velo-20240331

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, 2024


☐			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.)
2710 Lakeview Court, Fremont, CA			94538
(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 10, 2024, the registrant had 296,188,417 shares of common stock, $0.00001 per share outstanding.

TABLE OF CONTENTS


		Page
Part I. Financial Information

Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (unaudited)	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss ) for the Three Months Ended March 31, 2024 and 2023 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures a bout Market Risk	50
Item 4.	Controls and Procedures	50

Part II. Other Information

Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	57
Signatures		58

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 pursuant to 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

•“2023 Form 10-K” refer to our Annual Report on Form 10-K for the year-ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on April 3, 2024.

“Velo”, “Velo3D”, “Sapphire” and “Intelligent Fusion” are registered trademarks of Velo3D, Inc; and “Without Compromise”, “Flow” and “Assure” are trademarks of Velo3D, Inc.

Cautionary Note Regarding 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;

•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” herein and in Item 1A of our 2023 Form 10-K.

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 herein under the section entitled “Risk Factors” and in Item 1A of our 2023 Form 10-K. 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.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Velo3D, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)


	March 31,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	7,754	$	24,494
Short-term investments	3,151		6,621
Accounts receivable, net	11,653		9,583
Inventories	62,799		60,816
Contract assets	9,906		7,510
Prepaid expenses and other current assets	3,082		4,000
Total current assets	98,345		113,024
Property and equipment, net	15,253		16,326
Equipment on lease, net	5,482		6,667
Other assets	17,068		17,782
Total assets	$	136,148	$	153,799
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	15,595	$	15,854
Accrued expenses and other current liabilities	6,244		6,491
Debt – current portion	34,300		21,191
Contract liabilities	4,719		5,135
Total current liabilities	60,858		48,671
Long-term debt – less current portion	2,003		11,941
Contingent earnout liabilities	1,893		1,456
Warrant liabilities	14,455		11,835
Other noncurrent liabilities	11,489		11,556
Total liabilities	90,698		85,459
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.00001 par value - 500,000,000 shares authorized at March 31, 2024 and December 31, 2023, 261,704,589 and 258,418,695 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively	2		2
Additional paid-in capital	430,843		425,471
Accumulated other comprehensive loss	(44)		(96)
Accumulated deficit	(385,351)		(357,037)
Total stockholders’ equity	45,450		68,340
Total liabilities and stockholders’ equity	$	136,148	$	153,799

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

Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands, except share and per share data)


	Three Months Ended March 31,
	2024		2023
Revenue
3D Printer	$	7,660	$	24,448
Recurring payment	470		575
Support services	1,656		1,664
Total Revenue	9,786		26,687
Cost of revenue
3D Printer	9,394		22,168
Recurring payment	315		447
Support services	2,892		1,540
Total cost of revenue	12,601		24,155
Gross profit (loss)	(2,815)		2,532
Operating expenses
Research and development	5,043		10,417
Selling and marketing	4,809		6,174
General and administrative	8,783		10,191
Total operating expenses	18,635		26,782
Loss from operations	(21,450)		(24,250)
Interest expense	(3,897)		(220)
Gain (loss) on fair value of warrants	(2,620)		(2,553)
Gain (loss) on fair value of contingent earnout liabilities	(437)		(9,653)
Other income, net	94		351
Loss before provision for income taxes	(28,310)		(36,325)
Provision for income taxes	(4)		—
Net loss	$	(28,314)	$	(36,325)

Net loss per share:
Basic	$	(0.11)	$	(0.19)
Diluted	$	(0.11)	$	(0.19)

Shares used in computing net loss per share:
Basic	260,294,161		189,609,021
Diluted	260,294,161		189,609,021

Net loss	$	(28,314)	$	(36,325)
Net unrealized holding gain (loss) on available-for-sale investments	52		288
Total comprehensive loss	$	(28,262)	$	(36,037)

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,
	2024		2023
Cash flows from operating activities
Net loss	$	(28,314)	$	(36,325)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	4,567		1,560
Stock-based compensation	5,087		6,236
Loss on fair value of warrants	2,620		2,553
Loss on fair value of contingent earnout liabilities	437		9,653
Changes in assets and liabilities
Accounts receivable	(2,070)		(5,162)
Inventories	2,645		(1,425)
Contract assets	(2,118)		(1,124)
Prepaid expenses and other current assets	1,078		2,776
Other assets	396		247
Accounts payable	(4,199)		(2,694)
Accrued expenses and other liabilities	(218)		(1,848)
Contract liabilities	(416)		(4,583)
Other noncurrent liabilities	(18)		(698)
Net cash used in operating activities	(20,523)		(30,834)
Cash flows from investing activities
Purchase of property and equipment	(6)		(403)
Production of equipment for lease to customers	(1)		(135)
Proceeds from maturity of available-for-sale investments	3,500		21,500
Net cash provided by investing activities	3,493		20,962
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)
Issuance of common stock upon exercise of stock options	285		310
Net cash provided by financing activities	285		15,034
Effect of exchange rate changes on cash and cash equivalents	5		(6)
Net change in cash and cash equivalents	(16,740)		5,156
Cash and cash equivalents and restricted cash at beginning of period	25,294		32,783
Cash and cash equivalents and restricted cash at end of period	$	8,554	$	37,939

Supplemental disclosure of cash flow information
Cash paid for interest	$	556	$	220
Supplemental disclosure of non-cash information
Unpaid liabilities related to property and equipment	(59)		(16)
Equipment for lease to customers returned to inventory	912		—

The following table provides a reconciliation of cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows:


