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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 10-Q
_____________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number:        001-39757       
______________________________
Velo3D, Inc.
______________________________
(Exact name of registrant as specified in its charter)
Delaware98-1556965
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
511 Division Street, Campbell, CA
95008
(Address of Principal Executive Offices)(Zip Code)
(408) 610-3915
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.00001 per share
VLDNew York Stock Exchange
Warrants to purchase one share of common stock, each at an exercise price of $11.50 per shareVLD WSNew York Stock Exchange
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 ☒     No ☐

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes ☒     No ☐

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 filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes      No ☒
As of November 7, 2022, the registrant had 186,418,770 shares of common stock, $0.00001 per share outstanding.



TABLE OF CONTENTS
Page
Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (unaudited)
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (unaudited)





Explanatory Note – Certain Defined Terms
Unless otherwise stated in this Quarterly Report or the context otherwise requires, references to:
“2022 Private Warrant” means the warrant to purchase up to 70,000 shares of common stock issued to Silicon Valley Bank in conjunction with the joinder and fourth loan modification agreement.
“Board” or “Board of Directors” means the board of directors of the Company.
“Bylaws” means the restated bylaws of the Company.
“Business Combination Agreement” means that certain Business Combination Agreement, dated as of March 22, 2021, by and among JAWS Spitfire, Merger Sub and Legacy Velo3D, as amended by Amendment #1 to Business Combination Agreement dated as of July 20, 2021.
“Certificate of Incorporation” means the restated certificate of incorporation of the Company.
“common stock” means the shares of common stock, par value $0.00001 per share, of the Company.
“Class A ordinary shares” means the Class A ordinary shares, par value $0.0001 per share, of JAWS Spitfire, prior to the Domestication, which automatically converted, on a one-for-one basis, into shares of common stock in connection with the Closing.
“Class B ordinary shares” means the Class B ordinary shares, par value $0.0001 per share, of JAWS Spitfire, prior to the Domestication, which automatically converted, on a one-for-one basis, into shares of common stock in connection with the Closing.
“Closing” means the closing of the Merger.
“Closing Date” means September 29, 2021.
“Domestication” means the domestication contemplated by the Business Combination Agreement, whereby JAWS Spitfire effected a deregistration and a transfer by way of continuation from the Cayman Islands to the State of Delaware, pursuant to which JAWS Spitfire’s jurisdiction of incorporation was changed from the Cayman Islands to the State of Delaware.
“DGCL” means the General Corporation Law of the State of Delaware.
“Earnout Shares” means up to 21,758,148 shares of our common stock issuable pursuant to the Business Combination Agreement to certain Legacy Velo3D equity holders upon the achievement of certain vesting conditions.
“Equity Incentive Plan” means the Velo3D, Inc. 2021 Equity Incentive Plan.
“ESPP” means the Velo3D, Inc. 2021 Employee Stock Purchase Plan.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Founder Shares” means the 8,625,000 shares of our common stock issued to the Sponsor and the other Initial Stockholders in connection with the automatic conversion of the Class B ordinary shares in connection with the Closing.
“GAAP” means United States generally accepted accounting principles.
1


“Initial Stockholders” means the Sponsor together with Andy Appelbaum, Mark Vallely and Serena J. Williams.
“IPO” means the Company’s initial public offering, consummated on December 7, 2020, of 34,500,000 units (including 4,500,000 units that were issued to the underwriters in connection with the exercise in full of their over-allotment option) at $10.00 per unit.
“JAWS Spitfire” refers to JAWS Spitfire Acquisition Corporation, a Cayman Islands exempted company, prior to the Closing.
“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.
“Legacy Velo3D” means Velo3D, Inc., a Delaware corporation (n/k/a Velo3D US, Inc.), prior to the Closing.
“Legacy Velo3D equity holder” means certain former stockholders and equity award holders of Legacy Velo3D.
