The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
Notes to the Consolidated Financial Statements
(dollars in thousands, except per-share, share and unit amounts)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
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 consolidated financial statements include the accounts of ExOne, its wholly-owned subsidiaries, ExOne Americas LLC (United States), ExOne GmbH (Germany), ExOne KK (Japan); ExOne Property GmbH (Germany); effective in March 2014 and through September 2016, MWT — Gesellschaft für Industrielle Mikrowellentechnik mbH (Germany); effective in May 2014, 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”.
On September 15, 2016, the Company completed a transaction merging its MWT—Gesellschaft für Industrielle Mikrowellentechnik mbH (Germany) subsidiary with and into its ExOne GmbH (Germany) subsidiary. The purpose of this transaction was to further simplify the Company’s legal structure. There were no significant accounting or tax related impacts associated with the merger of these wholly owned subsidiaries.
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.
The consolidated financial statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All material intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of these consolidated financial statements requires the Company to make certain judgments, estimates and assumptions regarding uncertainties that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. Areas that require significant judgments, estimates and assumptions include accounting for accounts receivable (including the allowance for doubtful accounts); inventories (including the allowance for slow-moving and obsolete inventories); product warranty reserves; contingencies; income taxes (including the valuation allowance on certain deferred tax assets and liabilities for uncertain tax positions); equity-based compensation (including the valuation of certain equity-based compensation awards issued by the Company); and business combinations (including fair value estimates of contingent consideration) and testing for impairment of goodwill and long-lived assets (including the identification of reporting units and/or asset groups by management, estimates of future cash flows of identified reporting units and/or asset groups and fair value estimates used in connection with assessing the valuation of identified reporting units and/or asset groups). The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Foreign Currency
The local currency is the functional currency for significant operations outside of the United States. The determination of the functional currency of an operation is made based upon the appropriate economic and management indicators.
Foreign currency assets and liabilities are translated into their United States dollar equivalents based upon year end exchange rates, and are included in stockholders’ equity as a component of other comprehensive loss. Revenues and expenses are translated at average exchange rates. Transaction gains and losses that arise from exchange rate fluctuations are charged to operations as incurred, except for gains and losses associated with certain long-term intercompany transactions between subsidiaries for which settlement is not planned or anticipated in the foreseeable future, which are included in other comprehensive loss in the accompanying consolidated statement of operations and comprehensive loss.
The Company transacts business globally and is subject to risks associated with fluctuating foreign exchange rates. Approximately 54.0%, 50.9% and 51.9% of the consolidated revenue of the Company was derived from transactions outside the United States for 2016, 2015 and 2014, respectively. This revenue is generated primarily from wholly owned subsidiaries operating in
50
their respective countries and surrounding geographic areas. This revenue is prim
arily denominated in each subsidiary’s local functional currency, including the Euro and Japanese Yen.
Revenue Recognition
The Company derives revenue from the sale of 3D printing machines and 3D printed and other products, materials and services. Revenue is recognized by the Company when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) selling price is fixed or determinable and (iv) collectability is reasonably assured.
The Company enters into arrangements that may provide for multiple deliverables to a customer. Sales of 3D printing machines may also include optional equipment, materials, replacement components and services (installation, training and other services, including maintenance services and/or an extended warranty). The Company identifies all products and services that are to be delivered separately under an arrangement and allocates revenue to each based on their relative fair value. Fair values are generally established based on the prices charged when sold separately by the Company (vendor specific objective evidence). The allocated revenue for each deliverable is then recognized ratably based on relative fair values of the components of the sale. In the absence of vendor specific objective evidence or third party evidence in leading to a relative fair value for a sale component, the Company’s best estimate of selling price is used. The Company also evaluates the impact of undelivered items on the functionality of delivered items for each sales transaction and, where appropriate, defers revenue on delivered items when that functionality has been affected. Functionality is determined to be met if the delivered products or services represent a separate earnings process.
Certain of the Company’s arrangements for 3D printing machines contain acceptance provisions for which the Company must determine whether it can objectively demonstrate that either company-specific or customer-specific criteria identified in such provisions have been met prior to recognizing revenue on the transaction. To the extent that the Company is able to effectively demonstrate that specific criteria are met, revenue is recognized at the time of delivery (generally when title and risk and rewards of ownership have transferred to the customer), otherwise revenue is deferred until formal acceptance is provided from the customer.
The Company generally provides customers with a standard twelve month warranty on its 3D printing machines. The standard warranty is not treated as a separate service because the standard warranty is an integral part of the sale of the 3D printing machine. At the time of sale, a liability is recorded (with an offset to cost of sales) based upon the expected cost of replacement parts and labor to be incurred over the life of the standard warranty. Following the standard warranty period, the Company offers its customers optional maintenance service contracts or extended warranties. Deferred maintenance service revenues are generally recognized on a straight-line basis over the related contract period, except where sufficient historical evidence indicates that the costs of performing maintenance services under the contract are not incurred on a straight-line basis, with such revenues recognized in proportion to the costs expected to be incurred.
The Company sells equipment with embedded software to its customers. The embedded software is not sold separately and it is not a significant focus of the Company’s marketing effort. The Company does not provide post-contract customer support specific to the software or incur significant costs that are within the scope of Financial Accounting Standards Board (“FASB”) guidance on accounting for software to be leased or sold. Additionally, the functionality that the software provides is marketed as part of the overall product. The software embedded in the equipment is incidental to the equipment as a whole such that the FASB guidance referenced above is not applicable. Sales of these products are recognized in accordance with FASB guidance on accounting for multiple-element arrangements.
Shipping and handling costs billed to customers are included in revenue in the accompanying consolidated statement of operations and comprehensive loss. Costs incurred by the Company associated with shipping and handling are included in cost of sales in the accompanying consolidated statement of operations and comprehensive loss.
In assessing collectability as part of the revenue recognition process, the Company considers a number of factors in its evaluation of the creditworthiness of the customer, including past due amounts, past payment history, and current economic conditions. If it is determined that collectability cannot be reasonably assured, the Company will defer recognition of revenue until collectability is assured. For 3D printing machines, the Company’s terms of sale vary by transaction. To reduce credit risk in connection with 3D printing machine sales, the Company may, depending upon the circumstances, require customers to furnish letters of credit or bank guarantees or to provide advanced payment (either partial or in full). Prepayments received from customers are reported as deferred revenue and customer prepayments in the accompanying consolidated balance sheet. For 3D printed and other products and materials, the Company’s terms of sale generally require payment within 30 to 60 days after delivery, although the Company also recognizes that longer payment periods are customary in certain countries where it transacts business. Service arrangements are generally billed in accordance with specific contract terms and are typically billed in advance or in proportion to performance of the related services.
The Company has entered into certain contracts for the sale of its products and services with the federal government under fixed-fee, cost reimbursable and time and materials arrangements. With respect to cost reimbursable arrangements with the federal government, the Company generally bills for products and services in accordance with provisional rates as determined by the Company. To the extent that provisional rates billed under these contracts differ from actual experience, a billing adjustment (through revenue) is made in the period in which the difference is identified (generally upon completion of its annual Incurred Cost Submission filing as required by the federal government). For 2016, 2015 and 2014, revenues and any adjustments related to these contracts were not significant.
51
Cash and Cash Equiv
alents
The Company considers all highly liquid instruments with maturities when purchased of three months or less to be cash equivalents. The Company’s policy is to invest cash in excess of short-term operating and debt-service requirements in such cash equivalents. These instruments are stated at cost, which approximates fair value because of the short maturity of the instruments. The Company maintains cash balances with financial institutions located in the United States, Germany, Italy, Sweden and Japan. The Company places its cash with high quality financial institutions and believes its risk of loss is limited; however, at times, account balances may exceed international and federally insured limits. The Company has not experienced any losses associated with these cash balances.
Accounts Receivable
Accounts receivable are reported at their net realizable value. The Company’s estimate of the allowance for doubtful accounts related to trade receivables is based on the Company’s evaluation of customer accounts with past-due outstanding balances or specific accounts for which it has information that the customer may be unable to meet its financial obligations. Based upon review of these accounts, and management’s analysis and judgment, the Company records a specific allowance for that customer’s accounts receivable balance to reduce the outstanding receivable balance to the amount expected to be collected. The allowance is re-evaluated and adjusted periodically as additional information is received that impacts the allowance amount reserved. At December 31, 2016 and 2015, the allowance for doubtful accounts was approximately $1,566
and $1,920, respectively. During 2016 and 2015 the Company recorded net recoveries for bad debts of approximately $327 and $254, respectively, as reversals of previously recorded allowances (based on collections of the related accounts receivable) exceeded provisions recorded. During 2014 the Company recorded provisions for bad debts of approximately $2,391, associated with customer balances for which collectability became uncertain as a result of deteriorating credit quality based on either customer-specific or macroeconomic factors.
Inventories
The Company values all of its inventories at the lower of cost, as determined on the first-in, first-out method or market value. Overhead is allocated to work in process and finished goods based upon normal capacity of the Company’s production facilities. Fixed overhead associated with production facilities that are being operated below normal capacity are recognized as a period expense rather than being capitalized as a product cost. An allowance for slow-moving and obsolete inventories is provided based on historical experience and anticipated product demand. These provisions reduce the cost basis of the respective inventories and are recorded as a charge to cost of sales.
Property and Equipment
Property and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets, generally three to forty years. Leasehold improvements are amortized on a straight-line basis over the shorter of (i) their estimated useful lives or (ii) the estimated or contractual lives of the related leases. Gains or losses from the sale of assets are recognized upon disposal or retirement of the related assets. Repairs and maintenance are charged to expense as incurred.
