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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, 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)
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 16, 2023, the registrant had 200,793,531 shares of common stock, $0.00001 per share outstanding.



TABLE OF CONTENTS
Page
Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 (unaudited)
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)
Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities





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.
1


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 service and comply with our indebtedness, including the existing event of default under our senior secured convertible notes due 2026 and our negotiations with the holders of the notes regarding a proposed amendment to the notes;
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 and our ability to continue as a going concern;
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 expectations regarding our strategic realignment and related initiatives;

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our financial performance;
macroeconomic conditions, including economic downturns or recessions, inflation, interest rate fluctuations, supply chain shortages and any lingering effects of the COVID-19 pandemic on the foregoing; and
other factors detailed under the section entitled “Risk Factors”.
2


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.
3


Item 1. Financial Statements
Velo3D, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
September 30,December 31,
20232022
Assets
Current assets:
Cash and cash equivalents$58,131 $31,983 
Short-term investments13,468 48,214 
Accounts receivable, net12,597 9,185 
Inventories81,159 71,202 
Contract assets15,901 6,805 
Prepaid expenses and other current assets2,515 5,533 
Total current assets183,771 172,922 
Property and equipment, net17,430 19,812 
Equipment on lease, net7,020 9,070 
Other assets21,782 23,310 
Total assets$230,003 $225,114 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$13,135 $12,207 
Accrued expenses and other current liabilities11,215 15,877 
Debt – current portion52,211 2,775 
Debt derivatives
17,538  
Contract liabilities4,847 15,194 
Total current liabilities98,946 46,053 
Long-term debt – less current portion 5,422 
Contingent earnout liabilities14,414 17,414 
Warrant liabilities2,883 2,745 
Other noncurrent liabilities10,805 12,634 
Total liabilities127,048 84,268 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.00001 par value - 500,000,000 shares authorized at September 30, 2023 and December 31, 2022, 200,314,984 and 187,561,368 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively
2 2 
Additional paid-in capital399,847 361,528 
Accumulated other comprehensive loss(252)(837)
Accumulated deficit(296,642)(219,847)
Total stockholders’ equity102,955 140,846 
Total liabilities and stockholders’ equity$230,003 $225,114 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4


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,
2023202220232022
Revenue
3D Printer$21,428 $16,537 $69,193 $44,336 
Recurring payment531 1,183 1,141 3,042 
Support services1,849 1,395 5,422 3,599 
Total Revenue23,808 19,115 75,756 50,977 
Cost of revenue
3D Printer20,273 16,574 61,975 42,686 
Recurring payment111 656 893 2,059 
Support services1,936 2,006 5,495 5,106 
Total cost of revenue22,320 19,236 68,363 49,851 
Gross profit (loss)
1,488 (121)7,393 1,126 
Operating expenses
Research and development9,819 12,558 32,820 38,438 
Selling and marketing5,772 5,632 18,054 17,864 
General and administrative11,118 9,642 31,569 27,191 
Total operating expenses26,709 27,832 82,443 83,493 
Loss from operations(25,221)(27,953)(75,050)(82,367)
Interest expense(1,107)(129)(1,671)(362)
Gain (loss) on fair value of warrants1,587 (6,612)(138)11,039 
Gain (loss) on fair value of contingent earnout liabilities10,810 (40,885)3,000 58,110 
Loss on fair value of debt derivatives
(3,648) (3,648) 
Loss on debt extinguishment(253) (253) 
Other income, net
436 384 965 993 
Loss before provision for income taxes
(17,396)(75,195)(76,795)(12,587)
Provision for income taxes    
Net loss
$(17,396)$(75,195)$(76,795)$(12,587)
Net loss per share:
     Basic$(0.09)$(0.41)$(0.40)$(0.07)
     Diluted$(0.09)$(0.41)$(0.40)$(0.07)
Shares used in computing net loss per share:
     Basic197,833,109 185,560,177 193,816,804 184,454,371 
     Diluted197,833,109 185,560,177 193,816,804 184,454,371 
Net loss
$(17,396)$(75,195)$(76,795)$(12,587)
5


