<PAGE>

================================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-Q


(Mark One)
  [X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999
                                      Or
  [ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period
            from    to

  Commission file number: 0-20993



                                DTM CORPORATION
            (Exact name of registrant as specified in its charter)

             Texas                                        74-2487065
     (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                   Identification No.)

1611 Headway Circle, Building 2, Austin, Texas              78754
    (Address of principal executive offices)              (Zip Code)

                                (512) 339-2922
             (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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    .
                                       ---    ---

As of July 31, 1998, the latest practicable date, the Registrant had 6,973,503
outstanding shares of Common Stock.



================================================================================
<PAGE>

                                    PART I
                             FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                DTM Corporation

          Condensed Consolidated Statements of Operations (unaudited)
              (In thousands, except share and per share amounts)
<TABLE>
<CAPTION>

                                           Three Months Ended      Six Months Ended
                                                 June 30,               June 30,
                                         ---------------------   ----------------------
                                           1999        1998        1999        1998
                                         ---------   ---------   ---------   ----------
<S>                                      <C>         <C>         <C>         <C>
Revenues:
   Products                               $  6,657    $  6,591    $ 13,648    $ 11,561
   Service and support                         942         888       1,923       1,752
                                         ---------   ---------   ---------   ---------
                                             7,599       7,479      15,571      13,313
Cost of sales:
   Products                                  2,967       4,595       6,081       7,510
   Service and support                         580         518       1,160       1,030
                                         ---------   ---------   ---------   ---------
                                             3,547       5,113       7,241       8,540
                                         ---------   ---------   ---------   ---------

Gross Profit                                 4,052       2,366       8,330       4,773

Operating expenses:
   Selling, general and administrative       2,913       2,604       6,191       5,351
   Research and development                    788         855       1,450       1,843
   Provision for litigation settlement         -         1,700         -         1,700
                                         ---------   ---------   ---------   ---------
                                             3,701       5,159       7,641       8,894
                                         =========   =========   =========   =========

Operating income (loss)                        351      (2,793)        689      (4,121)

Other income (expense):
   Interest expense, net                       (21)        (14)        (28)        (20)
   Gain on sale of assets                       79         -           129         -
                                         ---------   ---------   ---------   ---------
                                                58         (14)        101         (20)
                                         ---------   ---------   ---------   ---------

Income (loss) before income taxes              409      (2,807)        790      (4,141)

Income tax expense                            (114)        -          (221)        -
                                         ---------   ---------   ---------   ---------

Net income (loss)                         $    295    $ (2,807)   $    569    $ (4,141)
                                         =========   =========   =========   =========

Net income (loss) per common share-basic  $   0.04    $  (0.45)   $   0.09    $  (0.66)
                                         =========   =========   =========   =========
Weighted-average number of shares
   outstanding                           6,716,928   6,286,851   6,615,687   6,286,851
                                         =========   =========   =========   =========
</TABLE>

See accompanying notes.

                                       1
<PAGE>

                                DTM Corporation

               Condensed Consolidated Balance Sheets (unaudited)
                      (In thousands, except share amounts)
<TABLE>
<CAPTION>

                                                June 30,    December 31,
                                                 1999          1998
                                              -----------   -----------
<S>                                           <C>           <C>
Assets
Current assets:
   Cash                                        $      489    $      429
   Accounts receivable, net                         6,127         5,186
   Inventory                                        2,757         3,456
   Prepaid expenses and other                         389           262
                                              -----------   -----------
Total current assets                                9,762         9,333
Property, net                                         956         1,388
Capitalized software development
      costs, net                                      502           629
Patent and license fees, net                          843           956
                                              -----------   -----------
Total assets                                   $   12,063    $   12,306
                                              ===========   ===========


Liabilities and shareholders' equity
Current liabilities:
   Accounts payable                            $    2,650    $    3,090
   Due to shareholder                                 -             909
   Deferred revenues and customer
      deposits                                      2,123         2,185
   Employee and agent compensation                    968           891
   Income taxes                                       221           -
   Accrued litigation settlement-
      stock portion                                   -             400
                                              -----------   -----------
Total current liabilities                           5,962         7,475

Shareholders' equity:
   Common stock, 6,973,503 shares outstanding
      at June 30, 1999 and 6,286,851 at
      December 31, 1998                                 1             1
   Additional paid-in capital                      54,022        53,161
   Accumulated deficit                            (47,766)      (48,335)
   Accumulated other comprehensive
      income (loss)                                  (156)            4
                                              -----------   -----------
Total shareholders' equity                          6,101         4,831
                                              -----------   -----------
Total liabilities and shareholders' equity     $   12,063    $   12,306
                                              ===========   ===========

</TABLE>

See accompanying notes.

                                       2
<PAGE>

                                DTM Corporation

          Condensed Consolidated Statements of Cash Flows (unaudited)
                                 (In thousands)
<TABLE>
<CAPTION>
                                                               Six Months Ended
                                                                   June 30,
                                                           -------------------------
                                                              1999          1998
                                                           -----------   -----------
<S>                                                        <C>           <C>
Operating activities:
Net income (loss)                                           $      569    $   (4,141)
Adjustments to reconcile net income (loss) to net cash
   provided by (used in) operating activities:
       Depreciation and amortization                               757           858
       Provision for doubtful accounts                              44           -
       Provision for obsolescence                                   53           675
       Stock option compensation expense                             6           -
       Provision for litigation settlement                         -           1,700
       Gain on disposal of equipment                              (129)          -
       Changes in assets and liabilities used in
        operating activities:
          Accounts receivable                                     (985)         (185)
          Inventory                                                646         2,240
          Prepaid expenses and current assets                     (127)          100
          Accounts payable                                        (440)         (387)
          Due to shareholder                                       -              (2)
          Deferred revenues                                        (62)          330
          Income taxes                                             221           -
          Employee and agent compensation                           77            27
                                                           -----------   -----------
Net cash provided by (used in) operating activities                630         1,215

Investing activities:
Purchases of property                                             (144)         (966)
Capitalized software development costs                             (60)         (173)
Patent and license expenditures                                    (33)         (125)
Proceeds from sale of equipment                                    281           -
                                                           -----------   -----------
Net cash provided by (used in) investing activities                 44        (1,264)

Financing activities:
Proceeds from short-term borrowings                              1,300           500
Repayments of short-term borrowings                             (1,300)         (500)
Repayments of due to shareholder                                  (454)          -
                                                           -----------   -----------
Net cash provided by financing activities                         (454)          -

Effect of foreign exchange rate changes                           (160)            1
                                                           -----------   -----------

Net change in cash                                                  60           (48)
Cash at the beginning of the period                                429         2,050
                                                           -----------   -----------
Cash at the end of the period                               $      489    $    2,002
                                                           ===========   ===========
Noncash items:
   Conversion of settlement liability into common
     stock                                                  $      400    $      -
   Conversion of portion of due to shareholder
     into common stock                                      $      455    $      -

</TABLE>

See accompanying notes.

