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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 10-Q
____________________
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to _____
Commission file number: 001-39092
____________________
SHAPEWAYS HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
____________________
Delaware87-2876494
(State or other jurisdiction of incorporation)(I.R.S. Employer Identification No.)
12163 Globe St,
Livonia, MI 48150
(Address of principal executive offices) (Zip Code)
(734) 422-6060
(Registrant’s telephone number, including area code)
____________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Trading
Symbol(s)
Name of each exchange
on which registered:
Common Stock, par value $0.0001 per shareSHPW
The Nasdaq Stock Market LLC
Warrants to purchase Common StockSHPWW
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.0405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
x
Smaller reporting company
x
Emerging growth company
x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2 of the Exchange Act). Yes ☐ No x
As of November 9, 2023 the registrant had 6,547,873 shares of common stock outstanding.

SHAPEWAYS HOLDINGS, INC.
TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Report”), including, without limitation, the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of present or historical fact included in or incorporated by reference in this Report, regarding the future financial performance of Shapeways Holdings, Inc. (the “Company,” “Shapeways,” “we,” “us” or “our”), as well as the Company’s strategy, future operations, future operating results, financial position, estimated revenues and losses, projected costs, prospects, plans, objectives of management and ability to implement additional cost-reduction measures or consummate capital raises or strategic alternatives are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would,” “will,” “seek,” “target,” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on information available as of the date of this Report and on the current expectations, forecasts and assumptions of the management of the Company, involve a number of judgments, risks and uncertainties and are inherently subject to changes in circumstances and their potential effects and speak only as of the date of such statements. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed, contemplated or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under Part II, Item 1A: “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under Part II, Item 1A: “Risk Factors” may not be exhaustive.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and the Company’s actual results of operations, financial condition and liquidity, and developments in the industry in the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this Report. In addition, even if the Company’s results or operations, financial condition and liquidity, and developments in the industry in which it operates are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods.

PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
SHAPEWAYS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30, 2023December 31, 2022
(Unaudited)
Assets
Current assets
Cash and cash equivalents$17,517 $30,630 
Restricted cash139 139 
Short-term investments— 9,816 
Accounts receivable3,832 1,606 
Inventory1,998 1,307 
Prepaid expenses and other current assets3,225 6,255 
Current assets held for sale 1,857 — 
Total current assets28,568 49,753 
Property and equipment, net5,988 15,627 
Operating lease, right-of-use assets, net1,948 2,365 
Goodwill6,286 6,286 
Intangible assets, net4,379 5,398 
Security deposits99 99 
Total assets$47,268 $79,528 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$1,657 $2,354 
Accrued expenses and other liabilities3,598 5,950 
Current portion of long-term debt55 — 
Operating lease liabilities, current872 719 
Finance lease liability, current62 — 
Other financing obligations, current40 — 
Deferred revenue1,838 972 
Total current liabilities8,122 9,995 
Operating lease liabilities, net of current portion1,176 1,715 
Deferred tax liabilities, net83 27 
Finance lease liability, noncurrent261 — 
Other financing obligations426 — 
Long-term debt441 — 
Total liabilities10,509 11,737 
Commitments and contingencies
Stockholders’ equity
Preferred stock ($0.0001 par value; 10,000,000 shares authorized; none issued or outstanding as of September 30, 2023 and December 31, 2022)
— — 
Common stock ($0.0001 par value; 120,000,000 shares authorized; 6,547,873 and 6,180,646 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively)(1)
1 5 
Additional paid-in capital203,732 201,362 
Accumulated deficit(166,409)(133,032)
Accumulated other comprehensive loss(565)(544)
Total stockholders’ equity 36,759 67,791 
Total liabilities and stockholders’ equity$47,268 $79,528 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
(1) Retroactively adjusted shares issued and outstanding to give effect to the Company's 1-for-8 reverse stock split. See Note 2.
1
SHAPEWAYS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
(in thousands, except share and per share amounts)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenue, net$8,371 $8,449 $25,010 $24,452 
Cost of revenue4,926 4,758 14,872 13,710 
Gross profit3,445 3,691 10,138 10,742 
Operating expenses
Selling, general and administrative10,964 7,605 27,526 20,516 
Research and development2,257 2,572 7,261 6,992 
Impairment on assets held for sale
9,680 — 9,680 — 
Total operating expenses22,901 10,177 44,467 27,508 
Loss from operations(19,456)(6,486)(34,329)(16,766)
Other income (expense)
Interest income247 21 913 23 
Interest expense(35)(7)(87)(7)
Loss on disposal of assets— — (85)— 
Change in fair value of earnout liability— 1,784 — 1,784 
Change in fair value of warrant liabilities— 31 — 1,558 
Other income70 110 268 149 
Total other income (expense), net282 1,939 1,009 3,507 
Loss before income tax expense(19,174)(4,547)(33,320)(13,259)
Income tax expense 19 3 57 2 
Net loss(19,193)(4,550)(33,377)(13,261)
Net loss per share:
Basic(1)
$(2.75)$(0.68)$(4.89)$(2.00)
Diluted(1)
$(2.75)$(0.68)$(4.89)$(2.00)
Weighted average common shares outstanding:
Basic(1)
6,968,534 6,648,195 6,824,520 6,623,168 
Diluted(1)
6,968,534 6,648,195 6,824,520 6,623,168 
Other comprehensive income (loss)
Foreign currency translation adjustment(65)(125)(21)(351)
Comprehensive loss$(19,258)$(4,675)$(33,398)$(13,612)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements
(1) Retroactively adjusted shares issued and outstanding, and per share information to give effect to the Company's 1-for-8 reverse stock split. See Note 2.