Net unrealized holding gain (loss) on available-for-sale investments149 (178)585 (1,121)
Total comprehensive loss
$(17,247)$(75,373)$(76,210)$(13,708)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6


Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Nine months ended September 30,
20232022
Cash flows from operating activities
Net loss
$(76,795)$(12,587)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization4,516 3,328 
Stock-based compensation19,486 15,090 
(Gain) loss on fair value of warrants138 (11,039)
Gain on fair value of contingent earnout liabilities(3,000)(58,110)
Loss on fair value of debt derivatives
3,648  
Loss on debt extinguishment253  
Changes in assets and liabilities
Accounts receivable(3,412)(8,144)
Inventories(3,739)(41,807)
Contract assets(9,096)(2,096)
Prepaid expenses and other current assets3,503 7,342 
Other assets1,503 1,970 
Accounts payable(1,556)1,177 
Accrued expenses and other liabilities(4,382)10,148 
Contract liabilities(10,347)3,789 
Other noncurrent liabilities(1,829)(1,215)
Net cash used in operating activities(81,109)(92,154)
Cash flows from investing activities
Purchase of property and equipment(1,072)(12,228)
Production of equipment for lease to customers(2,965)(4,174)
Purchases of available-for-sale investments (87,655)
Proceeds from maturity of available-for-sale investments35,092 29,550 
Net cash provided by (used in) investing activities31,055 (74,507)
Cash flows from financing activities
Proceeds from loan refinance, net of issuance costs 6,664 
Repayment of loans in connection with loan refinance (8,089)
Proceeds from convertible note, net of issuance costs65,736  
Proceeds from ATM offering, net of issuance costs18,423  
Proceeds from revolver facility14,000  
Proceeds from equipment loans1,600  
Repayment of revolver facility(17,000) 
Repayment of equipment loans(6,956)(355)
Issuance of common stock upon exercise of stock options410 1,243 
Net cash provided by (used in) financing activities76,213 (537)
Effect of exchange rate changes on cash and cash equivalents(11)(57)
Net change in cash and cash equivalents26,148 (167,255)
Cash and cash equivalents and restricted cash at beginning of period32,783 208,402 
Cash and cash equivalents and restricted cash at end of period$58,931 $41,147 
7


Supplemental disclosure of cash flow information
Cash paid for interest$1,123 $253 
Supplemental disclosure of non-cash information
Unpaid liabilities related to property and equipment27  
Equipment for lease to customers returned to inventory4,198 2,619 
Issuance of common stock warrants in connection with refinancing 170 
The following table provides a reconciliation of cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows:
September 30,
20232022
(In thousands)
Cash and cash equivalents$58,131 $40,347 
Restricted cash (Other assets)800 800 
Total cash and cash equivalents and restricted cash$58,931 $41,147 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8


Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share data)
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ Equity
SharesAmount
Balance as of June 30, 2022184,909,608 $2 $350,797 $(957)$(167,259)$182,583 
Issuance of common stock upon exercise of stock options and release of restricted stock units1,248,369 — 673 — — 673 
Stock-based compensation254,841 — 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 
Balance as of June 30, 2023196,737,320 $2 $390,240 $(401)$(279,246)$110,595 
Issuance of common stock upon exercise of stock options106,334 — 60 — — 60 
Issuance of common stock upon release of RSUs1,479,555 — — — — — 
Stock-based compensation— — 6,716 — — 6,716 
Issuance of common stock in connection with At-the-Market offering, net of issuance costs1,991,775 — 2,831 — — 2,831 
Net loss— — — — (17,396)(17,396)
Other comprehensive income— — — 149 — 149 
Balance as of September 30, 2023
200,314,984 $2 $399,847 $(252)$(296,642)$102,955 
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ Equity
SharesAmount
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 units2,795,000 — 1,243 — — 1,243 
Stock-based compensation385,324 — 15,090 — — 15,090 
Issuance of common stock warrants in connection with financing— — (170)— — (170)
Net income— — — — (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 
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 options1,401,769 — 410 — — 410 
Issuance of common stock upon release of RSUs3,119,282 — — — — — 
Stock-based compensation— — 19,486 — — 19,486 
Issuance of common stock in connection with At-the-Market offering, net of issuance costs8,232,565 — 18,423 — — 18,423 
Net loss— — — — (76,795)(76,795)
Other comprehensive income— — — 585 — 585 
Balance as of September 30, 2023
200,314,984 $2 $399,847 $(252)$(296,642)$102,955 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9