“Merger” and “Reverse Recapitalization” mean the merger contemplated by the Business Combination Agreement, whereby Merger Sub merged with and into Legacy Velo3D, with Legacy Velo3D surviving the merger as a wholly-owned subsidiary of the Company on the Closing Date.
“Merger Sub” means Spitfire Merger Sub, Inc., a Delaware corporation.
“NYSE” means the New York Stock Exchange.
“PIPE Financing” means the private placement pursuant to which the PIPE Investors collectively subscribed for 15,500,000 shares of our common stock at $10.00 per share, for an aggregate purchase price of $155,000,000, on the Closing.
“PIPE Investors” means certain institutional investors that invested in the PIPE Financing.
“PIPE Shares” means the 15,500,000 shares of our common stock issued in the PIPE Financing.
“private placement warrants” means the 4,450,000 warrants originally issued to the Sponsor in a private placement in connection with our IPO.
“public shares” means the Class A ordinary shares included in the units issued in our IPO.
“public shareholders” means holders of public shares.
“public warrants” means the 8,625,000 warrants included in the units issued in our IPO.
“Sarbanes-Oxley Act” or “SOX” means the Sarbanes-Oxley Act of 2002.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Sponsor” means Spitfire Sponsor LLC, a Delaware limited liability company.
“Velo3D” refers to Velo3D, Inc., a Delaware corporation (f/k/a JAWS Spitfire Acquisition Corporation, a Cayman Islands exempted company), and its consolidated subsidiaries following the Closing.
In addition, unless otherwise indicated or the context otherwise requires, references in this Quarterly Report to the “Company,” “we,” “us,” “our,” and similar terms refer to Legacy Velo3D prior to the Merger and to Velo3D and its consolidated subsidiaries after giving effect to the Merger.
2


PART I. FINANCIAL INFORMATION
Forward-looking Statements
Certain statements in this Quarterly Report may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “can,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report may include, for example, statements about:
our market opportunity;
the ability to maintain the listing of our common stock and the public warrants on the NYSE, and the potential liquidity and trading of such securities;
the ability to recognize the anticipated benefits of the Merger, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably and retain its key employees;
changes in applicable laws or regulations;
the inability to develop and maintain effective internal control over financial reporting;
our ability to raise financing in the future;
our success in retaining or recruiting, or changes required in, our officers, key employees or directors;
the period over which we anticipate our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements;
the potential for our business development efforts to maximize the potential value of our portfolio;
regulatory developments in the United States and foreign countries;
the impact of laws and regulations;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our financial performance;
the effect of the ongoing COVID-19 pandemic, economic downturns or recessions, inflation, interest rate fluctuations and supply chain shortages on the foregoing; and
other factors detailed under the section entitled “Risk Factors”.
The forward-looking statements contained in this Quarterly Report are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking
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statements. These risks and uncertainties include, but are not limited to, those factors described under the section entitled “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. Some of these risks and uncertainties may in the future be amplified by the ongoing COVID-19 pandemic and other macroeconomic factors and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any 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.
