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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 March 31, 2023
OR
| | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____ to ____
Commission File Number: 001-39757
______________________________
Velo3D, Inc.
______________________________
(Exact name of registrant as specified in its charter) | | | | | |
Delaware | 98-1556965 |
(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 class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, par value $0.00001 per share | VLD | New York Stock Exchange |
Warrants to purchase one share of common stock, each at an exercise price of $11.50 per share | VLD WS | New 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 filer | ☐ | | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | | Smaller 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 May 3, 2023, the registrant had 192,507,315 shares of common stock, $0.00001 per share outstanding.
TABLE OF CONTENTS
Explanatory Note
Unless otherwise stated in this Quarterly Report or the context otherwise requires, references to:
•“Legacy Velo3D” refer to Velo3D, Inc., a Delaware corporation, prior to the closing of the Merger;
•“Merger” refer to the merger contemplated by that certain Business Combination Agreement, dated as of March 22, 2021, by and among JAWS Spitfire Acquisition Corporation, a Cayman Islands exempted company (“JAWS Spitfire”), Legacy Velo3D and Spitfire Merger Sub, Inc., a Delaware corporation (“Merger Sub”), as amended by Amendment No. 1 to the Business Combination Agreement, dated as of July 20, 2021 (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 September 29, 2021;
•“Velo3D” refer to Velo3D, Inc., a Delaware corporation (f/k/a JAWS Spitfire Acquisition Corporation, prior to its domestication), and its consolidated subsidiaries following the closing of the Merger;
•“we,” “us,” and “our” or the “Company” refer to Velo3D following the closing of the Merger and to Legacy Velo3D prior to the closing of the Merger; and
•“2022 Form 10-K” refer to our Annual Report on Form 10-K for the year-ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 20, 2023.
“Velo”, “Velo3D”, “Sapphire” and “Intelligent Fusion” are registered trademarks of Velo3D, Inc; and “Without Compromise”, “Flow” and “Assure” are trademarks of Velo3D, Inc.
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 our public warrants on the New York Stock Exchange (the “NYSE”), and the potential liquidity and trading of such securities;
•our ability to execute our business plan, which may be affected by, among other things, competition and our ability to grow and manage growth profitably, maintain relationships with customers and retain our 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 continuing 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
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 impact of 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.
Item 1. Financial Statements
Velo3D, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data) | | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 37,139 | | | $ | 31,983 | |
Short-term investments | 26,870 | | | 48,214 | |
Accounts receivable, net | 14,347 | | | 9,185 | |
Inventories | 73,937 | | | 71,202 | |
Contract assets | 8,056 | | | 6,805 | |
Prepaid expenses and other current assets | 4,575 | | | 5,533 | |
Total current assets | 164,924 | | | 172,922 | |
Property and equipment, net | 19,075 | | | 19,812 | |
Equipment on lease, net | 6,672 | | | 9,070 | |
Other assets | 23,055 | | | 23,310 | |
Total assets | $ | 213,726 | | | $ | 225,114 | |
Liabilities and Stockholders’ Equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 10,584 | | | $ | 12,207 | |
Accrued expenses and other current liabilities | 13,805 | | | 15,877 | |
Debt – current portion | 2,729 | | | 2,775 | |
Contract liabilities | 10,611 | | | 15,194 | |
Total current liabilities | 37,729 | | | 46,053 | |
Long-term debt – less current portion | 9,756 | | | 5,422 | |
| | | |
Contingent earnout liabilities | 27,067 | | | 17,414 | |
Warrant liabilities | 5,298 | | | 2,745 | |
Other noncurrent liabilities | 11,936 | | | 12,634 | |
Total liabilities | 91,786 | | | 84,268 | |
Commitments and contingencies (Note 13) | | | |
Stockholders’ equity: | | | |
Common stock, $0.00001 par value - 500,000,000 shares authorized at March 31, 2023 and December 31, 2022, 192,479,797 and 187,561,368 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 2 | | | 2 | |
Additional paid-in capital | 378,532 | | | 361,528 | |
Accumulated other comprehensive loss | (549) | | | (837) | |
Accumulated deficit | (256,045) | | | (219,847) | |
Total stockholders’ equity | 121,940 | | | 140,846 | |
Total liabilities and stockholders’ equity | $ | 213,726 | | | $ | 225,114 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share data) | | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
Revenue | | | |