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 NoteCertain 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.
Going Concern, 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 while the Company expects it will need to engage in additional financings to fund its operations in the near-term, it may need to seek such 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 September 30, 2023, the Company had an accumulated deficit of $296.6 million.
10


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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, on August 10, 2023, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain affiliated institutional investors (collectively, the “Investor”) pursuant to which the Company agreed to issue and sell, in a registered public offering by the Company directly to the Investor (the “Offering”), up to $105 million aggregate principal amount of the Company’s senior secured convertible notes (the “Notes”). On August 14, 2023, the Company issued $70 million aggregate principal amount of Notes (the “Initial Notes”) to the Investor for approximately $66 million in net proceeds, and used approximately $22 million of the net proceeds to repay in full indebtedness outstanding under its third amended and restated loan and security agreement, as amended (the “Loan Agreement”). The Notes contain customary affirmative and negative covenants (including covenants that limit the Company’s ability to incur debt, make investments, transfer assets, engage in certain transactions with affiliates and merge with other companies, in each case, other than those permitted by the Notes) and events of default. Furthermore, the Company will be required to maintain a minimum of $30 million of unrestricted cash and cash equivalents and to maintain minimum levels of quarterly revenue through the quarter ended June 30, 2026 specified in the Notes. See Note 9. Long-Term Debt, for further information.
As noted above, the Notes require the Company to maintain minimum levels of quarterly revenue through the quarter ended June 30, 2026. As of November 20, 2023, the issuance date of the unaudited condensed consolidated financial statements, the Company was not in compliance with the minimum revenue covenant for the quarter ended September 30, 2023 and, as a result, the Investor has the right to declare the Notes due and payable in cash in an amount equal to the Event of Default Acceleration Amount (as defined in the Notes). In addition, the Company has experienced less revenue growth than expected due to the impact of delayed shipments during the three and nine months ended September 30, 2023. Further, due to the impact of fourth quarter customer order delays and the Company’s bookings to date, the Company expects additional contraction of revenue growth in the near term.
The Company has been negotiating a proposed amendment to the Notes with the Investor, which the Company anticipates completing in November 2023; however, the Company may not be able to obtain a waiver or an amendment on favorable terms or at all. If a waiver or amendment is not agreed to by the Investor, the Company does not have sufficient capital to satisfy the outstanding principal and interest due, and the Investor may foreclose upon the Company’s assets securing the Notes. Accordingly, as the Company was not in compliance with the minimum quarterly revenue covenant and the Notes are now callable by the Investor, the Company believes that there is substantial doubt about its ability to continue as a going concern for the twelve-month period following the issuance date of the unaudited condensed consolidated financial statements.
The Company is undertaking expense reduction and cash savings initiatives as part of a company wide restructuring and strategic realignment plan to help conserve working capital. The expense reduction and cash saving initiatives include streamlining facilities, managing working capital, reducing capital expenditures, and reducing overall selling, general and administrative expenses.
Even if the Company is able to agree an amendment with the Investor, the Company expects that it will need to engage in additional financings to fund its operations in the near-term as well as to respond to business challenges and opportunities. Accordingly, subject to the Company’s compliance with the covenants in the Notes, the Company expects it will need to engage in additional equity or debt financings to secure additional funds.


11


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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 nine months ended September 30, 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. For the nine-months ended September 30, 2023, the Company has sold $18.4 million of shares, net of issuance costs of $1.2 million. See Note 16. At-the-Market Offering, for further information.

