PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the period ended September 30, 2024 [Condensed Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The balance sheet reflects a significant decline in liquidity, total assets, and stockholders' equity Key Balance Sheet Items | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | Change (In thousands) | Percentage Change | | :--------------------------------- | :-------------------------------- | :--------------------------------- | :-------------------- | :------------------ | | **Assets** | | | | | | Cash and cash equivalents | $1,637 | $24,494 | $(22,857) | -93.3% | | Short-term investments | — | $6,621 | $(6,621) | -100.0% | | Total current assets | $79,792 | $113,024 | $(33,232) | -29.4% | | Total assets | $110,787 | $153,799 | $(43,012) | -28.0% | | **Liabilities** | | | | | | Debt – current portion | $29,602 | $21,191 | $8,411 | 39.7% | | Total current liabilities | $63,402 | $48,671 | $14,731 | 30.3% | | Total liabilities | $76,100 | $85,459 | $(9,359) | -10.9% | | **Stockholders' Equity** | | | | | | Total stockholders' equity | $34,687 | $68,340 | $(33,653) | -49.2% | - The company's **cash and cash equivalents significantly decreased by 93.3%** from $24.5 million at December 31, 2023, to $1.6 million at September 30, 2024, indicating a substantial reduction in liquidity[17](index=17&type=chunk) - **Total assets declined by 28.0%**, from $153.8 million to $110.8 million, while **total liabilities saw a modest decrease of 10.9%**, from $85.5 million to $76.1 million[17](index=17&type=chunk) - **Stockholders' equity decreased by 49.2%**, from $68.3 million to $34.7 million, primarily due to an accumulated deficit of $(408.4) million as of September 30, 2024[17](index=17&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)%20(unaudited)) The income statement shows a sharp revenue decline but a significant gross profit increase, offset by higher interest expenses Three-Month Operational Results | Metric | Three Months Ended Sep 30, 2024 (In thousands) | Three Months Ended Sep 30, 2023 (In thousands) | Change (In thousands) | % Change | | :--------------------------------------- | :------------------------------------- | :------------------------------------- | :-------------------- | :------- | | Total Revenue | $8,247 | $23,167 | $(14,920) | -64.4% | | Total cost of revenue | $4,176 | $23,004 | $(18,828) | -81.8% | | Gross profit (loss) | $4,071 | $163 | $3,908 | 2397.5% | | Total operating expenses | $22,816 | $26,025 | $(3,209) | -12.3% | | Loss from operations | $(18,745) | $(25,862) | $7,117 | -27.5% | | Interest expense | $(10,949) | $(3,018) | $(7,931) | 262.8% | | Net income (loss) | $(22,858) | $(19,464) | $(3,394) | 17.4% | | Basic EPS | $(2.47) | $(3.37) | $0.90 | -26.7% | | Diluted EPS | $(2.47) | $(3.37) | $0.90 | -26.7% | Nine-Month Operational Results | Metric | Nine Months Ended Sep 30, 2024 (In thousands) | Nine Months Ended Sep 30, 2023 (In thousands) | Change (In thousands) | % Change | | :--------------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Total Revenue | $28,377 | $74,988 | $(46,611) | -62.2% | | Total cost of revenue | $30,018 | $69,757 | $(39,739) | -57.0% | | Gross profit (loss) | $(1,641) | $5,231 | $(6,872) | -131.4% | | Total operating expenses | $59,074 | $81,049 | $(21,975) | -27.1% | | Loss from operations | $(60,715) | $(75,818) | $15,103 | -19.9% | | Interest expense | $(20,309) | $(3,582) | $(16,727) | 467.0% | | Net income (loss) | $(51,344) | $(78,990) | $27,646 | -35.0% | | Basic EPS | $(6.09) | $(13.96) | $7.87 | -56.4% | | Diluted EPS | $(6.09) | $(13.96) | $7.87 | -56.4% | - For the three months ended September 30, 2024, **total revenue decreased by 64.4% to $8.2 million**, primarily due to a significant drop in 3D Printer sales, partially offset by new licensing revenue[19](index=19&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[220](index=220&type=chunk) - **Gross profit saw a substantial increase of 2397.5% to $4.1 million** for the three months, mainly driven by the lower cost associated with license revenue[19](index=19&type=chunk)[232](index=232&type=chunk) - **Net loss for the three months increased by 17.4% to $(22.9) million**, largely influenced by a 262.8% increase in interest expense[19](index=19&type=chunk)[240](index=240&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Cash flows show reduced use in operations and lower proceeds from investing and financing activities