	March 31,
	2024		2023
	(In thousands)
Cash and cash equivalents	$	7,754	$	37,139
Restricted cash (Other assets)	800		800
Total cash and cash equivalents and restricted cash	$	8,554	$	37,939

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, 2022	187,561,368	$	2	$	361,528	$	(837)	$	(221,898)	$	138,795
Issuance of common stock upon exercise of stock options and release of restricted stock units	1,585,950	—		310		—		—		310
Stock-based compensation	—	—		6,236		—		—		6,236
Issuance of common stock warrants in connection with financing	3,332,479	—		10,458		—		—		10,458
Net loss	—	—		—		—		(36,325)		(36,325)
Other comprehensive loss	—	—		—		288		—		288
Balance as of March 31, 2023	192,479,797	$	2	$	378,532	$	(549)	$	(258,223)	$	119,762

Balance as of December 31, 2023	258,418,695	$	2	$	425,471	$	(96)	$	(357,037)	$	68,340
Issuance of common stock upon exercise of stock options and release of restricted stock units	3,285,894	—		285		—		—		285
Stock-based compensation	—	—		5,087		—		—		5,087
Net loss	—	—		—		—		(28,314)		(28,314)
Other comprehensive income	—	—		—		52		—		52
Balance as of March 31, 2024	261,704,589	$	2	$	430,843	$	(44)	$	(385,351)	$	45,450

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”), founded in June 2014 as a Delaware corporation headquartered in Campbell, California), Velo3D, B.V., (a sales and marketing office located in the Netherlands) and Velo3D, GmbH, (a sales and marketing office located in Germany). The first commercially developed 3D Printer was delivered in the fourth quarter of 2018.

On September 29, 2021 (the “Closing Date” or the “Reverse Recapitalization Date”), JAWS Spitfire completed the previously announced merger with Legacy Velo3D, with Legacy Velo3D surviving as a wholly-owned subsidiary of JAWS Spitfire (the “Merger” or the “Reverse Recapitalization”). In connection with the Merger, JAWS Spitfire was renamed “Velo3D, Inc.”, and Legacy Velo3D was renamed “Velo3D US, Inc.”

The shares and Net loss per share attributable to common stockholders, basic and diluted, prior to the Merger, have been retroactively restated as shares reflecting the exchange ratio (the “Exchange Ratio”) established in the Merger (0.8149 shares of Velo3D common stock for 1 share of Legacy Velo3D common stock, par value $0.00001 (the “Common Stock”)). All fractional shares were rounded.

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; 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, 2023 (the “2023 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, 2023 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, 2024, or for any other interim period or for any other future year.

Revision of Previously Issued Condensed Consolidated Financial Statements

During the fourth quarter of 2023, the Company identified a formula error and an incorrect hourly rate used in its calculation of variable consideration and the calculation of sales type leases related to revenue for the year ended

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

December 31, 2022. The Company concluded that the errors were not material, either individually or in the aggregate, to its previously issued consolidated financial statements. Additionally, the Company has revised its previously issued interim condensed consolidated financial statements for the period ended March 31, 2023. Refer to Note 16 for further discussion on the revision of the previously issued condensed consolidated financial statements.

Notice of Delisting

On December 28, 2023, the Company received written notice (the “Notice”) from the New York Stock Exchange (“NYSE”) that the Company was not in compliance criteria pursuant to the continued listing standards set forth in Section 802.01C of the NYSE Listed Company Manual because the average closing price of the Common Stock was less than $1.00 per share over a consecutive 30 trading-day period (the “Minimum Share Price Requirement”).

Pursuant to Section 802.01C of the NYSE Listed Company Manual, the Company will have until June 28, 2024 to regain compliance with the Minimum Share Price Requirement.

The Notice has no immediate impact on the listing of the Common Stock, which will continue to be listed and traded on the NYSE during the applicable cure period, subject to the Company’s compliance with the other continued listing requirements of the NYSE and will not affect the ongoing business operations of the Company or its reporting requirements with the Securities and Exchange Commission. However, failure to satisfy the conditions of the cure period or to maintain other NYSE listing requirements could lead to a delisting.

Going Concern, Financial Condition and Liquidity and Capital Resources

The unaudited condensed consolidated financial statements have been prepared on the basis of continuity of operations, the realization of assets and satisfaction of liabilities in the ordinary course of business. 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, 2024, the Company had an accumulated deficit of $385.4 million and cash and investments on hand of approximately $10.9 million.

Management believes that there is a substantial doubt concerning the Company’s ability to continue as a going concern. As of the date of the issuance of these financial statements, the Company does not have sufficient liquidity to meet its operating needs and satisfy its obligations for at least 12 months from the date of issuance of the unaudited condensed consolidated financial statements.

On April 1, 2024, the Company entered into a second note amendment (the “Second Note Amendment”) to its Secured Notes (as defined below) held with the Investors (as defined below). Pursuant to the Second Note Amendment, the Company agreed and made a cash payment of $5.5 million on April 1, 2024 to redeem approximately $4.2 million of aggregate principal amount of the Notes, together with accrued and unpaid interest, and a cash payment of $5.5 million on April 15, 2024 to repay approximately $4.6 million of principal of the Notes, together with accrued and unpaid interest. In connection with the Second Note Amendment, the Company issued to the Investors warrants to purchase 21,949,079 shares of the Company’s common stock that become exercisable 45 days after the original issuance date at an exercise price of $0.4556 per share. The Investors may exercise the Warrants by paying the exercise in cash or by reducing the outstanding principal amount under the Notes by an amount equal to the quotient of (A) the amount of the exercise price divided by (B) 1.20.