Fair Value of Debt Derivatives
Debt derivative liabilities, related to the Notes, are recorded at fair value on a recurring basis in the condensed consolidated balance sheets, and are categorized in accordance with the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their fair values. Changes to the fair value of the debt derivative liabilities occurring from subsequent remeasurement are recorded as gains or losses in the condensed consolidated statements of operations and comprehensive income (loss). See Note 10. Equity Instruments, for further information.

Convertible Notes
As of September 30, 2023, we carried the Notes at the initially allocated liability value less unamortized debt discount and issuance costs on our condensed consolidated balance sheet. The unamortized debt discount and issuance costs accrete to the carrying amount of the Notes over the term of the agreement using the effective interest rate method and are included in “Interest expense” in the condensed consolidated statements of operations and comprehensive income (loss). See Note 9. Long-Term Debt, 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.
12


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 3. Basic and Diluted Net Loss per Share
The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
(In thousands, except share and per share data)(In thousands, except share and per share data)
Numerator:
Net loss
$(17,396)$(75,195)$(76,795)$(12,587)
Denominator:
Weighted average shares outstanding–basic and diluted
197,833,109 185,560,177 193,816,804 184,454,371 
Net loss per share–basic and diluted
$(0.09)$(0.41)$(0.40)$(0.07)
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
September 30,
Nine Months Ended
September 30,
2023202220232022
Common stock options15,136,666 17,731,063 15,136,666 17,731,063 
Common stock warrants13,145,000 13,145,000 13,145,000 13,145,000 
Restricted stock units11,491,036 6,198,472 11,491,036 6,198,472 
Debt derivatives
45,132,171  45,132,171  
Total potentially dilutive common share equivalents84,904,873 37,074,535 84,904,873 37,074,535 
Total potentially dilutive common share equivalents for the three and nine months ended September 30, 2023 and 2022 excludes 21,265,936 and 21,758,148, respectively, shares related to the earnout liability as these shares are contingently issuable upon meeting certain triggering events.

13


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 September 30, 2023
Level 1Level 2Level 3Total
(In thousands)
Assets
Money market funds (i)$52,174 $ $ $52,174 
U.S. Treasury securities (ii)6,952   6,952 
Corporate bonds (ii) 6,516  6,516 
Total financial assets$59,126 $6,516 $ $65,642 
Liabilities
Common stock warrant liabilities (Public) (iii)$1,850 $ $ $1,850 
Common stock warrant liabilities (Private Placement) (iii)  934 934 
Common stock warrant liabilities (2022 Private Warrant) (iii)  99 99 
Contingent earnout liabilities  14,414 14,414 
Debt derivatives
  17,538 17,538 
Total financial liabilities$1,850 $ $32,985 $34,835 
Fair Value Measured as of December 31, 2022
Level 1Level 2Level 3Total
(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, Contingent earnout liabilities, and Debt derivative, 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 September 30, 2023 and December 31, 2022. Realized gains and losses, net of tax, were not material for any of the periods presented.
14


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:
December 31, 2022
Change in fair valueJune 30, 2023Change in fair valueSeptember 30, 2023
(In thousands)
Private placement warrant liabilities$888 $600 $1,488 $(554)$934 
2022 Private Warrant109 31 140 (41)99 
Contingent earnout liabilities17,414 7,810 25,224 (10,810)14,414 
Debt derivatives
   17,538 17,538 
$18,411 $8,441 $26,852 $6,133 $32,985 
December 31, 2021Change in fair valueJune 30, 2022Change in fair valueSeptember 30, 2022
(In thousands)
Private placement warrant liabilities$7,387 $(6,007)$1,380 $2,225 $3,605 
2022 Private Warrant   245 245 
Contingent earnout liabilities111,487 (98,995)12,492 40,885 53,377 
$118,874 $(105,002)$13,872 $43,355 $57,227 
The fair value of the Private Placement Warrant liability, the 2022 Private Warrant, Contingent earnout liability, and Debt derivative 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).
In determining the fair value of the Debt derivatives, the Company used the Monte Carlo simulation valuation model using a distribution of potential outcomes on a weekly basis over the applicable Debt derivative period using the most reliable information available (see Note 10, Equity Instruments).