                                       3
<PAGE>

                                DTM Corporation

                  Notes to Consolidated Financial Statements
                                  (Unaudited)

1.  Basis of Presentation

    The accompanying unaudited condensed consolidated financial statements of
DTM Corporation ("DTM" or the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months and six months ended June 30, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999. For further information, refer to the consolidated
financial statements and related footnotes of the Company for the year ended
December 31, 1998 as disclosed in the Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1999.

2.  Inventory

Inventory consisted of the following (in thousands):

                                                 March 31,    December 31,
                                                   1999          1998
                                                --------------------------

          Raw materials and purchsed parts       $  2,046     $  1,809
          Finished goods                              893        1,776
                                                --------------------------
                                                    2,939        3,585
          Reserve for obsolesence                    (182)        (129)
                                                --------------------------
                                                 $  2,757     $  3,456
                                                ==========================


3.  Financing Arrangements

    In June 1999, the Company entered into a $2.5 million credit facility with a
bank. This line of credit is collateralized solely by the Company's assets.
Borrowings under this line of credit bear interest at the bank's prime rate plus
2% and mature in June 2000. All customer remittances are applied against any
outstanding borrowings. The borrowing base includes a percentage of eligible
domestic and international trade accounts receivable and finished goods
inventories of the parent company. The inclusion of inventories in the borrowing
base is further limited to $400,000. At June 30, 1999, the borrowing base was
approximately $2.2 million and there were no outstanding loans.

    This line of credit requires the Company to maintain at least $3.2 million
in tangible net worth. At June 30, 1999, the Company's tangible net worth, for
the purposes of this financial covenant, was approximately $4.8 million.

4.  Contingencies

    In the ordinary course of business, the Company becomes involved in legal
proceedings and claims. In one such instance, the Company has initiated patent
infringement litigation in France, Germany and Italy against a competitor and
against one of that competitor's customers. The Company also initiated patent
infringement litigation in Japan against the competitor's distributor in the
Pacific Rim. In each of these cases, the Company alleges that the competitor is
selling rapid prototyping systems in Europe and Japan that make unauthorized use
of selective laser sintering technology covered by the European and Japanese
patents under which the Company has exclusive rights, and in each case the
Company is seeking injunctive relief and damages. It is anticipated that this
litigation will be pursued in conjunction with European and Japanese proceedings
in which the competitor has opposed the validity of those European and Japanese

                                       4
<PAGE>

                                DTM Corporation

                  Notes to Consolidated Financial Statements
                                  (Unaudited)


patents. Hearings have begun in the German, French, Italian and Japanese
lawsuits. It is not possible at this time to predict the outcome of these
proceedings.

    DTM has been informed by this competitor that it has obtained the worldwide
right to enforce certain U.S. patents and that it may bring patent infringement
litigation against the Company in U.S. courts. It is not possible at this time
to predict the outcome of this possible action, although the Company has
conducted a review of the patents in question and believes that it is not
infringing or would have valid defenses to claims such competitor may make
regarding selective laser sintering. If such a lawsuit is filed, the Company
intends to defend itself vigorously. However, a ruling that would have the
effect of allowing the competitor to sell rapid prototyping systems in the U.S.
without a license from DTM could have a material adverse effect on the Company's
business and financial performance.

5.  Common Stock


    On February 4, 1999, the Company issued 334,485 shares of common stock in
satisfaction of the final $400,000 portion of the settlement of the shareholder
class action litigation.

    On June 11, 1999, the Company issued 352,167 shares of common stock in
satisfaction of a $455,000 portion of its Due to Shareholder obligation.

    At June 30, 1999, the Company had reserved 1,268,659 shares of common stock
for issuance in connection with the 1999 Stock Option Plan (907,755 shares) and
for exercise of outstanding options issued in connection with the IPO in May
1997 under the effectively discontinued Equity Appreciation Plan (360,904
shares). The 1999 Stock Option Plan was approved by Shareholders at the May 25,
1999 Annual Meeting.

6.  Stock Option Plans

    During the six months ended June 30, 1999, 382,500 option shares were
granted to employees and a Director at a weighted average exercise price of
$1.28 per share. The 1999 grants were made at exercise prices equal to the
market value of the DTM common stock on the date of the grant and vest over
three years. In this same period, no options were exercised and 57,917 option
shares were canceled. At June 30, 1999, there were 959,804 option shares
outstanding at a weighted average exercise price of $2.40 per share.

         A summary of information about stock options outstanding and
exercisable at June 30, 1999 is as follows:



                 Weighted-Average      Options         Options
                  Exercise Price     Outstanding     Exercisable
                  --------------     -----------     -----------

                     $  1.25           328,300            -
                     $  1.47            54,000            -
                     $  2.00           100,000          35,000
                     $  2.06            61,600          21,560
                     $  2.23           339,872         339,872
                     $  8.03            55,000          38,500
                     $ 13.53            17,578          17,578
                     $ 14.67             3,454           3,454
                                     -----------     -----------
                      Total            959,804         455,964
                                     ===========     ===========


                                       5
<PAGE>

                                DTM Corporation

                  Notes to Consolidated Financial Statements
                                  (Unaudited)


7.  Earnings Per Share

    Common stock equivalents includes shares which would be issued upon exercise
of stock options. Common stock equivalents amounted to 22,063 in the three month
and six month period ended June 30, 1999. There were no common stock equivalents
in the three month and six month period ended June 30, 1998.

8.  Geographic and Customer Information


    The Company and its subsidiaries operate in one industry segment: the
development, manufacturing and service of selective laser sintering systems and
related products. Operations outside of the United States consist principally of
sales, marketing and customer support. Revenues are attributed to geographic
areas based upon the location of the customers. The following is a summary of
geographic area data for the for the interim periods (in thousands):

<TABLE>
<CAPTION>
                                           Three Months Ended       Six Months Ended
                                                June 30,                June 30,
                                          ---------------------   ---------------------
                                            1999        1998        1999        1998
                                          ---------   ---------   ---------   ---------
<S>                                       <C>         <C>         <C>         <C>
Revenues from external customers:
   North America                           $  3,513    $  3,520    $  7,521    $  6,053
   Europe                                     2,256       2,944       5,085       4,948
   PacRim                                     1,830       1,015       2,965       2,312
                                          ---------   ---------   ---------   ---------
                                           $  7,599    $  7,479    $ 15,571    $ 13,313
                                          =========   =========   =========   =========
</TABLE>


9.  Comprehensive Income

    Comprehensive income (loss) for the three months ended June 30, 1999 and
1998 was $189,000 and $(2,751,000), respectively. Comprehensive income (loss)
for the six months ended June 30, 1999 and 1998 was $409,000 and $(4,140,000),
respectively. The difference between comprehensive loss and net loss is
comprised of the effect of currency translation adjustments and hedging activity
in accordance with Financial Accounting Standards Board Statement No. 52,
"Foreign Currency Translation." The accumulated balance of foreign currency and
hedging activity, excluded from net loss, is presented in the Condensed
Consolidated Balance Sheets as "Accumulated other comprehensive loss."

