xone-10q_20160630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

x

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

For the quarterly period ended June 30, 2016

OR

o

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

For the transition period from                      to                     

Commission File No. 001-35806

 

The ExOne Company

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

46-1684608

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

127 Industry Boulevard

North Huntingdon, Pennsylvania 15642

(Address of principal executive offices) (Zip Code)

(724) 863-9663

(Registrant’s telephone number, including area code)

 

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 x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes x  No o

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

 

Large accelerated filer

 

o

 

Accelerated filer

 

x

 

 

 

 

 

 

 

Non-accelerated filer

 

o  (Do not check if a smaller reporting company)

 

Smaller reporting company

 

o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).  Yes o  No x

As of August 9, 2016, 16,067,620 shares of common stock, par value $0.01, were outstanding.

 

 

 

 


IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

We qualify as an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An EGC may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies.

As an EGC:

 

·

We are exempt from the requirement to obtain an attestation and report from our auditors on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;

 

·

We are permitted to provide less extensive disclosure about our executive compensation arrangements;

 

·

We are not required to give our stockholders non-binding advisory votes on executive compensation or golden parachute arrangements; and

 

·

We have elected to use an extended transition period for complying with new or revised accounting standards.

We will continue to operate under these provisions until December 31, 2018, or such earlier time that we are no longer an EGC. We would cease to be an EGC if we have more than $1.0 billion in annual revenues, qualify as a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which requires us to have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period. We may choose to take advantage of some, but not all, of these reduced burdens.

 

 

 

 


PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements.

The ExOne Company and Subsidiaries

Condensed Statement of Consolidated Operations and Comprehensive Loss (Unaudited)

(in thousands, except per-share amounts)

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue - third parties

 

$

11,718

 

 

$

7,358

 

 

$

20,097

 

 

$

14,149

 

Revenue - related parties

 

 

37

 

 

 

1,140

 

 

 

72

 

 

 

1,142

 

 

 

 

11,755

 

 

 

8,498

 

 

 

20,169

 

 

 

15,291

 

Cost of sales

 

 

8,249

 

 

 

7,393

 

 

 

14,787

 

 

 

14,186

 

Gross profit

 

 

3,506

 

 

 

1,105

 

 

 

5,382

 

 

 

1,105

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

1,946

 

 

 

1,659

 

 

 

3,839

 

 

 

3,393

 

Selling, general and administrative

 

 

4,663

 

 

 

6,343

 

 

 

9,988

 

 

 

12,461

 

 

 

 

6,609

 

 

 

8,002

 

 

 

13,827

 

 

 

15,854

 

Loss from operations

 

 

(3,103

)

 

 

(6,897

)

 

 

(8,445

)

 

 

(14,749

)

Other (income) expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

22

 

 

 

30

 

 

 

254

 

 

 

58

 

Other (income) expense - net

 

 

(205

)

 

 

71

 

 

 

(298

)

 

 

(79

)

 

 

 

(183

)

 

 

101

 

 

 

(44

)

 

 

(21

)

Loss before income taxes

 

 

(2,920

)

 

 

(6,998

)

 

 

(8,401

)

 

 

(14,728

)

Provision (benefit) for income taxes

 

 

22

 

 

 

(100

)

 

 

18

 

 

 

(159

)

Net loss

 

$

(2,942

)

 

$

(6,898

)

 

$

(8,419

)

 

$

(14,569

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.18

)

 

$

(0.48

)

 

$

(0.53

)

 

$

(1.01

)

Diluted

 

$

(0.18

)

 

$

(0.48

)

 

$

(0.53

)

 

$

(1.01

)

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(2,942

)

 

$

(6,898

)

 

$

(8,419

)

 

$

(14,569

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(249

)

 

 

685

 

 

 

1,799

 

 

 

(4,663

)

Comprehensive loss

 

$

(3,191

)

 

$

(6,213

)

 

$

(6,620

)

 

$

(19,232

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

2


The ExOne Company and Subsidiaries

Condensed Consolidated Balance Sheet (Unaudited)

(in thousands, except per-share and share amounts)

 

 

 

June 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

31,884

 

 

$

19,342

 

Accounts receivable - net of allowance of $1,675 (2016) and $1,920 (2015)

 

 

5,234

 

 

 

9,368

 

Inventories - net

 

 

19,934

 

 

 

19,839

 

Prepaid expenses and other current assets

 

 

1,969

 

 

 

2,918

 

Total current assets

 

 

59,021

 

 

 

51,467

 

Property and equipment - net

 

 

55,012

 

 

 

54,832

 

Other noncurrent assets

 

 

1,438

 

 

 

1,659

 

Total assets

 

$

115,471

 

 

$

107,958

 

Liabilities

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

140

 

 

$

138

 

Current portion of capital leases

 

 

85

 

 

 

82

 

Accounts payable

 

 

3,493

 

 

 

3,231

 

Accrued expenses and other current liabilities

 

 

5,008

 

 

 

6,410

 

Deferred revenue and customer prepayments

 

 

8,904

 

 

 

7,103

 

Total current liabilities

 

 

17,630

 

 

 

16,964

 

Long-term debt - net of current portion

 

 

1,742

 

 

 

1,812

 

