |
| 1.1 | x | |
| 1.2 | x |
| 6/24/19 | |
11/1/19 | |
US Ecology | |
NRC Group Holdings | |
$ | 863.2 | | |
| 2.2 | x | |
| 1.9 | x |
| 11/6/18 | |
1/4/19 | |
CVC Fund VII | |
ConvergeOne Holdings | |
$ | 1,694.4 | | |
| 1.2 | x | |
| 1.0 | x |
In the table above, multiples were considered
not applicable (N.A.) where financial information was not available.
The following table sets forth
the multiples indicated by this analysis:
| Multiple: | |
1st Quartile | | |
Median | | |
Mean | | |
3rd Quartile | |
| EV/LTM Revenue | |
| 1.2 | x | |
| 1.8 | x | |
| 1.9 | x | |
| 2.3 | x |
| EV/NTM Revenue | |
| 1.1 | x | |
| 1.4 | x | |
| 1.7 | x | |
| 2.1 | x |
Stifel applied ranges of the
first and third quartile multiples for the selected transactions to the corresponding LTM and NTM revenue of Desktop Metal per the Desktop
Metal Projections, to calculate a range of implied enterprise values. Stifel then calculated the implied equity value by subtracting
Desktop Metal’s total debt of approximately $116 million, consisting of Desktop Metal’s convertible notes outstanding, bank
debt and financial leases, as of June 30, 2024 as provided by Desktop Metal management, and then adding $47 million of Desktop Metal’s
cash, cash equivalents and short-term investments as of June 30, 2024, as provided by Desktop Metal management. The range of implied equity
values was then divided by Desktop Metal’s fully diluted shares outstanding to arrive at the following ranges of implied
prices per share of Desktop Metal Class A Common Stock.
| Multiple: |
|
Range of
Multiples |
|
Implied Value Per Share of
Class A Common Stock |
| EV/LTM Revenue |
|
1.2x – 2.3x |
|
$4.04 – $9.62 |
| EV/NTM Revenue |
|
1.1x – 2.1x |
|
$3.42 – $8.60 |
No company or transaction
used in the selected transactions analyses is identical to Desktop Metal or the Merger, and Stifel noted that no similar
transactions had occurred in the additive manufacturing segment in the last three years. Accordingly, an analysis of the results of
the foregoing is not mathematical; rather, it involves complex considerations and judgments concerning differences in financial and
operating characteristics of the companies and other factors that could affect the public trading value of the companies to which
Desktop Metal is being compared and the enterprise value and equity value of the transactions to which the Merger is being compared.
In evaluating the selected transactions, Stifel made judgments and assumptions with regard to industry performance, general
business, market and financial conditions and other matters, which are beyond Desktop Metal’s control, such as the impact of
competition on Desktop Metal’s business or the industry generally, industry growth and the absence of any adverse material
change in the financial condition of Desktop Metal, the companies involved in the selected transactions or the industry or in the
financial markets in general, which could affect the public trading value of the companies involved in the selected transactions
analysis and the enterprise value and equity value implied in the transactions to which the Merger is being compared.
| 6. | The second and third paragraphs under the heading “THE MERGER¾
Opinion of Desktop Metal’s Financial Advisor¾ Discounted Cash Flow Analysis”
on page 57 of the Definitive Proxy Statement are amended as follows: |
This analysis indicated a range
of enterprise values, which Stifel then decreased by Desktop Metal’s net debt to calculate a range of equity value. Stifel
calculated net debt by taking Desktop Metal’s total debt of approximately $116 million consisting of Desktop Metal’s convertible
notes outstanding, bank debt and financial leases, as of June 30, 2024 as provided by Desktop Metal management, and then subtracted $47
million of Desktop Metal’s cash, cash equivalents and short-term investments as of June 30, 2024, as provided by Desktop Metal management,
to calculate a range of implied equity values.
These equity values were then
divided by the fully diluted shares of approximately 33 million Class A Common Stock, determined using the treasury stock
method, and taking into account approximately 2 million restricted stock units (assuming all vest at 100% of target attainment)
and 0.014 million in-the-money stock options as of June 30, 2024, as provided to Stifel by Desktop Metal, to calculate the following
ranges of implied equity values per share:
| Discount Rate: |
|
Implied Value Per
Share of Class A
Common Stock |
| 13.0% Discount Rate |
|
$0.75 – $5.87 |
| 17.0% Discount Rate |
|
$0.10 – $4.49 |
Stifel then calculated the average
of the low and high values per share of Class A Desktop Metal Common Stock implied by each discount rate, resulting in a range of implied
value per share of Class A Common Stock of $0.42 to $5.18.