3D Printer | $ | 24,575 | | | $ | 10,184 | |
Recurring payment | 575 | | | 925 | |
Support services | 1,664 | | | 1,109 | |
Total Revenue | 26,814 | | | 12,218 | |
Cost of revenue | | | |
3D Printer | 21,974 | | | 10,479 | |
Recurring payment | 447 | | | 718 | |
Support services | 1,468 | | | 1,006 | |
Total cost of revenue | 23,889 | | | 12,203 | |
Gross profit | 2,925 | | | 15 | |
Operating expenses | | | |
Research and development | 10,547 | | | 12,915 | |
Selling and marketing | 6,174 | | | 5,983 | |
General and administrative | 10,327 | | | 9,290 | |
Total operating expenses | 27,048 | | | 28,188 | |
Loss from operations | (24,123) | | | (28,173) | |
Interest expense | (220) | | | (141) | |
Loss on fair value of warrants | (2,553) | | | (6,014) | |
Loss on fair value of contingent earnout liabilities | (9,653) | | | (31,232) | |
Other income, net | 351 | | | 219 | |
Loss before provision for income taxes | (36,198) | | | (65,341) | |
Provision for income taxes | — | | | — | |
Net loss | $ | (36,198) | | | $ | (65,341) | |
| | | |
Net loss per share: | | | |
Basic | $ | (0.19) | | | $ | (0.36) | |
Diluted | $ | (0.19) | | | $ | (0.36) | |
| | | |
Shares used in computing net loss per share: | | | |
Basic | 189,609,021 | | | 183,498,082 | |
Diluted | 189,609,021 | | | 183,498,082 | |
| | | |
Net loss | $ | (36,198) | | | $ | (65,341) | |
Net unrealized holding gain (loss) on available-for-sale investments | 288 | | | (594) | |
Total comprehensive loss | $ | (35,910) | | | $ | (65,935) | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| | | | | | | | | | | |
| Three months ended March 31, |
| 2023 | | 2022 |
Cash flows from operating activities | | | |
Net loss | $ | (36,198) | | | $ | (65,341) | |
Adjustments to reconcile net loss to net cash used in operating activities | | | |
Depreciation and amortization | 1,560 | | | 1,021 | |
Stock-based compensation | 6,236 | | | 4,957 | |
Loss on fair value of warrants | 2,553 | | | 6,014 | |
Loss on fair value of contingent earnout liabilities | 9,653 | | | 31,232 | |
Changes in assets and liabilities | | | |
Accounts receivable | (5,162) | | | 2,582 | |
Inventories | (1,425) | | | (16,302) | |
Contract assets | (1,251) | | | (1,156) | |
Prepaid expenses and other current assets | 2,776 | | | 5,036 | |
Other assets | 247 | | | 842 | |
Accounts payable | (2,694) | | | 1,880 | |
Accrued expenses and other liabilities | (1,848) | | | 2,707 | |
Contract liabilities | (4,583) | | | (2,866) | |
Other noncurrent liabilities | (698) | | | (713) | |
Net cash used in operating activities | (30,834) | | | (30,107) | |
Cash flows from investing activities | | | |
Purchase of property and equipment | (403) | | | (4,060) | |
Production of equipment for lease to customers | (135) | | | (1,707) | |
Purchases of available-for-sale investments | — | | | (66,942) | |
Proceeds from maturity of available-for-sale investments | 21,500 | | | — | |
Net cash provided by (used in) investing activities | 20,962 | | | (72,709) | |
Cash flows from financing activities | | | |
Proceeds from ATM offering, net of issuance costs | 10,458 | | | — | |
Proceeds from revolver facility | 5,000 | | | — | |
Repayment of equipment loans | (734) | | | (534) | |
Issuance of common stock upon exercise of stock options | 310 | | | 167 | |
Net cash provided by (used in) financing activities | 15,034 | | | (367) | |
Effect of exchange rate changes on cash and cash equivalents | (6) | | | 7 | |
Net change in cash and cash equivalents | 5,156 | | | (103,176) | |
Cash and cash equivalents and restricted cash at beginning of period | 32,783 | | | 208,402 | |
Cash and cash equivalents and restricted cash at end of period | $ | 37,939 | | | $ | 105,226 | |
| | | |
Supplemental disclosure of cash flow information | | | |
Cash paid for interest | $ | 220 | | | $ | 86 | |
Supplemental disclosure of non-cash information | | | |
| | | | | | | | | | | |
Unpaid liabilities related to property and equipment | (16) | | | (636) | |
Transfer between inventories and property and equipment | — | | | 150 | |
The following table provides a reconciliation of cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows:
| | | | | | | | | | | |
| March 31, |
| 2022 | | 2021 |
| (In thousands) |
Cash and cash equivalents | $ | 37,139 | | | $ | 104,426 | |
Restricted cash (Other assets) | 800 | | | 800 | |
Total cash and cash equivalents and restricted cash | $ | 37,939 | | | $ | 105,226 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Additional Paid-In Capital | | Accumulated Other Comprehensive Income (Loss) | | Accumulated Deficit | | Total Stockholders’ Equity |
| | Shares | | Amount | | | | |
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 | | 325,452 | | | — | | | 167 | | | — | | | — | | | 167 | |
Stock-based compensation | | — | | | — | | | 4,957 | | | — | | | — | | | 4,957 | |
Net loss | | — | | | — | | | — | | | | | (65,341) | | | (65,341) | |
Other comprehensive loss | | — | | | — | | | — | | | (594) | | | — | | | (594) | |