The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets (asset group) may not be recoverable. Recoverability of assets is determined by comparing the estimated undiscounted net cash flows of the operations related to the assets (asset group) to their carrying amount. An impairment loss would be recognized when the carrying amount of the assets (asset group) exceeds the estimated undiscounted net cash flows. The amount of the impairment loss to be recorded is calculated as the excess of carrying value of assets (asset group) over their fair value. The determination of what constitutes an asset group, the associated undiscounted net cash flows, the fair value of assets (asset group) and the estimated useful lives of assets require significant judgments and estimates by management. No impairment loss was recorded by the Company during 2016, 2015 or 2014.
Goodwill
Goodwill represents the excess of purchase price over the fair value of identifiable net assets of acquired entities. Goodwill is not amortized; instead, it is reviewed for impairment annually or more frequently if indicators of impairment exist (a triggering event) or if a decision is made to sell or exit a business. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, including a significant decline in an entity’s market capitalization, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows, among others.
Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment (an operating segment component). Based on an evaluation of its operational management and reporting structure, the Company has determined that it operates as a single operating segment, operating segment component, and reporting unit.
In reviewing goodwill for impairment, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (greater than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If an entity elects to perform a qualitative assessment and determines that an
52
impairment is more likely than not, the entity is then required to perform a two-step quantitative impairment test (described below), otherwise no further analysi
s is required however, it will continue to be evaluated at least annually as described above. An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test. The ultimate outco
me of the goodwill impairment review for a reporting unit should be the same whether an entity chooses to perform the qualitative assessment or proceeds directly to the two-step quantitative impairment test.
Under the qualitative assessment, various events and circumstances (or factors) that would affect the estimated fair value of a reporting unit are identified (similar to impairment indicators above). These factors are then classified by the type of impact they would have on the estimated fair value using positive, neutral, and adverse categories based on current business conditions. Additionally, an assessment of the level of impact that a particular factor would have on the estimated fair value is determined using high, medium, and low weighting.
Under the two-step quantitative impairment test, the evaluation of impairment involves comparing the current fair value of a reporting unit to its carrying value, including goodwill (step 1). The Company determines fair value through a combination of the market approach and income approach. The market approach includes consideration of the Company’s market capitalization (as a single reporting unit entity) along with consideration of other factors that could influence the use of market capitalization as a fair value estimate, including premiums or discounts to be applied based on both market and entity-specific data. The income approach includes consideration of present value techniques, principally the use of a discounted cash flow model. The development of fair value under both approaches requires the use of significant assumptions and estimates by management.
In the event the estimated fair value of a reporting unit is less than the carrying value (step 1), additional analysis would be required (step 2). The additional analysis (step 2) would compare the carrying amount of the reporting unit’s goodwill with the implied fair value of that goodwill, which may involve the use of valuation experts. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of that unit as if the reporting unit was acquired in a business combination and the fair value of the reporting unit represented the purchase price. If the carrying value of goodwill exceeds its implied fair value, an impairment loss equal to such excess would be recognized, which could significantly and adversely impact reported results of operations.
During the quarter ended September 30, 2015, as a result of the significant decline in market capitalization of the Company and continued operating losses and cash flow deficiencies, the Company identified a triggering event requiring an interim test for impairment of goodwill at the reporting unit level. In performing the impairment test for goodwill, the Company determined the carrying amount of goodwill to be in excess of the implied fair value of goodwill. As a result, the Company recognized an impairment loss of approximately $4,419.
Contingent Consideration
The Company records contingent consideration resulting from a business combination at its fair value on the date of acquisition. Each reporting period thereafter, the Company revalues these obligations and records increases or decreases in their fair value as a charge (credit) to selling, general and administrative costs. Changes in the fair value of contingent consideration obligations can result from adjustments to (i) forecast revenues, profitability or a combination thereto or (ii) discount rates. These fair value measurements represent Level 3 measurements, as they are based on significant unobservable inputs.
Product Warranty Reserves
Substantially all of the Company’s 3D printing machines are covered by a standard twelve month warranty. Generally, at the time of sale, a liability is recorded (with an offset to cost of sales) based upon the expected cost of replacement parts and labor to be incurred over the life of the standard warranty. Expected cost is estimated using historical experience for similar products. The Company periodically assesses the adequacy of the product warranty reserves based on changes in these factors and records any necessary adjustments if actual experience indicates that adjustments are necessary. Future claims experience could be materially different from prior results because of the introduction of new, more complex products, a change in the Company’s warranty policy in response to industry trends, competition or other external forces, or manufacturing changes that could impact product quality. In the event that the Company determines that its current or future product repair and replacement costs exceed estimates, an adjustment to these reserves would be charged to cost of sales in the period such a determination is made.
The following table summarizes changes in product warranty reserves (such amounts reflected in accrued expenses and other current liabilities in the accompanying consolidated balance sheet for each respective period):
For the years ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Balance at beginning of period
|
|
$
|
1,308
|
|
|
$
|
1,543
|
|
|
$
|
943
|
|
Provisions for new issuances
|
|
|
1,064
|
|
|
|
947
|
|
|
|
1,431
|
|
Payments
|
|
|
(867
|
)
|
|
|
(546
|
)
|
|
|
(841
|
)
|
Reserve adjustments
|
|
|
(374
|
)
|
|
|
(562
|
)
|
|
|
123
|
|
Foreign currency translation adjustments
|
|
|
(16
|
)
|
|
|
(74
|
)
|
|
|
(113
|
)
|
Balance at end of period
|
|
$
|
1,115
|
|
|
$
|
1,308
|
|
|
$
|
1,543
|
|
53
Income Taxes
The provision (benefit) for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, the provision (benefit) for income taxes represents income taxes paid or payable (or received or receivable) for the current year plus the change in deferred taxes during the year. Deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid, and result from differences between the financial and tax bases of assets and liabilities and are adjusted for changes in tax rates and tax laws when enacted.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company’s subsidiaries in Germany, Italy, Sweden and Japan are taxed as corporations under the taxing regulations of those respective countries. As a result, the accompanying consolidated statement of operations and comprehensive loss includes a provision (benefit) for income taxes related to these foreign jurisdictions. Any undistributed earnings are intended to be permanently reinvested in the respective subsidiaries.
The Company recognizes the income tax benefit from an uncertain tax position only if it is more likely than not that the income tax position will be sustained on examination by the taxing authorities based upon the technical merits of the position. The income tax benefits recognized in the consolidated financial statements from such positions are then measured based upon the largest amount that has a greater than 50% likelihood of being realized upon settlement. Income tax benefits that do not meet the more likely than not criteria are recognized when effectively settled, which generally means that the statute of limitations has expired or that appropriate taxing authority has completed its examination even through the statute of limitations remains open. Interest and penalties related to uncertain tax positions are recognized as part of the provision (benefit) for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related income tax benefits are recognized.
Taxes on Revenue Producing Transactions
Taxes assessed by governmental authorities on revenue producing transactions, including sales, excise, value added and use taxes, are recorded on a net basis (excluded from revenue) in the accompanying consolidated statement of operations and comprehensive loss.
Research and Development
The Company is involved in research and development of new methods and technologies relating to its products. Research and development expenses are charged to operations as they are incurred. The Company capitalizes the cost of certain materials, equipment and facilities that have alternative future uses in research and development projects or otherwise.
Advertising
Advertising costs are charged to expense as incurred, and were not significant for 2016, 2015 or 2014.
Defined Contribution Plan
The Company sponsors a defined contribution savings plan under section 401(k) of the Internal Revenue Code. Under the plan, participating employees in the United States may elect to defer a portion of their pre-tax earnings, up to the Internal Revenue Service’s annual contribution limit. During 2016, 2015 and 2014 the Company made discretionary matching contributions of 50% of the first 8% of employee contributions, subject to certain Internal Revenue Service limitations. Discretionary matching contributions made by the Company during 2016, 2015 and 2014 were approximately $264, $365 and $269, respectively.
Equity-Based Compensation
The Company recognizes compensation expense for equity-based grants using the straight-line attribution method, in which the expense is recognized ratably over the requisite service period based on the grant date fair value of the related award. Forfeitures of pre-vesting equity-based grants are recognized as they are incurred and result in an offset to equity-based compensation expense in the period of recognition. Fair value of equity-based awards is estimated on the date of grant using the Black-Scholes option pricing model.
Recently Adopted Accounting Guidance
On December 31, 2016, the Company adopted FASB Accounting Standards Update (“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
54
has concluded that substantial doubt exists, then the following disclosur
es 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. The adoption of this ASU did not have an impact on the consolidated financial statements of the Company. Subsequent to adop
tion, 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.
On December 31, 2016, the Company adopted FASB ASU 2015-03, “Interest – Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs” and FASB ASU 2015-15, “Interest – Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” These ASUs require 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 continue to be reported as interest expense. These ASUs have been applied retrospectively by the Company resulting in a decrease to prepaid expenses and other current assets ($6) and other noncurrent assets ($36) with a corresponding reduction to current portion of long-term debt ($6) and long-term debt – net of current portion ($36) at December 31, 2015, in the accompanying consolidated balance sheet as compared to amounts previously reported by the Company.
On December 31, 2016, the Company adopted FASB 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. In connection with the adoption of this ASU, the Company modified its policy for accounting for pre-vesting forfeitures from estimating an amount of equity-based grants expected to vest to recording the effect of pre-vesting forfeitures in the period in which they occur. The application of this policy change did not impact equity-based compensation expense recognized by the Company during 2016. Management has determined that the adoption of other elements of this ASU did not have an impact on the consolidated financial statements of the Company.