On April 10, 2024, the Company sold (such sale and issuance, the “Offering”) an aggregate of: (i) 34,285,715 shares of common stock and (ii) immediately exercisable warrants to purchase up to 34,285,715 shares of common stock at $0.35 per share. The offering price per share of common stock and accompanying warrant was $0.35 and resulted in gross proceeds to the Company of approximately $12 million. The Company intends to use the net proceeds from the Offering primarily for funding working capital and capital expenditures and other general corporate purposes, including repayment of the Company’s Secured Notes. As of May 9, 2024, the Company had approximately $11.1 million in accounts receivable and $5.7 million in cash and investments.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

See Note 17, Subsequent Events for further information regarding the Second Note Amendment and the Offering.

Further, the Company expects that it will need to engage in additional financings to fund its operations and satisfy its obligations in the near-term, through at-the-market sales under the ATM Agreement or other financings. The Company is in discussions with multiple financing sources to attempt to secure additional financing. There are no assurances that the Company will be able to obtain financing on acceptable terms, or at all, to provide the necessary interim funding to continue its operations and satisfy its obligations for at least 12 months from the date of issuance of the unaudited condensed consolidated financial statements.

In December 2023, the Board of Directors commenced a strategic business review process to explore alternatives in order to maximize stockholder value. Potential strategic alternatives actively being explored or evaluated currently include a potential merger, business combination or sale. There can be no assurance that the Company’s strategic review process will result in any transaction or other strategic outcome on acceptable terms, or at all, to provide the necessary funding to continue its operations and satisfy its obligations and if not, the Company may be required to sell assets, liquidate and/or file for bankruptcy. The Company's strategic review remains ongoing, with the Board of Directors in discussions with multiple parties.

The Company’s operational priorities include reliability improvements and system uptime for the products previously sold to its key customers. If the Company is unable to maintain system reliability and uptime consistent with the expectations of key customers the Company will not be able to collect outstanding receivables, which a significant portion are currently past due with customers, or variable consideration contingent on the future usage of 3D Printer systems and it will not be able to collect on contractual amounts owed which are contingent upon successful completion of site acceptance tests.

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 2023 Form 10-K. During the three months ended March 31, 2024, there were no significant updates to the Company’s significant accounting policies other than as described below.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09 (“ASU 2023-09”), Income Taxes (Topic 740): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. Two primary enhancements related to this ASU include disaggregating existing income tax disclosures relating to the effective tax rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this accounting standard update on the Company's condensed consolidated financial statements and related disclosures.

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 March 31,
	2024		2023
	(In thousands, except share and per share data)
Numerator:
Net loss	$	(28,314)	$	(36,325)
Denominator:
Weighted average shares outstanding–basic and diluted	260,294,161		189,609,021
Net loss per share–basic and diluted	$	(0.11)	$	(0.19)

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,
	2024	2023

Common stock options	11,394,757	15,388,946
Common stock warrants	50,945,000	13,145,000
Restricted stock units	18,260,514	12,455,651
Total potentially dilutive common share equivalents	80,600,271	40,989,597

Total potentially dilutive common share equivalents for the three months ended March 31, 2024 and 2023 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.

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, 2024
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Money market funds (i)	$	6,732	$	—	$	—	$	6,732
Corporate bonds (ii)	—		3,151		—		3,151
Total financial assets	$	6,732	$	3,151	$	—	$	9,883
Liabilities
Common stock warrant liabilities (Public Warrants) (iii)	$	489	$	—	$	—	$	489
Common stock warrant liabilities (Private Placement Warrants) (iii)	—		—		241		241
Common stock warrant liabilities (2022 Private Warrant) (iii)	—		—		28		28
Common stock warrant liabilities (RDO Warrants) (iii)	—		—		13,053		13,053
Common stock warrant liabilities (Placement Agent Warrants) (iii)	—		—		644		644
Contingent earnout liabilities	—		—		1,893		1,893
Total financial liabilities	$	489	$	—	$	15,859	$	16,348

	Fair Value Measured as of December 31, 2023
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Money market funds (i)	$	3,422	$	—	$	—	$	3,422
Corporate bonds (ii)	—		6,621		—		6,621
Total financial assets	$	3,422	$	6,621	$	—	$	10,043
Liabilities
Common stock warrant liabilities (Public Warrants) (iii)	$	258	$	—	$	—	$	258
Common stock warrant liabilities (Private Placement Warrants) (iii)	—		—		127		127
Common stock warrant liabilities (2022 Private Warrant) (iii)	—		—		23		23
Common stock warrant liabilities (RDO Warrants) (iii)	—		—		10,891		10,891
Common stock warrant liabilities (Placement Agent Warrants) (iii)	—		—		536		536
Contingent earnout liabilities	—		—		1,456		1,456
Total financial liabilities	$	258	$	—	$	13,033	$	13,291

(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.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

For more information regarding the Public Warrants, Private Placement Warrants, the 2022 Private Warrant, the RDO Warrants, the Placement Agent Warrants, and the Contingent earnout liabilities, 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, 2024 and December 31, 2023. Realized gains and losses, net of tax, were not material for any of the periods presented.

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		RDO Warrants		Placement Agent Warrants
	(In thousands)
Fair value as of January 1, 2024	$	127	$	23	$	1,456	$	10,891	$	536
Change in fair value	114		5		437		2,162		108
Fair value as of March 31, 2024	$	241	$	28	$	1,893	$	13,053	$	644


	Private placement warrant liabilities		2022 Private Warrant		Contingent earnout liabilities		RDO Warrants		Placement Agent Warrants
	(In thousands)
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	$	—	$	—

The fair value of the private placement warrant liability, the 2022 Private Warrant, Contingent earnout liability, RDO Warrants, and Placement Agent Warrants 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, Contingent earnout liability, and Debt derivatives, the Company used the Monte Carlo simulation model using a distribution of potential outcomes on a weekly basis over the applicable periods 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, RDO Warrants, and Placement Agent Warrants, 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).