| 7. | The fourth paragraph under the heading “THE MERGER ¾
Opinion of Desktop Metal’s Financial Advisor ¾ Conclusion” on page 58 of the
Definitive Proxy Statement is amended as follows: |
In 2023, Stifel acted as financial
advisor to Desktop Metal in connection with its proposed merger with Stratasys Ltd. (the “Stratasys Transaction”), for which
Stifel received compensation a fee of $1.5 million for providing an opinion to the board of directors of Desktop
Metal, which was not contingent upon the consummation of the Stratasys Transaction. Other than the Stratasys Transaction, there
are no material relationships that existed during the two years prior to the date of the Stifel Opinion or that as of such date were mutually
understood to be contemplated in which any compensation was received or is intended to be received as a result of the relationship between
Stifel and any party to the Merger. Stifel may seek to provide investment banking services to Desktop Metal or Nano or their respective
affiliates in the future, for which Stifel would seek customary compensation. In the ordinary course of its business, Stifel, its affiliates
and their respective clients may transact in the securities of each of Desktop Metal or Nano and may at any time hold a long or short
position in such securities.
THE MERGER¾Unaudited
Financial Forecasts
| 8. | The first three paragraphs in the section under the heading “THE MERGER ¾
Unaudited Financial Forecasts ¾ Summary of the financial forecasts by Desktop Metal”
beginning on page 60 of the Definitive Proxy Statement are amended as follows: |
In connection with the evaluation
of the Merger, Desktop Metal’s management prepared forecasts of Desktop Metal’s financial results for calendar years
2024 through 2028.
The following table presents
a summary of the GAAP financial forecasts by Desktop Metal:
| | |
FY 2024E | | |
FY 2025E | | |
FY 2026E | | |
FY 2027E | | |
FY 2028E | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
(dollars in millions, except Gross Margin data) | |
| Total Revenue | |
$ | 175.0 | | |
$ | 203.0 | | |
$ | 242.0 | | |
$ | 272.0 | | |
$ | 314.0 | |
| GAAP Cost of Sales(1) | |
$ | 161.5 | | |
$ | 164.4 | | |
$ | 178.2 | | |
$ | 187.5 | | |
$ | 203.8 | |
| GAAP Gross Profit(2) | |
$ | 13.5 | | |
$ | 38.6 | | |
$ | 63.8 | | |
$ | 84.5 | | |
$ | 110.2 | |
| GAAP Gross Margin(3) | |
| 8 | % | |
| 19 | % | |
| 26 | % | |
| 31 | % | |
| 35 | % |
| GAAP Operating Expenses: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Research & Development | |
| 42.1 | | |
| 33.0 | | |
| 34.0 | | |
| 36.0 | | |
| 40.3 | |
| Sales & Marketing | |
| 21.5 | | |
| 23.8 | | |
| 27.8 | | |
| 31.8 | | |
| 37.9 | |
| General & Administrative | |
| 35.7 | | |
| 28.7 | | |
| 30.2 | | |
| 30.7 | | |
| 31.3 | |
| Depreciation & Amortization | |
| 21.1 | | |
| 22.1 | | |
| 22.2 | | |
| 22.4 | | |
| 22.5 | |
| Stock-Based Compensation | |
| 29.1 | | |
| 23.1 | | |
| 23.5 | | |
| 23.8 | | |
| 24.2 | |
| Transaction & Restructuring Costs | |
| 12.6 | | |
| — | | |
| — | | |
| — | | |
| — | |
| Total GAAP Operating Expenses | |
$ | 162.1 | | |
$ | 130.7 | | |
$ | 137.6 | | |
$ | 144.7 | | |
$ | 156.2 | |
| GAAP Net Operating Income/(Loss)(4) | |
$ | (148.6 | ) | |
$ | (92.1 | ) | |
$ | (73.8 | ) | |
$ | (60.2 | ) | |
$ | (46.0 | ) |
| Other & Interest
(Expense)/Income, net | |
| (7.8 | ) | |
| (6.5 | ) | |
| (6.5 | ) | |
| (3.1 | ) | |
| (1.4 | ) |
| Benefit for
Income Taxes | |
| 0.2 | | |
| ¾ | | |
| ¾ | | |
| ¾ | | |
| ¾ | |
| Net Income/(Loss)(5) | |
$ | (156.2 | ) | |
$ | (98.6 | ) | |
$ | (80.4 | ) | |
$ | (63.3 | ) | |
$ | (47.4 | ) |
| (1) | GAAP Cost of Sales consists of the cost of products and cost of services. Cost of products includes the manufacturing
cost of Desktop Metal’s additive manufacturing systems and consumables, which primarily consists of amounts paid to third-party
contract manufacturers and suppliers and personnel-related costs directly associated with manufacturing operations. It also includes cost
of labor, materials and overhead for Desktop Metal’s produced parts offerings. Cost of services includes personnel-related costs
directly associated with the provision of support services to customers, which include engineers dedicated to remote support as well as,
training, support and the associated travel costs. GAAP Cost of Sales also includes depreciation and amortization, cost of spare or replacement
parts, warranty costs, excess and obsolete inventory and shipping costs and an allocated portion of overhead costs. |