Capital leases - net of current portion

 

 

41

 

 

 

81

 

Other noncurrent liabilities

 

 

9

 

 

 

28

 

Total liabilities

 

 

19,422

 

 

 

18,885

 

Contingencies and commitments

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 200,000,000 shares authorized,

   15,995,282 (2016) and 14,446,967 (2015) shares issued and outstanding

 

 

160

 

 

 

144

 

Additional paid-in capital

 

 

170,207

 

 

 

156,627

 

Accumulated deficit

 

 

(62,582

)

 

 

(54,163

)

Accumulated other comprehensive loss

 

 

(11,736

)

 

 

(13,535

)

Total stockholders' equity

 

 

96,049

 

 

 

89,073

 

Total liabilities and stockholders' equity

 

$

115,471

 

 

$

107,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

3


The ExOne Company and Subsidiaries

Condensed Statement of Consolidated Cash Flows (Unaudited)

(in thousands)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2016

 

 

2015

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(8,419

)

 

$

(14,569

)

Adjustments to reconcile net loss to cash used for operations:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,862

 

 

 

2,489

 

Deferred income taxes

 

 

(29

)

 

 

(206

)

Equity-based compensation

 

 

554

 

 

 

822

 

(Recoveries) provision for bad debts

 

 

(271

)

 

 

324

 

Loss from disposal of property and equipment

 

 

198

 

 

 

 

Amortization of debt issuance costs

 

 

204

 

 

 

 

Changes in fair value of contingent consideration

 

 

 

 

 

(193

)

Changes in assets and liabilities, excluding effects of foreign currency

   translation adjustments:

 

 

 

 

 

 

 

 

Decrease in accounts receivable

 

 

4,652

 

 

 

6,134

 

Increase in inventories

 

 

(948

)

 

 

(8,357

)

Decrease in prepaid expenses and other assets

 

 

823

 

 

 

89

 

Increase in accounts payable

 

 

208

 

 

 

1,914

 

Decrease in accrued expenses and other liabilities

 

 

(1,551

)

 

 

(527

)

Increase in deferred revenue and customer prepayments

 

 

1,550

 

 

 

3,974

 

Cash used for operating activities

 

 

(167

)

 

 

(8,106

)

Investing activities

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(331

)

 

 

(2,831

)

Proceeds from sale of property and equipment

 

 

44

 

 

 

 

Cash used for investing activities

 

 

(287

)

 

 

(2,831

)

Financing activities

 

 

 

 

 

 

 

 

Net proceeds from issuance of common stock - Registered direct offering

   to a related party

 

 

12,447

 

 

 

 

Net proceeds from issuance of common stock - At the market offerings

 

 

595

 

 

 

 

Payments on long-term debt

 

 

(68

)

 

 

(65

)

Payments on capital and financing leases

 

 

(41

)

 

 

(194

)

Cash provided by (used for) financing activities

 

 

12,933

 

 

 

(259

)

Effect of exchange rate changes on cash and cash equivalents

 

 

63

 

 

 

(226

)

Net change in cash and cash equivalents

 

 

12,542

 

 

 

(11,422

)

Cash and cash equivalents at beginning of period

 

 

19,342

 

 

 

36,202

 

Cash and cash equivalents at end of period

 

$

31,884

 

 

$

24,780

 

Supplemental disclosure of noncash investing and financing activities

 

 

 

 

 

 

 

 

Property and equipment included in accounts payable

 

$

20

 

 

$

234

 

Transfer of internally developed 3D printing machines from inventories to

   property and equipment for internal use or leasing activities

 

$

1,997

 

 

$

2,506

 

Transfer of internally developed 3D printing machines from property and equipment to

   inventories for sale

 

$

682

 

 

$

149

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

4


The ExOne Company and Subsidiaries

Condensed Statement of Changes in Consolidated Stockholders’ Equity (Unaudited)

(in thousands)

 

  

 

Common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

$

 

 

Additional

paid-in capital

 

 

Accumulated

deficit

 

 

Accumulated other

comprehensive loss

 

 

Total stockholders'

equity

 

Balance at December 31, 2014

 

 

14,417

 

 

$

144

 

 

$

154,902

 

 

$

(28,298

)

 

$

(8,203

)

 

$

118,545

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(14,569

)

 

 

 

 

 

(14,569

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,663

)

 

 

(4,663

)

Equity-based compensation

 

 

 

 

 

 

 

 

822

 

 

 

 

 

 

 

 

 

822

 

Common stock issued from equity incentive plan

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2015

 

 

14,428

 

 

$

144

 

 

$

155,724

 

 

$

(42,867

)

 

$

(12,866

)

 

$

100,135

 

Balance at December 31, 2015

 

 

14,447

 

 

$

144

 

 

$

156,627

 

 

$

(54,163

)

 

$

(13,535

)

 

$

89,073

 

Registered direct offering of common stock to a

   related party, net of issuance costs

 

 

1,424

 

 

 

15

 

 

 

12,432

 

 

 

 

 

 

 

 

 

12,447

 

At the market offerings of common stock, net

   of issuance costs

 

 

92

 

 

 

1

 

 

 

594

 

 

 

 

 

 

 

 

 

595

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,419

)