On December 31, 2016, the Company adopted FASB ASU 2016-18, “Statement of Cash Flows: Restricted Cash.” This ASU requires r
estricted cash and restricted cash equivalents to be included within the cash and cash equivalents line on the statement of cash flows with a corresponding reconciliation prepared to the statement of financial position for cash and cash equivalents and restricted cash balances. Transfers between restricted cash and restricted cash equivalents and cash and cash equivalents will no longer be presented as cash flow activities in the statement of cash flows and material balances of restricted cash and restricted cash equivalents must disclose information regarding the nature of the restrictions. This ASU has been applied retrospectively to each of the periods presented in the accompanying statement of consolidated cash flows with a corresponding reconciliation prepared to amounts reflected in the accompanying consolidated balance sheet at December 31, 2016 and 2015 for cash and cash equivalents and restricted cash balances (Note 8)
. The retrospective adoption of this ASU has resulted in a decrease to cash used for investing activities in the accompanying statement of consolidated cash flows of approximately $330 for 2015 as compared to amounts previously reported by the Company in addition to the other presentation changes associated with this ASU. The retrospective adoption of this ASU did not have an impact on amounts previously reported for 2014.
Recently Issued Accounting Guidance
The Company considers the applicability and impact of all ASUs as issued by the 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 October 2016, the FASB issued ASU 2016-16, “Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory.” This ASU modifies existing guidance and is intended to reduce diversity in practice with respect to the accounting for the income tax consequences of intra-entity transfers of assets. The ASU indicates that the current exception to income tax accounting that requires companies to defer the income tax effects of certain intercompany transactions would apply only to intercompany inventory transactions. That is, the exception would no longer apply to intercompany sales and transfers of other assets (e.g., intangible assets). Under the existing exception, income tax expense associated with intra-entity profits in an intercompany sale or transfer of assets is eliminated from earnings. Instead, that cost is deferred and recorded on the balance sheet (e.g., as a prepaid asset) until the assets leave the consolidated group. Similarly, the entity is prohibited from recognizing deferred tax assets for the increases in tax bases due to the intercompany sale or transfer. The Company has elected to early adopt this ASU effective on January 1, 2017. A modified retrospective basis of adoption is required for this ASU. As a result, a cumulative-effect adjustment of approximately $408 has been recorded to accumulated deficit on January 1, 2017, as a result of this adoption. This cumulative-effect adjustment relates to the prepaid expense associated with intra-entity transfers of property and equipment included in prepaid expenses and other current assets in the accompany consolidated balance sheet at December 31, 2016.
In October 2016, the FASB issued ASU 2016-17, “Consolidation: Interests Held through Related Parties That Are under Common Control.” This ASU modifies existing guidance with respect to how a decision maker that holds an indirect interest in a variable interest entity (“VIE”) through a common control party determines whether it is the primary beneficiary of the VIE as part of
55
the analysis of whether the VIE would need to be consolidated. Under the ASU, a decisio
n maker would need to consider only its proportionate indirect interest in the VIE held through a common control party. Previous guidance had required the decision maker to treat the common control party’s interest in the VIE as if the decision maker held
the interest itself. As a result of the ASU, in certain cases, previous consolidation conclusions may change. This ASU becomes effective for the Company on January 1, 2017, with retrospective application to January 1, 2016. The Company does not have signif
icant involvement with entities subject to consolidation considerations impacted by VIE model factors. Management has determined that the adoption of this ASU will not have an impact on the consolidated financial statements of the Company.
In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments.” This ASU is intended to reduce diversity in practice in how certain cash receipts and payments are presented and classified in the statement of cash flows. The standard provides guidance in a number of situations including, among others, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and distributions received from equity method investees. The ASU also provides guidance for classifying cash receipts and payments that have aspects of more than one class of cash flows. This ASU becomes effective for the Company on January 1, 2019. Early adoption is permitted. Management is currently evaluating the potential impact of this ASU 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 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 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.
56
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 were sold by the Company and 611,667 were sold by a selling stockholder (including consideration of the exercise of the underwriters’ over-allotment option). The Company received approximately $90,371 in unrestricted net proceeds in connection with this offering (net of underwriting commissions and offering costs).
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 were sold by the Company and 1,948,400 were sold by selling stockholders (including consideration of the exercise of the underwriters’ over-allotment option). The Company received approximately $64,948 in unrestricted net proceeds in connection with this offering (net of underwriting commissions and offering costs).
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 initial 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. Unrestricted 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 any periods subsequent to the quarter ended March 31, 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) were suspended. On August 18, 2016, the Company filed a post-effective amendment to its Shelf. Subsequent to the post-effective amendment filing, the Company re-activated the ATM on November 9, 2016.
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. Unrestricted 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 statement of consolidated operations and comprehensive loss, the Company has incurred net losses of approximately $14,598, $25,865 and $21,843 for 2016, 2015 and 2014, respectively. As noted above, the Company has received cumulative unrestricted net proceeds from the sale of its common stock of approximately $168,361 to fund its operations. At December 31, 2016, the Company had approximately $27,825 in unrestricted 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 (including asset sales) or a combination thereof.
57
Note 3. Accumulated Other Comprehensiv
e Loss
The following table summarizes changes in the components of accumulated other comprehensive loss:
For the years ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
(13,535
|
)
|
|
$
|
(8,203
|
)
|
|
$
|
(352
|
)
|
Other comprehensive loss
|
|
|
(1,200
|
)
|
|
|
(5,332
|
)
|
|
|
(7,851
|
)
|
Balance at end of period
|
|
$
|
(14,735
|
)
|
|
$
|
(13,535
|
)
|
|
$
|
(8,203
|
)
|
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 any of the periods presented.
Note 4. Loss Per Share
The Company presents basic and diluted loss per common share amounts. Basic 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 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 2016, 2015 and 2014, 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 (314,303 — 2016, 210,970 — 2015 and 215,137 — 2014) and unvested restricted stock issued (94,171 — 2016,
77,670 — 2015 and 80,834 — 2014), was anti-dilutive.
The information used to compute basic and diluted net loss per common share was as follows:
For the years ended December 31,
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Net loss
|
|
$
|
(14,598
|
)
|
|
$
|
(25,865
|
)
|
|
$
|
(21,843
|
)
|
Weighted average shares outstanding (basic and diluted)
|
|
|
15,934,935
|
|
|
|
14,427,956
|
|
|
|
14,411,054
|
|
Net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.92
|
)
|
|
$
|
(1.79
|
)
|
|
$
|
(1.52
|
)
|
Diluted
|
|
$
|
(0.92
|
)
|
|
$
|
(1.79
|
)
|
|
$
|
(1.52
|
)
|
Note 5. Acquisitions
MAM
On March 3, 2014, the Company, through its wholly-owned subsidiary ExOne Americas LLC, entered into an Asset Purchase Agreement to acquire (i) substantially all the assets of Machin-A-Mation Corporation (“MAM”), a specialty machine shop located in Chesterfield, Michigan, and (ii) the real property on which the MAM business is located from Metal Links, LLC, a Michigan limited liability company. The total purchase price was approximately $4,917, which included approximately $4,542 in cash and $375 in contingent consideration in the form of a two-year earn-out provision. The two-year earn-out provision was based on a combination of achievement of revenues and gross profit for the acquired business for which the Company assumed full achievement of both targets for each of the respective years from the date of acquisition.
58
The following table summarizes the final allocation of purchase price:
Accounts receivable
|
|
$
|
209
|
|
Inventories
|
|
|
224
|
|
Prepaid expenses and other current assets
|
|
|
15
|
|
Property and equipment
|
|
|
2,998
|
|
Intangible assets
|
|
|
503
|
|
Goodwill
|
|
|
1,407
|
|
Total assets
|
|
|
5,356
|
|
Accounts payable
|
|
|
56
|
|
Accrued expenses and other current liabilities
|
|
|
45
|
|
Long-term debt
|
|
|
338
|
|
Total liabilities
|
|
|
439
|
|
Total purchase price
|
|
$
|
4,917
|
|
The allocation of the purchase price to the net assets acquired and liabilities assumed resulted in the recognition of the following intangible assets:
|
|
Amount
|
|
|
Economic Life
(in years)
|
Customer relationships
|
|
$
|
464
|
|
|
7
|
Trade name
|
|
|
24
|
|
|
5
|
Noncompetition agreement
|
|
|
15
|
|
|
3
|
|
|
$
|
503
|
|
|
|
Of the $1,407 of goodwill generated as a result of the MAM acquisition, approximately $1,083 was determined to be deductible for income tax purposes. Goodwill associated with the MAM acquisition related principally to the complementary nature of the assets acquired in relation to the existing business held by the Company in Troy, Michigan, the combination of which enhances the post-printing capabilities of the Company. As the Company operates as a single operating segment (also a single reporting unit), there was no further assignment of goodwill to a reportable segment.
Immediately following the completion of the MAM acquisition, the Company elected to repay all of the long-term debt assumed as part of the transaction. Prepayment penalties associated with this repayment were not significant and no gain or loss was recorded by the Company.
The Company incurred total acquisition-related expenses of approximately $88 in connection with the MAM acquisition, of which $76 was recognized by the Company during 2014 (the remainder recognized during 2013). Acquisition-related expenses are expensed as incurred in accordance with FASB guidance associated with business combination activities, with amounts included in selling, general and administrative expenses in the statement of consolidated operations and comprehensive loss.
The results of operations and pro forma effects of the MAM acquisition are not significant relative to the Company and as such, have been omitted.