| (2) | GAAP Gross Profit is calculated based on the difference between Total Revenue and GAAP Cost of Sales. |
| (3) | GAAP Gross Margin is the percentage obtained by dividing GAAP Gross Profit by Total Revenue. |
| (4) | GAAP Net Operating Income/(Loss) is GAAP Gross Profit less GAAP Operating Expenses. |
| (5) | Net Income/(Loss) is GAAP Net Operating Income/(Loss) less other income (expense), interest income (expense),
change in fair value of investments and income tax benefit. |
The following table presents
a summary of the non-GAAP financial forecasts by Desktop Metal:
| | |
FY 2024E | | |
FY 2025E | | |
FY 2026E | | |
FY 2027E | | |
FY 2028E | |
| | |
| | |
| | |
| | |
| | |
| |
| | |
(dollars in millions, except Non-GAAP Gross Margin
data) | |
| Total Revenue | |
$ | 175.0 | | |
$ | 203.0 | | |
$ | 242.0 | | |
$ | 272.0 | | |
$ | 314.0 | |
| Non-GAAP Cost of Sales(1) | |
$ | 123.9 | | |
$ | 134.8 | | |
$ | 148.7 | | |
$ | 157.9 | | |
$ | 174.2 | |
| Non-GAAP Gross Profit(2) | |
$ | 51.1 | | |
$ | 68.2 | | |
$ | 93.3 | | |
$ | 114.1 | | |
$ | 139.8 | |
| Non-GAAP Gross Margin(3) | |
| 29 | % | |
| 34 | % | |
| 39 | % | |
| 42 | % | |
| 45 | % |
| Non-GAAP Operating Expenses: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Research & Development | |
| 42.1 | | |
| 33.0 | | |
| 34.0 | | |
| 36.0 | | |
| 40.3 | |
| Sales & Marketing | |
| 21.5 | | |
| 23.8 | | |
| 27.8 | | |
| 31.8 | | |
| 37.9 | |
| General & Administrative | |
| 35.7 | | |
| 28.7 | | |
| 30.1 | | |
| 30.7 | | |
| 31.3 | |
| Depreciation | |
| 8.3 | | |
| 8.5 | | |
| 8.7 | | |
| 8.8 | | |
| 8.9 | |
| Total Non-GAAP Operating Expenses(4) | |
$ | 107.5 | | |
$ | 93.9 | | |
$ | 100.5 | | |
$ | 107.3 | | |
$ | 118.4 | |
| Non-GAAP Net Operating Income/(Loss)(5) | |
$ | (56.5 | ) | |
$ | (25.8 | ) | |
$ | (7.3 | ) | |
$ | 6.8 | | |
$ | 21.4 | |
| Adjusted EBITDA(6) | |
$ | (45.3 | ) | |
$ | (11.6 | ) | |
$ | 7.3 | | |
$ | 21.7 | | |
$ | 36.5 | |
| (1) | Non-GAAP Cost of Sales is GAAP Cost of Sales less amortization, stock-based compensation and transaction
and restructuring costs. |
| (2) | Non-GAAP Gross Profit is calculated based on the difference between Total Revenue and Non-GAAP Cost of Sales. |
| (3) | Non-GAAP Gross Margin is the percentage obtained by dividing Non-GAAP Gross Profit by Total Revenue. |
| (4) | Non-GAAP Operating Expenses is GAAP operating expenses less stock-based compensation, amortization of acquired
intangible assets, restructuring expense and acquisition-related and integration costs. |
| (5) | Non-GAAP Net Operating Income/(Loss) is GAAP Net Operating Income/(Loss) less stock-based compensation, amortization
of acquired intangible assets, restructuring expense, acquisition-related and integration costs and change in fair value of investments. |
| (6) | Adjusted EBITDA is EBITDA adjusted for change in fair value of investments, stock-based compensation expense,
restructuring expense, goodwill impairment and transaction costs associated with acquisitions. “EBITDA” is net loss plus net
interest income, provision for income taxes, depreciation and amortization expense. |
THE MERGER¾Interests
of Desktop Metal’s Directors and Executive Officers in the Merger
| 9. | The disclosure under the heading “THE MERGER¾Interests
of Desktop Metal’s Directors and Executive Officers in the Merger” on page 63 of the Proxy Statement is supplemented by adding
the text below as a new second paragraph: |
As of the date of this
proxy statement, there have been no substantive discussions or negotiations with respect to post-closing employment for any of Desktop
Metal’s executive officers, and none of Desktop Metal’s executive officers have entered into any agreement with Nano or any
of its affiliates regarding employment with Nano or any of its affiliates. Prior to the execution and delivery of the Merger Agreement,
the parties engaged in general discussions regarding preserving the pre-closing compensation of Desktop Metal’s employees after
closing, but no agreement was reached other than as described herein. The only agreements between Nano and Desktop Metal’s executive
officers regarding Desktop Metal’s executive officers’ compensation or participation in the equity of the surviving company
are (i) the terms of the Replacement RSUs set forth in the Merger Agreement as described under the heading “¾Treatment
of Desktop Metal Equity Awards¾Restricted Stock Unit Awards”, (ii) the severance
letter agreements described under the heading “¾Treatment of Desktop Metal
Equity Awards¾Severance Letter Agreements” and (iii) the Nano RSU awards described
under the heading “¾RSU Letter Agreements” below.