Nine-Month Cash Flow Summary | Cash Flow Activity | Nine Months Ended Sep 30, 2024 (In thousands) | Nine Months Ended Sep 30, 2023 (In thousands) | Change (In thousands) | | :--------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | | Net cash used in operating activities | $(30,465) | $(81,109) | $50,644 | | Net cash provided by investing activities | $6,644 | $31,055 | $(24,411) | | Net cash provided by financing activities | $958 | $76,213 | $(75,255) | | Net change in cash and cash equivalents | $(22,857) | $26,148 | $(49,005) | - **Net cash used in operating activities significantly decreased by $50.6 million**, from $(81.1) million in 2023 to $(30.5) million in 2024, primarily due to a lower net loss and changes in operating assets and liabilities[21](index=21&type=chunk)[298](index=298&type=chunk)[300](index=300&type=chunk) - **Net cash provided by investing activities decreased by $24.4 million**, from $31.1 million in 2023 to $6.6 million in 2024, mainly due to lower proceeds from maturities of available-for-sale investments[21](index=21&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk) - **Net cash provided by financing activities saw a substantial decrease of $75.3 million**, from $76.2 million in 2023 to $1.0 million in 2024, reflecting reduced proceeds from convertible notes and ATM offerings[21](index=21&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (unaudited)](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(unaudited)) Stockholders' equity declined significantly due to an increased accumulated deficit from net losses Changes in Stockholders' Equity | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | Change (In thousands) | | :--------------------------------- | :-------------------------------- | :--------------------------------- | :-------------------- | | Common Stock (Shares) | 9,647,652 | 7,502,478 | 2,145,174 | | Common Stock (Amount) | $2 | $2 | $0 | | Additional Paid-In Capital | $443,066 | $425,471 | $17,595 | | Accumulated Deficit | $(408,381) | $(357,037) | $(51,344) | | Total Stockholders' Equity | $34,687 | $68,340 | $(33,653) | - **Total stockholders' equity decreased by $33.7 million**, from $68.3 million at December 31, 2023, to $34.7 million at September 30, 2024[24](index=24&type=chunk) - The **accumulated deficit increased by $51.3 million**, reflecting the net loss incurred during the nine months ended September 30, 2024[24](index=24&type=chunk) - **Additional paid-in capital increased by $17.6 million**, primarily due to stock-based compensation and capital raises[24](index=24&type=chunk) [Notes to Condensed Consolidated Interim Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Interim%20Financial%20Statements%20(unaudited)) These notes detail the company's business, accounting policies, financial events, and going concern uncertainty [Note 1. Description of Business and Basis of Presentation](index=10&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) The company produces metal 3D printers and faces substantial doubt about its ability to continue as a going concern - Velo3D, Inc. produces metal additive 3D Printers for high-value metal parts in industries like space, jet engines, and fuel delivery systems, also offering support services[27](index=27&type=chunk) - The company completed a **1-for-35 reverse stock split** effective June 13, 2024, retroactively adjusting all share numbers and per share amounts[32](index=32&type=chunk)[33](index=33&type=chunk) - Velo3D's common stock and warrants were **delisted from the NYSE** on September 10, 2024, and commenced trading on the OTCQX Best Market on September 11, 2024[36](index=36&type=chunk) - Management believes there is **substantial doubt about the company's ability to continue as a going concern** due to incurred losses, negative cash flows, and insufficient liquidity to meet obligations for the next 12 months[37](index=37&type=chunk)[38](index=38&type=chunk) - On December 24, 2024, the company completed a **debt-for-equity exchange**, issuing 185,151,333 shares of common stock to Arrayed Acquisition Corp. in exchange for the cancellation of $22.4 million in Secured Notes principal and $0.4 million in accrued interest. **Arrayed now owns 95% of the company's common stock**[44](index=44&type=chunk)[161](index=161&type=chunk) - On January 7, 2025, Velo3D issued a **Senior Secured Convertible Promissory Note for $5.0 million**, due April 7, 2025, with a repayment amount of $5.75 