2
SHAPEWAYS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(in thousands, except share and per share amounts)
Common Stock
Shares(1)
AmountAdditional
Paid-In
 Capital 		Accumulated
 Deficit 		Accumulated Other
 Comprehensive
 Loss 		Total
 Stockholders’
 Equity
Balance at January 1, 20236,180,646 $5 $201,362 $(133,032)$(544)$67,791 
Issuance of common stock for stock-based compensation20,507 — — — — — 
Cancellation of restricted stock(7)— — — — — 
Stock-based compensation expense— — 805 — — 805 
Net loss— — — (7,403)— (7,403)
Foreign currency translation— — — — 39 39 
Balance at March 31, 20236,201,146 5 202,167 (140,435)(505)61,232 
Issuance of common stock for stock-based compensation118,945 — — — — — 
Issuance of common stock upon settlement of earnout consideration liability156,658 — 537 — — 537 
Restricted stock units withheld for employee tax liability(34,058)— (111)— — (111)
Cancellation of restricted stock(170)— — — — — 
Stock-based compensation expense— — 476 — — 476 
Redemption of fractional shares on reverse stock split(85)— (4)— — (4)
Net loss— — — (6,781)— (6,781)
Foreign currency translation— — — — 5 5 
Balance at June 30, 20236,442,436 5 203,065 (147,216)(500)55,354 
Issuance of common stock for stock-based compensation86,876 — — — — — 
Restricted stock units withheld for employee tax liability(19,360)— (58)— — (58)
Cancellation of restricted stock(1,666)— — — — — 
Issuance of common stock under the ATM Facility, net of offering costs39,587 — 118 — — 118 
Stock-based compensation expense— — 603 — — 603 
Net loss— — — (19,193)— (19,193)
Impact of reverse stock split on Common stock — (4)4 — — — 
Foreign currency translation— — — — (65)(65)
Balance at September 30, 2023
6,547,873 $1 $203,732 $(166,409)$(565)$36,759 
(1) Retroactively adjusted shares issued and outstanding to give effect to the Company's 1-for-8 reverse stock split. See Note 2.
3
Common Stock    
Shares(1)
AmountAdditional
Paid-In
Capital
Accumulated
Deficit
Accumulated Other
Comprehensive
Loss
Total
Stockholders’
Equity
Balance at January 1, 20226,078,467 $5 $198,179 $(112,811)$(369)$85,004 
Issuance of Legacy Shapeways common stock upon exercise of stock options27,246 — 99 — — 99 
Stock-based compensation expense— — 312 — — 312 
Net loss — — — (4,037)— (4,037)
Transfer of Private Warrants to Public Warrants— — 382 — — 382 
Foreign currency translation— — — — (52)(52)
Balance at March 31, 20226,105,713 5 198,972 (116,848)(421)81,708 
Issuance of Legacy Shapeways common stock upon exercise of stock options45,966 — 189 — — 189 
Stock-based compensation expense— — 457 — — 457 
Net loss— — — (4,674)— (4,674)
Transfer of Private Warrants to Public Warrants— — 288 — — 288 
Foreign currency translation— — — — (174)(174)
Balance at June 30, 20226,151,679 5 199,906 (121,522)(595)77,794 
Stock issued for stock-based compensation10,106 — 1 — — 1 
Stock-based compensation expense— — 750 — — 750 
Net loss— — — (4,550)— (4,550)
Foreign currency translation— — — — (125)(125)
Balance at September 30, 2022
6,161,785 $5 $200,657 $(126,072)$(720)$73,870 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
(1) Retroactively adjusted shares issued and outstanding to give effect to the Company's 1-for-8 reverse stock split. See Note 2.
4
SHAPEWAYS HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands, except share and per share amounts)
Nine Months Ended September 30,
20232022
Cash flows from operating activities:
Net loss$(33,377)$(13,261)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization1,467 1,032 
Loss from impairment on assets held for sale
9,680 — 
Write-off of prepaid services 3,196 — 
Write-off of intangible assets
481 — 
Loss on disposal of assets85 — 
Stock-based compensation expense1,884 1,519 
Non-cash lease expense749 687 
Deferred income taxes56 — 
Interest receivable on short-term investments(611)— 
Change in fair value of earnout liability— (1,784)
Change in fair value of warrant liabilities— (1,558)
Change in operating assets and liabilities:
Accounts receivable(2,226)710 
Inventory(662)(152)
Prepaid expenses and other assets(89)(1,335)
Accounts payable(425)(396)
Accrued expenses and other liabilities(1,794)713 
Operating lease liabilities(721)(732)
Deferred revenue866 (458)
Net cash used in operating activities(21,441)(15,015)
Cash flows from investing activities:
Purchases of property and equipment(2,796)(9,043)
Purchase of short-term investments(9,769)— 
Proceeds from settlement of short-term investments20,000 — 
Cash paid for acquisitions, net of cash acquired— (8,861)
Net cash provided by (used in) investing activities7,435 (17,904)
Cash flows from financing activities:
Proceeds received from other finance obligations993 — 
Principal payments on finance leases(45)— 
Payments on other finance obligations(17)— 
Payments of taxes on restricted stock units withheld for employee taxes(169)— 
Proceeds from issuance of common stock118 289 
Net cash provided by financing activities880 289 
Net change in cash and cash equivalents and restricted cash(13,126)(32,630)
Effect of change in foreign currency exchange rates on cash and cash equivalents and restricted cash13 (112)
Cash and cash equivalents and restricted cash at beginning of period30,769 79,819 
Cash and cash equivalents and restricted cash at end of period$17,656 $47,077 
Supplemental disclosure of cash and non-cash transactions:
Cash paid for interest$87 $— 
Purchase of property and equipment included in accounts payable$39 $— 
Issuance of common stock upon settlement of earnout consideration liability$537 $— 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)

Note 1. Organization
On September 29, 2021 (the “Closing” or the “Closing Date”), Galileo Acquisition Corp., a Cayman Islands exempted company (“Galileo” and after the Domestication (as defined below) “Shapeways”), a publicly-traded special purpose acquisition company, consummated the transactions described in the Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) dated April 28, 2021, by and among Galileo Founders Holdings, L.P. (the “Sponsor”), Galileo Acquisition Corp., Galileo Acquisition Holdings, Inc., a Delaware corporation and wholly owned subsidiary of Galileo (“Merger Sub”), and Shapeways, Inc., a Delaware corporation (“Legacy Shapeways”), whereby Merger Sub merged with and into Legacy Shapeways, the separate corporate existence of Merger Sub ceasing and Legacy Shapeways being the surviving corporation and a wholly owned subsidiary of Shapeways (the “Merger”).
Further, on the Closing Date, Galileo was domesticated and continued as a Delaware corporation (the “Domestication” and, together with the Merger, the “Business Combination”), changing its name to “Shapeways Holdings, Inc.” (the “Company” and/or “Shapeways”). Simultaneously with the execution of the Business Combination, Galileo entered into subscription agreements pursuant to which certain investors agreed to purchase an aggregate of 7,500,000 shares of common stock for a purchase price of $10.00 per share and $75,000,000 in the aggregate (the “PIPE Investment”). At the Closing, the Company consummated the PIPE Investment. Shapeways also operates through its wholly owned subsidiaries, Shapeways BV, which was incorporated in the Netherlands on December 10, 2008 and Linear Mold & Engineering, LLC, also referred to as Linear AMS ("Linear"), which was acquired in May 2022.