10.  New Accounting Standards

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities", which is required to be adopted in years beginning
after June 15, 1999. The Statement permits early adoption as of the beginning of
any fiscal quarter after its issuance. Derivatives that are not hedges must be
adjusted to fair value through income. If the derivative is a hedge, depending
on the nature of the hedge, changes in the fair market value of the derivative
will either be offset against the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of the derivative's change in fair value will be immediately
recognized in earnings.

     The Company has not yet determined what the effect of Statement of
Financial Accounting Standards No. 133 will be on its earnings and financial
position and has not yet determined the timing or method of adoption. However,
the Statement could increase volatility in earnings and comprehensive income.

                                       6
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANNALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.


Business Environment and Risk Factors

     The following discussion and analysis should be read in conjunction with
the information set forth under the Company's Unaudited Condensed Consolidated
Financial Statements and notes thereto, as well as the section below under the
heading "Risk Factors That May Affect Future Results and Safe Harbor Statement."
The Company's future operating results may be affected by various trends and
factors, which are beyond the Company's control. These include, among other
factors, changes in general economic conditions, rapid or unexpected changes in
technologies and uncertain business conditions that affect the rapid prototyping
and rapid tooling industry. Accordingly, past results and trends should not be
used by investors to anticipate future results or trends.

     With the exception of historical information, the matters discussed below
under the heading "Results of Operations" and "Liquidity and Capital Resources"
may include forward-looking statements that involve risks and uncertainties. All
statements, trends and other information contained in this Quarterly Report on
Form 10-Q relative to markets for the Company's products and trends in revenue,
gross margin and anticipated expense levels constitute forward-looking
statements. These forward-looking statements generally can be identified by the
use of words such as "anticipate", "believe", "plan", "estimate", "expect",
"intend", "may", and "should" and other similar terminology. The Company wishes
to caution readers that a number of important factors, including those
identified in the section entitled "Risk Factors That May Affect Future Results
and Safe Harbor Statement" as well as factors discussed elsewhere in this report
and in the Company's other reports filed with the Securities and Exchange
Commission, could affect the Company's actual results and cause actual results
to differ materially from those forward-looking statements.

Overview

     DTM Corporation designs, develops, manufactures, markets and supports, on
an international basis, rapid prototyping and rapid tooling systems and related
powdered sintering materials and services. The Company's Sinterstation Systems
and powdered sintering materials are based on proprietary and patented selective
laser sintering technology. DTM was incorporated in 1987 and completed its
initial public offering ("IPO") of Common Stock in May 1997. Since 1992, DTM has
shipped over 250 Sinterstation Systems worldwide.

     The Company's selective laser sintering process uses laser energy to sinter
powdered material to create solid objects that aid in the design and manufacture
of products. The Company's Sinterstation Systems employ a combination of
software and hardware to produce functional models, patterns, injection-molding
tooling and metal parts from a variety of powdered materials. Customers input
designs into the Sinterstation Systems in the form of CAD drawings. The
functional models are used to verify a design's form and fit. The patterns can,
in turn, be used for secondary processes such as the production of non-durable
molds and investment casting. The Company's RapidTool process employs selective
laser sintering along with a furnace cycle to produce steel/copper composite
mold inserts that are used by the injection molder to produce production parts
in quantity. A variant of the RapidTool process is the production of mold
inserts in the Sinterstation System from a copper-reinforced thermoplastic-based
material system, without the need for a furnace cycle. These inserts produced
with this product are used by the injection molder to produce short-run
production parts. Sinterstation Systems also can be used in combination with the
Company's RapidTool process with a furnace cycle to produce metal parts.

     The Company's Sinterstation Systems are purchased by manufacturers,
universities, military and defense organizations and by service bureaus. These
service bureaus utilize rapid prototyping equipment to provide services to other
companies involved in product development. The Company distributes its products
in the United States, Canada, Western Europe and certain Pacific Rim and South
American countries. In the United States and Canada, the Company employs a
direct sales force. In Germany, DTM GmbH, a wholly owned subsidiary, distributes
DTM's products. DTM GmbH is a sales and service organization whose efforts are
augmented by sales agents in France, Italy, Portugal, Spain and Sweden. In

                                       7
<PAGE>

the United Kingdom, DTM (UK) LTD., a wholly owned subsidiary, distributes and
services DTM's products. The Company also distributes its goods and provides
services in the Pacific Rim and South America through a network of independent
agents, including agents in Brazil, China, India, Japan, Singapore, South Korea
and Taiwan.

     DTM's Sinterstation Systems typically include hardware, material handling
equipment, documentation, licenses for using DTM supplied software, licenses for
using DTM-supplied powdered sintering materials and installation. They can be
configured for use with a single sintering powder or for any combination of
thermoplastic, foundry sands or metal sintering powders. DTM typically offers
its Sinterstation Systems packaged with a 12-month warranty and preventive
maintenance contract, installation services, training services and an initial
supply of sintering materials. DTM offers a wide range of proprietary sintering
materials and software that optimizes their use in the Sinterstation System.

     The total value of a packaged offering is allocated among its various
components: systems and related equipment sintering materials, immediate
services and deferred services. Revenues from the sale of products are
recognized when title has transferred to the customer, the Company's remaining
obligations are insignificant and collection of the related receivable is
probable, which, typically, is upon shipment. The Company defers from three to
six percent of the revenues, excluding certain accessories, from each
Sinterstation System sale to cover the cost of a one-year warranty period. This
deferred amount represents the Company's estimate of the cost of providing such
warranty and preventive maintenance service and is recognized ratably as service
and support revenue over the 12-month warranty period. Upon expiration of the
12-month warranty period discussed above, the Company offers for sale to its
customers an annual maintenance contract, the revenues from which are recognized
ratably as service and support revenue over the related support period.

     The introduction of the new Sinterstation 2500plusTM in August of 1998 was
the culmination of a year-long project to design a system with a lower
manufactured cost that would permit the Company to be more price competitive
while improving its gross margins. Mainly as a result of the Sinterstation 2500
plus, total gross margins improved to approximately 50% beginning in the fourth
quarter of 1998. These higher gross margins allowed the Company to become
profitable beginning in the fourth quarter of 1998.

     On February 12, 1999, an investment partnership of independent investors
affiliated with Proactive Finance Group, LLC ("Proactive") acquired BFGoodrich's
remaining 47.7% interest in DTM. DTM now operates as an independent company.