million, convertible into common stock at $1.56 per share upon default[45](index=45&type=chunk)[163](index=163&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines key accounting policies, including revenue recognition for licenses and product warranty accruals - The FASB issued ASU 2023-09, 'Income Taxes (Topic 740): Improvement to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024, which the company is currently evaluating for impact[49](index=49&type=chunk) - Licensing revenue from perpetual licenses is recognized upfront upon delivery, while post-contract support (PCS) revenue is recognized ratably over the contract term or as support is used[51](index=51&type=chunk) - Revenue from time-based subscription licenses is allocated between the term license (recognized upfront) and PCS (recognized ratably over the term)[52](index=52&type=chunk)[53](index=53&type=chunk) - Product warranties for 3D printers, typically one year, are accrued at the time of sale based on historical data and future assumptions[54](index=54&type=chunk)[55](index=55&type=chunk) [Note 3. Basic and Diluted Net Loss per Share](index=13&type=section&id=Note%203.%20Basic%20and%20Diluted%20Net%20Loss%20per%20Share) This note provides the calculation of net loss per share, excluding antidilutive common stock equivalents Net Loss Per Share Calculation | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) (In thousands) | $(22,858) | $(19,464) | $(51,344) | $(78,990) | | Basic weighted average shares outstanding | 9,240,453 | 5,771,465 | 8,431,298 | 5,656,713 | | Diluted weighted average shares outstanding | 9,240,453 | 5,771,465 | 8,431,298 | 5,656,713 | | Basic Net income (loss) per share | $(2.47) | $(3.37) | $(6.09) | $(13.96) | | Diluted Net income (loss) per share | $(2.47) | $(3.37) | $(6.09) | $(13.96) | - Potentially dilutive common stock equivalents, totaling **6,210,347 for the three and nine months ended September 30, 2024**, were excluded from diluted net loss per share computation due to their antidilutive effect[56](index=56&type=chunk) [Note 4. Fair Value Measurements](index=14&type=section&id=Note%204.%20Fair%20Value%20Measurements) This note details the fair value hierarchy for financial assets and liabilities, with key liabilities valued using Level 3 inputs Fair Value of Financial Instruments | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | | :--------------------------------------- | :-------------------------------- | :--------------------------------- | | **Assets** | | | | Money market funds (Level 1) | $1,347 | $3,422 | | Corporate bonds (Level 2) | — | $6,621 | | Total financial assets | $1,347 | $10,043 | | **Liabilities** | | | | Common stock warrant liabilities (Level 3) | $2,350 | $11,785 | | Contingent earnout liabilities (Level 3) | $11 | $1,456 | | Total financial liabilities | $2,361 | $13,291 | - The company's financial liabilities measured at fair value, primarily common stock warrant liabilities and contingent earnout liabilities, are **classified as Level 3** due to significant unobservable inputs[58](index=58&type=chunk)[62](index=62&type=chunk) - The fair value of Private Placement Warrant liabilities, contingent earnout liabilities, and 2024 Private Warrants are determined using the **Monte Carlo simulation model**[63](index=63&type=chunk) - The fair value of 2022 Private Warrant, RDO Warrants, Placement Agent Warrants, BEPO Warrants, BEPO Agent Warrants, July 2024 Private Warrants, and August Inducement Warrants are estimated using the **Black-Scholes option pricing model**[64](index=64&type=chunk) [Note 5. Investments](index=16&type=section&id=Note%205.%20Investments) The company held no available-for-sale investments as of September 30, 2024 - As of September 30, 2024, there were **no available-for-sale (AFS) investments**, with investments sold during the quarter resulting in a realized loss of less than $0.1 million[65](index=65&type=chunk) Available-for-Sale Investments (as of Dec 31, 2023) | Item | Gross Amortized Cost (In thousands) | Gross Unrealized Loss (In thousands) | Fair Value (In thousands) | | :-------------------- | :---------------------------------- | :--------------------------------- | :------------------------ | | Corporate bonds | $6,717 | $(96) | $6,621 | | Total AFS investments | $6,717 | $(96) | $6,621 | [Note 6. Balance Sheet Components](index=16&type=section&id=Note%206.