Shapeways is a leader in the large and fast-growing digital manufacturing industry combining high quality, flexible on-demand manufacturing powered by purpose-built proprietary software which enables customers to rapidly transform digital designs into physical products, globally. Shapeways makes industrial-grade additive manufacturing accessible by fully digitizing the end-to-end manufacturing process, and by providing a broad range of solutions utilizing 12 additive manufacturing technologies and more than 120 materials and finishes, with the ability to easily scale new innovation. Shapeways has delivered over 24 million parts to over 1 million customers in over 180 countries, from inception through September 30, 2023.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and in accordance with the instruction to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. The unaudited condensed consolidated financial statements include the accounts of its wholly owned subsidiaries, Legacy Shapeways, Shapeways BV and Linear. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated interim financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. These unaudited condensed consolidated interim financial statements should be read along with the audited financial statements included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2022, as filed with the SEC on August 4, 2023 (the “Annual Report”).
Use of Estimates
The preparation of the Company’s unaudited condensed consolidated financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
6
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results may differ from those estimates.
Functional Currency
The Euro is the functional currency for Shapeways BV’s operations outside the United States. Assets and liabilities of these operations are translated into U.S. Dollars at the exchange rate in effect at the end of each period. Income statement accounts are translated at the average exchange rate prevailing during the period. Translation adjustments arising from the use of differing exchange rates from period to period are included as a component of other comprehensive loss within stockholders’ equity. Gains and losses from foreign currency transactions are included in net loss for the period.
Cash, Cash Equivalents and Restricted Cash
Cash includes cash on hand and demand deposits and highly liquid securities with original maturities at the date of acquisition of ninety days or less. The Company maintains its deposits at high quality financial institutions and monitors the credit ratings of those institutions. The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. While cash held by financial institutions may at times exceed federally insured limits, the Company believes that no material credit or market risk exposure exists due to the high quality of the institutions. The Company has not experienced any losses on such accounts. Restricted cash represents cash required to be held as collateral for the Company’s credit cards and security deposit for its facility in the Netherlands. Accordingly, these balances contain restrictions as to their availability and usage and are classified as restricted cash in the unaudited condensed consolidated balance sheets.
The reconciliation of cash, cash equivalents and restricted cash reported within the applicable unaudited condensed consolidated balance sheets that sum to the total of the same such amount shown in the unaudited condensed consolidated statements of cash flows is as follows:
September 30,
2023		September 30,
2022
Cash and cash equivalents$17,517 $46,941 
Restricted cash139 136 
$17,656 $47,077 
Short-term investments
The Company invests its excess cash in fixed income instruments including U.S. treasury securities with a maturity of six months or less. The Company has the means to and intends to, hold all investments to maturity, and as such, its investments are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts.
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and are generally unsecured as they are uncollateralized. The Company provides an allowance for doubtful accounts to reduce receivables to their estimated net realizable value. Judgement is exercised in establishing allowances and estimates are based on the customers’ payment history and liquidity. Any amounts that were previously recognized as revenue and subsequently determined to be uncollectible are charged to bad debt expense included in selling, general and administrative expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. Given the nature and historical collectability of the Company’s accounts receivable, an allowance for doubtful accounts was not deemed necessary at September 30, 2023 and December 31, 2022.
7
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Inventory
Inventory consists of raw materials, work-in-process and finished goods at the Company’s distribution centers. Raw materials are stated at the lower of cost or net realizable value, determined by the first-in-first-out method. Finished goods and work-in-process are valued using a methodology to determine the cost of each 3D printed object using allocations for material, labor, machine time and overhead. The Company periodically reviews its inventory for slow-moving, damaged and discontinued items and provides allowances to reduce such items identified to their recoverable amounts. As of September 30, 2023 and December 31, 2022, the Company determined an allowance was not deemed necessary.
Property and Equipment, net
Property and equipment are stated at cost, less accumulated depreciation. Maintenance and repairs are charged to expense when incurred. Additions and improvements that extend the economic useful life of the asset are capitalized and depreciated over the remaining useful lives of the assets. The cost and accumulated depreciation of assets sold or retired are removed from the respective accounts, and any resulting gain or loss is reflected in current earnings.
In March 2021, the Company entered into a non-binding Memorandum of Understanding (“MOU”) with Desktop Metal Inc. ("Desktop Metal"), pursuant to which Desktop Metal agreed to invest $20.0 million in the PIPE Investment. Upon consummation of this investment, the Company became obligated to purchase $20.0 million of equipment, materials and services from Desktop Metal. In September 2023, the Company identified $11.5 million of such equipment that would not be utilized in its operations and classified the assets as held for sale, at the lower of the carrying value or fair value. The Company recognized $9.7 million of impairment charges during the three and nine months ended September 30, 2023. No impairment charges were recorded for the three and nine months ended September 30, 2022. The Company also wrote off $3.2 million of prepaid services related to such equipment, which was included in selling, general and administrative expense on the condensed consolidated statements of operations and comprehensive loss. Costs for capital assets not yet placed into service are capitalized and depreciated once placed into service. Depreciation is recognized using the straight-line method in amounts considered to be sufficient to allocate the cost of the assets to operations over the estimated useful lives or lease terms, as follows:
Asset CategoryDepreciable Life
Machinery and equipment
5 to 10 years
Computers and IT equipment
3 to 10 years
Furniture and fixtures
7 to 10 years
Vehicles10 years
Leasehold improvements**
**Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset.
Long-Lived Assets, Including Definite-Lived Intangible Assets
Intangible assets, which consist of technology, customer relationships, trademarks, favorable and unfavorable operating leases, and non-competition agreements are stated at cost less accumulated amortization. Amortization is generally recorded on a straight-line basis over estimated useful lives ranging from two to ten years. The Company periodically reviews the estimated useful lives of intangible assets and adjusts when events indicate that a shorter life is appropriate. Capitalization of costs to develop software begins when preliminary development efforts are successful and completed. Costs related to the design or maintenance of internal-use software are expensed as incurred.
Long-lived assets, other than goodwill and other indefinite-lived intangibles, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets.
8
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Factors that the Company considers in deciding when to perform an impairment review include significant changes in the Company’s forecasted projections for the asset or asset group for reasons including, but not limited to, significant underperformance of a product in relation to expectations, significant changes, or planned changes in the Company’s use of the assets, significant negative industry or economic trends, and new or competing products that enter the marketplace. The impairment test is based on a comparison of the undiscounted cash flows expected to be generated from the use of the asset group. If impairment is indicated, the asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of the asset with the related impairment charge recognized within the unaudited condensed consolidated statements of operations and comprehensive loss. No impairment charges were recorded for the three and nine months ended September 30, 2023 and 2022.