                                       8
<PAGE>

Results Of Operations

     The following table sets forth for the periods indicated certain income
statement data as a percentage of our total revenues and certain sales data.

<TABLE>
<CAPTION>

                                           Second            Second             Six               Six
                                          Quarter           Quarter            Months            Months
                                            1999              1998              1999              1998
                                      ----------------  ----------------  ----------------  ----------------

<S>                                   <C>               <C>               <C>               <C>
Revenues                                        100.0%            100.0%            100.0%            100.0%
Gross profit                                     53.3              31.6              53.5              35.9
Selling, general and administrative              38.3              34.8              39.8              40.2
Research and development                         10.4              11.4               9.3              13.8
Provision for litigation settlement                 -              22.7                 -              12.8
Operating income                                  4.6             (37.3)              4.4             (31.0)
Gain on sales of equipment                        1.0                 -               0.8                 -
Interest expense                                 (0.3)             (0.2)             (0.2)             (0.2)
Income (loss) before income taxes                 5.4             (37.5)              5.1             (31.1)
Income tax expense                               (1.5)                -              (1.4)                -
Net income (loss)                                 3.9             (37.5)              3.7             (31.1)

Revenues components:
  Product sales                                  87.6              88.1              87.7              86.8
  Service and support revenues                   12.4              11.9              12.3              13.2
  Total                                         100.0             100.0             100.0             100.0

Gross margin details:
  Products                                       55.4              30.3              55.4              35.0
  Service and support                            38.4              41.7              39.7              41.2
  Total                                         53.33              31.6              53.5              35.9

Revenues from external customers:
  North America                                  46.2              47.1              48.3              45.5
  Europe                                         29.7              39.4              32.7              37.2
  PacRim                                         24.1              13.6              19.0              17.4
  Total                                         100.0             100.0             100.0             100.0

</TABLE>

     Revenues. Revenues increased 1.6% to $7.6 million in second quarter of
1999, compared to $7.5 million in the second quarter of 1998. Revenues derived
from customers in North America in the second quarter of 1999 at $3.5 million
were flat with the second quarter of 1998. For the first six months of 1999,
revenues increased 17.0% to $15.6 million, compared to $13.3 million in the in
the first six months of 1998. Revenues derived from customers in North America
in the first half of 1999 increased by approximately 24.3% to $7.5 million,
compared to $6.1 million in the first half of 1998. The increase in revenues was
primarily due to higher unit volumes of Sinterstation Systems and powdered
materials in the first six months of 1999 over the first six months of 1998.

     Revenues in past periods may not be indicative of revenues in the future,
which may be affected by other business environment and risk factors discussed
below, as well as other factors included elsewhere herein.

     Gross Profit.  Gross profit was $4.1 million, or 53.3% of revenues, in the
second quarter of 1999, compared to $2.4 million, or 31.6% of total revenues, in
the second quarter of 1998. The increase in gross profit and gross profit as a
percentage of revenues in the second quarter of 1999 primarily was due to the
decreased manufactured cost of the Sinterstation 2500plusTM that was introduced
in August of 1998 and replaced both previous models. For the first six months of
1999, gross profit was $8.3 million, or 53.5% of

                                       9
<PAGE>

total revenues, compared to $4.8 million, or 35.9% of total revenues, in the
first six months of 1998. The increase in gross profit primarily was due to
higher unit volumes of Sinterstation Systems and sintering materials and to an
increase in services. The increase in gross margin to over 50% was primarily due
to the decreased manufactured cost of the Sinterstation 2500plusTM that was
introduced in August of 1998 and replaced both previous models.

     Past gross margins are not necessarily indicative of future gross margins.
Currency changes, changes in mix and changes in material and labor costs, may
have an adverse effect on gross margins

     Selling, General and Administrative Expense.  Selling, general and
administrative expense was $2.9 million, or 38.3% of revenues, in the second
quarter of 1999, compared to $2.6 million, or 34.8% of revenues, in the second
quarter of 1998. Selling, general and administrative expense was $6.2 million,
or 39.8% of revenues, in the first six months of 1999, compared to $5.4 million,
or 40.2% of revenues, in the first six months of 1998. The decrease as a
percentage of total revenues during the first six months of 1999 primarily was
due to a proportionately higher growth in total revenues, while holding selling,
general and administrative expense relatively flat. Selling, general and
administrative expense may vary as a percentage of revenues in the future.

     Research and Development Expense. Research and development expense was
$788,000, or 10.4% of revenues, in the second quarter of 1999, compared to
$855,000, or 11.4% of revenues, in the second quarter of 1998. Research and
development expense was $1.5 million, or 9.3% in the first six months of 1999,
compared to $1.8 million in the first six months of 1998. The higher 1998
expense levels were, primarily, due to costs associated with multiple
significant new product development projects that were commenced in 1997 and
culminated in 1998 with the introduction of several new material systems and the
new Sinterstation Model 2500plusTM. The Company plans to continue its commitment
to research and development at approximately the current level of spending, as
the Company believes that the markets for its products are characterized by
technological innovation for hardware, software and powdered materials. Research
and development expense may increase in absolute dollars in future periods, and
such expenditures may vary as a percentage of sales.

     There can be no assurance that the Company's research and development
efforts will result in commercially successful new technology and products in
the future, and those efforts may be already affected by other factors which are
beyond the Company's control.

     Provision For Litigation Settlement. In 1998, DTM settled the shareholder
class action lawsuit pending against it. The charge to its second quarter
statement of operations in the amount of $1.7 million, consisted of $3.0
million, the proposed value of the settlement, and $200,000 in other costs, net
of the insurance recovery of $1.5 million. There was no corresponding charge in
1999.

     Gain on Sale of Assets. In the second quarter of 1999, the Company
continued to sell used Sinterstation 2500 and 2000 Systems under a program
announced in the third quarter of 1998 to sell systems that had been used
internally for development and support activities or under a discontinued rental
program. The Company recognized a net gain of $79,000 on those sales in the
second quarter of 1999 and $129,000 in the first six months of 1999.

     Interest Expense. Net interest expense for the second quarter of 1999 was
$21,000, compared to $14,000 for the second quarter of 1998. Net interest
expense for the first six months of 1999 was $$28,000, compared to $20,000 in
the first six months of 1998.

     Income Taxes. As a result the recent change in control, utilization of net
operating loss carryforwards will be subject to additional annual limits. In the
first quarter of 1999, the Company provided for income taxes at an estimated
28% annual effective rate.