%20Balance%20Sheet%20Components) This note provides a detailed breakdown of various balance sheet accounts, including receivables, inventories, and liabilities Accounts Receivable, Net | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | Change (In thousands) | | :--------------------------------- | :-------------------------------- | :--------------------------------- | :-------------------- | | Trade receivables | $13,049 | $10,203 | $2,846 | | Less: Allowances for credit losses | $(2,836) | $(620) | $(2,216) | | Total Accounts receivable, net | $10,213 | $9,583 | $630 | Inventories, Net | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | Change (In thousands) | | :----------------- | :-------------------------------- | :--------------------------------- | :-------------------- | | Raw materials | $64,767 | $75,581 | $(10,814) | | Work-in-progress | $12,756 | $9,922 | $2,834 | | Finished goods | $10,267 | $2,406 | $7,861 | | Less: Inventory reserve | $(25,814) | $(27,093) | $1,279 | | Total Inventories, net | $61,976 | $60,816 | $1,160 | Prepaid Expenses and Other Current Assets | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | Change (In thousands) | | :-------------------------------- | :-------------------------------- | :--------------------------------- | :-------------------- | | Prepaid insurance and other | $1,774 | $2,738 | $(964) | | Vendor prepayments | $160 | $1,262 | $(1,102) | | Total Prepaid expenses and other current assets | $1,934 | $4,000 | $(2,066) | Property, Plant and Equipment, Net | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | Change (In thousands) | | :--------------------------------- | :-------------------------------- | :--------------------------------- | :-------------------- | | Total property, plant and equipment | $25,233 | $25,236 | $(3) | | Less accumulated depreciation and amortization | $(12,081) | $(8,910) | $(3,171) | | Property, plant and equipment, net | $13,152 | $16,326 | $(3,174) | Other Assets | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | Change (In thousands) | | :--------------------------------- | :-------------------------------- | :--------------------------------- | :-------------------- | | Right of use assets | $8,041 | $10,672 | $(2,631) | | Non-current contract assets | $2,957 | $5,117 | $(2,160) | | Non-current prepaid expenses and other assets | $3,062 | $1,993 | $1,069 | | Total Other assets | $14,060 | $17,782 | $(3,722) | Accrued Expenses and Other Current Liabilities | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | Change (In thousands) | | :--------------------------------------- | :-------------------------------- | :--------------------------------- | :-------------------- | | Accrued expenses | $1,769 | $1,948 | $(179) | | Accrued salaries and benefits | $1,668 | $2,277 | $(609) | | Lease liability – current portion | $1,888 | $2,266 | $(378) | | Total Accrued expenses and other current liabilities | $5,325 | $6,491 | $(1,166) | Other Noncurrent Liabilities | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | Change (In thousands) | | :--------------------------------- | :-------------------------------- | :--------------------------------- | :-------------------- | | Lease liabilities – noncurrent portion | $8,887 | $10,176 | $(1,289) | | Other noncurrent liabilities | $1,450 | $1,380 | $70 | | Total other noncurrent liabilities | $10,337 | $11,556 | $(1,219) | [Note 7. Equipment on Lease, Net](index=18&type=section&id=Note%207.%20Equipment%20on%20Lease%2C%20Net) This note details the cost basis and future payments for equipment leased to customers - The cost basis of equipment leased to customers **decreased from $7.4 million** at December 31, 2023, **to $4.6 million** at September 30, 2024[77](index=77&type=chunk) - Depreciation expense for equipment on lease was **$0.1 million** for both the three months ended September 30, 2024 and 2023, and **$0.6 million and $0.7 million** for the nine months ended September 30, 2024 and 2023, respectively[78](index=78&type=chunk) Future Minimum Lease Payments | Period | Equipment on Lease Payments (In thousands) | | :------------------------- | :--------------------------------------- | | Remainder of 2024 | $500 | | 2025 | $1,167 | | Total lease payments to be received | $1,667 | [Note 8. Leases](index=19&type=section&id=Note%208.