Goodwill
Goodwill, which represents the excess of purchase prices over the fair value of net assets acquired, is carried at cost. Goodwill is not amortized; rather, it is subject to a periodic assessment for impairment by applying a fair value-based test. Goodwill is evaluated for impairment on an annual basis at a level of reporting referred to as the reporting unit, and more frequently if adverse events or changes in circumstances indicate that the asset may be impaired.
Under ASC 350, Intangibles - Goodwill and Other, the Company has the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative goodwill impairment test. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the goodwill impairment test is performed. Impairment tests are performed on a quarterly basis. Management uses the future discounted cash flows valuation approach to determine the fair value of reporting units and determines whether the fair value of reporting units exceeded its carrying amounts. If the fair value exceeds the carrying amount, then no impairment is recognized. If the carrying amount recorded exceeds the fair value calculated, then an impairment charge is recognized for the difference. The impairment review requires management to make judgments in determining various assumptions with respect to revenues, operating margins, growth rates and discount rates. The judgments made in determining the projected cash flows used to estimate the fair value can materially impact the Company’s financial condition and results of operations. No impairment charges related to Goodwill were recorded for the three and nine months ended September 30, 2023 and 2022.
Fair Value Measurements
The Company applies ASC 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.
The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below:
Level 1 - Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
9
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Level 3 - Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities.
Business Acquisitions
The purchase price of an acquisition is allocated to the assets acquired, including intangible assets, and liabilities assumed, based on their respective fair values at the acquisition date. Acquisition-related costs are expensed as incurred. The excess of the cost of an acquired entity, net of the amounts assigned to the assets acquired and liabilities assumed, is recognized as goodwill. The net assets and results of operations of an acquired entity are included on the Company’s unaudited condensed consolidated financial statements from the acquisition date.
Revenue Recognition
Revenue is derived from two primary sources: (a) products and services and (b) software.
The Company recognizes revenue following the five-step model prescribed under ASC 606, Revenue from Contracts with Customers ("ASC 606"): (i) identify contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the products or services it transfers to the customer. These contracts have different terms based on the scope, performance obligations, and complexity of the project, which often requires the Company to make judgments and estimates in recognizing revenues.
Performance obligations are satisfied both at a point of time and over time. All revenue is recognized based on the satisfaction of the performance obligation to date (see Note 6).
Leases
The Company’s lease arrangements relate primarily to office and manufacturing space and equipment. The Company’s leases have initial terms ranging from 2 to 10 years and may include renewal options and rent escalation clauses. The Company is typically required to make fixed minimum rent payments relating to its right to use an underlying leased asset. Additionally, the Company’s leases do not contain significantly restrictive covenants or residual value guarantees.
The Company determines if an arrangement is a lease at inception and classifies its leases at commencement. Operating leases are presented as operating lease right-of-use assets, net and the corresponding lease liabilities are included in operating lease liabilities, current and operating lease liabilities, net of current on the Company’s unaudited condensed consolidated balance sheets. Finance lease right-of-use assets are presented within property and equipment, net and the corresponding finance lease liabilities are included in finance lease liability, current and finance lease liability, noncurrent on the Company's unaudited condensed consolidated balance sheets. Operating lease right-of-use assets and finance lease right-of-use assets, (collectively "ROU assets") represent the Company’s right to use an underlying asset and lease liabilities represent the Company’s obligation for lease payments in exchange for the ability to use the asset for the duration of the lease term. The Company does not recognize short term leases that have a term of twelve months or less as ROU assets or lease liabilities. The Company’s short-term leases are not material and do not have a material impact on its ROU assets or lease liabilities.
ROU assets and lease liabilities are recognized at commencement date and determined using the present value of the future minimum lease payments over the lease term. The Company uses an incremental borrowing rate based on estimated rate of interest for collateralized borrowing since the Company’s leases do not include an implicit interest rate. The estimated incremental borrowing rate considers market data, actual lease economic environment, and actual lease term at commencement date. The lease term may include options to extend when it is reasonably certain that the Company will exercise that option. ROU assets include lease payments made in advance, and excludes any incentives received or initial direct costs incurred. The Company recognizes lease expense on a straight-line basis over the lease term.
10
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
The Company has lease agreements which contain both lease and non-lease components, which it has elected to account for as a single lease component. As such, minimum lease payments include fixed payments for non-lease components within a lease agreement, but exclude variable lease payments not dependent on an index or rate, such as common area maintenance, operating expenses, utilities, or other costs that are subject to fluctuation from period to period.
Stock-based Compensation
The Company recognizes stock-based compensation expense for all stock options, restricted stock units and other arrangements within the scope of ASC 718, Stock Compensation ("ASC 718"). Stock-based compensation expense is measured at the date of grant, based on the fair value of the award, and is recognized using the straight-line method over the employee’s requisite service period. Compensation for stock-based awards with vesting conditions other than service are recognized based on the probability of the performance condition being met over the vesting period. Forfeitures are recognized as they are incurred.
Common Stock Warrant Liabilities
The Company evaluates its warrants under ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815-40”). The Private Warrants (as defined in Note 14) previously met the definition of a derivative under ASC 815, and the Company recorded these warrants as liabilities on the unaudited condensed consolidated balance sheets at fair value, with subsequent changes in their respective fair values recognized in the unaudited condensed consolidated statements of operations and comprehensive loss at each reporting date.
In December 2022, the Company and the holders of the Private Warrants entered into letter agreements, pursuant to which such holders agreed that the Private Warrants will be exercisable for cash or on a cashless basis and redeemable on the same terms and subject to the same conditions as the Public Warrants (as defined in Note 14). The Company has therefore concluded that as of September 30, 2023 and December 31, 2022, all its warrants met the criteria to be classified in stockholders' equity.
Research and Development Costs
Research and development expenses consist primarily of allocated personnel costs, fees paid to consultants and outside service providers, and allocations for rent and overhead. Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received. For the three months ended September 30, 2023 and 2022, research and development costs were $2,257 and $2,572, respectively. For the nine months ended September 30, 2023 and 2022, research and development costs were $7,261 and $6,992, respectively.
Advertising Costs
Advertising costs are expensed as incurred. For the three months ended September 30, 2023 and 2022, advertising costs were $321 and $571, respectively. For the nine months ended September 30, 2023 and 2022, advertising costs were $928 and $1,425, respectively. Advertising costs are included in selling, general and administrative expense on the unaudited condensed consolidated statements of operations and comprehensive loss.
Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and the Netherlands. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Where applicable, the Company records a valuation allowance to reduce any deferred tax assets that it determines will not be realizable in the future.
11
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on income tax returns it files if such tax position is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position. These tax benefits are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. Although the Company believes that it has adequately reserved for uncertain tax positions (including interest and penalties), it can provide no assurance that the final tax outcome of these matters will not be materially different. The Company makes adjustments to these reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on the Company’s financial condition and operating results. Carryforward attributes that were generated in tax years prior to those that remain open for examination may still be adjusted by relevant tax authorities upon examination if they either have been, or will be, used in a future period.
In applying the estimated annual effective tax rate approach prescribed under ASC 740-270, Income Taxes - Interim Reporting, and based on present evidence and conclusions around the realizability of deferred tax assets, the Company determined that any deferred tax benefits related to the forecasted tax rate and pretax activity during the three and nine months ended September 30, 2023 and 2022 are neither more likely than not to be realized in the current year, nor realizable as a deferred tax asset at the end of the year. Therefore, the appropriate amount of income tax benefit to recognize related to deferred tax assets during the three and nine months ended September 30, 2023 and 2022 is zero. The Company’s effective tax rate was (0.17)% and (0.21)% for the three and nine months ended September 30, 2023, respectively and zero percent for the three and nine months ended September 30, 2022, respectively. The Company's effective tax rates differ from the applicable statutory tax rate primarily due to the fact that the Company maintains a full valuation allowance against its deferred tax assets as a result of its historical and current period losses.
Reverse Stock Split
On June 14, 2023, the Company’s Board of Directors approved a reverse stock split ratio of 1-for-8 (the “Reverse Stock Split”). On June 22, 2023, the effective date of the Reverse Stock Split, the number of the Company’s issued and outstanding shares of common stock decreased from 51,540,172 shares to 6,442,436 shares, net of fractional shares redeemed. The number of authorized shares and par value per common share remained unchanged. No fractional shares were issued as a result of the Reverse Stock Split. Stockholders who would otherwise have been entitled to receive a fractional share received a cash payment in lieu thereof. Prior to the effective date of the Reverse Stock Split, the Company had listed warrants to purchase a total of 18,410,000 shares of Common Stock, with each whole warrant being exercisable for one share of Common Stock at $11.50 per share. After the effective date of the Reverse Stock Split, every eight shares of Common Stock that may have been purchased pursuant to the warrants immediately prior to the Reverse Stock Split represented one share of Common Stock that may be purchased pursuant to such warrants immediately following the Reverse Stock Split. Correspondingly, the exercise price per share of Common Stock attributable to such warrants was proportionately increased, such that the exercise price immediately following the Reverse Stock Split was $92.00, which equals the product of eight multiplied by $11.50, the exercise price per share immediately prior to the Reverse Stock Split. The number of shares of Common Stock subject to the warrants was proportionately decreased by eight times, to an aggregate of 2,301,250 shares.
The share, per share and trading price amounts in the unaudited condensed consolidated financial statements and the accompanying notes, have been retrospectively adjusted to reflect the Reverse Stock Split for all periods presented.
Net loss per Share
In accordance with the provisions of ASC 260, Earnings Per Share, net loss per common share is computed by dividing net loss by the weighted-average shares of common stock outstanding during the period. Basic net loss per share is computed by dividing net loss by the weighted average number of shares outstanding during the period. Diluted net loss per share gives effect to all dilutive potential common shares outstanding during the period including stock options and warrants, using the treasury stock method, and convertible debt and convertible securities, using the if-converted method. During a loss period, the effect of the potential exercise of stock options and convertible debt are not considered in the
12
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
diluted net loss per share calculation since the effect would be anti-dilutive. A reconciliation of net loss and number of shares used in computing basic and diluted net loss per share is as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Basic and Diluted net loss per share computation:
Numerator for basic and diluted net loss per share:
Net loss$(19,193)$(4,550)$(33,377)$(13,261)
Denominator for basic and diluted net loss per share:
Weighted average common shares - basic and diluted6,968,534 6,648,195 6,824,520 6,623,168 
Basic and diluted net loss per share$(2.75)$(0.68)$(4.89)$(2.00)
The following table presents the outstanding shares of common stock equivalents that were excluded from the computation of the diluted net loss per share for the periods in which a net loss is presented because their effect would have been anti-dilutive:
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Common stock warrants(1)
2,301,250 2,301,250 2,301,250 2,301,250 
Earnout Shares438,800 438,800 438,800 438,800 
Unvested RSUs568,570 655,882 568,570 655,882 
(1) The number of shares of common stock subject to the warrants was proportionately decreased as a result of the Reverse Stock Split.
Included in net loss per share are 482,906 and 493,900 shares subject to options due to their nominal exercise prices as of September 30, 2023 and 2022, respectively.
Segment Information
The Company operates and reports in one segment, which focuses on providing additive and traditional manufacturing services to customers. The Company’s operating segment is reported in a manner consistent with the internal reporting provided to the chief operating decision maker (“CODM”). The Company’s CODM has been identified as its Chief Executive Officer. The Company is continually evaluating its operating and reporting segments as the Company continues to grow.
Recent Accounting Pronouncements
Accounting Pronouncements Recently Issued Not Yet Adopted
In October 2023, the FASB issued Accounting Standards Update ("ASU") 2023-06, Disclosure Improvements. The amendments in this ASU modify the disclosure or presentation requirements of a variety of topics in the codification. Certain of the amendments represent clarifications to or technical corrections of the current requirements. The amendments in this ASU are effective for the interim period June 30, 2027, with early adoption prohibited. The Company is currently evaluating the impact the standard will have on its condensed consolidated financial statements.
Note 3. Going Concern

The Company’s condensed consolidated financial statements are prepared in accordance with U.S. GAAP applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.

13
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
The Company had net loss of $33,377 and $13,261 for the nine months ended September 30, 2023 and 2022, respectively. The Company has incurred losses from operations since inception and as of September 30, 2023, had an accumulated deficit of $166,409 and negative cash flows of $13,126. These conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern for one year following the issuance of these financial statements.