15


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.
September 30, 2023
Amortized CostGross Unrealized GainGross Unrealized LossFair Value
(In thousands)
U.S. Treasury securities$7,039 $ $(87)$6,952 
Corporate bonds6,684  (168)6,516 
Total available-for-sale investments$13,723 $ $(255)$13,468 
December 31, 2022
Amortized CostGross Unrealized GainGross Unrealized LossFair Value
(In thousands)
U.S. Treasury securities$25,124 $ $(423)$24,701 
Corporate bonds23,927  (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 September 30, 2023 and December 31, 2022, respectively.
September 30, 2023
December 31, 2022
Fair ValueGross Unrealized LossFair ValueGross Unrealized Loss
(In thousands)
U.S. Treasury securities
Less than 12 months$6,952 $(87)$16,702 $(365)
12 months or longer  7,999 (58)
Total$6,952 $(87)$24,701 $(423)
Corporate bonds
Less than 12 months$6,516 $(168)$18,951 $(387)
12 months or longer  1,478 (27)
Total$6,516 $(168)$20,429 $(414)
The Company does not believe these AFS investments to be other-than-temporarily impaired as of September 30, 2023 and December 31, 2022.
There were no material realized gains or losses on AFS investments during the three and nine months ended September 30, 2023 and September 30, 2022.
16


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
All remaining contractual maturities of AFS investments held at September 30, 2023 are as follows:
Less than 12 monthsGreater than 12 months
Fair valueGross unrealized lossesFair valueGross unrealized losses
(In thousands)
Corporate bonds$6,516 $(168)$ $ 
U.S. Treasury securities6,952 (87)  
Total$13,468 $(255)$ $ 
Actual maturities may differ from the contractual maturities because the Company may sell these investments prior to their contractual maturities.
Note 6. Balance Sheet Components
Accounts Receivable, Net
Accounts receivable, net consisted of the following:
September 30,December 31,
20232022
(In thousands)
Trade receivables$12,697 $9,639 
Less: Allowances for credit losses(100)(454)
Total$12,597 $9,185 
Inventories
Inventories consisted of the following:
September 30,December 31,
20232022
(In thousands)
Raw materials$69,701 $58,585 
Work-in-progress10,300 12,617 
Finished goods1,158  
Total$81,159 $71,202 
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following:
September 30,December 31,
20232022
(In thousands)
Prepaid insurance and other$2,030 $3,316 
Vendor prepayments485 2,217 
Total$2,515 $5,533 
17


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Property and Equipment, Net
Property and equipment, net consisted of the following:
September 30,December 31,
20232022
(In thousands)
Computers and software$2,490 $2,222 
Lab equipment and other equipment7,995 7,379 
Furniture and fixtures246 181 
Leasehold improvements16,060 16,273 
Total property, plant and equipment26,791 26,055 
Less accumulated depreciation and amortization(9,361)(6,243)
Property, plant and equipment, net$17,430 $19,812 
Depreciation expense for the three months ended September 30, 2023 and 2022 was $1.5 million and $0.9 million, respectively. Depreciation expense for the nine months ended September 30, 2023 and 2022 was $3.8 million and $2.1 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 related to the Campbell (McGlincy) lease during the nine months ended September 30, 2023.
Other Assets
Other assets consisted of the following:
September 30,December 31,
20232022
(In thousands)
Right of use assets$11,600 $13,545 
Net investments in sales-type lease5,747 6,554 
Non-current prepaid expenses and other assets4,435 3,211 
Total Other assets$21,782 $23,310 
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
September 30,December 31,
20232022
(In thousands)
Accrued expenses$5,727 $8,602 
Accrued salaries and benefits3,171 4,830 
Lease liability – current portion2,317 2,445 
Total Accrued expenses and other current liabilities$11,215 $15,877 
18