Balance as of March 31, 2022 | | 183,557,946 | | | $ | 2 | | | $ | 345,418 | | | $ | (608) | | | $ | (295,208) | | | $ | 49,604 | |
| | | | | | | | | | | | |
Balance as of December 31, 2022 | | 187,561,368 | | | $ | 2 | | | $ | 361,528 | | | $ | (837) | | | $ | (219,847) | | | $ | 140,846 | |
Issuance of common stock upon exercise of stock options | | 1,186,212 | | | — | | | 310 | | | — | | | — | | | 310 | |
Issuance of common stock upon release of RSUs | | 399,738 | | | — | | | — | | | — | | | — | | | |
Stock-based compensation | | — | | | — | | | 6,236 | | | — | | | — | | | 6,236 | |
Issuance of common stock in connection with At-the-Market offering, net of issuance costs | | 3,332,479 | | | — | | | 10,458 | | | — | | | — | | | 10,458 | |
Net loss | | — | | | — | | | — | | | — | | | (36,198) | | | (36,198) | |
Other comprehensive income | | — | | | — | | | — | | | 288 | | | — | | | 288 | |
Balance as of March 31, 2023 | | 192,479,797 | | | $ | 2 | | | $ | 378,532 | | | $ | (549) | | | $ | (256,045) | | | $ | 121,940 | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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 in “Explanatory Note—Certain Defined Terms”); and (ii) Velo3D and its consolidated subsidiaries following the consummation of the Merger.
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 unaudited 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, 2022 (the “2022 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, 2022 has been derived from the audited financial statements of the Company. These unaudited 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, 2023, 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. 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 losses from operations and negative cash flows from operations in every year since inception and expects this to continue for the foreseeable future. As of March 31, 2023, the Company had an accumulated deficit of $256.0 million.
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
As of May 10, 2023, the issuance date of the unaudited condensed consolidated financial statements, the Company believes that the cash and cash equivalents on hand, 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 from the date of issuance of these condensed consolidated financial statements. On February 6, 2023, the Company entered into a sales agreement (the “ATM Sales Agreement”) with Needham & Company, LLC (“Needham”), as agent, pursuant to which the Company may offer and sell, from time to time through Needham, shares of its common stock, par value $0.00001 per share. See Note 16. At-the-Market Offering, for further information. In addition, the Company and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (“New SVB”), entered into a letter agreement, dated April 7, 2023, amending the Company’s existing loan agreements to reduce the requirement to maintain 90% of the dollar value of the Company’s operating accounts and depository accounts with New SVB or its affiliates to 50%. This amendment provides the Company greater flexibility to maintain operating cash at other banking institutions to minimize potential disruptions to working capital needs. In addition, on May 5, 2023, the Company entered into a fifth loan modification agreement with New SVB, which amended the loan agreements to, among other things, (i) update certain of the financial covenants related to the 2023 fiscal and (ii) establish an inventory appraisal requirement to be conducted within 90 days following the date of such agreement. See Note 9. Long-Term Debt, for further information.
Note 2. Summary of Significant Accounting Policies
For a detailed discussion about the Company’s significant accounting policies and for further information on significant accounting updates adopted in the prior year, see Note 2, Summary of Significant Accounting Policies, to the audited consolidated financial statements in the 2022 Form 10-K. During the three months ended March 31, 2023, there were no significant updates to the Company’s significant accounting policies other than as described below.
At-the-Market Offering
On February 6, 2023, the Company entered into the ATM Sales Agreement with Needham, as agent, pursuant to which the Company may offer and sell, from time to time through Needham, shares of its common stock pursuant to its universal shelf registration statement (the “Shelf Registration Statement”), which the Company filed with the SEC on November 14, 2022. As of March 31, 2023, the Company has sold $10.5 million of shares, net of issuance costs of $0.5 million. See Note 16. At-the-Market Offering, for further information.
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, and interim periods within those fiscal years. Early adoption is permitted. The Company adopted the new guidance in the first quarter of 2023. The effect on the consolidated financial statements and related disclosures was not material.