     Net Income (Loss). The Company had net income of $295,000 in the second
quarter of 1999, compared to a net loss of $2.8 million in the second quarter of
1998. This $3.1 million favorable change was primarily due to substantially
improved product gross margins in 1999 and the 1998 provision for litigation of
$1.7 million. For the first six months of 1999, the Company had net income of
$569,000, compared to a net loss of $4.1 million in the first six months of
1998. This $4.7 million favorable change

                                       10
<PAGE>

was primarily due to increased revenues and substantially improved gross margins
in 1999 and the 1998 provision for litigation of $1.7 million.


Liquidity and Capital Resources

     During the first six months of 1999, operating activities provided $630,000
in net cash, compared to $1.2 million provided in the comparable period of 1998.

     Accounts receivable, less allowance, represented approximately 73 days of
quarter sales at June 30, 1999, compared to 54 days at December 31, 1998. This
increase in days of quarter sales outstanding was primarily due to second
quarter sales heavily weighted to the end of the quarter. Inventory, less
allowance, represented approximately 70 days quarter costs on hand at June 30,
1999, compared to 75 at December 31, 1998.

     The Company's investing activities include expenditures for patents and
licenses, capitalized software costs and furniture and equipment, principally
consisting of the Company's Sinterstation Systems built for internal use and
rental purposes. Capital expenditures for the three months ended June 30, 1999
were [less than the proceeds from fixed asset sales].

     For 1999, the Company has planned for approximately $800,000 in capital
expenditures. This includes an additional Sinterstation 2500plusTM System to
support the new platform and Year 2000 compliance expenditures. The Company
intends to fund this additional investment from operations.

     DTM obtained a $2.5 million credit facility with Silicon Valley Bank in the
second quarter of 1999. The one-year credit facility will accrue interest at
prime plus 2% per annum and is secured by the corporate assets of DTM. At June
30, 1999, no amounts were outstanding under this facility and approximately $2.2
million was available to be borrowed.

     In the second quarter of 1999, DTM repaid a due to shareholder liability of
approximately $909,000. DTM satisfied this liability by making a payment of
$454,274 in cash borrowed under the new credit facility with Silicon Valley Bank
and by issuing 352,167 additional shares of DTM common stock. After the
transaction, DTM Acquisition Company, L.P. owns approximately 50.3% of the
outstanding capital stock of DTM.

     The Company believes that it has the financial resources needed to meet
business requirements, including capital expenditures, working capital
requirements, the debt obligations outstanding and operating lease commitments
for facilities and equipment through December 31, 1999. However, there can be no
assurance that this will be the case.

New Accounting Standard

     In June 1998, the Accounting Standards Board issued Statement of Financial
Accounting Standards Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities", which is required to be adopted in years beginning
after June 15, 1999. The Statement permits early adoption as of the beginning of
any fiscal quarter after its issuance. Derivatives that are not hedges must be
adjusted to fair value through income. If the derivative is a hedge, depending
on the nature of the hedge, changes in the fair market value of the derivative
will either be offset against the change in fair value of the hedged assets,
liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of the derivative's change in fair value will be immediately
recognized in earnings.

     The Company has not yet determined what the effect of Statement of
Financial Accounting Standards Statement No. 133 will be on its earnings and
financial position and has not yet determined the timing or method of adoption.
However, the Statement could increase volatility in earnings and comprehensive
income.

                                       11
<PAGE>

Year 2000 Plan

     Many currently installed computer systems and software products are coded
to accept only two-digit entries in date code fields. These date code fields
will need to accept four-digit entries to distinguish 21st century dates from
20th century dates. As a result, computer systems and/or software used by many
companies may need to be upgraded to comply with such "Year 2000" requirements.
Significant uncertainty exists concerning the potential effects associated with
such compliance.

     The Company has evaluated its Sinterstation Systems and believes that it
will have no exposures with respect to the Year 2000 issue.

     The Company has begun to develop a plan to upgrade or replace its internal
information technology to comply with Year 2000 requirements and begun to
evaluate packaged software solutions to assess Year 2000 compliance. The Company
currently expects this compliance project to be substantially completed by
September 1999 and to cost between $90,000 and $150,000. This estimate includes
internal costs, but excludes the costs to upgrade and replace systems in the
normal course of business. The Company does not expect this project to have a
significant effect on its operations. As of June 30, 1999, approximately $90,000
has been expensed in regard to this project. Such expenses are being funded
through operating cash flows. In a worst case scenario, the Company believes its
information systems might not properly account for amounts due from customers or
due to suppliers at the end of 1999 and the preparation of its financial
statements may be delayed.

     The Company has performed an evaluation of its non-information systems
(embedded technology such as microcontrollers) and does not believe that it has
material exposures in this area with respect to the Year 2000 issue.

     The Company has not made inquires of its key venders as to their status
with respect to the Year 2000 compliance issues. There can be no assurance that
Year 2000 compliance issues at these venders may not cause these venders to
disrupt the Company's production plans.

     Based upon available information, the Company does not believe any material
exposure to significant business interruption exists as a result of Year 2000
compliance issues, or that the cost of the remedial actions will have a material
adverse effect on its business, financial condition or results of operations of
the Company. Accordingly, the Company has not adopted any formal contingency
plan in the event its Year 2000 compliance project is not completed in a timely
manner.

     The estimates and conclusions set forth herein regarding Year 2000
compliance contain certain forward-looking statements and are based on
management's estimates of future events and information provided by third
parties.  There can be no assurance that such estimates and information provided
will prove to be accurate.  Risks to completing the Year 2000 compliance project
include the availability of resources, the Company's ability to discover and
correct potential Year 2000 problems and the ability of suppliers and other
third parties to bring their systems into Year 2000 compliance.

                                       12
<PAGE>

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS AND SAFE HARBOR STATEMENT

     Investors are cautioned that this Quarterly Report on Form 10-Q contains
forward-looking statements that involve risks and uncertainties, including the
following: (i) the Company's plans, strategies, objectives, expectations and
intentions are subject to change at any time at the discretion of management and
the Board of Directors; (ii) the Company's plans and results of operations will
be affected by the Company's ability to manage its growth and working capital;
and (iii) the Company's business is highly competitive and the entrance of new
competitors or the expansion of the operations by existing competitors in the
Company's markets could adversely affect the Company's plans and results of
operations. In addition, the Company identifies the risk factors discussed below
which may affect the Company's actual results and may cause actual results to
differ materially from those contained in forward looking statements.

Limited Operating History and Profitability

     The Company was incorporated in 1987 and shipped its first Sinterstation
Systems in 1992.  The Company realized its first profitable quarter in the
fourth quarter of 1998. Prior to the fourth quarter of 1998, the Company had
been unprofitable from its inception; most recently recognizing net losses of
approximately $7.3 million for the year ended December 31, 1997 and $5.1 million
for the nine months ended September 30, 1998. There can be no assurance that the
Company can maintain profitability in the future.