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Other Noncurrent Liabilities
Other noncurrent liabilities consisted of the following:
September 30,December 31,
20232022
(In thousands)
Lease liabilities – noncurrent portion$10,550 $12,206 
Other noncurrent liabilities255 428 
Total other noncurrent liabilities$10,805 $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 $7.4 million and accumulated depreciation of $0.4 million as of September 30, 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 $0.1 million and $0.3 million included in cost of revenue for the three months ended September 30, 2023 and 2022, respectively. The total depreciation expense was $0.7 million and $1.3 million included in cost of revenue for the nine months ended September 30, 2023 and 2022, respectively.
Lease payments from customers consisted of the following:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(In thousands)(In thousands)
Equipment on lease payments$531 $923 $1,141 $2,637 
Equipment on lease variable payments 260  405 
Total lease payments$531 $1,183 $1,141 $3,042 
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.
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.

19


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Total right-of-use (“ROU”) assets and lease liabilities are as follows:
September 30,December 31,
20232022
(In thousands)
Right-of-use assets:
Net book value (Other assets)$11,600 $13,545 
Operating lease liabilities:
Current (Accrued expense and other current liabilities)$2,201 $2,410 
Noncurrent (Other noncurrent liabilities)10,399 12,201 
12,600 14,611 
Financing lease liabilities:
Current (Accrued expense and other current liabilities)$43 $35 
Noncurrent (Other noncurrent liabilities)56 5 
$99 $40 
Total lease liabilities$12,699 $14,651 
There were no impairments recorded related to these assets as of September 30, 2023 and December 31, 2022.
Information about lease-related balances were as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
(In thousands, except years and percentages)(In thousands, except years and percentages)
Operating lease expense$746$721$2,256$2,156 
Financing lease expense1893627 
Short-term lease expense7895250262
Total lease expense$842$825$2,542$2,445 
Cash paid for leases$710$689$2,116$1,653 
Weighted – average remaining lease term – operating leases (years)3.44.33.44.3
Weighted – average discount rate – operating leases8.8%8.6%8.8%8.6%

20


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Maturity of operating lease liabilities as of September 30, 2023 are as follows:
(In thousands)
Remainder of 2023
$711 
20242,860 
20252,397 
20262,402 
20272,400 
Thereafter11,270 
Total operating lease payments$22,040 
Less portion representing imputed interest(9,440)
Total operating lease liabilities$12,600 
Less current portion2,201 
Long-term portion$10,399 
Note 9. Long-Term Debt
Long-term debt consisted of the following:
September 30,December 31,
20232022
(In thousands)
Revolving credit line$ $3,000 
Equipment loan 5,356 
Convertible notes
56,110  
Deferred financing costs(3,899)(159)
Total$52,211 $8,197 
Debt – current portion52,211 2,775 
Long-term debt – less current portion$ $5,422 
As of September 30, 2023, the Company’s debt arrangements comprised the Initial Notes (as defined below) issued to the Investor pursuant to the Securities Purchase Agreement and the Company’s indenture dated as of August 14, 2023 (the “Base Indenture”) between the Company and U.S. Bank Trust Company, National Association, a national banking association, as trustee (the “Trustee”), as supplemented by a first supplemental indenture dated as of August 14, 2023, between the Company and the Trustee (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”). See Senior Secured Convertible Notes section below for a full description of these debt arrangements. The Notes contain customary affirmative and negative covenants (including covenants that limit the Company’s ability to incur debt, make investments, transfer assets, engage in certain transactions with affiliates and merge with other companies, in each case, other than those permitted by the Notes) and events of default. Furthermore, the Company will be required to maintain a minimum of $30 million of unrestricted cash and cash equivalents and to maintain minimum levels of quarterly revenue through the quarter ended June 30, 2026 specified in the Notes. As described below, as of the issuance date of the unaudited condensed consolidated financial statements, the Company was not in compliance with the minimum revenue covenant for the quarter ended September 30, 2023.
On August 14, 2023, the Company used approximately $22 million of the net proceeds from the offering of the Initial Notes to repay all outstanding obligations under the Loan Agreement originally entered into with Silicon Valley Bank (“SVB”), which included the Company’s prior revolving credit line and equipment loans. With the payoff of the debt, the Loan Agreement was terminated and is no longer available to the Company. The Company recorded a loss on debt extinguishment of $0.3 million related to the termination of the Loan Agreement.
21