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 3. Basic and Diluted Net Income (Loss) per Share
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 March 31, |
| 2023 | | 2022 |
| (In thousands, except share and per share data) |
Numerator: | | | |
Net loss | $ | (36,198) | | | $ | (65,341) | |
Denominator: | | | |
Weighted average shares outstanding - basic and diluted | 189,609,021 | | | 183,498,082 | |
Net loss per share - basic and diluted | $ | (0.19) | | | $ | (0.36) | |
The following potentially dilutive shares of common stock equivalents “on an as-converted basis” were excluded from the computation of diluted net loss per share for the periods presented because including them would have had an antidilutive effect:
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
| | | |
Common stock warrants | 13,145,000 | | | 13,075,000 | |
Restricted stock units | 12,455,651 | | | 4,549,179 | |
Common stock options | 15,388,946 | | | 20,786,579 | |
Total potentially dilutive common share equivalents | 40,989,597 | | | 38,410,758 | |
Total potentially dilutive common share equivalents for the three months ended March 31, 2023 and 2022 excludes 21,758,148 shares related to the earnout liability as these shares are contingently issuable upon meeting certain triggering events.
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 4. 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 March 31, 2023 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| (In thousands) |
Assets | | | | | | | |
Money market funds (i) | $ | 6,308 | | | $ | — | | | $ | — | | | $ | 6,308 | |
U.S. Treasury securities (ii) | 14,323 | | | — | | | — | | | 14,323 | |
Corporate bonds (ii) | — | | | 12,547 | | | — | | | 12,547 | |
Total financial assets | $ | 20,631 | | | $ | 12,547 | | | $ | — | | | $ | 33,178 | |
Liabilities | | | | | | | |
Common stock warrant liabilities (Public) (iii) | $ | 3,395 | | | $ | — | | | $ | — | | | $ | 3,395 | |
Common stock warrant liabilities (Private Placement) (iii) | — | | | — | | | 1,757 | | | 1,757 | |
Common stock warrant liabilities (2022 Private Warrant) (iii) | — | | | — | | | 146 | | | 146 | |
Contingent earnout liabilities | — | | | — | | | 27,067 | | | 27,067 | |
Total financial liabilities | $ | 3,395 | | | $ | — | | | $ | 28,970 | | | $ | 32,365 | |
| | | | | | | |
| Fair Value Measured as of December 31, 2022 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| (In thousands) |
Assets | | | | | | | |
Money market funds (i) | $ | 31,728 | | | $ | — | | | $ | — | | | $ | 31,728 | |
U.S. Treasury securities (ii) | 24,701 | | | — | | | — | | | 24,701 | |
Corporate bonds (ii) | — | | | 23,513 | | | — | | | 23,513 | |
Total financial assets | $ | 56,429 | | | $ | 23,513 | | | $ | — | | | $ | 79,942 | |
Liabilities | | | | | | | |
Common stock warrant liabilities (Public) (iii) | $ | 1,748 | | | $ | — | | | $ | — | | | $ | 1,748 | |
Common stock warrant liabilities (Private Placement) (iii) | — | | | — | | | 888 | | | 888 | |
Common stock warrant liabilities (2022 Private Warrant) (iii) | — | | | — | | | 109 | | | 109 | |
Contingent earnout liabilities | — | | | — | | | 17,414 | | | 17,414 | |
Total financial liabilities | $ | 1,748 | | | $ | — | | | $ | 18,411 | | | $ | 20,159 | |
(i) Included in cash and cash equivalents on the condensed consolidated balance sheets.
(ii) Included in short-term investments on the condensed consolidated balance sheets.
(iii) Included in warrant liabilities on the condensed consolidated balance sheets.
For more information regarding the Public Warrants, Private Placement Warrants, the 2022 Private Warrant and the Earnout Shares, see Note 10, Equity Instruments.
The aggregate fair value of the Company’s money market funds approximated amortized cost and, as such, there were no unrealized gains or losses on money market funds as of March 31, 2023 and December 31, 2022. Realized gains and losses, net of tax, were not material for any of the periods presented.
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table presents a summary of the changes in the fair value of the Company’s Level 3 financial instruments:
| | | | | | | | | | | | | | | | | |
| Private placement warrant liabilities | | 2022 Private Warrant | | Contingent earnout liabilities |
| |
Fair value as of January 1, 2023 | $ | 888 | | | $ | 109 | | | $ | 17,414 | |
Change in fair value | 869 | | | 37 | | | 9,653 | |
Fair value as of March 31, 2023 | $ | 1,757 | | | $ | 146 | | | $ | 27,067 | |
| | | | | |
Fair value as of January 1, 2022 | $ | 7,387 | | | $ | — | | | $ | 111,487 | |
Change in fair value | 2,047 | | | — | | | 31,232 | |
Fair value as of March 31, 2022 | $ | 9,434 | | | $ | — | | | $ | 142,719 | |
The fair value of the Private Placement Warrant liability, the 2022 Private Warrant and contingent earnout liability are based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.