Possible Delisting of Securities from The Nasdaq National Market; Limited
Liquidity of Trading Market

     Shares of the Company's Common Stock are quoted on the National Market
System ("NMS") of The Nasdaq Stock Market ("Nasdaq").  Nasdaq has recently
promulgated new rules that make continued listing of companies on the NMS more
difficult and has significantly increased its enforcement efforts with regard to
the Nasdaq standards for such listing. The Company has been having difficulty
maintaining one such standard, the $5.0 million market value of public float
requirement. Public float is defined for purposes of this calculation as shares
that are not held directly or indirectly by any officer or director of the
Company or any person who is the beneficial owner of more than 10 percent of the
total shares outstanding. On June 30, 1999, the Company's public float was
believed to be no less than 3,464,146 shares of Common Stock and the minimum bid
price was $1.34 per share. This resulted in a market value of public float of
$4,642,000. The Company plans to seek an appeal of any attempt by Nasdaq to
delist the Company's securities. However, there can be no assurance that such an
appeal would be successful and, therefore, that the Company could avoid having
its securities delisted.

     In addition, Nasdaq also requires companies whose stock is included for
quotation on the NMS maintain $4,000,000 in net tangible assets and a minimum
bid price of $1.00. As of June 30, 1999, the Company had net tangible assets of
$6,101,000, for such purpose and the minimum bid price was in excess of $1.00.
While the Company believes it is currently in compliance with these standards,
if the Company fails to continue to satisfy these requirements, its Common Stock
may be delisted from the NMS.

     If the Company is delisted from the NMS, it may choose to list its Common
Stock on the Nasdaq SmallCap Market, the OTC Bulletin Board or some other
quotation medium, such as the Pink Sheets, depending on its ability to meet the
specific listing requirements.  If the Company is delisted from the NMS, it is
unlikely that the Company would be able to have its Common Stock included for
quotation on the Nasdaq SmallCap Market.  As a result, an investor would find it
more difficult to dispose of, or to obtain accurate quotations of the price of,
the Company's Common Stock.

     Additionally, if the Company's Common Stock is not traded on a national
securities exchange or on Nasdaq, it may be subject to so-called "penny stock"
rules that impose additional sales practice and market-making requirements on
broker-dealers who sell or make a market in such securities.  Consequently, the
delisting of the Company's Common Stock from the NMS could adversely affect the
ability or willingness of broker-dealers who sell or make a market in the
Company's Common Stock and the ability of investors of the Company's Common
Stock to sell their securities in the secondary market.

                                       13
<PAGE>

Such delisting may also have the adverse effect of reducing the visibility,
liquidity and prestige of the Company's Common Stock.

Future Capital Needs; Uncertainty of Additional Financing; Possibility of
Significant Dilution

     The Company's future capital requirements will depend on a number of
factors, including its profitability, growth rate, working capital requirements,
expenses associated with protection of its patents and other intellectual
property and costs of future research and development activities. Developing
technology companies such as DTM typically need large amounts of capital to fund
growth. However, the Company's cash requirements may vary materially from those
now planned as a result of unforeseen changes that could consume a significant
portion of the available resources before that time.

     Future operating results will depend, in part, on the Company's ability to
obtain and manage capital sufficient to finance its business. To the extent that
funds expected to be generated from the Company's operations are insufficient to
meet current or planned operating requirements or to maintain its listing on the
Nasdaq NMS, the Company will seek to obtain additional funds through bank
facilities, equity or debt financing, collaborative or other arrangements with
corporate partners and others from other sources.  Additional funding may not be
available when needed or on terms acceptable to the Company, which could have a
material adverse effect on the Company's business, financial condition and
results of operations.  If adequate funds are not available, the Company may be
required to delay or to eliminate certain expenditures or to license to third
parties the rights to commercialize technologies that the Company would
otherwise seek to develop itself.  In addition, in the event that the Company
obtains any additional funding, such financing may have a substantially dilutive
effect on the holders of the Company's securities.  See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources".

Quarterly Fluctuations in Operating Results

     The Company's revenues and operating results have varied substantially from
quarter to quarter and may continue to do so. DTM typically experiences a
relatively long lead-time, often from six to 24 months, to complete a
Sinterstation System sale and has historically experienced no backlog.
Furthermore, new product introductions, seasonality of customer buying patterns
and other factors can cause fluctuations in quarterly results. These
fluctuations have precluded, and may continue to preclude, the Company from
managing its inventories effectively from quarter to quarter. Further, a
majority of the sales of the Company's Sinterstation Systems occur at the end of
the quarter, often in the last weeks of the quarter. Accordingly, the Company's
ability to forecast the timing and amount of specific sales is limited, and the
deferral or loss of one or more significant sales could materially adversely
affect operating results in a particular quarter. The current 12-week
manufacturing cycle of the new Sinterstation System Model 2500plusTM negatively
impacts the Company's ability to control its inventories. The failure of the
Company to complete a particular Sinterstation System sale in any given quarter
can have a material adverse effect on the Company's business and financial
performance for that quarter and quarterly fluctuations could cause a material
adverse effect on the price at which the Company's Common Stock trades. The
tendency for a large number of the Company's sales made during a quarter to be
completed at or near the end of the quarter also hinders the Company's ability
to predict sales, control sales prices and enforce its standard terms.

Emerging Rapid Prototyping Market

     The market for rapid prototyping products and services, such as those
marketed by the Company, is in an early stage of development and includes
multiple, competing technologies, many of which are not yet fully developed.
Participants in this market are moving to address new applications, many of
which may not yet be known or accepted by potential users. Rapid prototyping
requires that a CAD file describe a design and organizations who are not
currently using CAD are not, generally, potential customers for rapid
prototyping products and services. Significant education of the end user in both
CAD modeling and rapid prototyping in general has in some cases been a
prerequisite to product acceptance. It is not clear at this time which one or
more technologies will gain broad market acceptance. There can be no assurance
that DTM will emerge as a market leader, or even a major market participant, as
the market evolves and matures.

                                       14
<PAGE>

Emerging Rapid Tooling Market

     The market for rapid tooling products and services, such as those marketed
by the Company, is in an even earlier stage of development than rapid
prototyping. Participants in this market, including the Company, are moving to
address new applications, many of which may not yet be known or accepted by
potential users. The companies who use traditional-machining methods to make
tooling have made large capital investments in traditional equipment and have
mature infrastructures for doing so. They may be highly resistant both on
financial and cultural bases to adopting new technologies. There can be no
assurance that rapid tooling technologies will evolve to the point that the
perceived value will overcome those obstacles.  There can be no assurance that
DTM will emerge as a market leader, or even a major market participant, as the
market evolves and matures.