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company amortizes deferred financing costs over the life of the applicable indebtedness. As of September 30, 2023 and December 31, 2022, the remaining unamortized balance of deferred financing costs was $3.9 million and $0.2 million, respectively, and was included in Debt — current portion on the balance sheets.
Senior Secured Convertible Notes — On August 10, 2023, the Company entered into the Securities Purchase Agreement with the Investor pursuant to which the Company agreed to issue and sell in an offering up to $105 million aggregate principal amount of Notes.
On August 14, 2023 (the “Initial Closing Date”), the Company issued $70 million aggregate principal amount of the Notes (the “Initial Notes”) to the Investor. In addition, the Company has granted the Investor the right to purchase up to an additional $35 million aggregate principal amount of the Notes (the “Additional Notes”) so long as the notice to exercise such option is provided no later than the first anniversary of the Initial Closing Date.
The Notes bear interest at 6.00% per annum, payable quarterly in cash on January 1, April 1, July 1 and October 1 of each year, commencing on October 1, 2023, and will mature on August 1, 2026. Beginning on January 1, 2024, the Investor may elect to require the Company to repay principal on the Notes quarterly pursuant to the terms of the Notes at a repayment price (the “Repayment Price”) equal to 115% of the Notes principal balance repaid plus accrued interest. The repayments are calculated at rate of 12.5% of 115% of the principal balance and will reduce the principal balance of the Notes by the amount repaid divided by a rate of 1.15. The end of term maturity balance is the principal balance of the Note multiplied by 115%. The effective interest rate was 39.9% for the three and nine months ended September 30, 2023.
The Notes include terms that provide the Investor seniority over other unsecured obligations in any settlement negotiations in the event of liquidation. Additionally, the Notes contain redemption features in the event of default or a fundamental change in control that would make the Notes immediately callable at a predetermined rate as described in the Notes. The redemption features are settled in cash. As of September 30, 2023, the Company has included the effect of an event of default in the valuation of the Notes and related debt derivatives. As of September 30, 2023, the Company has not included the effect of a fundamental change in control in the valuation of the Notes and related debt derivatives, as the Company believes the likelihood of this occurring is remote. The Company will continue to monitor the likelihood of these events in future reporting periods.
The Notes are convertible based on a conversion rate of 644.7453 shares of the Company’s common stock per $1,000 principal amount of Notes as of September 30, 2023 (equivalent to a conversion price of approximately $1.55 per share of the Company’s common stock).
The Company incurred deferred financing costs of $4.1 million related to the Initial Closing, which were capitalized upon issuance and are being accreted over the term of the indebtedness using the effective interest rate method and are included in “Interest expense” in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
Additionally, the Company is accreting discounts of $28.6 million and capitalizing to the carrying value of the Notes over the term of the indebtedness using the effective interest rate method. The $28.6 million discount includes $13.9 million related to its debt derivatives, $10.5 million related to the Repayment Price, $0.1 million related to lender fees paid, and $4.1 million in third-party fees. For further information on the valuation of the debt derivative discount, see Note 10, Equity Instruments below.
As of the issuance date of the unaudited condensed consolidated financial statements, the Company was not in compliance with the Notes’ minimum revenue covenant for the quarter ended September 30, 2023 and, as a result, the Investor has the right to declare the Notes due and payable in cash in an amount equal to the Event of Default Acceleration Amount (as defined in the Notes). The Company has been negotiating a proposed amendment to the Notes with the Investor, which the Company anticipates completing in November 2023; however, the Company may not be able to obtain a waiver or an amendment on favorable terms or at all. If a waiver or amendment is not agreed to by the Investor, the Company does not have sufficient capital to satisfy the outstanding principal and interest due.