In determining the fair value of the Private Placement Warrant liability the Company used the Monte Carlo Simulation Model that assumes optimal exercise of the Company’s redemption option at the earliest possible date (see Note 10, Equity Instruments).
In determining the fair value of the 2022 Private Warrant, the Company used the Black-Scholes option pricing model to estimate the fair value using unobservable inputs including the expected term, expected volatility, risk-free interest rate and dividend yield (see Note 10, Equity Instruments).
In determining the fair value of the contingent earnout liability, the Company used the Monte Carlo simulation valuation model using a distribution of potential outcomes on a weekly basis over the applicable earnout period using the most reliable information available (see Note 10, Equity Instruments).
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5. Investments
Available-for-sale Investments
The following table summarizes the Company’s available-for-sale (“AFS”) investments. These are classified as “Short-term investments” on the condensed consolidated balance sheets.
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 |
| Amortized Cost | | Gross Unrealized Gain | | Gross Unrealized Loss | | Fair Value |
| (In thousands) |
U.S. Treasury securities | $ | 14,582 | | | $ | — | | | $ | (259) | | | $ | 14,323 | |
Corporate bonds | 12,837 | | | — | | | (290) | | | 12,547 | |
Total available-for-sale investments | $ | 27,419 | | | $ | — | | | $ | (549) | | | $ | 26,870 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2022 |
| Amortized Cost | | Gross Unrealized Gain | | Gross Unrealized Loss | | Fair Value |
| (In thousands) |
U.S. Treasury securities | $ | 25,124 | | | $ | — | | | $ | (423) | | | $ | 24,701 | |
Corporate bonds | 23,927 | | | — | | | (414) | | | 23,513 | |
Total available-for-sale investments | $ | 49,051 | | | $ | — | | | $ | (837) | | | $ | 48,214 | |
The following table presents the breakdown of the AFS investments in an unrealized loss position as of March 31, 2023 and December 31, 2022, respectively.
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
| Fair Value | | Gross Unrealized Loss | | Fair Value | | Gross Unrealized Loss |
| (In thousands) |
U.S. Treasury securities | | | | | |
Less than 12 months | $ | — | | | $ | — | | | $ | 16,702 | | | $ | (365) | |
12 months or longer | 14,323 | | | (259) | | | 7,999 | | | (58) | |
Total | $ | 14,323 | | | $ | (259) | | | $ | 24,701 | | | $ | (423) | |
| | | | | | | |
Corporate bonds | | | | | | | |
Less than 12 months | $ | — | | | $ | — | | | $ | 18,951 | | | $ | (387) | |
12 months or longer | 12,547 | | | (290) | | | 1,478 | | | (27) | |
Total | $ | 12,547 | | | $ | (290) | | | $ | 20,429 | | | $ | (414) | |
The Company does not believe these AFS investments to be other-than-temporarily impaired as of March 31, 2023 and December 31, 2022.
There were no material realized gains or losses on AFS investments during the three months ended March 31, 2023 and March 31, 2022.
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The fair value of AFS investments with maturities greater than 12 months were $4.6 million at March 31, 2023.
Note 6. Balance Sheet Components
Accounts Receivable, Net
Accounts receivable, net consisted of the following:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (In thousands) |
Trade receivables | $ | 14,414 | | | $ | 9,639 | |
Less: Allowances for credit losses | (67) | | | (454) | |
Total | $ | 14,347 | | | $ | 9,185 | |
Inventories
Inventories consisted of the following:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (In thousands) |
Raw materials | $ | 62,662 | | | $ | 58,585 | |
Work-in-progress | 8,534 | | | 12,617 | |
Finished goods | 2,741 | | | — | |
Total | $ | 73,937 | | | $ | 71,202 | |
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (In thousands) |
Prepaid insurance and other | $ | 2,757 | | | $ | 3,316 | |
Vendor prepayments | 1,818 | | | 2,217 | |
Total | $ | 4,575 | | | $ | 5,533 | |
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Property and Equipment, Net
Property and equipment, net consisted of the following:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (In thousands) |
Computers and software | $ | 2,272 | | | $ | 2,222 | |
Lab equipment and other equipment | 7,630 | | | 7,379 | |
Furniture and fixtures | 240 | | | 181 | |
Leasehold improvements | 15,948 | | | 16,273 | |
Construction in progress | 21 | | | — | |
Total property, plant and equipment | 26,111 | | | 26,055 | |
Less accumulated depreciation and amortization | (7,036) | | | (6,243) | |
Property, plant and equipment, net | $ | 19,075 | | | $ | 19,812 | |
Depreciation expense for the three months ended March 31, 2023 and 2022 was $1.2 million and $0.5 million, respectively.
The manufacturing facility operating lease at Campbell (McGlincy) was terminated on March 31, 2023, and is no longer in use. There were no significant asset retirement obligations. The Company wrote-off $0.6 million in fully-depreciated leasehold improvements during the three months ended March 31, 2023.