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Item 1. Financial Statements
Velo3D, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
September 30,December 31,
20222021
Assets
Current assets:
Cash and cash equivalents$40,347 $207,602 
Short-term investments72,478 15,483 
Accounts receivable, net20,922 12,778 
Inventories69,313 22,479 
Contract assets2,370 274 
Prepaid expenses and other current assets4,623 9,458 
Total current assets210,053 268,074 
Property and equipment, net19,208 10,046 
Equipment on lease, net8,084 8,366 
Other assets20,132 16,231 
Total assets$257,477 $302,717 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$14,134 $9,882 
Accrued expenses and other current liabilities19,682 9,414 
Debt – current portion1,954 5,114 
Contract liabilities26,041 22,252 
Total current liabilities61,811 46,662 
Long-term debt – less current portion4,356 2,956 
Contingent earnout liabilities53,377 111,487 
Warrant liabilities10,836 21,705 
Other noncurrent liabilities14,227 9,492 
Total liabilities144,607 192,302 
Commitments and contingencies (Note 15)
Stockholders’ equity:
Common stock, $0.00001 par value - 500,000,000 shares authorized at September 30, 2022 and December 31, 2021, 186,412,818 and 183,232,494 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
2 2 
Additional paid-in capital356,457 340,294 
Accumulated other comprehensive loss(1,135)(14)
Accumulated deficit(242,454)(229,867)
Total stockholders’ equity112,870 110,415 
Total liabilities and stockholders’ equity$257,477 $302,717 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenue
3D Printer$16,537 $7,281 $44,336 $13,594 
Recurring payment1,183 596 3,042 1,231 
Support services1,395 834 3,599 2,204 
Total Revenue19,115 8,711 50,977 17,029 
Cost of revenue
3D Printer16,574 5,692 42,686 10,174 
Recurring payment656 418 2,059 862 
Support services2,006 1,127 5,106 2,725 
Total cost of revenue19,236 7,237 49,851 13,761 
Gross profit (loss)(121)1,474 1,126 3,268 
Operating expenses
Research and development12,558 7,987 38,438 19,081 
Selling and marketing5,632 3,346 17,864 7,706 
General and administrative9,642 5,158 27,191 15,162 
Total operating expenses27,832 16,491 83,493 41,949 
Loss from operations(27,953)(15,017)(82,367)(38,681)
Interest expense(129)(986)(362)(1,630)
Loss on the convertible note modification (50,577) (50,577)
Gain (loss) on fair value of warrants(6,612)(1,892)11,039 (3,633)
Gain (loss) on fair value of contingent earnout liabilities(40,885)2,014 58,110 2,014 
Other income (expense), net384 (120)993 (156)
Loss before provision for income taxes(75,195)(66,578)(12,587)(92,663)
Provision for income taxes    
Net loss$(75,195)$(66,578)$(12,587)$(92,663)
Net loss per share:
     Basic$(0.41)$(3.36)$(0.07)$(5.34)
     Diluted$(0.41)$(3.36)$(0.07)$(5.34)
Shares used in computing net loss per share:
     Basic185,560,177 19,793,863 184,454,371 17,348,557 
     Diluted185,560,177 19,793,863 184,454,371 17,348,557 
Net loss$(75,195)$(66,578)$(12,587)$(92,663)
Net unrealized holding loss on available-for-sale investments(178) (1,121) 
Total comprehensive loss$(75,373)$(66,578)$(13,708)$(92,663)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine months ended September 30,
20222021
Cash flows from operating activities
Net loss$(12,587)$(92,663)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization3,328 1,276 
Stock-based compensation15,090 1,751 
Loss on the convertible note modification 50,577 
(Gain) loss on fair value of warrants(11,039)3,633 
Gain on fair value of contingent earnout liabilities(58,110)(2,014)
Changes in assets and liabilities
Accounts receivable(8,144)(5,326)
Inventories(41,807)(3,022)
Contract assets(2,096)1,523 
Prepaid expenses and other current assets7,342 (1,767)
Other assets1,970 (2,407)
Accounts payable1,177 (252)
Accrued expenses and other liabilities10,148 3,400 
Contract liabilities3,789 12,414 
Other noncurrent liabilities(1,215)1,611 
Net cash used in operating activities(92,154)(31,266)
Cash flows from investing activities
Purchase of property and equipment(12,228)(1,534)
Production of equipment for lease to customers(4,174)(6,919)
Purchases of available-for-sale investments(87,655) 
Proceeds from maturity of available-for-sale investments29,550  
Net cash used in investing activities(74,507)(8,453)
Cash flows from financing activities