MWT
On March 6, 2014, the Company, through its wholly-owned subsidiary ExOne GmbH, entered into a Purchase and Assignment Contract to acquire all of the shares of MWT—Gesellschaft für Industrielle Mikrowellentechnik mbH (“MWT”), a pioneer in industrial-grade microwaves with design and manufacturing experience based in Elz, Germany. The total purchase price was approximately €3,500 ($4,814) which was settled in cash on the date of acquisition.
59
The following table summarizes the final allocation of purchase price:
Cash and cash equivalents
|
|
$
|
201
|
|
Accounts receivable
*
|
|
|
118
|
|
Inventories
|
|
|
476
|
|
Prepaid expenses and other current assets
|
|
|
29
|
|
Property and equipment
|
|
|
21
|
|
Intangible assets
|
|
|
1,704
|
|
Goodwill
|
|
|
3,685
|
|
Total assets
|
|
|
6,234
|
|
Accounts payable
|
|
|
128
|
|
Accrued expenses and other current liabilities
|
|
|
605
|
|
Deferred revenue and customer prepayments
*
|
|
|
195
|
|
Deferred income taxes
|
|
|
492
|
|
Total liabilities
|
|
|
1,420
|
|
Total purchase price
|
|
$
|
4,814
|
|
*
|
Included in accounts receivable and deferred revenue and customer prepayments were amounts due to MWT and the Company at the date of acquisition of approximately $117 and $195, respectively. These amounts were settled between the parties immediately following completion of the acquisition, resulting in no impact to the consolidated financial statements of the Company.
|
The allocation of the purchase price to the net assets acquired and liabilities assumed resulted in the recognition of the following intangible assets:
|
|
Amount
|
|
|
Economic Life
(in years)
|
Unpatented technology
|
|
$
|
1,668
|
|
|
4
|
Trade name
|
|
|
36
|
|
|
4
|
|
|
$
|
1,704
|
|
|
|
None of the goodwill associated with the MWT acquisition was determined to be deductible for income tax purposes. Goodwill associated with the MWT acquisition related principally to the complementary nature of the industrial microwave technologies acquired in relation to the existing business held by the Company in Gersthofen, Germany, the combination of which enhances the post-printing capabilities of the Company. As the Company operates as a single operating segment (also a single reporting unit), there was no further assignment of goodwill to a reportable segment.
The Company incurred total acquisition-related expenses of approximately $143 in connection with the MWT acquisition, of which $138 was recognized by the Company during 2014 (the remainder recognized during 2013). Acquisition-related expenses are expensed as incurred in accordance with FASB guidance associated with business combination activities, with amounts included in selling, general and administrative expenses in the statement of consolidated operations and comprehensive loss.
The results of operations and pro forma effects of the MWT acquisition are not significant relative to the Company and as such, have been omitted.
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 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 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. All amounts associated with involuntary employee terminations have been settled by the Company.
Refer to Note 22 for additional restructuring actions initiated by the Company in January 2017.
60
Note 7. Impairment
During the quarter ended December 31, 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, advers
e 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.
During the quarter ended September 30, 2015, as a result of the significant decline in the market capitalization of the Company and continued operating losses and cash flow deficiencies, the Company identified a triggering event requiring both (i) a test for the recoverability of long-lived assets held for use at the asset group level and (ii) a test for impairment of goodwill at the reporting unit level. Assessing the recoverability of long-lived assets held for use and goodwill requires significant judgments and estimates by management.
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
.
The Company subsequently performed an impairment test for goodwill. For purposes of testing goodwill for impairment, the Company operates as a singular reporting unit. In assessing goodwill for impairment, the Company compared the fair value of its reporting unit to its carrying value. The Company determined the fair value of its reporting unit through a combination of the market approach and income approach. The Company’s use of the market approach included consideration of the Company’s market capitalization along with consideration of other factors that could influence the use of market capitalization as a fair value estimate, including premiums or discounts to be applied based on both market and entity-specific data. The Company’s use of the income approach included consideration of present value techniques, principally the use of a discounted cash flow model. In performing the impairment test for goodwill, the Company determined the carrying amount of goodwill to be in excess of the implied fair value of goodwill
. As a result, the Company recognized an impairment loss of approximately $4,419 associated with goodwill during the quarter ended September 30, 2015.
The following table details the changes in the carrying amount of goodwill for the year ended December 31:
|
|
2016
|
|
|
2015
|
|
Balance at beginning of period
|
|
$
|
—
|
|
|
$
|
4,665
|
|
Foreign currency translation adjustments
|
|
|
—
|
|
|
|
(246
|
)
|
Impairment
|
|
|
—
|
|
|
|
(4,419
|
)
|
Balance at end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
Note 8. Cash, Cash Equivalents, and Restricted Cash
The following provides a reconciliation of cash, cash equivalents, and restricted cash as reported in the accompanying consolidated balance sheet to the same such amounts shown in the accompanying statement of consolidated cash flows at December 31:
|
|
2016
|
|
|
2015
|
|
Cash and cash equivalents
|
|
$
|
27,825
|
|
|
$
|
19,342
|
|
Restricted cash included in prepaid expenses and other current assets
|
|
|
330
|
|
|
|
330
|
|
Total cash, cash equivalents, and restricted cash shown in the
statement of consolidated cash flows
|
|
$
|
28,155
|
|
|
$
|
19,672
|
|
61
The Company is required to maintain a cash collateral balance to offset certain short-term, unsecured lending commitments from a financial institution associated with the Company’s corporate credit card program. This balance is considered legally restrict
ed by the Company.
Note 9. Inventories
Inventories consist of the following at December 31:
|
|
2016
|
|
|
2015
|
|
Raw materials and components
|
|
$
|
7,429
|
|
|
$
|
9,467
|
|
Work in process
|
|
|
5,166
|
|
|
|
6,048
|
|
Finished goods
|
|
|
3,243
|
|
|
|
4,324
|
|
|
|
$
|
15,838
|
|
|
$
|
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 sale in accordance with customer specifications.
At December 31, 2016 and 2015, the allowance for slow-moving and obsolete inventories was approximately $1,517
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, resulting in a reversal of the previously recorded reserve.
During the quarter ended December 31, 2016, the Company recorded a charge of approximately $280 to cost of sales in the accompanying statement of consolidated operations and comprehensive loss associated with certain work in process inventories for which cost was determined to exceed net realizable value. There were no such charges recorded by the Company during 2015 or 2014.
Note 10. Property and Equipment
Property and equipment consist of the following at December 31:
|
|
2016
|
|
|
2015
|
|
|
Economic Life
(in years)
|
Land
|
|
$
|
6,902
|
|
|
$
|
6,969
|
|
|
N/A
|
Buildings and related improvements
|
|
|
27,913
|
|
|
|
28,498
|
|
|
5 - 40
|
Machinery and equipment
|
|
|
23,419
|
|
|
|
23,935
|
|
|
3 - 20
|
Other
|
|
|
5,876
|
|
|
|
5,995
|
|
|
3 - 20
|
|
|
|
64,110
|
|
|
|
65,397
|
|
|
|
Less: Accumulated depreciation
|
|
|
(13,908
|
)
|
|
|
(11,017
|
)
|
|
|
|
|
|
50,202
|
|
|
|
54,380
|
|
|
|
Construction-in-progress
|
|
|
932
|
|
|
|
452
|
|
|
|
Property and equipment - net
|
|
$
|
51,134
|
|
|
$
|
54,832
|
|
|
|
Machinery and equipment includes assets leased by the Company of approximately $365
and $364 at December 31, 2016 and 2015, respectively.
Machinery and equipment includes assets leased to customers (principally 3D printing machines and related equipment) under operating lease arrangements of approximately $2,610 and $2,267 at December 31, 2016 and 2015, respectively. The carrying value of these assets was approximately $2,100
and $1,816 at December 31, 2016 and 2015, respectively.
Minimum future rentals of machinery and equipment under non-cancellable arrangements at December 31, 2016, are as follows:
2017
|
|
$
|
698
|
|
2018
|
|
|
167
|
|
2019
|
|
|
20
|
|
2020
|
|
|
—
|
|
2021
|
|
|
—
|
|
Thereafter
|
|
|
—
|
|
|
|
$
|
885
|
|
62
Depreciation expense was approximately $5,241, $4,809 and $4,139 for 2016, 2015
and 2014, respectively.
Note 11. Intangible Assets
Intangible assets, which are included in other noncurrent assets on the accompanying consolidated balance sheet, were as follows:
December 31, 2016
|
|
Gross
Carrying
Amount
|
|
|
Accumulated Amortization
|
|
|
Net
|
|
Unpatented technology
|
|
$
|
1,276
|
|
|
$
|
(904
|
)
|
|
$
|
372
|
|
Customer relationships
|
|
|
464
|
|
|
|
(188
|
)
|
|
|
276
|
|
Trade names
|
|
|
52
|
|
|
|
(33
|
)
|
|
|
19
|
|
Noncompetition agreement
|
|
|
15
|
|
|
|
(14
|
)
|
|
|
1
|
|
|
|
$
|
1,807
|
|
|
$
|
(1,139
|
)
|
|
$
|
668
|
|
December 31, 2015
|
|
Gross
Carrying
Amount
|
|
|
Accumulated Amortization
|
|
|
Net
|
|
Unpatented technology
|
|
$
|
1,323
|
|
|
$
|
(606
|
)
|
|
$
|
717
|
|
Customer relationships
|
|
|
464
|
|
|
|
(122
|
)
|
|
|
342
|
|
Trade names
|
|
|
53
|
|
|
|
(22
|
)
|
|
|
31
|
|
Noncompetition agreement
|
|
|
15
|
|
|
|
(9
|
)
|
|
|
6
|
|
|
|
$
|
1,855
|
|
|
$
|
(759
|
)
|
|
$
|
1,096
|
|
Amortization expense related to the intangible assets was approximately $418, $418 and $381 for 2016, 2015 and 2014, respectively.