%20Leases) This note outlines the company's operating lease liabilities for its office and manufacturing facilities - The company leases office and manufacturing facilities under non-cancellable operating leases expiring between 2024 and 2032[81](index=81&type=chunk) Lease Assets and Liabilities | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | | :--------------------------------------- | :-------------------------------- | :--------------------------------- | | Right-of-use assets (Net book value) | $8,041 | $10,672 | | Operating lease liabilities (Current) | $1,749 | $2,153 | | Operating lease liabilities (Noncurrent) | $8,737 | $9,973 | | Total operating lease liabilities | $10,486 | $12,126 | | Total lease liabilities | $10,775 | $12,442 | Future Operating Lease Payments | Year | Operating Lease Payments (In thousands) | | :---------------- | :-------------------------------------- | | Remainder of 2024 | $661 | | 2025 | $2,390 | | 2026 | $2,430 | | 2027 | $2,400 | | 2028 | $2,490 | | Thereafter | $8,779 | | Total operating lease payments | $19,150 | | Less imputed interest | $(8,664) | | Total operating lease liabilities | $10,486 | [Note 9. Debt](index=20&type=section&id=Note%209.%20Debt) This note details the company's Secured Notes, including interest, maturity, and repayment terms Debt Composition | Item | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | | :--------------------------------- | :-------------------------------- | :--------------------------------- | | Secured notes | $30,055 | $33,516 | | Deferred financing costs | $(453) | $(384) | | Total Debt | $29,602 | $33,132 | | Debt – current portion | $29,602 | $21,191 | | Long-term debt – less current portion | — | $11,941 | - The company's debt consists of **Secured Notes** with High Trail Investments ON LLC and an affiliated institutional investor, bearing **6.00% interest per annum** and maturing on August 1, 2026[86](index=86&type=chunk)[90](index=90&type=chunk) - Repayment of principal on Secured Notes requires paying **120% of the principal amount** (Repayment Price) plus accrued interest[90](index=90&type=chunk) - On July 1, 2024, a Third Note Amendment **deferred a $10.5 million partial redemption payment** over ten equal monthly payments starting August 1, 2024[88](index=88&type=chunk) Future Minimum Debt Payments | Year | Minimum Aggregate Payments (In thousands) | | :--- | :---------------------------------------- | | 2024 | $15,550 | | 2025 | $16,700 | | Total | $32,250 | [Note 10. Equity Instruments](index=21&type=section&id=Note%2010.%20Equity%20Instruments) This note describes the company's common stock, warrants, and recent equity offerings - As of September 30, 2024, Velo3D had **9,647,652 shares of common stock outstanding**, with 500,000,000 shares authorized[97](index=97&type=chunk) - On April 10, 2024, the company completed a BEPO Offering, selling 979,592 shares of common stock and warrants for $12.25 per share, generating approximately **$12 million in gross proceeds**[99](index=99&type=chunk)[100](index=100&type=chunk) - In connection with the Second Note Amendment, the company issued **627,117 2024 Private Warrants** exercisable at $15.946 per share[107](index=107&type=chunk) - On July 1, 2024, the company issued **1,650,000 July 2024 Private Warrants** exercisable at $3.00 per share[108](index=108&type=chunk) - On August 12, 2024, a warrant inducement **reduced the exercise price of 742,857 Existing Warrants** from $19.78 to $2.28 per share and issued 1,485,714 August Inducement Warrants at $2.28 per share[109](index=109&type=chunk) Reserved Common Stock | Item | September 30, 2024 (share data) | December 31, 2023 (share data) | | :--------------------------------------- | :------------------------------ | :----------------------------- | | Common stock warrants | 5,504,118 | 1,455,574 | | Shares available for future grant under 2021 Equity Incentive Plan | 595,704 | 844,496 | | Reserved for At-the-Market offering | 80,742 | 80,742 | | Reserved for employee stock purchase plan | 284,367 | 210,606 | | Total shares of common stock reserved | 6,464,931 | 2,591,418 | Outstanding Warrants | Warrant Type | Issue Date | Expiration Date | Number of Warrants | Exercise Price per warrant | | :--------------------------------------- | :--------- | :-------------- | :----------------- | :------------------------- | | Private Placement Warrants | 12/02/2020 | 09/29/2026 | 127,143 | $402.50 | | Public Warrants | 12/02/2020 | 09/29/2026 | 246,429 | $402.50 | | 2022 Private Warrant | 07/25/2022 | 07/24/2034 | 2,000 | $89.60 | | RDO Warrants | 12/29/2023 | 12/29/2028 | 285,714 | $19.78 | | Placement Agent Warrants | 12/29/2023 | 12/29/2028 | 51,429 | $21.75 | | 2024 Private Warrants | 4/1/2024 | 5/16/2025 | 627,117 | $15.95 | | BEPO Warrants | 4/12/2024 | 4/12/2029 | 979,592 | $12.25 | | BEPO Agent Warrants | 4/12/2024 | 4/12/2029 | 48,980 | $13.48 | | July 2024 Private Warrants | 7/01/2024 | 7/01/2029 | 1,650,000 | $3.00 | | August Inducement Warrants | 8/13/2024 | 08/12/2029 | 1,485,714 | $2.28 | | Total | | | 5,504,118 | | [Note 11. Equity Incentive Plans and Stock-Based Compensation](index=28&type=section&id=Note%2011.