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, 2024
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(In thousands)
Corporate bonds	$	3,195	$	—	$	(44)	$	3,151
Total available-for-sale investments	$	3,195	$	—	$	(44)	$	3,151


	December 31, 2023
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(In thousands)
Corporate bonds	$	6,717	$	—	$	(96)	$	6,621
Total available-for-sale investments	$	6,717	$	—	$	(96)	$	6,621

The following table presents the breakdown of the AFS investments in an unrealized loss position as of March 31, 2024 and December 31, 2023, respectively.


	March 31, 2024				December 31, 2023
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
	(In thousands)
Corporate bonds
Less than 12 months	$	—	$	—	$	—	$	—
12 months or longer	3,151		(44)		6,621		(96)
Total	$	3,151	$	(44)	$	6,621	$	(96)

There were no material realized gains or losses on AFS investments during the three months ended March 31, 2024 and March 31, 2023.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

All remaining contractual maturities of AFS investments held at March 31, 2024 are as follows:


	Less than 12 months				Greater than 12 months
	Fair value		Gross unrealized losses		Fair value		Gross unrealized losses
	(In thousands)
Corporate bonds	$	3,151	$	(44)	$	—	$	—

Total	$	3,151	$	(44)	$	—	$	—

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:


	March 31,		December 31,
	2024		2023
	(In thousands)
Trade receivables	$	12,376	$	10,203
Less: Allowances for credit losses	(723)		(620)
Total	$	11,653	$	9,583

Inventories

Inventories consisted of the following:


	March 31,		December 31,
	2024		2023
	(In thousands)
Raw materials	$	45,634	$	48,488
Work-in-progress	15,486		9,922
Finished goods	1,679		2,406
Total	$	62,799	$	60,816

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


	March 31,		December 31,
	2024		2023
	(In thousands)
Prepaid insurance and other	$	2,922	$	2,738
Vendor prepayments	160		1,262
Total	$	3,082	$	4,000

Property and Equipment, Net

Property and equipment, net consisted of the following:


	March 31,		December 31,
	2024		2023
	(In thousands)
Computers and software	$	2,526	$	2,549
Lab equipment and other equipment	8,019		8,075
Furniture and fixtures	206		206
Leasehold improvements	14,471		14,406
Total property, plant and equipment	25,222		25,236
Less accumulated depreciation and amortization	(9,969)		(8,910)
Property, plant and equipment, net	$	15,253	$	16,326

Depreciation expense for the three months ended March 31, 2024 and 2023 was $1.1 million and $1.2 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 for McGlincy. The Company’s right-of-use assets and lease liabilities related to McGlincy were amortized in full over the life of the lease. Additionally, the Company exited from its two facilities at Campbell (Division) on December 31, 2023, which are no longer in use, however the lease agreement was not terminated.

Other Assets

Other assets consisted of the following:


	March 31,		December 31,
	2024		2023
	(In thousands)
Right of use assets	$	10,237	$	10,672
Non-current contract assets	4,839		5,117
Non-current prepaid expenses and other assets	1,992		1,993
Total Other assets	$	17,068	$	17,782

Certain balances included in contract assets for prior periods have been reclassified to conform to the current period presentation.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


	March 31,		December 31,
	2024		2023
	(In thousands)
Accrued expenses	$	1,862	$	1,948
Accrued salaries and benefits	2,263		2,277
Lease liability – current portion	2,119		2,266
Total Accrued expenses and other current liabilities	$	6,244	$	6,491

Other Noncurrent Liabilities

Other noncurrent liabilities consisted of the following:


	March 31,		December 31,
	2024		2023
	(In thousands)
Lease liabilities – noncurrent portion	$	9,779	$	10,176
Other noncurrent liabilities	1,710		1,380
Total other noncurrent liabilities	$	11,489	$	11,556

Note 7. Equipment on Lease, Net

The equipment leased to customers had a cost basis of $6.2 million and accumulated depreciation of $0.7 million as of March 31, 2024. The equipment leased to customers had a cost basis of $7.4 million and accumulated depreciation of $0.8 million as of December 31, 2023.

The total depreciation expense was $0.3 million and $0.3 million included in cost of revenue for the three months ended March 31, 2024 and 2023, respectively.

Lease payments from customers consisted of the following:


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Equipment on lease payments	$	470	$	575
Equipment on lease variable payments	—		—
Total lease payments	$	470	$	575

Note 8. Leases

The Company leases its office and manufacturing facilities under four non-cancellable operating leases, including options to extend, which expire between 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. Additionally, the Company

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

exited from its two facilities at Campbell (Division) on December 31, 2023, which are no longer in use, however the lease agreement has not been terminated as of March 31, 2024.

Total right-of-use (“ROU”) assets and lease liabilities are as follows:


	March 31,		December 31,
	2024		2023
	(In thousands)
Right-of-use assets:
Net book value (Other assets)	$	10,237	$	10,672
Operating lease liabilities:
Current (Accrued expense and other current liabilities)	$	1,986	$	2,153
Noncurrent (Other noncurrent liabilities)	9,558		9,973
	11,544		12,126
Financing lease liabilities:
Current (Accrued expense and other current liabilities)	$	133	$	113
Noncurrent (Other noncurrent liabilities)	221		203
	$	354	$	316
Total lease liabilities	$	11,898	$	12,442

There were no impairments recorded related to these assets as of March 31, 2024 and December 31, 2023.

