AMS Below article leader board Dec 14

Updated 8/5 with comments from Zortrax: see rejoinder at end of article.

The 3D printing industry is a small bubble within the larger world of manufacturing. Within that bubble, every nation has its own 3D printing microcosm, with only a few countries like the US and the Netherlands gaining international prominence. Attending North America’s largest trade show dedicated to the technology, I was introduced, by way of their US distributor DesignBox3D, to a Polish manufacturer of desktop 3D printers called 3DGence. What was a relatively small producer of low-cost 3D printers from Poland doing at a massive industrial trade show half-way around the world?

It was then that I began to trace the history of one of the 3D printing industry’s microcosms, the Polish 3D printing scene, to learn about how a small East European country could jump to international recognition. It all traced back to one company.

mmh m200

The M200 3D printer from Zortrax.

The whole thing began about two years back, when an unknown 3D printer startup out of Poland suddenly became an international player with a massive bit of news: PC manufacturer Dell had placed an order for 5,000 of their desktop 3D printers. Zortax seemed ordinary from the start, just a small business with yet another desktop 3D printer on Kickstarter. After the news about Dell, however, it was natural to wonder what made their relatively simple M200 3D printer so special.

Soon, enough user reviews established the M200 as a pretty reliable machine. The heated bed features perforations that actually make it easy to remove completed prints from the platform. Auto-calibration produces a pretty good level of reliability. And the M200 is easy to use, pretty much the plug-n-play 3D printer the consumer industry has been waiting for.

The thing about Zortrax is that they aren’t just an ordinary startup—not for Poland, anyway. There were a couple of established 3D printing companies from Poland on the scene before Zortrax showed up. But, with the Dell story, the entire Polish 3D printing industry was galvanized with international attention suddenly directed towards a country that otherwise may have gone unnoticed. This led to Poland’s own micro bubble, with numerous startups receiving investments and media coverage indicative of a growing industry potentially capable of recharging the Polish economy.

Zortrax led the charge. In March 2014, the company issued 10,000 unsecured bonds worth PLN1000 (USD$329) each in order to raise USD$3.5 million. Though they never went public, as they’d originally suggested they might, Zortrax continued to gain in popularity, eventually seeing the opening of an official Zortrax showroom and the design of a new 3D printer geared towards the professional market, the Inventure. The company also posted good sales numbers, with Zortrax recently bringing in PLN37.6M (USD$9.4M) in sales and earning a net profit of PLN8M (USD$2M) in 2015.

Looking at the company’s publicly disclosed sales numbers, however, things just don’t seem to add up. In 2015, Zortrax reported selling 5,500 M200 3D printers with revenues of PLN37.6M. However, in 2014, the year in which Zortrax claimed to have sold 5,000 printers to Dell, revenues were only PLN12M, less than one-third that the following year.

During this time, Zortrax printers and filaments remained at the same price. If a similar number of units were sold each year, how, then, could their revenue have increased so much from 2014 to 2015? On the other hand, if the Dell deal is removed from the equation and 5,000 3D printers were not sold in 2014, the numbers make sense.

When asked whether or not the deal with Zortrax ever actually took place, a representative at Dell reported that, according to their records, no transaction between Dell and Zortrax has ever occurred. This does not mean that Zortrax and Dell never initiated a business arrangement, but that it was never actualized in the end.

Though Dell confirms that the transaction never took place, the reference to the deal continues to make its way into articles about the 3D printer manufacturer to this day, including stories by publications as large as the BBC and Forbes. At USD$1,900 per 3D printer, the Dell deal, excluding any big discount, would net Zortrax somewhere in the ballpark of USD$9.5 million, a substantial amount to have claimed, but fabricating such a transaction doesn’t hurt anyone on the face of it. The M200 is a printer that has earned its due respect and hardly had an unhappy customer.

USD$3.5 million in bonds, however, are tied to investors who might be less than happy to discover that the company had never sold USD$9.5 million worth of 3D printers to a name brand company—particularly when the Dell transaction may have been a lynch pin for selling USD$3.5 million shares on the capital market. Zortrax advertised the sale of shares, first in a brochure ahead of the sale of stock. The brochure reads in one section labeled “REASONS FOR INVESTMENT” (translated from Polish): “Signed a contract with Dell to ensure Issuer’s stable financial results Issuer’s and thus the correct handling and repayment of Bonds.”

mmh brochure

A section from a brochure advertising the upcoming sale of Zortrax shares on the Polish capital market.