Future estimated amortization expense related to the intangible assets at December 31, 2016, is approximately as follows:
2017
|
|
$
|
398
|
|
2018
|
|
|
126
|
|
2019
|
|
|
67
|
|
2020
|
|
|
66
|
|
2021
|
|
|
11
|
|
Thereafter
|
|
|
—
|
|
|
|
$
|
668
|
|
Note 12. Long-Term Debt
Long-term debt consists of the following at December 31:
|
|
2016
|
|
|
2015
|
|
|
|
Principal
|
|
|
Unamortized Debt Issuance Costs
|
|
|
Net
|
|
|
Principal
|
|
|
Unamortized Debt Issuance Costs
|
|
|
Net
|
|
Building note payable
|
|
$
|
1,812
|
|
|
$
|
(36
|
)
|
|
$
|
1,776
|
|
|
$
|
1,950
|
|
|
$
|
(42
|
)
|
|
$
|
1,908
|
|
Less: amount due within one year
|
|
|
(138
|
)
|
|
|
6
|
|
|
|
(132
|
)
|
|
|
(138
|
)
|
|
|
6
|
|
|
|
(132
|
)
|
|
|
$
|
1,674
|
|
|
$
|
(30
|
)
|
|
$
|
1,644
|
|
|
$
|
1,812
|
|
|
$
|
(36
|
)
|
|
$
|
1,776
|
|
Terms of the building note payable include monthly payments of approximately $18 including interest at 4.00% through May 2017, and subsequently, the monthly average yield on United States Treasury Securities plus 3.25% for the remainder of the term through May 2027. The building note payable is collateralized by the Company’s facility located in North Huntingdon, Pennsylvania which had a carrying value of approximately $5,535 at December 31, 2016.
At December 31, 2016, the Company identified that it was not in compliance with the annual cash flow-to-debt service ratio covenant associated with the building note payable. The Company requested and was granted a waiver related to compliance with this annual covenant at December 31, 2016 and through December 31, 2017. Related to the 2016 non-compliance, there were no cross default provisions or related impacts on other lending or financing agreements.
63
Future maturities of long-term debt at December 31,
2016, are approximately as follows:
2017
|
|
$
|
138
|
|
2018
|
|
|
142
|
|
2019
|
|
|
149
|
|
2020
|
|
|
157
|
|
2021
|
|
|
165
|
|
Thereafter
|
|
|
1,061
|
|
|
|
$
|
1,812
|
|
Note 13. Leases
Capital
The Company leases certain equipment and vehicles under capital lease arrangements, expiring in various years through 2019.
Future maturities of capital leases at December 31, 2016, are approximately as follows:
2017
|
|
$
|
72
|
|
2018
|
|
|
8
|
|
2019
|
|
|
2
|
|
2020
|
|
|
—
|
|
2021
|
|
|
—
|
|
Thereafter
|
|
|
—
|
|
|
|
$
|
82
|
|
Operating
The Company leases various manufacturing and office facilities, machinery and other equipment and vehicles under operating lease arrangements (with initial terms greater than twelve months), expiring in various years through 2021.
Future minimum lease payments of operating lease arrangements (with initial terms greater than twelve months) at December 31, 2016, are approximately as follows:
2017
|
|
$
|
393
|
|
2018
|
|
|
229
|
|
2019
|
|
|
164
|
|
2020
|
|
|
22
|
|
2021
|
|
|
2
|
|
Thereafter
|
|
|
—
|
|
|
|
$
|
810
|
|
Rent expense under operating lease arrangements was approximately $335, $421 and $982 for 2016, 2015 and 2014, respectively.
Note 14. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following at December 31:
|
|
2016
|
|
|
2015
|
|
Accrued payroll and related costs
|
|
$
|
1,661
|
|
|
$
|
1,816
|
|
Product warranty reserves
|
|
|
1,115
|
|
|
|
1,308
|
|
Liability for uncertain tax positions
|
|
|
754
|
|
|
|
781
|
|
Accrued license fees
|
|
|
409
|
|
|
|
534
|
|
Value-added taxes (VAT) payable
|
|
|
224
|
|
|
|
242
|
|
Accrued sales commissions
|
|
|
223
|
|
|
|
588
|
|
Accrued professional fees
|
|
|
119
|
|
|
|
203
|
|
Other
|
|
|
619
|
|
|
|
938
|
|
|
|
$
|
5,124
|
|
|
$
|
6,410
|
|
64
Note 15. Contingencies and Commitments
Contingencies
On November 19, 2016, the Company (through its ExOne GmbH subsidiary) issued to a customer in the People’s Republic of China a notice seeking confirmation of expiration of the obligations and completion of a sales agreement between the parties relating to certain 3D printing machines and related equipment (the “Sales Agreement”) citing, among other things, that the customer denied the Company access to service and install the 3D printing machines and related equipment. The customer has denied the claims made by the Company and has alleged losses and damages incurred as a result of alleged non-performance by the Company of approximately $4,697 (RMB 32,615). The total value of the Sales Agreement is approximately $3,280 (€3,116) with all associated proceeds having been previously received by the Company from the customer, such amounts reflected in deferred revenue and customer prepayments at December 31, 2016 in the accompanying consolidated balance sheet. To date, the Company has not received any notice of litigation or proceedings from the customer. In addition, the customer has not provided any evidence or substantiation of its alleged claims or losses. In response, the Company filed (on February 8, 2017) a Notice of Arbitration via the Switzerland Chambers’ Arbitration Institution, the agreed upon dispute resolution procedure under the Sales Agreement, effectively seeking affirmation of its position in accordance with the Swiss Rules of International Arbitration. The customer has not yet responded to the Notice of Arbitration. The Company intends to vigorously pursue its rights in this matter and it is the Company’s position that it has not breached any of its obligations and has no liability for these alleged claims. In the event that litigation or proceedings are filed by the customer, the Company intends to vigorously defend itself against any and all claims made by the customer related to this matter. At this time, the Company cannot reasonably estimate an outcome for this matter.
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.
Commitments
In the normal course of its operations, ExOne GmbH issues guarantees and letters of credit to third parties in connection with certain commercial transactions requiring security. ExOne GmbH maintains a
credit facility agreement with a German bank which provides for various short-term financings in the form of overdraft credit, guarantees, letters of credit and collateral security for commercial transactions for approximately $1,400 (€1,300). In addition, ExOne GmbH may use the credit facility agreement for short-term, fixed-rate loans in minimum increments of approximately $100 (€100) with minimum terms of at least thirty days. The overdraft credit interest rate is fixed at 10.2% while the interest rate associated with commercial transactions requiring security (guarantees, letters of credit or collateral security) is fixed at 1.75%. The credit facility agreement has an indefinite term and is subject to cancellation by either party at any time upon repayment of amounts outstanding or expiration of commercial transactions requiring security. There is no commitment fee associated with the credit facility agreement. There are no negative covenants associated with the credit facility agreement. The credit facility agreement has been guaranteed by the Company. At December 31, 2016 and 2015, there were no outstanding borrowings in the form of overdraft credit or short-term loans under the credit facility agreement
. At December 31, 2016, total outstanding guarantees and letters of credit issued by ExOne GmbH were approximately $400 (€380) with expiration dates ranging from April 2017 through July 2018. At December 31, 2015, total outstanding guarantees and letters of credit issued by ExOne GmbH were approximately $685 (€628).
Note 16. 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.
Incentive stock options (“ISOs”) and restricted stock issued by the Company are generally subject to service conditions resulting in annual vesting on the anniversary of the date of grant over a period typically ranging between one and three years. Certain ISOs and stock bonus awards issued by the Company vest immediately upon issuance. ISOs issued by the Company have a contractual life which expires ten years from the date of grant subject to continued service to the Company by the participant.
65
The following table summarizes the total equity-based compensation expense recognized for awards issued under the Plan:
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Equity-based compensation expense recognized:
|
|
|
|
|
|
|
|
|
|
|
|
|
ISOs
|
|
$
|
614
|
|
|
$
|
807
|
|
|
$
|
633
|
|
Restricted stock
|
|
|
849
|
|
|
|
918
|
|
|
|
376
|
|
Stock bonus awards
|
|
|
—
|
|
|
|
—
|
|
|
|
197
|
|
Total equity-based compensation expense before income taxes
|
|
|
1,463
|
|
|
|
1,725
|
|
|
|
1,206
|
|
Benefit for income taxes
*
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total equity-based compensation expense net of income taxes
|
|
$
|
1,463
|
|
|
$
|
1,725
|
|
|
$
|
1,206
|
|
*
|
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 December 31, 2016, total future compensation expense related to unvested awards yet to be recognized by the Company was approximately $847
for ISOs and $874
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 1.9 years.
During 2016 and 2014, the fair value of ISOs was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:
|
|
August 19,
2016
|
|
|
August 12,
2016
|
|
|
December 19,
2014
|
|
Weighted average fair value per ISO
|
|
$
|
7.97
|
|
|
$
|
8.07
|
|
|
$
|
9.60
|
|
Volatility
|
|
|
66.24
|
%
|
|
|
66.43
|
%
|
|
|
67.00
|
%
|
Average risk-free interest rate
|
|
|
1.20
|
%
|
|
|
1.18
|
%
|
|
|
1.76
|
%
|
Dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Expected term (years)
|
|
|
5.5
|
|
|
|
6.0
|
|
|
|
6.0
|
|
During 2015, there were no ISOs issued by the Company.