Information about lease-related balances were as follows:


	Three Months Ended March 31,
	2024		2023
	(In thousands, except years and percentages)
Operating lease expense	$	733	$	764
Financing lease expense	49		9
Short-term lease expense	68		84
Total lease expense	$	850	$	857
Cash paid for leases	$	746	$	706
Weighted – average remaining lease term – operating leases (years)	7.6		3.8
Weighted – average discount rate – operating leases	8.9%		8.7%

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Maturity of operating lease liabilities as of March 31, 2024 are as follows:


	(In thousands)
Remainder of 2024	$	2,091
2025	2,390
2026	2,430
2027	2,400
2028	2,490
Thereafter	8,779
Total operating lease payments	$	20,580
Less portion representing imputed interest	(9,036)
Total operating lease liabilities	$	11,544
Less current portion	1,986
Long-term portion	$	9,558

Note 9. Long-Term Debt

Long-term debt consisted of the following:


	March 31,		December 31,
	2024		2023
	(In thousands)
Secured notes	$	36,791	$	33,516
Deferred financing costs	(488)		(384)
Total	$	36,303	$	33,132
Debt – current portion	34,300		21,191
Long-term debt – less current portion	$	2,003	$	11,941

The Company’s debt consists of Secured Notes entered into with High Trail Investments ON LLC and an affiliated institutional investor (together, the "Investors"). The Secured 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). For a full description of the debt arrangement, see Note 9, Long-Term Debt, in the audited consolidated financial statements included in the 2023 Form 10-K.

On April 1, 2024, the Company entered into the Second Note Amendment, to its Secured Notes with the Investors. For further information on the Second Note Amendment, see Note 17, Subsequent Events.

Secured Notes —

The Secured 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 January 1, 2024, and will mature on August 1, 2026. When the Company repays principal on the Secured Notes pursuant to the terms of the Secured Notes, it will be required to pay 120% of the principal amount repaid (the “Repayment Price”) plus accrued and unpaid interest.

On the first day of each three-month period beginning on April 1, 2024 (a “Partial Redemption Date”), the Company will redeem a portion of the principal amount of the Secured Notes at the Repayment Price plus accrued and unpaid interest, unless the Investors cancel such redemption. The aggregate principal amount of the Secured

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Notes that will be redeemable on a Partial Redemption Date will be $8,750,000 for a Repayment Price of $10,500,000.

The Secured Notes include terms that provide the Investors seniority over other unsecured obligations in any settlement negotiations in the event of liquidation. Additionally, the Secured Notes contain redemption features in the event of default or a fundamental change in control that would make the Secured Notes immediately callable at a predetermined rate as described in the Secured Notes. The redemption features are settled in cash. As of March 31, 2024, the Company has not included the effect of an event of default or the effect of a fundamental change in control in the valuation of the Secured Notes, as the Company believes the likelihood of these occurring to be remote. The Company will continue to monitor the likelihood of these events in future reporting periods.

The Company incurred deferred financing costs of $0.4 million related to the Secured Notes, which were capitalized upon issuance and are being accreted over the term of the Secured Notes using the effective interest rate method with $0.1 million amortized to interest expense for the three months ended March 31, 2024. As of March 31, 2024, the remaining unamortized balance of deferred financing costs was $0.3 million and were included in Debt — current portion on the balance sheets.

Additionally, the Company is accreting discounts of $11.5 million and capitalizing to the carrying value of the Secured Notes over the term of the Secured Notes using the effective interest rate method with $3.1 million amortized to interest expense for the three months ended March 31, 2024. As of March 31, 2024, the unamortized discount was $7.2 million, which includes the difference between the principal and the Repayment Price, and capitalized deferred financing costs. For the three months ended March 31, 2024, the Company incurred and paid $0.6 million in interest expense related to the Secured Notes. The effective interest rate was 45.1% for the three months ended March 31, 2024.

The future minimum aggregate payments for the above borrowings are equal to the quarterly payments made using the Repayment Price, are as follows as of March 31, 2024:


	(In thousands)
2024	$	42,000
2025	2,000
	$	44,000

Note 10. Equity Instruments

Common stock

The total amount of our authorized share capital consists of 500,000,000 shares of common stock, par value $0.00001 per share, and 10,000,000 shares of preferred stock, par value $0.00001 per share. As of March 31, 2024, we had 261,704,589 shares of common stock outstanding.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 future issuance on an “as if converted” basis were as follows:


	March 31,	December 31,
	2024	2023
	(share data)
Common stock warrants	50,945,000	50,945,000
Shares available for future grant under 2021 Equity Incentive Plan	29,230,966	16,041,013
Reserved for At-the-Market offering	2,825,941	2,825,941
Reserved for employee stock purchase plan	9,955,400	7,371,214
Total shares of common stock reserved	92,957,307	77,183,168

In February 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, up to $40.0 million shares of its common stock pursuant to a shelf registration statement on Form S-3 (the "Shelf Registration Statement") and the related prospectus supplement and accompanying base prospectus, and in connection therewith, the Company reserved 20,000,000 shares of common stock for issuance under the ATM Sales Agreement. On January 31, 2024, the Company filed an amendment to the prospectus supplement increasing the aggregate dollar amount of shares available to be sold from time to time pursuant to the ATM Sales Agreement to $75 million. During the three months ended March 31, 2024, the Company sold no shares pursuant to the ATM sales agreement.

Effective January 1, 2024, pursuant to the evergreen provisions of the Company’s 2021 Equity Incentive Plan (the “2021 EIP”), the Company added an additional 12,920,934 shares of common stock for issuance under the 2021 EIP and 2,584,186 shares of common stock for issuance under the 2021 ESPP.