Forward-Looking Statements
This Supplement contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements include
statements relating to the proposed transaction between Desktop Metal and Nano, including statements regarding the benefits of the
transaction and the anticipated timing of the transaction, and information regarding Desktop Metal’s business, including
expectations regarding outlook and all underlying assumptions, Nano’s and Desktop Metal’s objectives, plans and
strategies, information relating to operating trends in markets where Desktop Metal operates, statements that contain projections of
results of operations or of financial condition and all other statements other than statements of historical fact that address
activities, events or developments that Desktop Metal intends, expects, projects, believes or anticipates will or may occur in the
future. Such statements are based on management’s beliefs and assumptions made based on information currently available to
management. All statements in this communication, other than statements of historical fact, are forward-looking statements that may
be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,”
“anticipates,” “should,” “estimates,” “may,” “will,”
“intends,” “projects,” “could,” “would,” “estimate,”
“potential,” “continue,” “plan,” “target,” or the negative of these words or similar
expressions. These forward-looking statements involve known and unknown risks and uncertainties, which may cause Desktop
Metal’s actual results and performance to be materially different from those expressed or implied in the forward-looking
statements. Factors and risks that may cause Desktop Metal’s or Nano’s actual results or performance to be materially
different from those expressed or implied in the forward-looking statements include, but are not limited to, (i) the ultimate
outcome of the proposed transaction between Desktop Metal and Nano, including the possibility that Desktop Metal’s
stockholders will reject the proposed transaction; (ii) reductions in the Per Share Merger Consideration to be paid based on
transaction expenses, potential borrowings under the Bridge Loan Facility and agreements relating to severance for certain executive
officers and employees of Desktop Metal; (iii) the effect of the announcement of the proposed transaction on the ability of Desktop
Metal to operate its business and retain and hire key personnel and to maintain favorable business relationships; (iv) the timing of
the proposed transaction; (v) the occurrence of any event, change or other circumstance that could give rise to the termination of
the proposed transaction; (vi) the ability to satisfy closing conditions to the completion of the proposed transaction (including
any necessary stockholder approvals); (vii) other risks related to the completion of the proposed transaction and actions related
thereto; and (viii) those factors and risks described in Item 3.D “Key Information - Risk Factors,” Item 4
“Information on the Company”, and Item 5 “Operating and Financial Review and Prospects” in Nano’s
Annual Report on Form 20-F for the year ended December 31, 2023 and Part 1, Item 1A, “Risk Factors” in Desktop
Metal’s Annual Report on Form 10-K for the year ended December 31, 2023 and Part II, Item 1A, “Risk Factors” in
Desktop Metal’s most recent Quarterly Reports on Form 10-Q, each filed with the SEC, and in Desktop Metal’s other
filings with the SEC.
The forward-looking statements included in this communication
are made only as of the date hereof. The Company undertakes no obligation to update any forward-looking statements to reflect subsequent
events or circumstances, except as required by law.
Additional Information about the Transaction and
Where to Find It
In connection with the proposed Merger, Desktop Metal
has filed the Definitive Proxy Statement with the SEC. Desktop Metal may also file other relevant documents with the SEC regarding the
proposed transaction. This document is not a substitute for the Definitive Proxy Statement or any other document that Desktop Metal may
file with the SEC. The definitive proxy statement has been mailed to stockholders of Desktop Metal. INVESTORS AND SECURITY HOLDERS ARE
URGED TO READ THE DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS
OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders are able to obtain free copies of the Definitive
Proxy Statement and other documents containing important information about Desktop Metal and the proposed transaction through the website
maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Desktop Metal are available free of charge
on Desktop Metal’s website at https://ir.desktopmetal.com/sec-filings/all-sec-filings.
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