Other Assets
Other assets consisted of the following:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (In thousands) |
Right of use assets | 12,855 | | | 13,545 | |
Net investments in sales-type lease | 6,288 | | | 6,554 | |
Non-current prepaid expenses and other assets | 3,912 | | | 3,211 | |
Total Other assets | $ | 23,055 | | | $ | 23,310 | |
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (In thousands) |
Accrued expenses | $ | 8,586 | | | $ | 8,602 | |
Accrued salaries and benefits | 2,812 | | | 4,830 | |
Lease liability – current portion | 2,407 | | | 2,445 | |
Total Accrued expenses and other current liabilities | $ | 13,805 | | | $ | 15,877 | |
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Other Noncurrent Liabilities
Other noncurrent liabilities consisted of the following:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (In thousands) |
Lease liabilities - noncurrent portion | $ | 11,606 | | | $ | 12,206 | |
Other noncurrent liabilities | 330 | | | 428 | |
Total other noncurrent liabilities | $ | 11,936 | | | $ | 12,634 | |
Please refer to Note 10, Equity Instruments, for further details of the contingent earnout liability and warrant liabilities.
Note 7. Equipment on Lease, Net
The equipment leased to customers had a cost basis of $8.1 million and accumulated depreciation of $1.4 million as of March 31, 2023. The equipment leased to customers had a cost basis of $10.6 million and accumulated depreciation of $1.5 million as of December 31, 2022.
The total depreciation expense was $0.3 million and $0.5 million included in cost of revenue for the three months ended March 31, 2023 and 2022, respectively.
Lease payments from customers consisted of the following:
| | | | | | | | | | | |
| March 31, |
| 2023 | | 2022 |
| (In thousands) |
Equipment on lease payments | 575 | | | 880 | |
Equipment on lease variable payments | — | | | 45 | |
Total lease payments | $ | 575 | | | $ | 925 | |
The Company entered into debt secured by certain leased equipment to customers. See Note 9, Long-term Debt, for a description of these financing arrangements.
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 8. Leases
The Company leases its office and manufacturing facilities under four non-cancellable operating leases, including options to extend, which expire in 2024 to 2032. The agreements include a provision for renewal at the then prevailing market rate for terms specified in each lease.
As noted above in Note 6, Balance Sheet Components, the manufacturing facility operating lease at Campbell (McGlincy) was terminated on March 31, 2023, and is no longer in use. The Company’s right-of-use assets and lease liabilities related to McGlincy were amortized in full over the life of the lease.
Total right-of-use (“ROU”) assets and lease liabilities are as follows:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (In thousands) |
Right-of-use assets: | | | |
Net book value (Other assets) | $ | 12,855 | | | $ | 13,545 | |
Operating lease liabilities: | | | |
Current (Accrued expense and other current liabilities) | $ | 2,375 | | | $ | 2,411 | |
Noncurrent (Other noncurrent liabilities) | 11,606 | | | 12,201 | |
| 13,981 | | | 14,612 | |
Financing lease liabilities: | | | |
Current (Accrued expense and other current liabilities) | $ | 32 | | | $ | 35 | |
Noncurrent (Other noncurrent liabilities) | — | | | 5 | |
| $ | 32 | | | $ | 40 | |
Total lease liabilities | $ | 14,013 | | | $ | 14,652 | |
There were no impairments recorded related to these assets as of March 31, 2023 and December 31, 2022.
Information about lease-related balances were as follows:
| | | | | | | | | | | |
| Three Months Ended March 31, |
| 2023 | | 2022 |
| (In thousands, except years and percentages) |
Operating lease expense | $ | 764 | | $ | 717 |
Financing lease expense | 9 | | 9 |
Short-term lease expense | 84 | | 99 |
Total lease expense | $ | 857 | | $ | 825 |
Cash paid for leases | $ | 706 | | $ | 281 |
Weighted – average remaining lease term – operating leases (years) | 3.8 | | 4.6 |
Weighted – average discount rate – operating leases | 8.7% | | 4.4% |
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Maturity of operating lease liabilities as of March 31, 2023 are as follows:
| | | | | |
| (In thousands) |
Remainder of 2023 | $ | 2,080 | |
2024 | 2,730 | |
2025 | 2,266 | |
2026 | 2,313 | |
2027 | 2,400 | |
Thereafter | 11,270 | |
Total operating lease payments | $ | 23,059 | |
Less portion representing imputed interest | (9,078) | |
Total operating lease liabilities | $ | 13,981 | |
Less current portion | 2,375 | |
Long-term portion | $ | 11,606 | |
Note 9. Long-Term Debt
Long-term debt consisted of the following:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (In thousands) |
Revolving credit line | $ | 8,000 | | | $ | 3,000 | |
Equipment loan | 4,622 | | | 5,356 | |
Deferred financing costs | (137) | | | (159) | |
Total | $ | 12,485 | | | $ | 8,197 | |
Debt – current portion | 2,729 | | | 2,775 | |
Long-term debt – less current portion | $ | 9,756 | | | $ | 5,422 | |
The Company’s banking arrangements include a revolving credit line and equipment loans originally entered into with Silicon Valley Bank (“SVB”). For a full description of these banking arrangements, see Note 10, Long-Term Debt, in the audited consolidated financial statements included in the 2022 Form 10-K. These loans contain customary representations and warranties, reporting covenants, events of default and termination provisions. The affirmative covenants include, among other things, that the Company furnish monthly financial statements, a yearly budget, timely files taxes, maintains good standing and government compliance, maintains liability and other insurance and furnishes audited financial statements no later than the date of delivery to the Board of Directors.