The Company initiated a number of cost reduction measures in the quarter ended September 30, 2023, including a reduction in force completed in October 2023, reduction of new hires and reduction in non-critical capital and discretionary operating expenditures. The Company has also identified several further potential actions that could be initiated in a timely manner to extend the cash runway necessary to fund operations and to address the Company’s liquidity needs over the twelve-month period from the date of issuance of these condensed consolidated financial statements. These actions include raising substantial additional capital to fund its operations through equity or debt financings or other sources, strategic collaborations, deferral and reprioritization of certain additional research and development programs that would involve reduced program and headcount spend, further reduction in force, realignment of operating infrastructure including closing or downsizing manufacturing facilities, and further reduction in non-critical capital and discretionary operating expenditures including personnel costs, travel and recruitment, additional equipment and business support spend. Although the Company is continuing to explore actions to maximize shareholder value and management has taken actions to reduce cash use, it cannot be sure these actions will sufficiently reduce or eliminate future losses.

Furthermore, the Company has been working with advisors in considering the strategic alternatives available to the Company. Potential strategic alternatives may include, without limitation, a sale of a material portion of the Company’s assets, merger, business combination, or other strategic transaction. The Company has not made a decision to pursue or not pursue any particular strategic alternative, and there can be no assurance that this process will result in any transaction.

The Company believes management’s plans may not provide sufficient liquidity to meet its financial obligations and maintain levels of liquidity over the twelve-month period from the date of issuance of these financial statements. As such, the Company demonstrates adverse conditions that raise substantial doubt about the Company's ability to continue as a going concern for one year following the issuance of these condensed consolidated financial statements.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.
Note 4. Short-term Investments
As of September 30, 2023, the Company's short-term investments consisted of U.S. Treasury Securities classified as held-to-maturity. Held-to-maturity investments are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts. The Company considers all investments with original maturities of 3 months or less to be cash and cash equivalents and investments with original maturities of more than three months but less than one year to be short-term investments. The carrying value, excluding gross unrealized holding gains or losses and fair value as of September 30, 2023 and December 31, 2022 were as follows:
September 30, 2023
Amortized Cost and Carrying ValueGross Unrealized GainsGross Unrealized Losses
Fair Value September 30, 2023
Classified as Cash and cash equivalents
U.S. Treasury Securities$14,933 $45 $— $14,978 
Classified as short-term investments
U.S. Treasury Securities$— $— $— $— 
14
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
December 31, 2022
Amortized Cost and Carrying ValueGross Unrealized GainsGross Unrealized Losses
Fair Value December 31, 2022
Classified as Cash and cash equivalents
U.S. Treasury Securities$19,864 $73 $— $19,937 
Classified as short-term investments
U.S. Treasury Securities$9,816 $33 $— $9,849 
Note 5. Business Acquisitions
Acquisition of MFG.com
On April 22, 2022, the Company completed the acquisition of the outstanding assets of MP2020, Inc. ("MFG.com" or "MFG") under an Asset Purchase Agreement ("MFG Purchase"). MFG.com is expected to help the Company's software strategy by providing an immediate supply chain of a wide range of traditional manufacturing services that its customers can leverage.
The following table summarizes the total consideration for the MFG Purchase:
April 22, 2022
Cash consideration$2,700 
Holdback consideration300 
Total consideration$3,000 
The holdback consideration represents the portion of the purchase price to be paid within 12 months from the closing date, subject to reduction for certain indemnifications and other potential obligations of the acquired businesses. The holdback consideration was recorded in accrued expenses and other liabilities on the unaudited condensed consolidated balance sheets and was paid January 2023.
The Company has accounted for the MFG Purchase as a business combination in accordance with ASC Topic 805, Business Combinations ("ASC 805"). The following table summarizes the allocation of the purchase price to the estimated fair values of assets acquired and liabilities assumed:
April 22, 2022
Assets acquired:
Goodwill$1,954 
Intangible assets1,604 
Other assets15 
Total assets acquired 3,573 
Liabilities assumed:
Deferred revenue573 
Total liabilities assumed573 
Net assets acquired$3,000 
15
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
The estimated useful lives of the identifiable intangible assets acquired is as follows:
Gross Value Estimated Life (in years)
Customer relationships$264 10
Trade name240 10
Acquired software platform910 10
Customer list190 3
Total intangible assets$1,604 
The goodwill will not be deductible for tax purposes. The Company incurred $212 of transaction costs related to this acquisition, which are included in general and administrative expenses on the unaudited condensed consolidated statements of operations.
The Company has determined that the impact of the MFG Purchase was not material to its condensed consolidated financial statements; therefore, separate presentation of revenue and earnings since the acquisition date and pro forma information are not required nor included herein.
Acquisition of Linear AMS
On May 9, 2022, the Company completed the acquisition of the membership interest of Linear Mold & Engineering, LLC ("Linear AMS" or "Linear") under a Membership Interest Purchase Agreement (the "Linear AMS Purchase"). Linear is expected to help the Company expand its go to market strategy by leveraging Linear's highly technical business development and user application experience and extend its enterprise customer base in key markets.
The following table summarizes the total consideration for the Linear AMS Purchase:
May 9, 2022
Cash consideration$6,090 
Holdback consideration800 
Earnout consideration liability2,900 
Total consolidation$9,790 
The holdback consideration represents the portion of the purchase price payable 12 months from the closing date, subject to reduction for certain indemnifications and other potential obligations of Linear AMS. The estimated fair value of the earnout consideration liability at acquisition was determined using a Monte Carlo simulation based on certain performance metrics for the 12 months ended December 31, 2022. During 2022, the Company recognized a non-cash gain of $1,824 as a result of the actual revenue performance of Linear for the year ended December 31, 2022. The final earnout consideration liability was paid in cash of $539 and a non-cash issuance of equity valued at $537 in April 2023.
16
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
The Company has accounted for the Linear AMS Purchase as a business combination in accordance with ASC 805. The following table summarizes the fair values of assets acquired and liabilities assumed as of the acquisition date:
May 9, 2022
Assets acquired:
Cash and cash equivalents$29 
Accounts receivable1,117 
Inventory214 
Prepaid expenses34 
Security deposits92 
Property and equipment, net2,086 
Right-of-use assets2,131 
Goodwill2,497 
Intangible assets, net4,199 
Total assets acquired12,399 
Liabilities assumed:
Accounts payable308 
Accrued expenses and other liabilities170 
Operating lease liability2,131 
Total liabilities assumed2,609 
Net assets acquired$9,790 
The estimated useful lives of the identifiable intangible assets acquired is as follows:
May 9, 2022Estimated Life (in years)
Customer relationships$2,822 10
Trade name647 10
Noncompetition agreement52 2
Favorable operating lease699 4
Unfavorable operating lease(21)4
Total intangible assets$4,199 
The goodwill will not be deductible for tax purposes. The Company incurred $161 of transaction costs related to this acquisition, which are included in general and administrative expenses on the unaudited condensed consolidated statements of operations.