Volatility has been estimated based on historical volatilities of certain peer group companies over the expected term of the awards, due to a lack of historical stock prices for a period at least equal to the expected term of issued awards. The average risk-free rate is based on a weighted average yield curve of risk-free interest rates consistent with the expected term of the awards. Expected dividend yield is based on historical dividend data as well as future expectations. Expected term has been calculated using the simplified method as the Company does not have sufficient historical exercise experience upon which to base an estimate.
66
The activity for ISOs was as follows:
|
|
Number of
ISOs
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Grant Date Fair
Value
|
|
Outstanding at December 31, 2013
|
|
|
173,333
|
|
|
$
|
18.00
|
|
|
$
|
11.03
|
|
ISOs granted
|
|
|
62,000
|
|
|
$
|
15.74
|
|
|
$
|
9.60
|
|
ISOs exercised
|
|
|
(18,529
|
)
|
|
$
|
18.00
|
|
|
$
|
11.03
|
|
ISOs forfeited
|
|
|
(1,667
|
)
|
|
$
|
18.00
|
|
|
$
|
11.03
|
|
ISOs expired
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Outstanding at December 31, 2014
|
|
|
215,137
|
|
|
$
|
17.35
|
|
|
$
|
10.62
|
|
ISOs exercisable at December 31, 2014
|
|
|
39,804
|
|
|
$
|
18.00
|
|
|
$
|
11.03
|
|
ISOs expected to vest at December 31, 2014
|
|
|
166,638
|
|
|
$
|
17.21
|
|
|
$
|
10.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
ISOs
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Grant Date Fair
Value
|
|
Outstanding at December 31, 2014
|
|
|
215,137
|
|
|
$
|
17.35
|
|
|
$
|
10.62
|
|
ISOs granted
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
ISOs exercised
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
ISOs forfeited
|
|
|
(3,334
|
)
|
|
$
|
16.31
|
|
|
$
|
9.96
|
|
ISOs expired
|
|
|
(833
|
)
|
|
$
|
18.00
|
|
|
$
|
11.03
|
|
Outstanding at December 31, 2015
|
|
|
210,970
|
|
|
$
|
17.43
|
|
|
$
|
10.67
|
|
ISOs exercisable at December 31, 2015
|
|
|
115,472
|
|
|
$
|
17.61
|
|
|
$
|
10.78
|
|
ISOs expected to vest at December 31, 2015
|
|
|
90,898
|
|
|
$
|
17.09
|
|
|
$
|
10.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
ISOs
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Grant Date Fair
Value
|
|
Outstanding at December 31, 2015
|
|
|
210,970
|
|
|
$
|
17.43
|
|
|
$
|
10.67
|
|
ISOs granted
|
|
|
139,000
|
|
|
$
|
13.72
|
|
|
$
|
8.00
|
|
ISOs exercised
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
ISOs forfeited
|
|
|
(9,335
|
)
|
|
$
|
15.25
|
|
|
$
|
9.27
|
|
ISOs expired
|
|
|
(26,332
|
)
|
|
$
|
17.74
|
|
|
$
|
10.87
|
|
Outstanding at December 31, 2016
|
|
|
314,303
|
|
|
$
|
15.62
|
|
|
$
|
9.38
|
|
ISOs exercisable at December 31, 2016
|
|
|
194,471
|
|
|
$
|
16.90
|
|
|
$
|
10.26
|
|
ISOs expected to vest at December 31, 2016
|
|
|
119,832
|
|
|
$
|
13.97
|
|
|
$
|
8.22
|
|
At December 31, 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 ISOs expected to vest at December 31, 2016, was approximately 7.2 and 9.4
years, respectively. ISOs with an aggregate intrinsic value of approximately $312 were exercised by employees during 2014, resulting in proceeds to the Company from the exercise of stock options of approximately $333. The Company received no income tax benefit related to these exercises. There were no exercises during 2016 or 2015.
67
The activity for restricted stock was as follows:
|
|
Shares of
Restricted
Stock
|
|
|
Weighted Average
Grant Date Fair
Value
|
|
Outstanding at December 31, 2013
|
|
|
20,000
|
|
|
$
|
23.26
|
|
Restricted stock granted
|
|
|
67,500
|
|
|
$
|
22.69
|
|
Restricted stock vested
|
|
|
(6,666
|
)
|
|
$
|
23.26
|
|
Restricted stock forfeited
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding at December 31, 2014
|
|
|
80,834
|
|
|
$
|
22.78
|
|
Restricted stock expected to vest at December 31, 2014
|
|
|
80,834
|
|
|
$
|
22.78
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
Restricted
Stock
|
|
|
Weighted Average
Grant Date Fair
Value
|
|
Outstanding at December 31, 2014
|
|
|
80,834
|
|
|
$
|
22.78
|
|
Restricted stock granted
|
|
|
26,000
|
|
|
$
|
13.23
|
|
Restricted stock vested
|
|
|
(29,164
|
)
|
|
$
|
22.82
|
|
Restricted stock forfeited
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding at December 31, 2015
|
|
|
77,670
|
|
|
$
|
19.57
|
|
Restricted stock expected to vest at December 31, 2015
|
|
|
77,670
|
|
|
$
|
19.57
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
Restricted
Stock
|
|
|
Weighted Average
Grant Date Fair
Value
|
|
Outstanding at December 31, 2015
|
|
|
77,670
|
|
|
$
|
19.57
|
|
Restricted stock granted
|
|
|
74,500
|
|
|
$
|
11.78
|
|
Restricted stock vested
|
|
|
(54,331
|
)
|
|
$
|
18.06
|
|
Restricted stock forfeited
|
|
|
(3,668
|
)
|
|
$
|
19.46
|
|
Outstanding at December 31, 2016
|
|
|
94,171
|
|
|
$
|
14.29
|
|
Restricted stock expected to vest at December 31, 2016
|
|
|
94,171
|
|
|
$
|
14.29
|
|
Restricted stock vesting during 2016, 2015 and 2014 had a fair value of approximately $536, $356 and $282, respectively.
Note 17. Income Taxes
The components of loss before taxes were as follows:
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
United States
|
|
$
|
(15,585
|
)
|
|
$
|
(13,138
|
)
|
|
$
|
(15,683
|
)
|
Foreign
|
|
|
1,054
|
|
|
|
(12,900
|
)
|
|
|
(6,001
|
)
|
Loss before income taxes
|
|
$
|
(14,531
|
)
|
|
$
|
(26,038
|
)
|
|
$
|
(21,684
|
)
|
The provision (benefit) for income taxes consisted of the following:
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
Current
|
|
|
Deferred
|
|
|
Total
|
|
|
Current
|
|
|
Deferred
|
|
|
Total
|
|
|
Current
|
|
|
Deferred
|
|
|
Total
|
|
United States
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
(20
|
)
|
|
$
|
—
|
|
|
$
|
20
|
|
|
$
|
20
|
|
Foreign
|
|
|
96
|
|
|
|
(29
|
)
|
|
|
67
|
|
|
|
95
|
|
|
|
(248
|
)
|
|
|
(153
|
)
|
|
|
290
|
|
|
|
(151
|
)
|
|
|
139
|
|
Provision (benefit) for income taxes
|
|
$
|
96
|
|
|
$
|
(29
|
)
|
|
$
|
67
|
|
|
$
|
95
|
|
|
$
|
(268
|
)
|
|
$
|
(173
|
)
|
|
$
|
290
|
|
|
$
|
(131
|
)
|
|
$
|
159
|
|
The net benefit for deferred income taxes for 2016, 2015 and 2014 includes approximately $3, $116 and $54, respectively,
associated with net operating loss carryforwards.
68
A reconciliation of the provision (benefit) for income taxes at the United States statutory rate of 34.0% to the effective rate of the Company for the years ended
December 31 is as follows:
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
United States statutory rate (34.0%)
|
|
$
|
(4,941
|
)
|
|
$
|
(8,853
|
)
|
|
$
|
(7,373
|
)
|
Effect of foreign disregarded entity
|
|
|
269
|
|
|
|
(2,599
|
)
|
|
|
(962
|
)
|
Effect of intercompany asset transfers
|
|
|
(756
|
)
|
|
|
(53
|
)
|
|
|
992
|
|
Taxes on foreign operations
|
|
|
(97
|
)
|
|
|
648
|
|
|
|
119
|
|
Increase in uncertain tax positions
|
|
|
—
|
|
|
|
—
|
|
|
|
210
|
|
Goodwill impairment
|
|
|
—
|
|
|
|
1,031
|
|
|
|
—
|
|
Net change in valuation allowances
|
|
|
5,300
|
|
|
|
9,173
|
|
|
|
6,980
|
|
Permanent differences and other
|
|
|
292
|
|
|
|
480
|
|
|
|
193
|
|
Provision (benefit) for income taxes
|
|
$
|
67
|
|
|
$
|
(173
|
)
|
|
$
|
159
|
|
Effective tax rate
|
|
|
(0.5
|
)%
|
|
|
0.7
|
%
|
|
|
(0.7
|
)%
|
The components of deferred income tax assets and liabilities consist of the following at December 31:
|
|
2016
|
|
|
2015
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
554
|
|
|
$
|
655
|
|
Inventories
|
|
|
705
|
|
|
|
796
|
|
Accrued expenses and other current liabilities
|
|
|
234
|
|
|
|
699
|
|
Net operating loss carryforwards
|
|
|
23,516
|
|
|
|
17,475
|
|
Tax credit carryforwards
|
|
|
676
|
|
|
|
765
|
|
Other
|
|
|
1,305
|
|
|
|
1,461
|
|
Valuation allowance
|
|
|
(25,177
|
)
|
|
|
(20,089
|
)
|
Total deferred tax assets
|
|
|
1,813
|
|
|
|
1,762
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
(1,243
|
)
|
|
|
(943
|
)
|
Other
|
|
|
(570
|
)
|
|
|
(847
|
)
|
Total deferred tax liabilities
|
|
|
(1,813
|
)
|
|
|
(1,790
|
)
|
Net deferred tax liabilities
*
|
|
$
|
—
|
|
|
$
|
(28
|
)
|
*
|
At December 31, 2015, net deferred tax liabilities were reflected in other noncurrent liabilities in the consolidated balance sheet.
|
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 any of the periods presented 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 its net deferred tax assets are realizable based on any combination of the above factors in a single, or in multiple, taxing jurisdictions, a reversal of the related portion of the Company’s existing valuation allowances may occur.