On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. On March 14, 2023, Silicon Valley Bridge Bank, N.A. (“SVBB”), a new bank that is regulated by the Office of the Comptroller of the Currency, announced that it had assumed all loan positions, including as lender, issuing bank, administrative and any other function that was formerly performed by SVB, and that all commitments to advance under existing credit agreements would be honored in accordance with and pursuant to the terms thereof. On March 27, 2023, First-Citizens Bank & Trust Company (“FCB”) purchased all of the assets and liabilities of SVBB from the FDIC.
The Company and Silicon Valley Bank, a division of FCB (“New SVB”), entered into a letter agreement, dated April 7, 2023, amending the loan agreements to reduce the requirement to maintain 90% of the dollar value of the Company’s operating accounts and depository accounts with New SVB or its affiliates to 50%. This amendment provides the Company greater flexibility to maintain operating cash at other banking institutions to minimize potential disruptions to working capital needs.
In addition, on May 5, 2023, the Company entered into a fifth loan modification agreement with New SVB, which amended the loan agreements to, among other things, (i) update certain of the financial covenants related to
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
the 2023 fiscal and (ii) establish an inventory appraisal requirement to be conducted within 90 days following the date of such agreement.
The Company amortizes deferred financing costs over the life of the borrowing. As of March 31, 2023 and December 31, 2022, the remaining unamortized balance of deferred financing costs was $0.1 million, respectively for both periods, and was included in Debt — current portion on the balance sheets.
Revolving Credit Line — On February 3, 2023, the Company drew an additional $5.0 million on the revolving credit facility, with a variable interest rate of the greater of 5.75% or Prime plus 2.50% and a term of 22 months due on December 31, 2024. As of March 31, 2023, the Company has $22.0 million on the revolving credit line undrawn after the draw on February 3, 2023.
In April 2023, the Company drew an additional $5.0 million on the revolving credit facility, with a variable interest rate of the greater of 5.75% or Prime plus 2.50% and a term of 22 months due on December 31, 2024. The Company has $17.0 million on the revolving credit line undrawn after the April 2023 draw.
Interest on the outstanding balance of the revolving credit line is payable monthly at an annual rate of the Wall Street Journal Prime Rate plus 0.25% when the Company’s Adjusted Quick Ratio (“AQR”) is less than or equal to 1.50, and plus 0.75% when the Company’s AQR is greater than 1.50. The effective interest rate was 6.2% and 4.6% for the three months ended March 31, 2023 and 2022, respectively. The loan fees were less than $0.1 million as of March 31, 2023.
Equipment Loan — As of March 31, 2023, the remaining equipment loan availability was $10.4 million.
For the three months ended March 31, 2023, $0.7 million in principal payments were paid. As of March 31, 2023, the outstanding balance was $4.6 million. The effective interest rate was 7.9% and 3.2% for the three months ended March 31, 2023 and 2022, respectively.
The future minimum aggregate payments for the above borrowings are as follows as of March 31, 2023:
| | | | | |
| (In thousands) |
2023 | $ | 2,200 | |
2024 | 1,622 | |
2025 | 8,800 | |
| $ | 12,622 | |
Note 10. Equity Instruments
Common stock
The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders but are not entitled to cumulative voting rights, are entitled to receive ratably such dividends as may be declared by the Company’s Board of Directors out of funds legally available therefor subject to preferences that may be applicable to any shares of redeemable convertible preferred stock currently outstanding or issued in the future, are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preference of any then outstanding redeemable convertible preferred stock in the event of the Company’s liquidation, dissolution, or winding up, have no preemptive rights and no right to convert their common stock into any other securities, and have no redemption or sinking fund provisions applicable to the common stock.
