Quarterly report pursuant to Section 13 or 15(d)

Equity Instruments

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Equity Instruments
 3 Months Ended
Mar. 31, 2024
Equity [Abstract]  
Equity Instruments 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.
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 
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.
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.
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 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.
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 Earnout Shares.
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.