The Company has determined that the impact of the Linear AMS Purchase was not material to its consolidated financial statements; therefore, separate presentation of revenue and earnings since the acquisition date and pro forma information are not required nor included herein.
Acquisition of Maker OS
On April 13, 2022, the Company completed the acquisition of the outstanding assets of Maker OS under an Asset Purchase Agreement ("Maker OS Asset Purchase"). Maker OS is expected to help the Company expand on its manufacturing capabilities and help it build comprehensive ordering services within its software offerings. The total cash consideration paid related to this transaction was $100.
17
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
The Company has accounted for the Maker OS Asset Purchase as an asset purchase and no liabilities were assumed as part of the acquisition. The following table summarizes the fair values of assets acquired as of the acquisition date:
April 13, 2022
Assets acquired:
Intangible assets$100 
Total assets acquired $100 
The Company incurred immaterial transaction costs related to the Maker OS Asset Purchase, which are included in selling, general and administrative expenses on the unaudited condensed consolidated statements of operations.
Note 6. Revenue Recognition
Under ASC 606, revenue is recognized throughout the life of the executed agreement. The Company measures revenue based on consideration specified in a contract with a customer. Furthermore, the Company recognizes revenue when a performance obligation is satisfied by transferring control of the product or service to the customer which could occur over time or at a point in time.
A performance obligation is a promise in a contract to transfer a distinct service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation. Customers typically receive the benefit of the Company’s services as (or when) they are performed. Substantially all customer contracts provide that compensation is received for services performed to date. Payments from customers are based on billing terms established in the contracts with each customer, which vary by the type of customer and the product or services offered. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.
Nature of Products and Services
The following is a description of the Company’s products and services from which the Company generates revenue, as well as the nature, timing of satisfaction of performance obligations, and significant payment terms for each:
Direct sales
The Company provides customers with an additive manufacturing service, allowing for the customer to select the specifications of the model which they wish to have printed. Shapeways prints the 3D model and ships the product directly to the customer.
The Company recognizes the sale of products through its e-commerce website over time using the output method. Contracts involving the sale of products through its e-commerce website do not include other performance obligations. As such, allocation of the transaction price was not necessary as the entire contract price is attributed to the sole performance obligation identified.
18
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Marketplace sales
The Company provides a platform for shop owners to list their designs through Shapeways’ marketplace website. The Company prints the 3D models and ships the product directly to the customer, handling the financial transaction, manufacturing, distribution and customer service on behalf of the shop owners. Judgment is applied to determine whether the Company is the principal or the agent, which could impact the recognition of revenue and cost of revenue within the consolidated statements of operations and comprehensive loss. The Company considers whether it has the primary responsibility for fulfilling the promise to provide the specified product or service to the end user, whether it has inventory risk prior to transferring the product or service to the customer and if the Company has discretion in establishing prices. The Company acts as an agent in these arrangements where it facilitates the sales of the goods and services on behalf of third-party shop owners to end customers. The Company is considered an agent and recognizes revenue generated from these transactions on a net basis since the Company lacks the ability to establish the overall selling price of the goods or services provided to the end user.
The Company recognizes the sale of 3D printed products to customers at a point in time, specifically upon shipping the goods to the customer (FOB Origin) given the transfer of significant risks and rewards of ownership at that point in time. Contracts involving the manufacturing and delivery of 3D printed products to customers do not include other performance obligations. As such, allocation of the transaction price is not necessary as the entire contract price is attributed to the sole performance obligation identified.
Software revenue
The Company launched the first phase of its software offering under the brand "OTTO" in the fourth quarter of 2021. The software enables other manufacturers to leverage Shapeways’ existing end-to-end manufacturing software to scale their businesses and shift to digital manufacturing. Shapeways’ software offers improved customer accessibility, increased productivity, and expanded manufacturing capabilities for its customers. The Company expanded its software offering's customer base and feature set with the acquisitions of MFG and MakerOS, both completed in April 2022.
For each of the performance obligations classified as software revenue, the performance obligations are satisfied evenly over the term of the contract. For contracts including performance obligations classified as software revenue, the Company identified that each performance obligation has an explicitly stated standalone selling price. As such, allocation is not necessary as the prices included in the contract are attributed to each separate performance obligation.
The following table presents the Company's revenue disaggregated by revenue source:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Major products and service lines:
Direct sales$6,773 $6,457 $19,247 $18,901 
Marketplace sales776 1,403 3,571 4,383 
Software822 589 2,192 1,168 
Total revenue$8,371 $8,449 $25,010 $24,452 
Timing of revenue recognition:
Products transferred at a point in time$776 $1,403 $3,571 $4,383 
Products and services transferred over time7,595 7,046 21,439 20,069 
Total revenue$8,371 $8,449 $25,010 $24,452 
19
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Deferred Revenue
The Company records deferred revenue when cash payments are received in advance of performance. Deferred revenue activity consisted of the following:
September 30,
2023		December 31,
2022
Balance at beginning of the period $972 $921 
Deferred revenue recognized during period(25,010)(33,157)
Additions to deferred revenue during period25,876 33,208 
Total deferred revenue $1,838 $972 
The Company expects to satisfy its remaining performance obligations within the next twelve months. The $972 of deferred revenue as of January 1, 2023 was recognized during the nine months ended September 30, 2023. The opening balance of accounts receivable as of January 1, 2022 was $1,372.
Practical Expedients and Exemptions
The Company applies the practical expedient related to incremental costs of obtaining a contract. Although certain of its commission costs qualify for capitalization under ASC 340-40, Contracts with Customers, their amortization period is less than one year. Therefore, utilizing the practical expedient, the Company expenses these costs as incurred.
Note 7. Inventory
Components of inventory consisted of the following:
September 30,
2023		December 31,
2022
Raw materials$1,283 $849 
Work-in-process485 209 
Finished goods230 249 
Total$1,998 $1,307 
Note 8. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
September 30,
2023		December 31,
2022
Prepaid expenses$2,251 $1,384 
VAT receivable914 990 
Prepaid insurance 12 401 
Prepaid service expenses— 3,231 
Security deposits— 175 
Other current assets 48 74 
Total$3,225 $6,255 
20
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Note 9. Property and Equipment, Net
Property and equipment, net consisted of the following:
September 30,
2023		December 31,
2022
Machinery and equipment$10,659 $10,450 
Computers and IT equipment1,136 1,138 
Leasehold improvements2,773 2,429 
Furniture and fixtures106 81 
Vehicles42 42 
Assets to be placed in service 189 11,749 
Property and equipment 14,905 25,889 
Less: Accumulated depreciation(8,917)(10,262)
Property and equipment, net$5,988 $15,627 
For the three months ended September 30, 2023 and 2022, depreciation expense totaled $335 and $285, respectively. For the nine months ended September 30, 2023 and 2022, depreciation expense totaled $929 and $721, respectively. Of these amounts, depreciation charged to cost of revenue was $273 and $249 for the three months ended September 30, 2023 and 2022, respectively and $789 and $616 for the nine months ended September 30, 2023 and 2022, respectively.