Proceeds from loan refinance, net of issuance costs6,664  
Repayment of loans in connection with loan refinance(8,089) 
Proceeds from Merger 143,183 
Proceeds from PIPE financing 155,000 
Proceeds from loan refinance 19,339 
Repayment of term loan (4,997)
Repayment of property and equipment loan(355)(833)
Proceeds from term loan revolver facility 3,000 
Proceeds from convertible notes 5,000 
Proceeds from equipment loans 5,419 
Repayment of equipment loans (1,878)
Issuance of common stock upon exercise of stock options1,243 313 
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Net cash provided by (used in) financing activities(537)323,546 
Effect of exchange rate changes on cash and cash equivalents(57) 
Net change in cash and cash equivalents(167,255)283,827 
Cash and cash equivalents and restricted cash at beginning of period208,402 15,517 
Cash and cash equivalents and restricted cash at end of period$41,147 $299,344 
Supplemental disclosure of cash flow information
Cash paid for interest$253 $857 
Supplemental disclosure of non-cash information
Conversion of warrants into redeemable convertible preferred stock, net settlement 899 
Conversion of convertible notes to Series D redeemable convertible preferred stock 5,000 
Conversion of redeemable convertible preferred stock into common stock 180,180 
Conversion of warrants into common stock, net settlement 3,635 
Reclassification of warrants liability upon the reverse recapitalization 21,051 
Reclassification of contingent earnout liability upon the reverse recapitalization 120,763 
Issuance of common stock warrants in connection with financing 316 
Issuance of common stock warrants in connection with refinancing170  
Unpaid liabilities related to property and equipment 3,231 
Unpaid merger transactional costs 19,313 
The following table provides a reconciliation of cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows:
September 30,
20222021
(In thousands)
Cash and cash equivalents$40,347 $296,826 
Restricted cash (Other assets)800 2,518 
Total cash and cash equivalents and restricted cash$41,147 $299,344 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(In thousands, except share data)
Redeemable Convertible Preferred StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
Balance as of June 30, 2021 117,734,383 $123,704 16,168,582 $1 $16,446 $ $(148,861)$(132,414)
Conversion of warrants into preferred stock, net settlement126,802 899 — — — — — — 
Conversion of convertible notes into preferred stock6,820,022 55,577 — — — — — — 
Conversion of convertible preferred stock into common stock in connection with the reverse recapitalization (124,681,207)(180,180)126,310,700 — 180,180 — — 180,180 
Conversion of warrants into common stock, net settlement— — 239,992 — 3,635 — — 3,635 
Issuance of contingent earnout liability upon the reverse recapitalization— — — — (120,763)— — (120,763)
Issuance of warrants upon the reverse recapitalization— — — — (21,051)— — (21,051)
Issuance of common stock upon the reverse recapitalization, net of issuance costs— — 40,409,132 1 278,270 — — 278,271 
Issuance of common stock upon exercise of stock options— — 35,420 — 30 — — 30 
Issuance of common stock warrants in connection with financing— — — — 182 — — 182 
Stock-based compensation— — — — 676 — — 676 
Net loss— — — — — — (66,578)(66,578)
Balance as of September 30, 2021
 $ 183,163,826 $2 $337,605 $ $(215,439)$122,168 
Balance as of June 30, 2022 $ 184,909,608 $2 $350,797 $(957)$(167,259)$182,583 
Issuance of common stock upon exercise of stock options and release of restricted stock units— — 1,248,369 — 673 — — 673 
Stock-based compensation— — 254,841 — 5,157 — — 5,157 
Issuance of common stock warrants in connection with financing— — — — (170)— — (170)
Net loss— — — — — — (75,195)(75,195)
Other comprehensive loss— — — — — (178)— (178)
Balance as of September 30, 2022
  186,412,818 $2 $356,457 $(1,135)$(242,454)$112,870 
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Redeemable Convertible Preferred StockCommon StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
Balance as of December 31, 2020
117,734,383 $123,704 16,003,558 $1 $14,954 $ $(122,776)$(107,821)
Conversion of warrants into preferred stock, net settlement126,802 899 — — — — — — 
Conversion of convertible notes into preferred stock6,820,022 55,577 — — — — — — 