%20Equity%20Incentive%20Plans%20and%20Stock-Based%20Compensation) This note details the company's equity incentive plans and associated stock-based compensation expenses - As of September 30, 2024, the company had **595,704 shares reserved** for issuance under its 2021 Equity Incentive Plan (2021 EIP) and **284,367 shares** under its 2021 Employee Stock Purchase Plan (2021 ESPP)[139](index=139&type=chunk) Stock Option Activity | Metric | September 30, 2024 | September 30, 2023 | | :--------------------------------------- | :------------------- | :------------------- | | Options Outstanding | 275,000 | 433,000 | | Weighted Average Exercise Price | $25.91 | $19.60 | | Weighted Average Remaining Contractual Term (years) | 5.3 | 6.7 | RSU Activity | Metric | September 30, 2024 | September 30, 2023 | | :--------------------------------------- | :------------------- | :------------------- | | RSUs Balance | 431,000 | 350,000 | | Weighted Average Grant Date Fair Value | $49.53 | $121.80 | | Aggregate Intrinsic Value | $310,000 | $26,411,000 | Stock-Based Compensation Expense | Expense Type | Three Months Ended Sep 30, 2024 (In thousands) | Three Months Ended Sep 30, 2023 (In thousands) | Nine Months Ended Sep 30, 2024 (In thousands) | Nine Months Ended Sep 30, 2023 (In thousands) | | :--------------------------------------- | :------------------------------------- | :------------------------------------- | :------------------------------------ | :------------------------------------ | | Restricted stock units | $2,445 | $4,917 | $9,375 | $13,720 | | Stock options | $16 | $88 | $115 | $956 | | Earnout shares–employees | $1,246 | $1,711 | $3,551 | $4,810 | | Total Stock-based compensation expense | $3,707 | $6,716 | $13,041 | $19,486 | [Note 12. Income Taxes](index=30&type=section&id=Note%2012.%20Income%20Taxes) No income tax provision was recorded due to projected losses and a full valuation allowance on deferred tax assets - **No provision for federal and state income taxes** was recorded for any periods presented due to projected losses, and a **full valuation allowance** was maintained on deferred tax assets as of September 30, 2024 and 2023[148](index=148&type=chunk) [Note 13. Commitments and Contingencies](index=30&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) The company has significant purchase commitments but is not aware of any material litigation - The company is **not aware of any material litigation**, claims, or assessments that would adversely affect its financial position as of September 30, 2024[149](index=149&type=chunk) - Non-cancellable **purchase commitments** for parts and assemblies totaled **$18.7 million**, due upon receipt and expected to be delivered throughout the remainder of 2024[150](index=150&type=chunk) [Note 14. Employee Defined-Contribution Plans](index=30&type=section&id=Note%2014.%20Employee%20Defined-Contribution%20Plans) This note details the company's contributions to its 401(k) employee retirement plan - The company contributed **$0.2 million and $0.3 million** to its 401(k) Plan for the three months ended September 30, 2024 and 2023, respectively, and **$0.8 million and $1.0 million** for the nine months ended September 30, 2024 and 2023, respectively[151](index=151&type=chunk) [Note 15. Revenue](index=31&type=section&id=Note%2015.