 

 

 

 

 

(8,419

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,799

 

 

 

1,799

 

Equity-based compensation

 

 

 

 

 

 

 

 

554

 

 

 

 

 

 

 

 

 

554

 

Common stock issued from equity incentive plan

 

 

32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2016

 

 

15,995

 

 

$

160

 

 

$

170,207

 

 

$

(62,582

)

 

$

(11,736

)

 

$

96,049

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

5


The ExOne Company and Subsidiaries

Notes to the Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands, except per-share and share amounts)

Note 1. Basis of Presentation

Organization

The ExOne Company (“ExOne”) is a corporation organized under the laws of the state of Delaware. ExOne was formed on January 1, 2013, when The Ex One Company, LLC, a Delaware limited liability company, merged with and into a Delaware corporation, which survived and changed its name to The ExOne Company (the “Reorganization”). As a result of the Reorganization, The Ex One Company, LLC became ExOne, the common and preferred interest holders of The Ex One Company, LLC became holders of common stock and preferred stock, respectively, of ExOne, and the subsidiaries of The Ex One Company, LLC became the subsidiaries of ExOne. The condensed consolidated financial statements include the accounts of ExOne, its wholly-owned subsidiaries, ExOne Americas LLC (United States), ExOne GmbH (Germany), ExOne Property GmbH (Germany); MWT—Gesellschaft für Industrielle Mikrowellentechnik mbH (Germany); ExOne KK (Japan); ExOne Italy S.r.l (Italy); and effective in July 2015, ExOne Sweden AB (Sweden). Collectively, the consolidated group is referred to as the “Company”.

The Company filed a registration statement on Form S-3 (No. 333-203353) with the Securities and Exchange Commission (“SEC”) on April 10, 2015.  The purpose of the Form S-3 was to register, among other securities, debt securities. Certain subsidiaries of the Company (other than any minor subsidiary) are co-registrants with the Company (“Subsidiary Guarantors”), and the registration statement registered guarantees of debt securities by one or more of the Subsidiary Guarantors. The Subsidiary Guarantors are 100% owned by the Company and any guarantees by the Subsidiary Guarantors will be full and unconditional.

Basis of Presentation

The condensed consolidated financial statements of the Company are unaudited. The condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary by management to fairly state the results of operations, financial position and cash flows of the Company. All material intercompany transactions and balances have been eliminated in consolidation. The results reported in these condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the entire year. The December 31, 2015 condensed consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). This Quarterly Report on Form 10-Q should be read in connection with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, which includes all disclosures required by GAAP.

Recently Issued Accounting Guidance

The Company considers the applicability and impact of all Accounting Standard Updates (“ASUs”) as issued by the Financial Accounting Standards Board (“FASB”). Recently issued ASUs not listed below were assessed and determined to be either not applicable or are currently expected to have no impact on the consolidated financial statements of the Company.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” This ASU created a comprehensive framework for all entities in all industries to apply in the determination of when to recognize revenue, and, therefore, supersedes virtually all existing revenue recognition requirements and guidance. This framework is expected to provide a consistent and comparable methodology for revenue recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract(s), (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract(s), and (v) recognize revenue when, or as, the entity satisfies a performance obligation. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date,” which deferred the effective date of this guidance for the Company until January 1, 2019, or January 1, 2018, in the event that the Company no longer qualifies as an EGC.  Early adoption is permitted, but the Company may adopt the changes no earlier than January 1, 2017 (regardless of EGC status). In March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations”, which serves to clarify the implementation guidance issued in ASU 2014-09 with respect to principal versus agent considerations in an arrangement. In April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing”, which serves to clarify the implementation guidance issued in ASU 2014-09 with respect to identifying performance obligations in an arrangement and accounting for licensing arrangements. In May 2016, the FASB issued ASU 2016-11, “Revenue Recognition and Derivatives and Hedging: Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting”, which serves to rescind certain previously issued SEC Staff Observer comments upon adoption of ASU 2014-09. In May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients”, which serves to clarify certain technical aspects and transition guidance associated with ASU 2014-09. Management is currently evaluating the potential impact of these collective changes on the consolidated financial statements of the Company.

6


In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” Under GAAP, continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Even if an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. Because there is no guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related note disclosures, there is diversity in practice whether, when, and how an entity discloses the relevant conditions and events in its financial statements. As a result, this ASU requires an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that financial statements are issued. Substantial doubt is defined as an indication that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that financial statements are issued. If management has concluded that substantial doubt exists, then the following disclosures should be made in the financial statements: (i) principal conditions or events that raised the substantial doubt, (ii) management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations, (iii) management’s plans that alleviated the initial substantial doubt or, if substantial doubt was not alleviated, management’s plans that are intended to at least mitigate the conditions or events that raise substantial doubt, and (iv) if the latter in (iii) is disclosed, an explicit statement that there is substantial doubt about the entity’s ability to continue as a going concern. This ASU becomes effective for the Company on December 31, 2016. Subsequent to adoption, this ASU will need to be applied by management at the end of each annual period and interim period therein to determine what, if any, impact there will be on the consolidated financial statements of the Company in a given reporting period.