Conversion of convertible preferred stock into common stock in connection with the reverse recapitalization(124,681,207)(180,180)126,310,700 — 180,180 — — 180,180 
Conversion of warrants into common stock, net settlement— — 239,992 — 3,635 — — 3,635 
Issuance of contingent earnout liability upon the reverse recapitalization— — — — (120,763)— — (120,763)
Issuance of warrants upon the reverse recapitalization— — — — (21,051)— — (21,051)
Issuance of common stock upon the reverse recapitalization, net of issuance costs— — 40,409,132 1 278,270 — — 278,271 
Issuance of common stock upon exercise of stock options— — 200,444 — 313 — — 313 
Issuance of common stock warrants in connection with financing— — — — 316 — — 316 
Stock-based compensation— — — — 1,751 — — 1,751 
Net loss— — — — — — (92,663)(92,663)
Balance as of September 30, 2021
 $ 183,163,826 $2 $337,605 $ $(215,439)$122,168 
Balance as of December 31, 2021
 $ 183,232,494 $2 $340,294 $(14)$(229,867)$110,415 
Issuance of common stock upon exercise of stock options and release of restricted stock units— — 2,795,000 — 1,243 — — 1,243 
Stock-based compensation— — 385,324 — 15,090 — — 15,090 
Issuance of common stock warrants in connection with financing— — — — (170)— — (170)
Net loss— — — — — — (12,587)(12,587)
Other comprehensive loss— — — — — (1,121)— (1,121)
Balance as of September 30, 2022
 $ 186,412,818 $2 $356,457 $(1,135)$(242,454)$112,870 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Description of Business and Basis of Presentation
Velo3D, Inc., a Delaware corporation (“Velo3D” ), formerly known as JAWS Spitfire Acquisition Corporation (“JAWS Spitfire”), produces metal additive three dimensional printers (“3D Printers”) which enable the production of components for space rockets, jet engines, fuel delivery systems and other high value metal parts, which it sells or leases to customers for use in their businesses. The Company also provides support services (“Support Services”) for an incremental fee. Velo3D’s subsidiaries are Velo3D US, Inc., formerly known as Velo3D, Inc. (“Legacy Velo3D”), which was founded in June 2014 as a Delaware corporation headquartered in Campbell, California, Velo3D B.V., which was founded in September 2021 in the Netherlands, and Velo3D GmBH, which was founded in June 2022 in Germany. The first commercially developed 3D Printer was delivered in the fourth quarter of 2018.
Unless otherwise stated herein or unless the context otherwise requires, references in these notes to the “Company” refer to (i) Legacy Velo3D prior to the consummation of the Merger (as defined below); and (ii) Velo3D and its consolidated subsidiaries following the consummation of the Merger.
On September 29, 2021 (the “Closing Date” or the “Reverse Recapitalization Date”), JAWS Spitfire completed the previously announced merger with Legacy Velo3D, with Legacy Velo3D surviving as a wholly-owned subsidiary of JAWS Spitfire (the “Merger” or the “Reverse Recapitalization”). In connection with the Merger, JAWS Spitfire was renamed “Velo3D, Inc.”, and Legacy Velo3D was renamed “Velo3D US, Inc.”
Accordingly, all historical financial information prior to the Closing Date presented in the unaudited condensed consolidated financial statements of Velo3D represents the accounts of Legacy Velo3D. The shares and net income (loss) per share attributable to common stockholders, basic and diluted, prior to the Merger, have been retroactively restated as shares reflecting the exchange ratio (the “Exchange Ratio”) established in the Merger (0.8149 shares of Velo3D common stock, par value $0.00001 (the “common stock”) for 1 share of Legacy Velo3D common stock). All fractional shares were rounded.
Basis of Presentation
The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the requirements of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial reporting. Intercompany balances and transactions have been eliminated in consolidation. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) and the related notes, which provide a more complete discussion of the Company’s accounting policies and certain other information. The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements of the Company. These condensed consolidated financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2022, or for any other interim period or for any other future year.