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 March 31, 2024 and December 31, 2023.

Common Stock Warrant Liabilities

50,945,000 warrants to purchase an equal number of shares of common stock of were exercisable as of March 31, 2024 and December 31, 2023. The Private Placement Warrants, the 2022 Private Warrant, the RDO Warrants, the Placement Agent Warrants, and the Public Warrants to purchase shares of common stock (each as defined below) are liability classified and recorded at fair value on the issue date with periodic remeasurement. Warrants for shares of common stock consisted of the following:


	March 31, 2024 and December 31, 2023
	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
RDO Warrants - Common Stock	12/29/2023	12/29/2028	36,000,000	$0.57	$0.30
Placement Agent Warrants - Common Stock	12/29/2023	12/29/2028	1,800,000	$0.62	$0.30
			50,945,000

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 as a reverse recapitalization. The 2022 Private Warrant was issued in connection with the Company’s entry into the joinder and fourth loan modification with SVB. See Note 9, Long-Term Debt, in the consolidated financial statements included in the 2023 Form 10-K. The liability for warrants on common stock carried at fair value was as follows:


	Fair Value on December 31, 2023		Gain (loss) on fair value of warrants		Fair Value on March 31, 2024
	(In thousands)
Private placement warrants – Common Stock	$	127	$	114	$	241
2022 Private Warrant – Common Stock	23		5		28
Public warrants – Common Stock	258		231		489
RDO Warrants - Common Stock	10,891		2,162		13,053
Placement Agent Warrants - Common Stock	536		108		644
	$	11,835	$	2,620	$	14,455

The liabilities associated with the Private Placement Warrants, 2022 Private Warrant, RDO Warrants, and Placement Agent Warrants 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 months ended March 31, 2024 and March 31, 2023.

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. The RDO Warrants are exercisable to purchase one share of common stock at a price of $0.57 per warrant share. The Placement Agent Warrants are exercisable to purchase one share of common stock at a price of $0.62 per warrant share . The RDO Warrants and Placement Agent Warrants are exercisable until December 29, 2028 and allows cashless exercise in whole or part.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

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, 2024			As of December 31, 2023
Current stock price	$	0.46		$	0.40
Expected volatility	115.0		%	105.0		%
Risk-free interest rate	4.5		%	4.1		%
Dividend rate	—		%	—		%
Expected Term (years)	2.50			2.75

Expected volatility: The volatility is determined iteratively, such that the concluded value of the Public Warrant is equal to the traded price.

Risk-free interest rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities corresponding to the expected term of the common stock warrants.

Expected dividend yield: The expected dividend rate is zero as the Company currently has no history or expectation of declaring dividends on its common stock.

Expected term: The expected term represents the period that the warrants are expected to be outstanding and is determined using the simplified method, which deems the term to be the average of the time to vesting and the contractual life of the common stock warrants.

2022 Private Warrant, RDO Warrants, Placement Agent Warrants - Fair Value Assumptions

The fair value assumptions used in the Black-Scholes simulation model for the recurring valuation of the 2022 Private Warrant, the RDO Warrants, and the Placement Agent Warrants liabilities were as follows:



	As of March 31, 2024			As of December 31, 2023
Current stock price	$	0.46		$0.40
Expected volatility	114.7		%	108.3%
Risk-free interest rate	4.2% - 5.4%			3.8% - 3.9%
Dividend rate	—		%	—%
Expected Term (years)	4.75 - 10.32			5 - 10.57

Expected volatility: The expected volatility was derived from the implied volatility of the Company’s publicly traded common stock.

Expected dividend yield: The expected dividend rate is zero as the Company currently has no history or expectation of declaring dividends on its common stock.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Expected term: The expected term represents the period that the warrant is expected to be outstanding and is determined using the simplified method, which deems the term to be the average of the time to vesting and the contractual life of the warrant.

Contingent Earnout Liabilities

The contingent earnout liability is for Earnout Shares (as defined below) for pre-closing Legacy Velo3D equity holders (“Eligible Legacy Velo3D Equityholders”). During the time period between September 29, 2021 (the “Closing Date”) and the five-year anniversary of the Closing Date, Eligible Legacy Velo3D Equityholders may receive up to 21,758,148 shares of common stock (the “Earnout Shares”), which is based on two tranches of 10,879,074 per tranche. The Earnout Shares issuable to holders of employee stock options are accounted as stock-based compensation expense as they are subject to forfeiture based on the satisfaction of certain employment conditions. See Note 11, Equity Incentive Plans & Stock Based Compensation, for further discussion.

The rollforward for the contingent earnout liabilities for the three months ended March 31, 2024 and 2023, was as follows:


	March 31,
	2024		2023
	(In thousands)
Beginning Balance	$	1,456	$	17,414
Gain on fair value of contingent earnout liabilities	$	437	$	9,653
Ending Balance	$	1,893	$	27,067

Fair Value Assumptions – Contingent Earnout Liabilities

Assumptions used in the fair value of the contingent earnout liabilities are described below.



	As of March 31, 2024	As of December 31, 2023
Current stock price	$0.46	$0.40
Expected volatility	115.0%	105.0%
Risk-free interest rate	4.5%	4.1%
Dividend yield	—%	—%
Expected Term (years)	2.50	2.75

Expected volatility: The expected volatility was derived from the implied volatility of the Company’s publicly traded common stock.

Expected dividend yield: The expected dividend rate is zero as the Company currently has no history or expectation of declaring dividends on its common stock.