In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs.” Further, in August 2015, the FASB issued ASU 2015-15, “Interest – Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” This ASU requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset, with an exception for line of credit arrangements. Amortization of debt issuance costs will continue to be reported as interest expense. This ASU becomes effective for the Company on December 31, 2016. Early adoption is permitted. The ASU will be applied retrospectively to each prior period presented. Management has determined that the adoption of this ASU will not have a significant impact on the consolidated financial statements of the Company.

In July 2015, the FASB issued ASU 2015-11, “Inventory: Simplifying the Measurement of Inventory.” This ASU requires inventories to be measured at the lower of cost and net realizable value, with net realizable value defined as the estimated selling price in the normal course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU becomes effective for the Company on January 1, 2017. Early adoption is permitted. The ASU will be applied prospectively in the interim or annual period adopted. Management has determined that the adoption of this ASU will not have an impact on the consolidated financial statements of the Company.

In February 2016, the FASB issued ASU 2016-02, “Leases.” As a result of this ASU, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (i) a lease liability, which is a lessee‘s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. As a result of this ASU, lessor accounting is largely unchanged and lessees will no longer be provided with a source of off-balance sheet financing. This ASU becomes effective for the Company on January 1, 2019. Early adoption is permitted. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. Management is currently evaluating the potential impact of this ASU on the consolidated financial statements of the Company.

In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” This ASU simplifies certain aspects of accounting for equity-based compensation, including (i) accounting for income taxes, (ii) accounting for pre-vesting forfeitures and (iii) certain classification and disclosure elements. This ASU becomes effective for the Company on January 1, 2018. Early adoption is permitted. Management is currently evaluating the potential impact of this ASU on the consolidated financial statements of the Company.

Note 2. Liquidity

On February 6, 2013, the Company commenced an initial public offering of 6,095,000 shares of its common stock at a price to the public of $18.00 per share, of which 5,483,333 shares of common stock were sold by the Company and 611,667 shares of common stock were sold by a selling stockholder (including consideration of the exercise of the underwriters’ over-allotment option). Following completion of the offering on February 12, 2013, the Company received net proceeds of approximately $91,996 (net of underwriting commissions).

7


On September 9, 2013, the Company commenced a secondary public offering of 3,054,400 shares of its common stock at a price to the public of $62.00 per share, of which 1,106,000 shares of common stock were sold by the Company and 1,948,400 shares of common stock were sold by selling stockholders (including consideration of the exercise of the underwriters’ over-allotment option). Following completion of the offering on September 13, 2013, the Company received net proceeds of approximately $65,315 (net of underwriting commissions).

On January 8, 2016, the Company announced that it had entered into an At Market Issuance Sales Agreement (“ATM”) with FBR Capital Markets & Co. (“FBR”) and MLV & Co. LLC (“MLV”) pursuant to which FBR and MLV agreed to act as distribution agents in the sale of up to $50,000 in the aggregate of ExOne common stock in “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”). Both FBR and MLV have been identified as related parties to the Company on the basis of significant influence in that a member of the Board of Directors of the Company also serves as a member of the Board of Directors of FBR (which controls MLV).  The terms of the ATM were reviewed and approved by a sub-committee of the Board of Directors of the Company (which included each of the members of the Audit Committee of the Board of Directors except for the identified director who also holds a position on the Board of Directors of FBR).  Terms of the ATM require a 3.0% commission on the sale of common stock under the ATM and a reimbursement of certain legal expenses of $25.  During the quarter ended March 31, 2016, the Company sold 91,940 shares of common stock under the ATM at a weighted average selling price of approximately $9.17 per share resulting in gross proceeds to the Company of approximately $843.  Net proceeds to the Company from the sale of common stock under the ATM during the quarter ended March 31, 2016 were approximately $595 (after deducting offering costs of approximately $248, including certain legal, accounting and administrative costs associated with the ATM, of which approximately $50 was paid to FBR or MLV relating to the aforementioned reimbursement of certain legal expenses and commissions on the sale of common stock under the ATM). There were no sales of shares of common stock under the ATM during the quarter ended June 30, 2016.

The Company’s ongoing ability to issue and sell shares of common stock under the ATM is dependent on its ability to use its shelf Registration Statement on Form S-3 (the “Shelf”), as filed on April 10, 2015. As a result of the Company’s delinquent filing of its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015, the Company’s offerings and sales under the Shelf (and therefore the ATM) are currently suspended.

On January 11, 2016, the Company announced that it had entered into a subscription agreement with Rockwell Forest Products, Inc. and S. Kent Rockwell for the registered direct offering and sale of 1,423,877 shares of ExOne common stock at a per share price of $9.13 (a $0.50 premium from the closing price on the close of business on January 8, 2016).  The terms of this transaction were reviewed and approved by a sub-committee of independent members of the Board of Directors of the Company (which included each of the members of the Audit Committee of the Board of Directors). The sub-committee of independent members of the Board of Directors of the Company were advised on the transaction by an independent financial advisor and independent legal counsel. Concurrent with the approval of this sale of common stock under the terms identified, a separate sub-committee of independent members of the Board of Directors of the Company approved the termination of the Company’s revolving credit facility with RHI Investments, LLC.  Following completion of the registered direct offering on January 13, 2016, the Company received gross proceeds of approximately $13,000.  Net proceeds to the Company from the sale of common stock in the registered direct offering were approximately $12,447 (after deducting offering costs of approximately $553). 