Financial Condition and Liquidity and Capital Resources
The condensed consolidated financial statements are unaudited and have been prepared on the basis of continuity of operations, the realization of assets and satisfaction of liabilities in the ordinary course of business. On September 29, 2021, the Company consummated the Merger, which resulted in the Company receiving
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Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
approximately $278.3 million in total net proceeds, including $155.0 million from the private placement of 15,500,000 shares of common stock at $10.00 per share (the “PIPE Financing”). Since inception, the Company has not achieved profitable operations or generated positive cash flows from operations. The Company’s operating plan may change as a result of many factors currently unknown and there can be no assurance that the current operating plan will be achieved in the time frame anticipated by the Company, and it may need to seek additional funds sooner than planned. If adequate funds are not available to the Company on a timely basis, it may be required to delay, limit, reduce, or terminate certain commercial efforts, or pursue merger or acquisition strategies, all of which could adversely affect the holdings or the rights of the Company’s stockholders. The Company has incurred net operating losses and negative cash flows from operations in every year since inception and expects this to continue for the foreseeable future. As of September 30, 2022, the Company had an accumulated deficit of $242.5 million.
As of November 14, 2022, the issuance date of the unaudited condensed consolidated financial statements, the Company believes that the cash and cash equivalents on hand and cash the Company obtained from the Merger and the PIPE Financing, together with cash the Company expects to generate from future operations, will be sufficient to meet the Company’s working capital and capital expenditure requirements for a period of at least twelve months.
Note 2. Summary of Significant Accounting Policies
For a detailed discussion about the Company’s significant accounting policies and for further information on accounting updates adopted in the prior year, see Note 2, Summary of Significant Accounting Policies, to the audited consolidated financial statements in the 2021 Form 10-K. During the nine months ended September 30, 2022, there were no significant updates to the Company’s significant accounting policies other than as described below.
Revenue - Variable Consideration
The sales of 3D Printer systems under certain contracts may include variable consideration such that the Company is entitled to a rate per print hour used on the 3D Printer systems. The Company makes certain estimates in calculating the variable consideration, including amount of hours, the estimated life of the equipment and the discount rate. Although estimates may be made on a contract-by-contract basis, whenever possible, the Company uses all available information including historical customer usage and collection patterns to estimate variable consideration.
The Company intends to update its estimates of variable consideration on a quarterly basis based on the latest data available, and adjust the transaction price accordingly by recording an adjustment to net revenue and contract assets. The Company has recognized the estimate of variable consideration to the extent that it is probable that a significant reversal will not occur as a result from a change in estimation.
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”)”, and has since released various amendments including ASU No. 2019-04. The guidance modifies the measurement of expected credit losses on certain financial instruments. This guidance is effective for the Company for the fiscal year beginning after December 15, 2022. Early adoption is permitted. The Company is currently assessing the impact of the guidance on its consolidated financial statements and disclosures.
In July 2021, the FASB issued ASU 2021-05, “Leases (“Topic 842”) Lessors — Certain Leases with Variable Lease Payments”, that amends the lessor’s lease classification for leases that include any amount of variable lease payments that are not variable lease payments that do not depend on an index or a rate as an operating lease at lease commencement if classifying the lease as a sales-type lease or a direct financing lease would result in the recognition of a selling loss. This guidance is effective for the Company for the fiscal year beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted the new guidance in the first quarter of 2022. The effect on the consolidated financial statements and related disclosures is not material.
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Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 3. Reverse Recapitalization
On September 29, 2021, Spitfire Merger Sub, Inc. (“Merger Sub”) merged with Legacy Velo3D, with Legacy Velo3D surviving as a wholly-owned subsidiary of Velo3D. Immediately prior to the closing of the Merger:
• all issued and outstanding 6,738,651 shares of Legacy Velo3D outstanding Series A redeemable convertible preferred stock was converted into an equivalent number of shares of Legacy Velo3D common stock on a 1:2.178 basis;
• all issued and outstanding 8,386,456 shares of Legacy Velo3D outstanding Series B redeemable convertible preferred stock was converted into an equivalent number of shares of Legacy Velo3D common stock on a 1:2.273 basis;
• all issued and outstanding 8,513,343 shares of Legacy Velo3D outstanding Series C redeemable convertible preferred stock was converted into an equivalent number of shares of Legacy Velo3D common stock on a 1:2.372 basis; and
• all issued and outstanding 101,042,757 shares of Legacy Velo3D outstanding Series D redeemable convertible preferred stock was converted into an equivalent number of shares of Legacy Velo3D common stock on a 1:1.000 basis.