Competition

     The market for rapid prototyping systems is intensely competitive. In
marketing its Sinterstation Systems, the Company experiences competition from
many sources. Certain of the Company's competitors are better known and have
greater financial, research and development, production and marketing resources
than DTM. The principal worldwide competitors are 3D Systems Corporation and
Stratasys, Inc. EOS GmbH is a significant competitor outside of North America.
Competition has increased as a result of the introduction of new products or
product enhancements by these competitors and the entry into the industry by
other companies. Increased competition has in the past resulted, and may in the
future continue to result, in price reductions, reduced margins and loss of
market share, all of which have materially adversely affected the Company's
business and financial results.

Limited Product Company

     The Company currently offers one model of Sinterstation Systems for sale.
The sale of Sinterstation Systems comprised 61% of revenues in the year ended
December 31, 1998 and 66% of revenues in each of the years ended December 31,
1997 and 1996.  The remaining revenues were comprised of sales of powdered
sintering materials, spare parts and services to the installed base of
Sinterstation owners. Sinterstation Systems are priced at the premium end of the
range of today's rapid prototyping products and are sold on the basis of
performance and suitability to specific applications. In a downturn or a soft
market, the Company's dependence upon a limited range of products, as opposed to
a wide range of products at different price points, has caused the Company's
financial performance to be adversely affected and may continue to do so.

Intellectual Property And Proprietary Rights

     In pursuing protection for its proprietary rights in its Sinterstation
Systems, materials and related technology, the Company currently relies on a
combination of patent, copyright, trademark and trade secret rights, as well as
contractual provisions. The Company typically seeks patent protection for its
selective laser sintering technology, including, where deemed appropriate, the
selective laser sintering process, its Sinterstation Systems and the materials
used in its Sinterstation Systems. However, patent protection may not always be
available. There can be no assurance that patents will be issued under any or
all of the patent applications to which the Company has rights. In addition, the
laws of various countries in which the Company's products may be sold may not
protect the Company's products and intellectual property rights to the same
extent as the laws of the United States.

     In addition, the Company can give no assurance that the issued patents to
which it holds rights will be adequate to protect its interests or, if
challenged, held valid. The Company's competitors could develop non-infringing
systems, materials or technologies that are equivalent or superior to those of
the Company. A competitors currently does and others also may practice
technology covered by DTM's patents or other legal or contractual protections
regardless of the fact that it is legally protected.  Any litigation to enforce
the Company's intellectual property rights would be expensive, time-consuming,
may divert management resources and may not be adequate to protect the Company's
business.  While DTM defends its intellectual property vigorously, there can be
no assurance that it will be successful in its various litigation in many
countries. If the Company were unsuccessful in enforcing its intellectual
property rights or other

                                       15
<PAGE>

contractual rights in the context of third-party offers to sell selective laser
sintering systems or sintering powders or if the Company were found to have
violated state or federal antitrust laws, the Company's future revenues might be
adversely affected. For example, a court granted a temporary summary judgment
against the Company in 1997, ruling that a customer had been given an implied
personal license by DTM to one of DTM's patented sintering materials. Although
the summary judgment was stayed in connection with a settlement agreement in
this case, there can be no assurance that intellectual property claims against
the Company in the future will not have a material adverse effect on the
Company's business, financial performance and results of operations.

     Furthermore, unrelated third parties hold many patents and pending patent
applications under which the Company is not a licensee that relate to the design
and manufacture of rapid prototyping systems and materials. If such a third
party brought infringement litigation against the Company, and if the Company
was not successful in defending such litigation or in obtaining a license, the
Company's business and financial performance could be materially adversely
affected. The Company has been threatened with such litigation by a competitor.

     Certain key intellectual property used in the selective laser sintering
process is licensed to the Company by The University of Texas System. As a
licensee, the Company's rights to practice the technology are not absolute. The
University of Texas could terminate, attempt to terminate or amend the license
if the Company could be shown to be in material default of the terms of the
license. Even if DTM has a basis for objection, defense of its rights as a
licensee could be costly and the outcome would be uncertain. Loss of significant
rights as a licensee under this license could have a material adverse effect on
the Company's business and financial performance.

Dependence on Key Personnel

     The Company's success depends to a substantial extent on a relatively few
key management employees. Losing the services of one or more key employees could
have a material adverse effect on the Company's business and financial
performance. The Company's success also depends on its ability to continue to
attract highly talented technical personnel. Candidates with appropriate
training and expertise may be in short supply in the geographic areas where the
Company is attempting to recruit personnel. The Company has put in place
incentive compensation plans intended to provide motivation for continued
employment of key employees. The Company can give no assurance that it will be
able to retain employees or continue to attract, assimilate and retain other
skilled personnel.

Dependence on Third Party Suppliers

     The Company subcontracts for manufacture of Sinterstation System
components, powdered sintering materials and accessories from single-source,
third-party suppliers. A disruption in supply or failure of a supplier to remain
competitive in functionality or price could have a material adverse effect on
the Company's sales or reputation for timely delivery, and, hence, on the
Company's business, financial performance and results of operations.

International Operations

     Revenues from customers located outside the U.S. represented 53%, 60% and
50% of the Company's total revenues in 1998, 1997 and 1996, respectively. The
Company believes that continued growth and profitability will require expansion
of its sales in international markets. This expansion may be costly and time-
consuming and may not generate returns for a significant period of time, if at
all.

     Fluctuations in exchange rates as well as interest rates have significantly
affected DTM's sales in foreign markets. In particular, a strengthening U.S.
dollar has adversely affected the price competitiveness of DTM's products and
services in the international markets.  A significant and increasing portion of
international sales are denominated in currencies other than U.S. dollars,
thereby exposing the Company to gains and losses on non-U.S. currency
transactions. There can be no assurance that any hedging activity by the Company
to limit currency exchange risk  will be successful in avoiding exchange-related
losses. Nor can there be assurance that the Company's exposure to risks
associated with international operations will not continue to have a material
adverse effect on its liquidity, capital resources and results of operations.

                                       16
<PAGE>

The regulatory environment, including import/export laws, protective trade
policies and currency controls of foreign governments, also could materially
adversely affect the Company's business and financial performance.

Control of the Company

     Proactive currently controls approximately 50.3% of the outstanding Common
Stock. At this percentage, Proactive could control elections of the Company's
Board of Directors and could control or substantially affect the outcome of most
matters submitted to the Company's shareholders for their vote or consent.
Proactive could also cause, prevent or delay a change in control of the Company.

Product Liability

     Products as complex as those offered by the Company may contain undetected
defects or errors when first introduced or as enhancements are released that,
despite testing by the Company, are not discovered until after the product has
been installed and used by customers, which could result in delayed market
acceptance of the product or damage to the Company's reputation and business.
The Company attempts to include provisions in its agreements with customers that
are designed to limit the Company's exposure to potential liability for damages
arising out of defects or errors in the Company's products. However, the nature
and extent of such limitations vary from customer to customer and it is possible
that such limitations may not be effective as a result of unfavorable judicial
decisions or laws enacted in the future. The sale and support of the Company's
products entails the risk of product liability claims. Any such claim brought
against the Company, regardless of its merit, could result in material expense
to the Company, diversion of management time and attention, and damage to the
Company's business reputation and its ability to retain existing customers or
attract new customers.