Then, when a memorandum for selling the bonds was drafted, the Dell transaction was mentioned multiple times. On page 29 of the memorandum for the 10,000 bonds, the company wrote (translated from Polish):

  1. Indication of the source of funds for the repayment resulting from securities issued
    Liabilities arising from the issued Series A2 Bonds will be repaid from the Issuer’s operating activities. On January 20, 2014. The Company has entered into a contract with an American computer giant – Dell Inc., Dell Asia Pacific Co., Ltd. The contract is the delivery by the Issuer of five thousand Zortrax M200 3D printers in 2014. Payments for the delivered printer shall be made within up to 28 days after accepting the handover protocol on the side of the receiver.

The scale of the contract provides a dynamic development for the Issuer in the future, and the results and high profits due to the fair margins realized from the sale of Zortrax M200 3D printers. Moreover, the Issuer negotiates new contracts with international companies of comparable scale to a contract with Dell Inc., Dell Asia Pacific Co., Ltd.

Since then, the company has ceased to mention Dell in its marketing materials. All mention of the transaction has been scrubbed from the Zortrax website and, in the most recent memorandum associated with selling 162,500 shares of stock on the capital market, the “American computer giant”, Dell, is not referred to once.

This Dell deal may not have only been crucial for obtaining the USD$3.5 million investment, but it may have potentially influenced some investors purchasing the 10,000 shares. The transaction also seems to have provided the groundwork for the company’s reputation overall. Just this February, Zortrax CEO Rafał Tomasiak received an honorary red-and-white flag from Andrzej Duda, the President of the Republic of Poland, for the contributions his company has made to the country.

mmh poland

Poland’s Deputy Prime Minister and Minister of Science and Higher Education Jaroslaw Gowin standing with Zortrax CEO Rafał Tomasiak.

President Duda was not the only government representative to take notice of the company. The Deputy Prime Minister and Minister of Science and Higher Education, Jaroslaw Gowin, visited Zortrax’s new headquarters on July 12th where it was discussed that Zortrax might cooperate with the country’s National Research and Development Center.

More recently, in a new pre-IPO investment round, Zortrax decided to sell all of the shares to a sole investor, venture capital firm Ultro, which belongs to Dariusz Miłek, CEO of Polish shoe giant CCC and the fourth richest Pole in the world according to Forbes. Purchasing all 1.2 million shares for PLN$44 million, Ultro now owns 15% of the 3D printer company. The funds will be used to create new printers and even acquire other companies.

With this news in mind, it’s worth considering that, had it not been for one very large deal with a very recognizable tech giant, Zortrax may never have broken through the insular Polish 3D printing ecosystem and into the industry at large.

The company’s products have been seen as good quality and reliable overall—though the Inventure printer never made it to market due to manufacturing issues in China—so investors may not be ultimately disappointed with purchasing shares in Zortrax. If they are disappointed, however, the deal could prove to be problematic in the case of a civil lawsuit or, worse, criminal proceedings. Discuss further over in the Dell/Zortrax 3D Printer Transaction Never Happened forum at 3DPB.com.

 


mmhMichael Molitch-Hou is the Editor of ENGINEERING.com’s 3D printing section. Michael previously served as Editor-in-Chief of 3D Printing Industry and has covered additive manufacturing technology day in and day out since 2012 and has hundreds of article to his credit. 

 


Rejoinder:

Zortrax has issued comments on this matter:

“In late 2013 and early 2014, prior to the commercial launch of our debut 3D printer, strong interest in the product provided a good outlook for our entry into the 3D printing sector. A potential contract with the Asian division of Dell, noted in the article, was communicated through various marketing channels, due to a mutual good faith effort to complete the deal. Due to confidentiality of the agreement, we are not able to reveal additional details of the contract, other than to say that it could not be completed on mutually acceptable terms and conditions by both parties.

We want to clearly communicate that information related to this opportunity was, and has been clearly communicated to prospective investors. As the article noted, Zortrax discontinued communication efforts regarding the potential contract in our marketing communications, addresses to the market, and conversations with investors due to its unsuccessful conclusion.

We would like to note that financial numbers quoted in the article do clearly indicate the usage of real numbers. Potential profits from unrealized contracts are not reported and were not formally included for the basis of establishing the valuation of the company.

Since 2011, Zortrax has focused efforts on providing the highest quality products and services in the field of 3D printing technology. This effort has been validated by, among other things, numerous honors and awards, and constant company growth creating new jobs, and the further development of innovative products and services.”

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