The Company has incurred a net loss in each of its annual periods since its inception. As shown in the accompanying condensed statement of consolidated operations and comprehensive loss, the Company incurred a net loss of approximately $2,942 and $8,419 for the quarter and six months ended June 30, 2016, respectively. As noted above, the Company has received cumulative unrestricted net proceeds from the sale of its common stock of approximately $170,353 to fund its operations. At June 30, 2016, the Company had approximately $31,884 in cash and cash equivalents.

Management believes that the Company’s existing capital resources will be sufficient to support the Company’s operating plan. If management anticipates that the Company’s actual results will differ from its operating plan, management believes it has sufficient capabilities to enact cost savings measures to preserve capital. Further, the Company may seek to raise additional capital to support its growth through additional debt, equity or other alternatives or a combination thereof.

Note 3. Accumulated Other Comprehensive Loss

The following table summarizes changes in the components of accumulated other comprehensive loss:

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

Foreign currency translation adjustments

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Balance at beginning of period

 

$

(11,487

)

 

$

(13,551

)

 

$

(13,535

)

 

$

(8,203

)

Other comprehensive (loss) income

 

 

(249

)

 

 

685

 

 

 

1,799

 

 

 

(4,663

)

Balance at end of period

 

$

(11,736

)

 

$

(12,866

)

 

$

(11,736

)

 

$

(12,866

)

 

8


Foreign currency translation adjustments consist of (i) the effect of translation of functional currency financial statements (denominated in the Euro and Japanese Yen) to the reporting currency of the Company (United States dollar) and (ii) certain long-term intercompany transactions between subsidiaries for which settlement is not planned or anticipated in the foreseeable future.

There were no tax impacts related to income tax rate changes and no amounts were reclassified to earnings for either of the periods presented.

Note 4. Loss Per Share

The Company presents basic and diluted net loss per common share amounts. Basic net loss per share is calculated by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the applicable period. Diluted net loss per share is calculated by dividing net loss available to common shareholders by the weighted average number of common shares and common equivalent shares outstanding during the applicable period.

As the Company incurred a net loss during each of the quarters and six months ended June 30, 2016 and 2015, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock, including incentive stock options (182,637 – 2016 and 206,303 – 2015) and unvested restricted stock issued (72,338 – 2016 and 92,503 – 2015), was anti-dilutive.

The information used to compute basic and diluted net loss per common share was as follows:

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net loss

 

$

(2,942

)

 

$

(6,898

)

 

$

(8,419

)

 

$

(14,569

)

Weighted average shares outstanding (basic and diluted)

 

 

15,994,458

 

 

 

14,428,634

 

 

 

15,869,904

 

 

 

14,425,950

 

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.18

)

 

$

(0.48

)

 

$

(0.53

)

 

$

(1.01

)

Diluted

 

$

(0.18

)

 

$

(0.48

)

 

$

(0.53

)

 

$

(1.01

)

 

 

Note 5. Inventories

Inventories consist of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

Raw materials and components

 

$

9,835

 

 

$

9,467

 

Work in process

 

 

5,026

 

 

 

6,048

 

Finished goods

 

 

5,073

 

 

 

4,324

 

 

 

$

19,934

 

 

$

19,839

 

 

Raw materials and components consist of (i) consumable materials and (ii) component parts and subassemblies associated with 3D printing machine manufacturing and support activities. Work in process consists of 3D printing machines and other products in varying stages of completion. Finished goods consist of 3D printing machines and other products prepared for delivery in accordance with customer specifications.

At June 30, 2016 and December 31, 2015, the allowance for slow-moving and obsolete inventories was approximately $1,526 and $1,909, respectively, and has been reflected as a reduction to inventories (principally raw materials and components). Included in the allowance for slow-moving and obsolete inventories at December 31, 2015, is approximately $507 associated with the Company’s laser micromachining product line which was discontinued at the end of 2014. During the quarter ended June 30, 2016, the Company sold its remaining laser micromachining inventories, eliminating the previously recorded reserve.

Note 6. Restructuring

In April 2016, the Company committed to a plan to consolidate certain of its 3D printing operations in its Auburn, Washington facility into its North Las Vegas, Nevada facility and reorganize certain of its corporate departments as part of its 2016 operating plan. As a result of these actions, during the quarter ended June 30, 2016, the Company incurred a net charge of approximately $170 including, $57 associated with involuntary employee terminations and $113 associated with the disposal of certain property and equipment related to the Auburn, Washington facility which was either sold or abandoned. This net charge was split between cost of sales ($129), research and development ($2) and selling, general and administrative expenses ($39) in the accompanying condensed statement of consolidated operations and comprehensive loss. In addition to the net charge incurred by the Company in connection with this plan, the Company also has an operating lease commitment for the Auburn, Washington facility with a lease term through

9


December 2018. At the time of closure of this facility, the Company was able to secure a firmly committed sublease arrangement with a third party which fully offsets its remaining contractual operating lease liability. There are no additional charges expected to be incurred associated with this plan in future periods. Of the amounts associated with involuntary employee terminations, approximately $5 remained unsettled at June 30, 2016 (included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet). These remaining amounts were settled by the Company in July 2016.