Year 2000 Compliance

     The Company has begun an evaluation of its internal information technology
and non-information systems to assess Year 2000 compliance and has a plan to
bring all such systems into compliance by September 1999. There can be no
assurance that the project will identify and address all significant Year 2000
problems in a prompt and cost-effective manner. Furthermore, the Company has not
adopted any formal contingency plan in the event its Year 2000 project is not
completed in a timely manner. A delay in completion of the Company's compliance
project or any unforeseen Year 2000 problems, if not fixed, could have a
material adverse effect on the Company's business financial condition and
results of operations. Please see "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Year 2000."

Possible Issuance of Preferred Stock

     The Company's Articles of Incorporation authorize the issuance of up to
3,000,000 shares of Preferred Stock, $0.001 par value ("Preferred Stock"), the
terms of which would be determined by the Board of Directors at the time of
issuance, without further shareholder approval. The Board of Directors would
determine whether these shares would carry voting rights, preferences in the
payment of dividends, sinking fund provisions and liquidation, redemption or
conversion rights, if any. The Company has no current plans to issue Preferred
Stock. However, if such stock is issued in the future, the rights of the holders
of Common Stock could be materially adversely affected. It is possible that the
Board of Directors could grant future holders of Preferred Stock rights that
could restrict the Company's ability to merge or sell its assets to a third
party, resulting in preservation of the control of the Company by its then
current owners. The Preferred Stock provisions of the Company's Articles of
Incorporation could inhibit a third party from acquiring a significant amount of
the Common Stock, thereby delaying or preventing changes of the management or
control of the Company, and possibly materially adversely affecting the Common
Stock price as a result.

                                       17
<PAGE>

Shares Eligible for Future Sale; Probable Resale of Common Stock Issued in
connection with Settlement of Shareholder Class Action Litigation

     Sales of shares of Common Stock into the market by Proactive, employees
exercising options or recipients of shares to be distributed in settlement of
the Company's shareholder class action litigation escrow could cause a decline
in the price of such stock. The shares of the Common Stock owned by Proactive
will be freely tradable, subject to the resale limitations of Rule 144, as
promulgated by the U.S. Securities and Exchange Commission, that are applicable
to an affiliate of the Company, after a minimum of one year has elapsed from the
date on which Proactive acquired such shares. In addition, if the Company
proposes to register any of its securities under the Securities Act of 1933,
whether for its own account, for the account of other shareholders or for both,
Proactive is entitled to notice of such registration and is entitled to include
its shares of the Company's Common Stock in the registration.

     DTM employees hold immediately exercisable options to purchase 455,964
shares of Common Stock. The Company registered the issuance and the sale of the
shares of Common Stock that would be issued upon exercise of options under the
stock option plans on a Form S-8 Registration Statements. As a result, the
Common Stock acquired by employees of DTM upon exercise of options outstanding
under the stock option plans will be freely tradeable (subject to compliance
with certain provisions of Rule 144, in the case of affiliates of the Company).

     The non-cash component of the settlement of the shareholder class action
resulted in the issuance of 334,485 shares of the Company's Common Stock into a
settlement escrow on February 4, 1999. Such shares are freely tradable. The
escrow agent has advised the Company, that the escrow agent intends to sell such
shares prior to the distribution to the recipients of the settlement. Sales of
Common Stock into the market by the escrow agent or, if distributed, the
recipients of the settlement could cause a decline in the price of such stock.

Market Volatility

     The Company's Common Stock is listed on the Nasdaq National Market System.
Historically, the stock market has experienced volatility that has particularly
affected the market price of common stock of technology-related companies. That
volatility sometimes has been unrelated to the operating performance of such
companies.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


     Information related to quantitative and qualitative disclosures regarding
market risk is set forth in Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Risk Factors under Item 2 above.
Such information is incorporated by reference herein.

                                       18
<PAGE>

                                    PART II
                               OTHER INFORMATION


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

At the 1999 Annual Meeting of the Shareholders of DTM the following matters were
voted as follows:

   Proposal 1:  To elect five directors to the Company's Board of Directors to
                serve until the next annual meeting or until their respective
                successors are duly elected and qualified as follows:


                                 # of Shares                       # of Shares
                                ------------                      ------------
   Lawrence Goldstein      For    6,440,783  Withheld Authority       32,150
   Anthony Mariotti        For    6,440,783  Withheld Authority       32,150
   John S. Murchison, III  For    6,415,078  Withheld Authority       57,855
   Thomas G. Ricks         For    6,440,733  Withheld Authority       32,200
   James B. Skaggs         For    6,440,783  Withheld Authority       32,150

   Proposal 2:  To approve the adoption of the DTM Corporation 1999 Stock Option
                Plan:

                                 # of Shares        # of Shares      # of Shares
                                 -----------        -----------      -----------
                           For    3,962,637  Against  125,200  Abstain   55,075

   Proposal 3:  To ratify the appointment of Ernst & Young LLP as independent
                auditors of DTM Corporation for the fiscal year ending December
                31, 1999:

                                 # of Shares        # of Shares      # of Shares
                                 -----------        -----------      -----------
                           For    6,436,313  Against   10,100  Abstain   26,520

                                       19
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

        (a) Exhibits

               Exhibit 4.2 Registration rights agreement with DTM Acquisition
                Company, L.P., dated June 11, 1999

               Exhibit 10.21 Debt Repayment Agreement, dated as of April 12,
                1999, between DTM and DTM Acquisition Company, L.P.

               Exhibit 10.22 1999 Management Incentive Plan adopted March 17,
                1999

               Exhibit 27.1 - Current Financial Data Schedule for the quarter
                ended June 30, 1999





                                       20
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated:  August 13, 1999

                                  DTM CORPORATION
                                  (Registrant)


                                  By:  /s/ John S. Murchison, III
                                     ----------------------------------
                                          John S. Murchison, III
                                          President and Chief Executive Officer


                                  By:  /s/ Geoffrey W. Kreiger
                                     ----------------------------------
                                          Geoffrey W. Kreiger
                                          Vice President of Finance, Treasurer
                                          and Secretary

<PAGE>

                               Index to Exhibits
                               -----------------

Number                         Description
------                         -----------

4.2       Registration rights agreement with DTM Acquisition Company, L.P.,
          dated June 11, 1999

10.21     Debt Repayment Agreement, dated as of April 12, 1999

10.22     1999 Management Incentive Plan adopted March 17, 1999

27.1      Current Financial Data Schedule for the quarter ended June 30, 1999