22


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Revolving Credit Line — For the three months ended September 30, 2023, the Company did not draw from the revolving credit facility and for the nine months ended September 30, 2023, the Company drew $14.0 million on the revolving credit facility. As of September 30, 2023, the Company had no outstanding balance or remaining revolving credit line availability due to the repayment and termination of the Loan Agreement in connection with the issuance of the Initial Notes.
Interest on the balance of the revolving credit line was payable monthly at an annual rate of the greater of (1) the Wall Street Journal Prime Rate plus 0.25% and (2) 5.0% when the Company’s Adjusted Quick Ratio (“AQR”) was at least 1.50 to 1.0, and at an annual rate of the greater of (1) the Wall Street Journal Prime Rate plus 0.75% and (2) 5.50% when the Company did not maintain such AQR. The effective interest rate was 12.0% and 5.8% for the three months ended September 30, 2023 and 2022, respectively. The effective interest rate was 15.8% and 5.2% for the nine months ended September 30, 2023 and 2022, respectively. Interest expense for the three months ended September 30, 2023 includes an additional $0.3 million for final payments made during the extinguishment of the SVB loans.
Equipment Loan As of September 30, 2023, the Company had no outstanding balance or remaining equipment loan availability due to the repayment and termination of the Loan Agreement in connection with the issuance of the Initial Notes.
The effective interest rate was 18.1% and 5.5% for the three months ended September 30, 2023 and 2022, respectively. The effective interest rate was 12.6% and 4.1% for the nine months ended September 30, 2023 and 2022, respectively. Interest expense for the three months ended September 30, 2023 includes an additional $0.1 million for final payments made under the Loan Agreement.
The future minimum aggregate payments for the above borrowings are equal to the quarterly payments made using the Repayment Price, beginning are as follows as of September 30, 2023:
(In thousands)
2023$ 
202440,250 
202540,250 
$80,500 
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.

23


Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Common Stock Reserved for Future Issuance
Shares of common stock reserved for future issuance on an “as if converted” basis were as follows:
September 30,December 31,
20232022
(share data)
Common stock warrants13,145,000 13,145,000 
Common shares related to debt derivative
45,132,171  
Shares available for future grant under 2021 Equity Incentive Plan30,298,210 20,861,294 
Reserved for At-the-Market offering11,876,135  
Reserved for employee stock purchase plan7,371,214 5,495,601 
Total shares of common stock reserved 107,822,730 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. In August 2023, the Company issued the Initial Notes, which are convertible into 644.7453 shares of common stock per $1000 in principal amount for a total of up to 45,132,171 shares of common stock. However, the Notes provide that the number of shares of common stock issuable upon conversion or otherwise pursuant to the Notes may not exceed 39,349,491 shares in the aggregate until the Company’s stockholders approve the issuance of such shares in accordance with NYSE listing rules.
The shares available for future grant under the 2021 EIP are net of any un-exercised stock options (vested and unvested) and unvested restricted stock units (“RSUs”) outstanding that may convert to common stock in the future upon exercise or vesting as of September 30, 2023 and December 31, 2022.
Common Stock Warrant Liabilities
Warrants for common stock of 13,145,000 were exercisable 1-to-1 as of September 30, 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:

December 31, 2022 and September 30, 2023
Issue DateExpiration
Date
Number of
Warrants
Exercise
Price per warrant
Fair Value on Issue Date per warrant
Private placement warrants - Common Stock12/02/202009/29/20264,450,000 $11.50$2.00
2022 Private Warrant – Common Stock07/25/202207/24/203470,000 $2.56$2.43
Public warrants – Common Stock12/02/202009/29/20268,625,000 $11.50$3.30
13,145,000 

24


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 warrantsFair Value on June 30, 2023Loss on fair value of warrants
Fair Value on September 30, 2023
(In thousands)
Private placement warrants – Common Stock$888