In connection with the Merger, shares of Legacy Velo3D redeemable convertible preferred stock were converted into an equivalent number of shares of Legacy Velo3D common stock at their respective conversion ratios and concurrently recast into 126,310,700 shares of common stock.
As of September 29, 2021 and after giving effect to the Exchange Ratio, there were 183,163,826 shares of common stock outstanding, comprised of the 126,310,700 shares of common stock issued in respect of the Legacy Velo3D redeemable convertible preferred stock, 16,443,994 shares of common stock issued in respect of Legacy Velo3D common stock, and 40,409,132 shares of common stock issued to public shareholders of JAWS Spitfire, the JAWS Spitfire initial shareholders, and third-party PIPE Investors (as defined below).
At the Merger, eligible former Legacy Velo3D equity holders received or had the right to receive shares of common stock at a deemed value of $10.00 per share after giving effect to the Exchange Ratio of 0.8149 as defined in the Business Combination Agreement, dated as of March 22, 2021, by and among JAWS Spitfire, Merger Sub and Legacy Velo3D, as amended by Amendment #1 to Business Combination Agreement dated as of July 20, 2021 (the “Business Combination Agreement”). Accordingly, immediately following the consummation of the Merger, Legacy Velo3D common stock exchanged into 142,754,694 shares of common stock, 66,830,878 shares of common stock were reserved for the issuance of common stock upon the potential future exercise of Legacy Velo3D stock options, common stock warrants, and shares of common stock issuable under the Company’s employee stock purchase plan.
In connection with the execution of the Business Combination Agreement, JAWS Spitfire entered into separate subscription agreements (each a “Subscription Agreement”) with a number of investors (each a “PIPE Investor”), pursuant to which the PIPE Investors agreed to purchase, and JAWS Spitfire agreed to sell to the PIPE Investors, an aggregate of 15,500,000 shares of common stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $155.0 million, in a private placement pursuant to the Subscription Agreements (the “PIPE Financing”). The PIPE Financing closed simultaneously with the consummation of the Merger.
In connection with the Merger, 8,625,000 of JAWS Spitfire Class B ordinary shares originally purchased by Spitfire Sponsor LLC (“the Sponsor”) were exchanged for shares of common stock prior to the Closing (the “Founder Shares”).
Pursuant to JAWS Spitfire’s Articles of Association, JAWS Spitfire’s public shareholders were entitled to elect to redeem their public shares for cash even if they had approved the Merger. As of September 24, 2021, the final day of the redemption period, public shareholders had redeemed 18,215,868 Class A ordinary shares of JAWS Spitfire
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Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
for cash at the redemption price of $10.00 per share, based on funds held in the trust account for an aggregate payment of $182.2 million (the “Redemptions”).
The number of shares of common stock issued immediately following the consummation of the Merger was:
Shares
Public shares, outstanding prior to Merger34,500,000 
Less redemption of public shares(18,215,868)
Public shares following redemptions16,284,132 
Shares issued in PIPE Financing15,500,000 
Public shares and PIPE Financing Shares31,784,132 
Founder Shares8,625,000 
Legacy Velo3D shares (1)
142,754,694 
Total shares of common stock immediately after Merger183,163,826 
(1) Upon consummation of the Merger, 175,173,445 Legacy Velo3D shares were exchanged at the Exchange Ratio and fractional shares were rounded to whole shares.
The Merger was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, JAWS Spitfire was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Velo3D are represented as a continuation of the financial statements of Legacy Velo3D, with the Merger being treated as the equivalent of Legacy Velo3D issuing stock for the net assets of JAWS Spitfire, accompanied by a recapitalization. The net assets of JAWS Spitfire are stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Merger are those of Legacy Velo3D in future reports.