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Common Stock Reserved for Future Issuance
Shares of common stock reserved for issuance on an “as if converted” basis were as follows:
| | | | | | | | | | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| (share data) |
Common stock warrants | 13,145,000 | | | 13,145,000 | |
Shares available for future grant under 2021 Equity Incentive Plan | 29,294,376 | | | 20,861,294 | |
Reserved for At-the-Market offering | 16,667,521 | | | — | |
Reserved for employee stock purchase plan | 7,371,214 | | | 5,495,601 | |
Total shares of common stock reserved | 66,478,111 | | | 39,501,895 | |
In February 2023, the Company entered into the ATM Sales Agreement with Needham, as agent, pursuant to which the Company may offer and sell, from time to time through Needham, up to $40.0 million shares of its common stock pursuant to the Shelf Registration Statement, and in connection therewith, the Company reserved 20,000,000 shares of common stock for issuance under the ATM Sales Agreement. In March 2023, pursuant to the evergreen provisions of the Company’s 2021 Equity Incentive Plan (the “2021 EIP”), the Company registered an additional 9,378,068 shares of common stock for issuance under the 2021 EIP and 1,875,613 shares of common stock for issuance under the 2021 ESPP.
The shares available for future grant under the 2021 EIP include un-exercised stock options (vested and unvested) and unvested restricted stock units (“RSUs”) as of March 31, 2023 and December 31, 2022.
Common Stock Warrant Liabilities
Warrants for common stock of 13,145,000 were exercisable 1-to-1 as of March 31, 2023 and December 31, 2022. The warrants on common stock are liability classified and recorded at fair value on the issue date with periodic remeasurement. Warrants for shares of common stock consist of 8,625,000 publicly-traded warrants (the “Public Warrants”), 4,450,000 private placement warrants (the “Private Placement Warrants”) and a warrant to purchase 70,000 shares of common stock (the “2022 Private Warrant”), as summarized in the following table:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 and December 31, 2022 |
| Issue Date | | Expiration Date | | Number of Warrants | | Exercise Price per warrant | | Fair Value on Issue Date per warrant |
| | | | | | | | | |
Private placement warrants - Common Stock | 12/02/2020 | | 09/29/2026 | | 4,450,000 | | | $11.50 | | $2.00 |
2022 Private Warrant - Common Stock | 07/25/2022 | | 07/24/2034 | | 70,000 | | | $2.56 | | $2.43 |
Public warrants - Common Stock | 12/02/2020 | | 09/29/2026 | | 8,625,000 | | | $11.50 | | $3.30 |
| | | | | 13,145,000 | | | | | |
Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Warrant Liabilities - Fair Value
The issuance of the Private Placement Warrant and Public Warrant liabilities were accounted for upon the reverse recapitalization. See Note 3, Reverse Recapitalization, in the audited consolidated financial statements included in the 2022 Form 10-K. The 2022 Private Warrant was issued in connection with the Company’s entry into the joinder and fourth loan modification with SVB. See Note 10, Long-Term Debt, in the consolidated financial statements included in the 2022 Form 10-K. The liability for warrants on common stock carried at fair value was as follows:
| | | | | | | | | | | | | | | | | |
| Fair Value on December 31, 2022 | | Gain on fair value of warrants | | Fair Value on March 31, 2023 |
| (In thousands) |
Private placement warrants - Common Stock | $ | 888 | | | $ | 869 | | | $ | 1,757 | |
2022 Private Warrant - Common Stock | 109 | | | 37 | | | 146 | |
Public warrants - Common Stock | 1,748 | | | 1,647 | | | 3,395 | |
| $ | 2,745 | | | $ | 2,553 | | | $ | 5,298 | |
During the three months ended March 31, 2022, the gain on fair value of warrants was $6.0 million with ending balance of $27.7 million at March 31, 2022. The liabilities associated with the Private Placement Warrants and 2022 Private Warrant were subject to remeasurement at each balance sheet date using the Level 3 fair value inputs and the Public Warrants were subject to remeasurement at each balance sheet date using Level 1 fair value inputs for the three ended March 31, 2023 and March 31, 2022.
Each Private Placement Warrant is exercisable to purchase one share of common stock at a price of $11.50 per share. Subject to certain exceptions, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants. The 2022 Private Warrant is exercisable to purchase one share of common stock at a price of $2.56 per share and allows cashless exercise in whole or part. The Public Warrants may only be exercised for a whole number of shares. The Public Warrants became exercisable on December 7, 2021.
Private Placement Warrant - Fair Value Assumptions
The fair value assumptions used in the Monte Carlo simulation model for the recurring valuation of the private placement common stock warrant liability were as follows:
| | | | | | | | | | | |
| | | |
| As of March 31, 2023 | | As of December 31, 2022 |
Current stock price | $ | 2.27 | | | $ | 1.79 | |
Expected volatility | 78.0 | % | | |