Expected term: The expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method, which deems the term to be the average of the time to vesting and the contractual life of the Earnout Shares.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 11. Equity Incentive Plans and Stock-Based Compensation

As of March 31, 2024, the Company had a remaining allocated reserve of 29,230,966 shares of its common stock for issuance under its 2021 Equity Incentive Plan (the “2021 EIP”), which provides for the granting of stock options, restricted stock units (“RSUs”) and stock appreciation rights to employees, directors, and consultants of the Company. As of March 31, 2024, the Company had an allocated reserve of 9,955,400 shares of its common stock for issuance under its 2021 Employee Stock Purchase Plan (“2021 ESPP”). As of March 31, 2024, the Company had not begun any offering periods for the 2021 ESPP.

Stock options

Activity under the 2021 EIP is set forth below:


	Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in years
	(In thousands)	(Per share data)		(Years)
Outstanding as of December 31, 2022	16,960	$	0.54	7.3
Granted	—	$	—
Exercised	(1,186)	$	0.26
Forfeited or expired	(385)	$	0.63
Outstanding as of March 31, 2023	15,389	$	0.56	7.0
Options vested and expected to vest as of March 31, 2023	15,389	$	0.56
Vested and exercisable as of March 31, 2023	10,800	$	0.67

Outstanding as of December 31, 2023	13,152	$	0.61	6.2
Granted	—	$	—
Exercised	(1,614)	$	0.18
Forfeited or expired	(144)	$	0.81
Outstanding as of March 31, 2024	11,394	$	0.67	5.9
Options vested and expected to vest as of March 31, 2024	11,394	$	0.67
Vested and exercisable as of March 31, 2024	10,897	$	0.68

The aggregate intrinsic value of options outstanding was $2.4 million and $2.3 million, respectively, as of March 31, 2024 and December 31, 2023. Intrinsic value of options exercised for the three months ended March 31, 2024 and 2023 was $0.2 million and $3.5 million, respectively. The total grant date fair value of options vested was $0.1 million and $0.3 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, total unrecognized compensation cost related to options was $0.1 million related to 0.5 million unvested options and is expected to be recognized over a weighted-average period of 0.8 years.

For the three months ended March 31, 2024, there were no options granted.

Restricted Stock Units

The fair value of RSUs under the Company’s 2021 EIP is estimated using the value of the Company’s common stock on the date of grant.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

The following table summarizes outstanding and expected to vest RSUs as of March 31, 2024 and 2023 and their activity during the three months ended March 31, 2024 and 2023:


	Number of Shares	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
	(In thousands)	(Per share data)		(In thousands)
Balance as of December 31, 2022	9,623	$	4.47	$	17,225
Granted	4,180	2.11		8,819
Released	(400)	5.55		1,300
Cancelled	(948)	4.37		2,520
Balance as of March 31, 2023	12,455	$	3.65	$	28,274
Expected to vest as of March 31, 2023	12,455	$	3.65	$	28,274

Balance as of December 31, 2023	20,066	$	1.94	$	7,978
Granted	1,133	0.35		393
Released	(1,668)	2.41		444
Cancelled	(1,271)	1.92		480
Balance as of March 31, 2024	18,260	$	1.80	$	8,319
Expected to vest as of March 31, 2024	18,260	$	1.80	$	8,319

The aggregate intrinsic value of outstanding RSUs is calculated based on the closing price of the Company’s common stock as of the date outstanding. As of March 31, 2024, there was $29.9 million of unrecognized compensation cost related to 18.3 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 2.9 years. As of March 31, 2023, there was $40.9 million of unrecognized compensation cost related to 12.5 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 2.9 years.

Earnout Shares––Employees

The Earnout Shares issuable to holders of employee stock options are accounted as stock-based compensation expense as they are subject to forfeiture based on the satisfaction of certain employment conditions. The estimated fair values of the Earnout Shares associated with vested stock options are recognized as an expense and determined by the Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis over the five-year earnout period. The portion of the Earnout Shares associated with unvested stock options are recognized as an expense and considers the vesting continuing employment requirements.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Stock-based Compensation Expense

The following sets forth the total stock-based compensation expense by type of award included in operating expenses on the statements of operations:


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Restricted stock units	$	3,829	$	4,058
Stock options	60		750
Earnout shares–employees	1,198		1,428
	$	5,087	$	6,236

The following sets forth the total stock-based compensation expense for the stock options, RSUs, and earnout shares - employees included in cost of revenue and operating expenses on the statements of operations:


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Cost of 3D Printer	$	389	$	194
Cost of Support services	195		72
Research and development	1,550		2,803
Selling and marketing	1,054		1,495
General and administrative	1,899		1,672
	$	5,087	$	6,236

Note 12. Income Taxes

The income tax provision is calculated for an interim period by distinguishing between elements recognized in the income tax provision through applying an estimated annual effective tax rate (the “ETR”) to a measure of year-to-date operating results referred to as “ordinary income (or loss),” and discretely recognizing specific events referred to as “discrete items” as they occur. The income tax provision or benefit for each interim period is the difference between the year-to-date amount for the current period and the year-to date amount for the period prior. Under ASC 740-270-30-36, entities subject to income taxes in multiple jurisdictions should apply one overall ETR instead of separate ETRs for each jurisdiction when calculating the interim-period income tax or benefit related to ordinary income (or loss) for the year-to-date interim period, except in certain circumstances. The Company’s effective tax rates for the three and three months ended March 31, 2024 and 2023 differ from the federal statutory rate principally as a result of valuation allowances expected to be applied to net operating loss carry-forwards which will not meet the threshold for recognition as deferred tax assets.