Note 7. Impairment

During the quarter ended June 30, 2016, as a result of continued operating losses and cash flow deficiencies, the Company identified a triggering event requiring a test for the recoverability of long-lived assets held for use at the asset group level. Assessing the recoverability of long-lived assets held for use requires significant judgments and estimates by management.

For purposes of testing long-lived assets for recoverability, the Company operates as three separate asset groups: United States, Europe and Japan. In assessing the recoverability of long-lived assets held for use, the Company determined the carrying amount of long-lived assets held for use to be in excess of the estimated future undiscounted net cash flows of the related assets. The Company proceeded to determine the fair value of its long-lived assets held for use, principally through use of the market approach. The Company’s use of the market approach included consideration of market transactions for comparable assets. Management concluded that the fair value of long-lived assets held for use exceeded their carrying value and as such no impairment loss was recorded.   

A significant decrease in the market price of a long-lived asset, adverse change in the use or condition of a long-lived asset, adverse change in the business climate or legal or regulatory factors impacting a long-lived asset and continued operating losses and cash flow deficiencies associated with a long-lived asset, among other indicators, could cause a future assessment to be performed which may result in an impairment of long-lived assets held for use, resulting in a material adverse effect on the financial position and results of operations of the Company.

 

Note 8. Contingencies and Commitments

The Company and its subsidiaries are subject to various litigation, claims, and proceedings which have been or may be instituted or asserted from time to time in the ordinary course of business. Management does not believe that the outcome of any pending or threatened matters will have a material adverse effect, individually or in the aggregate, on the financial position, results of operations or cash flows of the Company.

Note 9. Equity-Based Compensation

On January 24, 2013, the Board of Directors of the Company adopted the 2013 Equity Incentive Plan (the “Plan”). In connection with the adoption of the Plan, 500,000 shares of common stock were reserved for issuance pursuant to the Plan, with automatic increases in such reserve available each year annually on January 1 from 2014 through 2023 equal to the lesser of (i) 3.0% of the total outstanding shares of common stock as of December 31 of the immediately preceding year or (ii) a number of shares of common stock determined by the Board of Directors, provided that the maximum number of shares authorized under the Plan will not exceed 1,992,241 shares, subject to certain adjustments.

The following table summarizes the total equity-based compensation expense recognized for awards issued under the Plan:

 

 

 

Quarter Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Equity-based compensation expense recognized:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Incentive stock options

 

$

40

 

 

$

186

 

 

$

143

 

 

$

381

 

Restricted stock

 

 

202

 

 

 

233

 

 

 

411

 

 

 

441

 

Total equity-based compensation expense before income taxes

 

 

242

 

 

 

419

 

 

 

554

 

 

 

822

 

Benefit for income taxes*

 

 

 

 

 

 

 

 

 

 

 

 

Total equity-based compensation expense net of income taxes

 

$

242

 

 

$

419

 

 

$

554

 

 

$

822

 

*

The benefit for income taxes from equity-based compensation for each of the periods presented has been determined to be $0 based on valuation allowances against net deferred tax assets.

At June 30, 2016, total future compensation expense related to unvested awards yet to be recognized by the Company was approximately $242 for incentive stock options (“ISOs”) and $729 for restricted stock. Total future compensation expense related to unvested awards yet to be recognized by the Company is expected to be recognized over a weighted-average remaining vesting period of approximately 1.1 years.

10


The activity for ISOs was as follows:

 

  

 

Six Months Ended June 30,

 

 

 

2016

 

 

2015

 

 

 

Number of

ISOs

 

 

Weighted Average Exercise Price

 

 

Weighted Average Grant Date Fair Value

 

 

Number of

ISOs

 

 

Weighted Average Exercise Price

 

 

Weighted Average Grant Date Fair Value

 

Outstanding at beginning of period

 

 

210,970

 

 

$

17.43

 

 

$

10.67

 

 

 

215,137

 

 

$

17.35

 

 

$

10.62

 

ISOs granted

 

 

 

 

$

 

 

$

 

 

 

 

 

$

 

 

$

 

ISOs exercised

 

 

 

 

$

 

 

$

 

 

 

 

 

$

 

 

$

 

ISOs forfeited

 

 

(5,334

)

 

$

15.74

 

 

$

9.60

 

 

 

(8,834

)

 

$

17.23

 

 

$

10.54

 

ISOs expired

 

 

(22,999

)

 

$

17.79

 

 

$

10.90

 

 

 

 

 

$

 

 

$

 

Outstanding at end of period

 

 

182,637

 

 

$

17.33

 

 

$

10.61

 

 

 

206,303

 

 

$

17.35

 

 

$

10.62

 

ISOs exercisable at end of period

 

 

148,304

 

 

$

17.70

 

 

$

10.84

 

 

 

96,472

 

 

$

18.00

 

 

$

11.03

 

ISOs expected to vest at end of period

 

 

29,183

 

 

$

15.74

 

 

$

9.60

 

 

 

104,836

 

 

$

16.80

 

 

$

10.27

 

 

At June 30, 2016, there was no intrinsic value associated with ISOs exercisable or ISOs expected to vest. The weighted average remaining contractual term of ISOs exercisable and expected to vest at June 30, 2016, was approximately 6.8 years and 8.2 years, respectively.