The following table summarizes changes to the Company’s valuation allowances for the years ended December 31:
|
|
2016
|
|
|
2015
|
|
Balance at beginning of period
|
|
$
|
20,089
|
|
|
$
|
11,069
|
|
Increase to allowances
|
|
|
5,300
|
|
|
|
9,173
|
|
Foreign currency translation and other adjustments
|
|
|
(212
|
)
|
|
|
(153
|
)
|
Balance at end of period
|
|
$
|
25,177
|
|
|
$
|
20,089
|
|
At December 31, 2016, the Company had approximately $59,107 in net operating loss carryforwards, subject to certain limitations, which expire from 2033 to 2036, and $676
in tax credit carryforwards which expire in 2023, to offset the future taxable income of its United States subsidiary. At December 31, 2016, the Company had approximately $3,093
in net operating loss carryforwards which expire from 2018 through 2025, to offset the future taxable income of its Japanese subsidiary. At December 31, 2016, the Company had approximately $8,864
in net operating loss carryforwards which do not expire, to offset the future taxable income of its collective German, Italian and Swedish subsidiaries.
69
The Company has a liability for uncertain tax positions related to certain capitalized expenses and in
tercompany transactions. At December 31, 2016 and 2015, the liability for uncertain tax positions was approximately $754 and $781, respectively, and is included in accrued expenses and other current liabilities in the accompanying consolidated balance shee
t. At December 31, 2016 and 2015, the Company had an additional liability for uncertain tax positions related to its ExOne GmbH (Germany) subsidiary of approximately $232 and $195, respectively, which was fully offset against net operating loss carryforwar
ds. At December 31, 2016 and 2015, the Company had an additional liability for uncertain tax positions related to its ExOne KK (Japan) subsidiary of approximately $416 and $285, respectively, which were fully offset against net operating loss carryforwards
.
A reconciliation of the beginning and ending amount of unrecognized tax benefits at December 31 was as follows:
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
Balance at beginning of period
|
|
$
|
781
|
|
|
$
|
871
|
|
|
$
|
768
|
|
Increases related to current year tax positions
|
|
|
—
|
|
|
|
—
|
|
|
|
210
|
|
Foreign currency translation adjustments
|
|
|
(27
|
)
|
|
|
(90
|
)
|
|
|
(107
|
)
|
Balance at end of period
|
|
$
|
754
|
|
|
$
|
781
|
|
|
$
|
871
|
|
The Company includes interest and penalties related to income taxes as a component of the provision (benefit) for income taxes in the accompanying consolidated statement of operations and comprehensive loss.
The Company files income tax returns in the United States, Germany, Italy, Sweden (effective 2015) and Japan. The following table summarizes tax years remaining subject to examination for each of the Company’s subsidiaries at December 31, 2016:
Jurisdiction
|
|
Tax Years
Remaining Subject
to Examination
|
United States
|
|
2013-2016
|
Germany
*
|
|
2010-2016
|
Italy
|
|
2014-2016
|
Sweden
|
|
2015-2016
|
Japan
|
|
2011-2016
|
*
|
At December 31, 2016, our ExOne GmbH (2010-2013) and ExOne Property GmbH (2013) subsidiaries were under examination by local taxing authorities.
|
Note 18. 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;
|
|
|
|
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 December 31, 2016 and 2015, the Company had no financial instruments (assets or liabilities) measured at fair value on a recurring basis.
70
In connection with the MAM acquisition, the Company issued contingent consideration subject to certain forecasts of future profitability (revenues an
d gross profit) of MAM for the years ended December 31, 2015 and 2014 (an unobservable input).
The valuation technique utilized by the Company with respect to this instrument was a discounted cash flow model, principally based on the assumption of achievem
ent of the profitability targets stipulated in the earn-out provision per the Asset Purchase Agreement. Expected payments were discounted using a market interest rate assumption.
During 2015, the Company recorded net changes in the fair value of contingent
consideration issued in connection with the MAM acquisition of approximately ($193), with a corresponding amount (a net benefit) recorded to selling, general and administrative expenses. Changes in contingent consideration recorded by the Company during 2
015 are based on (i) revisions of estimates of revenues and gross profit for MAM for the year ended December 31, 2015 and (ii) the impact of discounting future cash payments on the associated liabilities. During 2014, the Company recorded net changes in th
e fair value of contingent consideration issued in connection with the MAM acquisition of approximately ($185), with a corresponding amount (a net benefit) recorded to selling, general and administrative expenses. Changes in contingent consideration record
ed by the Company during 2015 are based on (i) revisions of estimates of revenue and gross profit for MAM for the period from acquisition (March 3, 2014) through December 31, 2014 and (ii) the impact of discounting future cash payments on the associated li
abilities.
The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial instruments:
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Balance at beginning of period
|
|
$
|
—
|
|
|
$
|
190
|
|
Purchases
|
|
|
—
|
|
|
|
—
|
|
Sales
|
|
|
—
|
|
|
|
—
|
|
Issuances
|
|
|
—
|
|
|
|
—
|
|
Settlements
|
|
|
—
|
|
|
|
—
|
|
Realized (gains) losses
|
|
|
—
|
|
|
|
(193
|
)
|
Unrealized (gains) losses
|
|
|
—
|
|
|
|
3
|
|
Transfers into Level 3
|
|
|
—
|
|
|
|
—
|
|
Transfers out of Level 3
|
|
|
—
|
|
|
|
—
|
|
Balance at end of period
|
|
$
|
—
|
|
|
$
|
—
|
|
The carrying values and fair values of other financial instruments (assets and liabilities) not required to be recorded at fair value were as follows:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
|
Carrying
Value
|
|
|
Fair
Value
|
|
Cash and cash equivalents
|
|
$
|
27,825
|
|
|
$
|
27,825
|
|
|
$
|
19,342
|
|
|
$
|
19,342
|
|
Restricted cash
*
|
|
$
|
330
|
|
|
$
|
330
|
|
|
$
|
330
|
|
|
$
|
330
|
|
Current portion of long-term debt
**
|
|
$
|
132
|
|
|
$
|
138
|
|
|
$
|
132
|
|
|
$
|
138
|
|
Current portion of capital leases
|
|
$
|
72
|
|
|
$
|
72
|
|
|
$
|
82
|
|
|
$
|
82
|
|
Long-term debt - net of current portion
**
|
|
$
|
1,644
|
|
|
$
|
1,674
|
|
|
$
|
1,776
|
|
|
$
|
1,812
|
|
Capital leases - net of current portion
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
81
|
|
|
$
|
81
|
|
*
Restricted cash included in prepaid expenses and other current assets in the accompanying consolidated balance sheet.
**
Carrying value at December 31, 2016 and 2015 reflects the impact of adoption of FASB guidance re
lating to the presentation of debt issuance costs in
December 2016 (Note 1).
The carrying amounts of cash and cash equivalents, restricted cash, 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 and restricted cash are classified in Level 1; current portion of long-term debt, current portion of capital leases, long-term debt – net of current portion and capital leases – net of current portion are classified in Level 2.
Note 19. Customer Concentrations
During 2016, 2015 and 2014, 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. During 2016, 2015 and 2014 the Company’s five most
71
significant customers represented app
roximately 17.1%, 19.0% and 23.1% of total revenue, respectively. At December 31, 2016 and 2015, accounts receivable from the Company’s five most significant customers were approximately $1,867
and $4,808, respectively.
Note 20. 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 former Chairman and CEO of the Company
(the Executive Chairman of the Company effective August 19, 2016)
. 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 former
Chairman and CEO of the Company
(the Executive Chairman of the Company effective August 19, 2016)
. There were no borrowings under the Credit Agreement from its inception 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. During
2015, the Company recorded interest expense relating to the Credit Agreement of approximately $39, of which approximately $28 was related to the commitment fee on the unused portion of the revolving credit facility and $11 was related to the amortization of deferred financing costs.
Upon termination of the Credit Agreement, all liens and guaranties in respect thereof were released.
Revenues
During 2016, 2015, and 2014 sales of products and/or services to related parties were approximately $75, $1,435 and $871, respectively. Included in sales of products and/or services to related parties during the respective years are the following transactions which required approval by the Audit Committee of the Board of Directors in accordance with Company policy:
In December 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 party on the basis that a member of the Board of Directors of the Company also receives his principal compensation from the related party. Total consideration for the 3D printing machine (approximately $120) 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. During 2015, the Company recorded revenue of approximately $120 based on the delivery of products and/or services. None of the proceeds associated with this transaction were received by the Company at December 31, 2015, such amounts due from this customer relating to this transaction reflected in accounts receivable – net, in the accompanying consolidated balance sheet. All of the proceeds associated with this transaction were received by the Company at December 31, 2016.