Note 13. Commitments and Contingencies

The Company may be involved in various lawsuits, claims, and proceedings, including intellectual property, commercial, securities, and employment matters that arise in the normal course of business. The Company accrues a liability when management believes information available prior to the issuance of the condensed consolidated financial statements indicates it is probable a loss has been incurred as of the date of the condensed consolidated financial statements and the amount of loss can be reasonably estimated. The Company adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Legal costs are expensed as incurred. As of March 31, 2024 , the Company is not aware of any

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

litigation, claim or assessment in which the outcome, individually or in the aggregate, would have a material adverse effect on its financial positions, results of operations, cash flows or future earnings.

The Company’s purchase obligations per terms and conditions with suppliers and vendors are cancellable in whole or in part prior to shipment. Non-cancellable purchase commitments (purchase orders) of $21.5 million for parts and assemblies are due upon receipts and will primarily be delivered throughout 2024. If inventory is shipped, the Company will accrue a liability under accrued expenses. The Company has no other commitment and contingencies, except for the operating leases. See Note 8, Leases, for further discussion.

Note 14. Employee Defined-Contribution Plans

The Company has a defined-contribution plan intended to qualify under Section 401 of the Internal Revenue Code (the “401(k) Plan”). The Company contracted with a third-party provider to act as a custodian and trustee, and to process and maintain the records of participant data. Substantially all of the expenses incurred for administering the 401(k) Plan are paid by the Company. Accrued salaries and benefits included accruals related to the 401(k) plans the Company offers to its employees. In order to qualify for these plans, employees must meet the minimum age requirement (21 years) and begin participating on their entry date which is the first paycheck date in the month following the month of eligibility described above. Employee and employer contributions are immediately 100% fully vested. The plans offer employer contributions of 3.0% of an employee’s eligible compensation following safe-harbor rules. The Company’s contribution to the 401(k) plan was $0.3 million and $0.4 million for the three months ended March 31, 2024 and 2023, respectively. The Company has paid all matching contributions as of March 31, 2024.

Note 15. Revenue

Customer Concentration

The customer concentration for balances greater than 10% of revenues and 10% of accounts receivables, net, respectively, are presented below:


	Total Revenue				Accounts Receivable, Net
	Three Months Ended March 31,				March 31,		December 31,
	2024		2023		2024		2023
	(as a percentage)
Customer 1	26.8	%	—	%	<10	%	—	%
Customer 2	13.5	%	16.6	%	<10	%	<10	%
Customer 3	<10	%	17.6	%	<10	%	<10	%
Customer 4	<10	%	10.7	%	—	%	—	%
Customer 5	<10	%	10.6	%	<10	%	<10	%
Customer 6	—	%	10.6	%	<10	%	<10	%

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Revenue by Geographic Area

The Company currently sells its products in the geographic regions as follows:


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Americas	$	9,373	$	22,163
Europe	325		4,425
Other	88		99
Total	$	9,786	$	26,687

Contract Assets and Liabilities

There was $0.9 million of revenue recognized during the three months ended March 31, 2024, included in contract liabilities as of December 31, 2023. The amount of revenue recognized during the three months ended March 31, 2023 included in contract liabilities as of December 31, 2022 was $0.9 million. The change in contract assets reflects the difference in timing between the Company’s satisfaction of remaining performance obligations and the Company’s contractual right to bill its customers. The Company had no material asset impairment charges related to contract assets in the periods presented.

Variable Consideration

The Company estimates its variable consideration on a quarterly basis based on the latest data available, and adjust the transaction price accordingly by recording an adjustment to net revenue and contract assets. The Company has recognized the estimate of variable consideration to the extent that it is probable that a significant reversal will not occur as a result from a change in estimation. There was no revenue related to variable consideration during the three months ended March 31, 2024 and 2023.

Note 16. Revision of Previously Issued Condensed Consolidated Financial Statements

As discussed in Note 1, during the fourth quarter of 2023, the Company identified errors related to revenue, other assets and contract assets which also impacted the interim periods in 2023 as originally presented in the Company’s quarterly reports on Form 10-Q. Additionally, the Company has made adjustments to correct for other previously identified immaterial errors including the classification of stock-based compensation as cost of revenue for the three months ended March 31, 2023. The Company concluded that these errors were not material, either individually or in the aggregate, to its previously issued interim condensed consolidated financial statements. There were no changes to previously issued total cash flows generated from (used by) operating, investing, or financing activities for any of the impacted periods. The Company revised the Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2023 to reflect the corrections of these immaterial errors presented in this Quarterly Report.

Velo3D, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

The impact of the revision is as follows:


	For the Three Months Ended
	March 31, 2023
	As Previously Reported		Adjustment		As Revised
Revenue
3D Printer	$	24,575	$	(127)	$	24,448
Recurring payment	575		—		575
Support services	1,664		—		1,664
Total Revenue	26,814		(127)		26,687
Cost of revenue
3D Printer	21,974		194		22,168
Recurring payment	447		—		447
Support services	1,468		72		1,540
Total cost of revenue	23,889		266		24,155
Gross profit	2,925		(393)		2,532
Operating expenses
Research and development	10,547		(130)		10,417
Selling and marketing	6,174		—		6,174
General and administrative	10,327		(136)		10,191
Total operating expenses	27,048		(266)		26,782
Loss from operations	(24,123)		(127)		(24,250)
Interest expense	(220)		—		(220)
Gain (loss) on fair value of warrants	(2,553)		—		(2,553)
Gain (loss) on fair value of contingent earnout liabilities	(9,653)		—		(9,653)
Other income, net	351		—		351
Gain (loss) before provision for income taxes	(36,198)		(127)		(36,325)
Provision for income taxes	—		—		—
Net income (loss)	(36,198)		(127)		(36,325)

Net income (loss) per share:
Basic	$	(0.19)	$	—	$	(0.19)
Diluted	$