The activity for restricted stock was as follows:

 

  

 

Six Months Ended June 30,

 

 

 

2016

 

 

2015

 

 

 

Shares of

Restricted

Stock

 

 

Weighted Average Grant Date Fair Value

 

 

Shares of

Restricted

Stock

 

 

Weighted Average Grant Date Fair Value

 

Outstanding at beginning of period

 

 

77,670

 

 

$

19.57

 

 

 

80,834

 

 

$

22.78

 

Restricted stock granted

 

 

27,500

 

 

$

8.90

 

 

 

22,500

 

 

$

14.17

 

Restricted stock vested

 

 

(32,498

)

 

$

20.54

 

 

 

(10,831

)

 

$

34.80

 

Restricted stock forfeited

 

 

(334

)

 

$

62.53

 

 

 

 

 

$

 

Outstanding at end of period

 

 

72,338

 

 

$

14.88

 

 

 

92,503

 

 

$

19.28

 

Restricted stock expected to vest at end of period

 

 

72,338

 

 

$

14.88

 

 

 

92,503

 

 

$

19.28

 

 

*

Restricted stock vesting during the six months ended June 30, 2016 and 2015, had a fair value of approximately $304 and $158, respectively.

 

Note 10. Income Taxes

The provision (benefit) for income taxes for the quarters ended June 30, 2016 and 2015 was $22 and ($100), respectively. The provision (benefit) for income taxes for the six months ended June 30, 2016 and 2015 was $18 and ($159), respectively. The Company has completed a discrete period computation of its benefit for income taxes for each of the periods presented. Discrete period computation is as a result of (i) jurisdictions with losses before income taxes for which no tax benefit can be recognized and (ii) an inability to generate reliable estimates for results in certain jurisdictions as a result of inconsistencies in generating net operating profits (losses) in those jurisdictions.

The effective tax rate for the quarters ended June 30, 2016 and 2015 was 0.8% (provision on a loss) and 1.4% (benefit on a loss), respectively. The effective tax rate for the six months ended June 30, 2016 and 2015 was 0.2% (provision on a loss) and 1.1% (benefit on a loss), respectively. The effective tax rate differs from the United States federal statutory rate of 34.0% for each of the periods presented primarily due to net changes in valuation allowances for the periods.

The Company has provided a valuation allowance for its net deferred tax assets as a result of the Company not generating consistent net operating profits in jurisdictions in which it operates. As such, any benefit from deferred taxes in either quarterly period has been fully offset by changes in the valuation allowance for net deferred tax assets. The Company continues to assess its future taxable income by jurisdiction based on (i) recent historical operating results, (ii) the expected timing of reversal of temporary differences, (iii) various tax planning strategies that the Company may be able to enact in future periods, (iv) the impact of potential operating changes on the business and (v) forecast results from operations in future periods based on available information at the end of each reporting period. To the extent that the Company is able to reach the conclusion that deferred tax assets are realizable based on any combination of the above factors, a reversal of existing valuation allowances may occur.

11


The Company has a liability for uncertain tax positions related to certain capitalized expenses and intercompany transactions. At June 30, 2016 and December 31, 2015, the liability for uncertain tax positions was approximately $795 and $781, respectively, and is included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheet. At June 30, 2016 and December 31, 2015, the Company had an additional liability for uncertain tax positions related to its ExOne GmbH (Germany) subsidiary of approximately $219 and $195, respectively, which were fully offset against net operating loss carryforwards. At June 30, 2016 and December 31, 2015, the Company had an additional liability for uncertain tax positions related to its ExOne KK (Japan) subsidiary of approximately $422 and $285, respectively, which were fully offset against net operating loss carryforwards. At June 30, 2016, the Company’s ExOne GmbH (2010-2013) and ExOne Property GmbH (2013) subsidiaries were under examination by local taxing authorities.

 

Note 11. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.

The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

 

Level 1

 

Observable inputs such as quoted prices in active markets for identical investments that the Company has the ability to access.

 

 

 

Level 2

 

Inputs include:

 

 

 

 

 

Quoted prices for similar assets or liabilities in active markets;

 

 

 

 

 

Quoted prices for identical or similar assets or liabilities in inactive markets;

 

 

 

 

 

Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

 

 

 

 

 

Inputs that are derived principally from, or corroborated by, observable market data by correlation or other means.

 

 

 

Level 3

 

Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

The Company is required to disclose its estimate of the fair value of material financial instruments, including those recorded as assets or liabilities in its consolidated financial statements, in accordance with GAAP.

At June 30, 2016 and December 31, 2015, the Company had no financial instruments (assets or liabilities) measured at fair value on a recurring basis.