On March 26, 2021, the Company entered into a MOU with Desktop Metal, pursuant to which Desktop Metal agreed to invest $20.0 million in the PIPE Investment. Upon consummation of this investment, the Company became obligated to purchase $20.0 million of equipment, materials and services from Desktop Metal. In conjunction with these obligations, the Company and Desktop Metal agreed to develop a strategic partnership. In September 2023, the Company identified $11.5 million of equipment that would not be utilized in its operations and classified the assets as held for sale at the lower of the carrying value or fair value. The Company recognized $9.7 million of impairment charges on these assets during the three and nine months ended September 30, 2023. The Company also wrote off $3.2 million of prepaid services related to such equipment, which was included in selling, general and administrative expenses on the condensed consolidated statements of operations and comprehensive loss.
Note 10. Goodwill and Intangible Assets
Changes in the carrying amount of goodwill as of September 30, 2023 and December 31, 2022 are as follows:
September 30,
2023		December 31,
2022
Balance, beginning of period$6,286 $1,835 
Acquired goodwill— 4,451 
Balance, end of period
$6,286 $6,286 
The Company had no accumulated impairment losses on goodwill during the three and nine months ended September 30, 2023 and 2022.
21
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Intangible assets consisted of the following as of September 30, 2023:
Gross carrying amountAccumulated amortizationIntangible assets, netWeighted average amortization period (in years)
Customer relationships$3,086 $(437)$2,649 10
Trade name987 (140)847 10
Acquired software platform910 (129)781 10
Customer lists190 (90)100 3
Noncompetition agreement52 (37)15 2
Unfavorable operating lease(21)8 (13)4
Total intangible assets, net$5,204 $(825)$4,379 
During the three and nine months ended September 30, 2023, the Company wrote off $481 of intangible assets related to the favorable operating lease. There were no intangible assets written off during the three and nine months ended September 30, 2022.
Intangible assets consisted of the following as of December 31, 2022:
Gross carrying amountAccumulated amortizationIntangible assets, netWeighted average amortization period (in years)
Customer relationships$3,086 $(206)$2,880 10
Trade name987 (66)921 10
Acquired software platform910 (61)849 10
Customer lists190 (42)148 3
Noncompetition agreement52 (17)35 2
Favorable operating lease699 (117)582 4
Unfavorable operating lease(21)4 (17)4
Total intangible assets, net$5,903 $(505)$5,398 
The Company recognized $160 and $188 of amortization expense during the three months ended September 30, 2023 and 2022, respectively and $538 and $311 of amortization expense during the nine months ended September 30, 2023 and 2022, respectively. The Company estimates the future aggregate amortization expense related to its intangible assets as of September 30, 2023 will be as follows:
Amortization expense
Remainder of 2023$146 
2024565 
2025514 
2026497 
2027498 
Thereafter2,159 
Total$4,379 
22
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Note 11. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following:
September 30,
2023		December 31,
2022
Accrued compensation$1,544 $1,504 
Holdback consideration400 1,100 
Accrued selling expenses605 487 
Taxes payable71 339 
Accrued acquisition of property and equipment39 225 
Earnout consideration liability— 1,076 
Other accrued expenses and other liabilities939 1,219 
Total$3,598 $5,950 
Note 12. Commitments and Contingencies
Leases
During the three and nine months ended September 30, 2023, the Company maintained six leases of facilities located in the United States and the Netherlands, as well as two leases of equipment classified as finance leases. In addition, the Company has two failed sale-leaseback transactions that have been recorded as finance obligations within its unaudited condensed consolidated balance sheets. See Note 13 for additional information.
The table below presents certain information related to the Company’s lease costs:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Operating lease expense$249 $302 $749 $687 
Finance lease expense12 — 31 — 
Interest expense on finance lease liabilities5 — 14 — 
Total lease cost$266 $302 $794 $687 
The Company recorded sublease income of $62 and $108 during the three months ended September 30, 2023 and 2022, respectively and $221 and $142 during the nine months ended September 30, 2023 and 2022, respectively. The sublease income is associated with the Company's sublease of its facility in Michigan.
23
SHAPEWAYS HOLDINGS, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share amounts)
Right-of-use assets and lease liabilities for operating leases were recorded in the unaudited condensed consolidated balance sheets as follows:
September 30,
2023		December 31,
2022
Assets:
Operating lease right-of-use assets, net$1,948 $2,365 
Finance lease right-of-use assets, net323 — 
Total lease assets$2,271 $2,365 
Liabilities:
Current liabilities:
Operating lease liabilities, current$872 $719 
Finance lease liability, current62 — 
Non-current liabilities:
Operating lease liabilities, net of current portion1,176 1,715 
Finance lease liability, net of current portion261 — 
Total lease liabilities
$2,371 $2,434 
The Company’s lease agreements do not state an implicit borrowing rate, therefore, an internal incremental borrowing rate was determined based on information available at the lease commencement date for the purposes of determining the present value of lease payments. The incremental borrowing rate reflects the cost to borrow on a securitized basis in each market. The weighted-average remaining lease term for operating and finance leases was 2.33 years and 4.49 years, respectively and the weighted-average incremental borrowing rate for operating and finance leases was 6.93% and 8.24%, respectively, as of September 30, 2023.
Supplemental cash flow information related to the Company’s leases was as follows:
Nine Months Ended
September 30,
20232022
Operating cash flows from operating leases$721 $732 
Financing cash flows from finance leases$45 $— 
Lease liabilities arising from obtaining right-of-use assets$595 $— 
As of September 30, 2023, future minimum lease payments required under operating and finance leases are as follows:
Operating LeasesFinance Leases
Rest of 2023
$242 $22 
2024965 87 
2025791 87 
2026236 87 
2027— 87 
Thereafter— 18 
Total minimum lease payments2,234 388 
Less effects of discounting(186)(65)
Present value of future minimum lease payments$