Legacy Velo3D has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances as of the Closing: (1) Legacy Velo3D’s stockholders have a majority of the voting power of Velo3D; (2) the board of directors of Velo3D initially had twelve members, and Legacy Velo3D had the ability to nominate the majority of the initial members of the board of directors; (3) Legacy Velo3D’s senior management is the senior management of Velo3D and is responsible for day-to-day operations; (4) Velo3D has assumed the Velo3D name; and (5) the current strategy and operations of Velo3D continue to be Legacy Velo3D’s strategy and operations to develop the next generation of AM printers.
In connection with the Merger and the PIPE Financing, the Company received $298.2 million of gross proceeds including the contribution of $345.0 million of cash held in JAWS Spitfire’s trust account from its initial public offering (the “IPO”), redemptions of JAWS Spitfire public shareholders of $182.2 million, and $155.0 million of cash in connection with the PIPE Financing. The gross proceeds were net of $19.6 million of costs incurred by JAWS Spitfire prior to the Closing. The Company incurred $19.9 million of transaction costs, consisting of banking, legal, and other professional fees, of which $19.1 million was recorded as a reduction to additional paid-in capital of proceeds (“APIC”), and the remaining $0.8 million was expensed in the condensed statements of operations. The total net cash proceeds to the Company were $278.3 million.

14


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4. Basic and Diluted Net Income (Loss) per Share
Basic net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding. Diluted net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive shares of common stock been issued. The Company applies the treasury stock method to determine the dilutive effect of potentially dilutive securities.
The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share attributable to common stockholders:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(In thousands, except share and per share data)
Numerator:
Net loss$(75,195)$(66,578)$(12,587)$(92,663)
Denominator:
Basic weighted average shares outstanding185,560,177 19,793,863 184,454,371 17,348,557 
Diluted weighted average shares outstanding185,560,177 19,793,863 184,454,371 17,348,557 
Net loss per share
     Basic$(0.41)$(3.36)$(0.07)$(5.34)
     Diluted$(0.41)$(3.36)$(0.07)$(5.34)
The following potentially dilutive shares of common stock equivalents “on an as-converted basis” were excluded from the computation of diluted net income (loss) per share attributable to common stockholders as including them would have had an antidilutive effect:
Three Months Ended September 30,Nine Months Ended
September 30,
2022202120222021
Common stock warrants13,145,000 13,075,000 13,145,000 13,075,000 
Restricted stock units6,198,472  6,198,472 
Common stock options17,731,063 21,342,660 17,731,063 21,342,660 
Total potentially dilutive common share equivalents37,074,535 34,417,660 37,074,535 34,417,660 
Total potentially dilutive common share equivalents for the three and nine months ended September 30, 2022 and September 30, 2021 excludes 21,758,148 shares related to the earnout liability as these shares are contingently issuable upon meeting certain triggering events.

15


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5. Fair Value Measurements
The Company’s assets and liabilities that were measured at fair value on a recurring basis were as follows:
Fair Value Measured as of September 30, 2022
Level 1Level 2Level 3Total
(In thousands)
Assets
Money market funds (i)$39,215 $ $ $39,215 
U.S. Treasury securities (ii)35,131   35,131 
Corporate bonds (ii) 37,347  37,347 
Total financial assets$74,346 $37,347 $ $111,693 
Liabilities
Common stock warrant liabilities (Public) (iii)$6,986 $ $ $6,986 
Common stock warrant liabilities (Private Placement) (iii)  3,605 3,605 
Common stock warrant liabilities (2022 Private Warrant) (iii)245 245 
Contingent earnout liabilities  53,377 53,377 
Total financial liabilities$6,986 $ $57,227 $64,213 
Fair Value Measured as of December 31, 2021
Level 1Level 2Level 3Total
(In thousands)
Assets
Money market funds (i)$207,471 $ $ $207,471 
U.S. Treasury securities (ii)8,141   8,141 
Corporate bonds (ii)