The carrying values and fair values of other financial instruments (assets and liabilities) not required to be recorded at fair value were as follows:

  

 

June 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

 

 

Carrying

Value

 

 

Fair

Value

 

 

Carrying

Value

 

 

Fair

Value

 

Cash and cash equivalents

 

$

31,884

 

 

$

31,884

 

 

$

19,342

 

 

$

19,342

 

Current portion of long-term debt

 

$

140

 

 

$

140

 

 

$

138

 

 

$

138

 

Current portion of capital leases

 

$

85

 

 

$

85

 

 

$

82

 

 

$

82

 

Long-term debt - net of current portion

 

$

1,742

 

 

$

1,742

 

 

$

1,812

 

 

$

1,800

 

Capital leases - net of current portion

 

$

41

 

 

$

41

 

 

$

81

 

 

$

81

 

 

The carrying amounts of cash and cash equivalents, current portion of long-term debt and current portion of capital leases approximate fair value due to their short-term maturities. The fair value of long-term debt – net of current portion and capital leases – net of current portion have been estimated by management based on the consideration of applicable interest rates (including certain instruments at variable or floating rates) and other available information (including quoted prices of similar instruments available to the Company). Cash and cash equivalents are classified in Level 1; current portion of long-term debt, current portion of capital and financing leases, long-term debt – net of current portion and capital and financing leases – net of current portion are classified in Level 2.

12


Note 12. Concentration of Credit Risk

During the quarters and six months ended June 30, 2016 and 2015, the Company conducted a significant portion of its business with a limited number of customers, though not necessarily the same customers for each respective period. For the quarters ended June 30, 2016 and 2015, the Company’s five most significant customers represented approximately 35.4% and 25.5% of total revenue, respectively. For the six months ended June 30, 2016 and 2015, the Company’s five most significant customers represented approximately 28.7% and 18.9% of total revenue, respectively. At June 30, 2016 and December 31, 2015, accounts receivable from the Company’s five most significant customers were approximately $1,859 and $4,808, respectively.

Note 13. Related Party Transactions

Revolving Credit Facility with a Related Party

On October 23, 2015, ExOne and its ExOne Americas LLC and ExOne GmbH subsidiaries, as guarantors, entered into a Credit Agreement (the “Credit Agreement”) with RHI Investments, LLC (“RHI”), a related party, on a $15,000 revolving credit facility to (i) assist the Company in its efforts to finance customer acquisition of its 3D printing machines and 3D printed and other products and services and (ii) provide additional funding for working capital and general corporate purposes.  RHI was determined to be a related party based on common control by the Chairman and CEO of the Company. Prior to execution, the Credit Agreement was subject to review and approval by a sub-committee of independent members of the Board of Directors of the Company (which included each of the members of the Audit Committee of the Board of Directors).  The Company incurred approximately $215 in debt issuance costs associated with the Credit Agreement.

On January 10, 2016, the Company delivered notice to RHI of its intent to terminate the Credit Agreement in connection with the closing of a registered direct offering of common stock to an entity under common control by the Chairman and CEO of the Company. There were no borrowings under the Credit Agreement from January 1, 2016 through the effective date of its termination, January 13, 2016.  In connection with the termination, the Company settled its remaining accrued interest under the Credit Agreement of approximately $5 relating to the commitment fee on the unused portion of the revolving credit facility (100 basis points, or 1.0% on the unused portion of the revolving credit facility). In addition, during the quarter ended March 31, 2016, the Company recorded approximately $204 to interest expense related to the accelerated amortization of debt issuance costs. Upon termination of the Credit Agreement, all liens and guaranties in respect thereof were released.

Other

Refer to Note 2 for further discussion relating to two separate equity offerings during the quarter ended March 31, 2016, certain elements of which qualify as related party transactions.

Revenues

Sales of products and/or services to related parties for the quarters ended June 30, 2016 and 2015 were approximately $37 and $1,140, respectively. Sales of products and/or services to related parties for the six months ended June 30, 2016 and 2015 were approximately $72 and $1,142, respectively.

In December 2014, the Company entered into a sale agreement for a 3D printing machine with a powdered metal company with proprietary powders determined to be a related entity based on common control by the Chairman and CEO of the Company. Total consideration for the 3D printing machine (approximately $1,000) was determined to represent a fair market value selling price (based on comparable 3D printing machine sales to third parties) and was approved prior to execution by the Audit Committee of the Board of Directors of the Company. The Company recorded revenue of approximately $815 on this transaction during 2014 based on the delivery of products and/or services. During the quarter and six months ended June 30, 2015, the Company recorded approximately $115 of the remaining consideration covered under this transaction based on the delivery of additional products and/or services.

In March 2015, the Company entered into a separate sale agreement for a 3D printing machine with the same related entity described above. Total consideration for the 3D printing machine (approximately $950) was determined to represent a fair market value selling price (based on comparable 3D printing machine sales to third parties) and was approved prior to execution by the Audit Committee of the Board of Directors of the Company. The Company recorded revenue of approximately $866 on this transaction during the quarter ended June 30, 2015, based on the delivery of products and/or services.

In June 2015, the Company entered into a sale agreement for a 3D printing machine with a multi-national, diversified metals company determined to be a related entity on the basis that a member of the Board of Directors of the Company also receives his principal compensation from the entity. Total consideration for the 3D printing machine (approximately $146) was determined to represent a fair market value selling price (based on comparable 3D printing machine sales to third parties) and was approved prior to execution by the Audit Committee of the Board of Directors of the Company. The Company recorded revenue of