In June 2015, the Company entered into a separate sale agreement for a 3D printing machine with the same multi-national, diversified metals company described above. 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. During 2015, the Company recorded revenue of approximately $146 based on the delivery of products and/or services. All of the proceeds associated with this transaction were received by the Company at December 31, 2015.
In March 2015, 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 party based on common control by the former Chairman and CEO of the Company (the Executive Chairman of the Company effective August 19, 2016). 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. During 2015, the Company recorded revenue of approximately $913 based on the delivery of products and/or services. All of the proceeds associated with this transaction were received by the Company at December 31, 2015. At December 31, 2015, the Company continued to defer the remaining consideration covered under this transaction (approximately $37) as certain additional products and/or services remained undelivered by the Company. These additional products and/or services were delivered by the Company during 2016.
In December 2014, the Company entered into a separate sale agreement for a 3D printing machine with the same powdered metal company with proprietary powders described above. 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. During 2014 and 2015, the Company
72
reco
rded revenue of approximately $815 and $185, respectively, based on the delivery of products and/or services. All of the proceeds associated with this transaction were received by the Company at December 31, 2015.
Amounts due from related parties at December 31, 2016 and 2015, were approximately $1 and $151, respectively, and are reflected in accounts receivable – net, in the accompanying consolidated balance sheet. At December 31, 2015, the Company continued to defer approximately $37 of consideration associated with sales to related parties for which products and/or services remained undelivered to the customer, with such amounts reflected in deferred revenue and customer prepayments in the accompanying consolidated balance sheet. There were no such deferred amounts at December 31, 2016.
Expenses
During 2016, 2015 and 2014, purchases of products and/or services from related parties were approximately $28, $77 and $115, respectively. Products and/or services purchased by the Company during 2016, 2015 and 2014 principally include certain raw materials and components, website design services and the corporate use of an airplane and leased office space from certain related parties under common control by the Executive Chairman of the Company (formerly the Chairman and CEO of the Company through August 19, 2016). Included in purchases of products and/or services from related parties during the respective years is the following transaction which required approval by the Audit Committee of the Board of Directors in accordance with Company policy:
In December 2014, the Company entered into a consulting arrangement with Hans J. Sack who was subsequently appointed to the Board of Directors of the Company on December 17, 2014. Total consideration under the consulting arrangement was approximately $75, of which approximately $50 was included in selling, general and administrative expenses in the statement of consolidated operations and comprehensive loss during
2015 based on the services rendered (the remaining amount having been recorded by the Company during 2014). This arrangement was approved by the Audit Committee of the Board of Directors of the Company in connection with the appointment of Hans J. Sack to the Board of Directors of the Company. In March 2015, Hans J. Sack resigned from the Board of Directors of the Company to accept a position as President of the Company.
The Company also receives the benefit of the corporate use of an airplane from a related party under common control by the Executive Chairman of the Company (formerly the Chairman and CEO of the Company through August 19, 2016) for no consideration. The Company estimates the fair market value of the benefits received during 2016, 2015 and 2014 were approximately $22, $38
and $34, respectively.
Amounts due to related parties at December 31, 2016, were approximately $4 and are reflected in accounts payable in the accompanying consolidated balance sheet.
Amounts due to related parties at December 31, 2015, were approximately $15 of which approximately $1 and $14 are reflected in accounts payable and accrued expenses and other current liabilities, respectively, in the accompanying consolidated balance sheet.
Other
Refer to Note 2 for further discussion relating to two separate common equity offerings during the quarter ended March 31, 2016, certain elements of which qualify as related party transactions.
Note 21. Segment, Product and Geographic Information
The Company manages its business globally in a singular operating segment in which it develops, manufactures and markets 3D printing machines, 3D printed and other products, materials and services. Geographically, the Company conducts its business through wholly owned subsidiaries in the United States, Germany, Italy, Sweden and Japan.
Revenue by product for the year ended December 31 was as follows:
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
3D printing machines
|
|
$
|
20,977
|
|
|
$
|
15,464
|
|
|
$
|
22,792
|
|
3D printed and other products, materials and services
|
|
|
26,811
|
|
|
|
24,889
|
|
|
|
21,108
|
|
|
|
$
|
47,788
|
|
|
$
|
40,353
|
|
|
$
|
43,900
|
|
Geographic information for revenue for the year ended December 31 was as follows (based on the country where the sale originated):
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
United States
|
|
$
|
21,992
|
|
|
$
|
19,817
|
|
|
$
|
21,115
|
|
Germany
|
|
|
15,990
|
|
|
|
14,174
|
|
|
|
18,118
|
|
Japan
|
|
|
8,647
|
|
|
|
5,613
|
|
|
|
4,623
|
|
Italy
|
|
|
729
|
|
|
|
684
|
|
|
|
44
|
|
Sweden
|
|
|
430
|
|
|
|
65
|
|
|
|
—
|
|
|
|
$
|
47,788
|
|
|
$
|
40,353
|
|
|
$
|
43,900
|
|
73
Geographic information for long-lived assets at December 31 was as follows (based on the physical location of assets):
|
|
2016
|
|
|
2015
|
|
United States
|
|
$
|
19,691
|
|
|
$
|
20,984
|
|
Germany
|
|
|
25,068
|
|
|
|
26,600
|
|
Japan
|
|
|
4,996
|
|
|
|
5,210
|
|
Italy
|
|
|
939
|
|
|
|
1,213
|
|
Sweden
|
|
|
303
|
|
|
|
363
|
|
Other
*
|
|
|
137
|
|
|
|
462
|
|
|
|
$
|
51,134
|
|
|
$
|
54,832
|
|
*
Other represents certain long-lived assets (principally 3D printing machines and related equipment) held by the Company under operating lease arrangements in foreign jurisdictions
other than those with which the Company has a physical location.
Note 22. Subsequent Events
On January 26, 2017, the Company committed to a plan to consolidate certain of its 3D printing operations from its North Las Vegas, Nevada facility into its Troy, Michigan and Houston, Texas facilities and exit its non-core specialty machining operations in its Chesterfield, Michigan facility. These actions were taken as a result of t
he accelerating adoption rate of the Company’s sand printing technology in North America which has resulted in a refocus of the Company’s operational strategy.
Both actions are expected to be completed by June 30, 2017. The Company expects to record restructuring charges associated with this plan of approximately $1,100 to $1,600, of which approximately $1,000 to $1,300 will be non-cash. The restructuring charges are expected to consist of approximately $100 to $200 for employee termination costs, approximately $1,000 to $1,300 in asset impairment charges for certain property and equipment and intangible assets expected to be sold or abandoned, and approximately $100 for other associated exit costs.
Refer to Note 15 for further discussion relating to a contingency matter with a customer, certain elements of which qualify as a reportable subsequent event.
The Company has evaluated all of its activities and concluded that no other subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the notes to the consolidated financial statements, except as described above.
74
The ExOne Company and Subsidiaries
Supplemental Quarterly Financial Information (Unaudited)
(in thousands, except per-share amounts)
|
|
For the Quarter Ended
|
|
|
|
December 31,
2016
|
|
|
September 30,
2016
|
|
|
June 30,
2016
|
|
|
March 31,
2016
|
|
Revenue - third parties
|
|
$
|
14,629
|
|
|
$
|
12,987
|
|
|
$
|
11,718
|
|
|
$
|
8,379
|
|
Revenue - related parties
|
|
|
2
|
|
|
|
1
|
|
|
|
37
|
|
|
|
35
|
|
Total
|
|
$
|
14,631
|
|
|
$
|
12,988
|
|
|
$
|
11,755
|
|
|
$
|
8,414
|
|
Gross profit
|
|
$
|
5,220
|
|
|
$
|
3,560
|
|
|
$
|
3,506
|
|
|
$
|
1,876
|
|
Net loss
|
|
$
|
(2,568
|
)
|
|
$
|
(3,611
|
)
|
|
$
|
(2,942
|
)
|
|
$
|
(5,477
|
)
|
Net loss per common share
*
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.16
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.35
|
)
|
Diluted
|
|
$
|
(0.16
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.35
|
)
|
|
|
For the Quarter Ended
|
|
|
|
December 31,
2015
|
|
|
September 30,
2015
|
|
|
June 30,
2015
|
|
|
March 31,
2015
|
|
Revenue - third parties
|
|
$
|
16,057
|
|
|
$
|
8,712
|
|
|
$
|
7,358
|
|
|
$
|
6,791
|
|
Revenue - related parties
|
|
|
141
|
|
|
|
152
|
|
|
|
1,140
|
|
|
|
2
|
|
Total
|
|
$
|
16,198
|
|
|
$
|
8,864
|
|
|
$
|
8,498
|
|
|
$
|
6,793
|
|
Gross profit
|
|
$
|
6,069
|
|
|
$
|
1,169
|
|
|
$
|
1,105
|
|
|
$
|
—
|
|
Net loss
|
|
$
|
(1,219
|
)
|
|
$
|
(10,077
|
)
|
|
$
|
(6,898
|
)
|
|
$
|
(7,671
|
)
|
Net loss per common share
*
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.08
|
)
|
|
$
|
(0.70
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
(0.53
|
)
|
Diluted
|
|
$
|
(0.08
|
)
|
|
$
|
(0.70
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
(0.53
|
)
|
*
|
Per-share amounts are calculated independently for each quarter presented; therefore the sum of the quarterly per-share amounts may not equal the per-share amounts for the year.
|
75