%20Revenue) This note provides a breakdown of revenue by customer concentration and geographic region Revenue by Customer Concentration | Customer | Three Months Ended Sep 30, 2024 (Revenue %) | Three Months Ended Sep 30, 2023 (Revenue %) | Nine Months Ended Sep 30, 2024 (Revenue %) | Nine Months Ended Sep 30, 2023 (Revenue %) | | :--------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Customer 1 | 50.7% | <10% | 21.0% | <10% | | Customer 2 | 27.5% | <10% | 14.4% | <10% | | Customer 3 | <10% | —% | 16.4% | —% | | Customer 4 | <10% | <10% | 14.4% | <10% | | Customer 5 | <10% | 22.8% | <10% | <10% | | Customer 6 | <10% | 14.2% | <10% | <10% | | Customer 7 | —% | 14.1% | <10% | <10% | | Customer 8 | —% | 13.3% | —% | <10% | | Customer 9 | —% | 12.4% | —% | <10% | | Customer 10 | <10% | —% | <10% | —% | Revenue by Geographic Region | Geographic Region | Three Months Ended Sep 30, 2024 (In thousands) | Three Months Ended Sep 30, 2023 (In thousands) | Nine Months Ended Sep 30, 2024 (In thousands) | Nine Months Ended Sep 30, 2023 (In thousands) | | :------------------ | :------------------------------------- | :------------------------------------- | :------------------------------------ | :------------------------------------ | | Americas | $8,031 | $22,766 | $27,507 | $65,852 | | Europe | $205 | $329 | $706 | $8,927 | | Other | $11 | $72 | $164 | $209 | | Total | $8,247 | $23,167 | $28,377 | $74,988 | - Revenue recognized from contract liabilities was **$0.5 million and $2.1 million** for the three and nine months ended September 30, 2024, respectively[154](index=154&type=chunk) - There was **no revenue related to variable consideration** for the three and nine months ended September 30, 2024, compared to $3.9 million for the same periods in 2023[155](index=155&type=chunk) [Note 16. Revision of Previously Issued Condensed Consolidated Interim Financial Statements](index=31&type=section&id=Note%2016.%20Revision%20of%20Previously%20Issued%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This note details the revision of prior period financial statements to correct immaterial errors - The company **revised previously issued condensed consolidated interim financial statements** for the period ended September 30, 2023, to correct immaterial errors related to revenue, other assets, contract assets, and classification of stock-based compensation[156](index=156&type=chunk)[157](index=157&type=chunk) Revisions for Three Months Ended Sep 30, 2023 | Metric | As Previously Reported (3M Sep 2023) | Adjustment (3M Sep 2023) | As Revised (3M Sep 2023) | | :--------------------------------------- | :----------------------------------- | :----------------------- | :----------------------- | | Total Revenue | $23,808 | $(641) | $23,167 | | Total cost of revenue | $22,320 | $684 | $23,004 | | Gross profit | $1,488 | $(1,325) | $163 | | Total operating expenses | $26,709 | $(684) | $26,025 | | Loss from operations | $(25,221) | $(641) | $(25,862) | | Interest expense | $(1,107) | $(1,911) | $(3,018) | | Net loss | $(17,396) | $(2,068) | $(19,464) | Revisions for Nine Months Ended Sep 30, 2023 | Metric | As Previously Reported (9M Sep 2023) | Adjustment (9M Sep 2023) | As Revised (9M Sep 2023) | | :--------------------------------------- | :----------------------------------- | :----------------------- | :----------------------- | | Total Revenue | $75,756 | $(768) | $74,988 | | Total cost of revenue | $68,363 | $1,394 | $69,757 | | Gross profit | $7,393 | $(2,162) | $5,231 | | Total operating expenses | $82,443 | $(1,394) | $81,049 | | Loss from operations | $(75,050) | $(768) | $(75,818) | | Interest expense | $(1,671) | $(1,911) | $(3,582) | | Net loss | $(76,795) | $(2,195) | $(78,990) | [Note 17. Subsequent Events](index=34&type=section&id=Note%2017.%20Subsequent%20Events) This note describes significant events after the reporting period, including a workforce reduction and debt-for-equity exchange - On October 9, 2024, the company initiated a **reduction in force, affecting 46 employees (approximately 32% of its workforce)**, with estimated costs of $1.3 million to $1.5 million[159](index=159&type=chunk) - On December 9, 2024, **Arrayed Acquisition Corp. purchased the Senior Secured Notes** from the original holders, and a forbearance agreement was entered into[160](index=160&type=chunk) - On December 24, 2024, a **debt-for-equity exchange** occurred where the company issued 185,151,333 shares of common stock to Arrayed in exchange for the cancellation of $22.4 million in Secured Notes principal and $0.4 million in accrued interest. **Arrayed became the owner of 95% of the company's common stock**[161](index=161&type=chunk) - On January 7, 2025, the company issued a **$5.0 million Senior Secured Convertible Promissory Note** to Thieneman Properties, LLC, payable by April 7, 2025, for $5.75 million, convertible at $1.56 per share upon default[163](index=163&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operational results, strategic shifts, and liquidity challenges [Overview](index=35&type=section&id=Overview) The company produces integrated 3D printing solutions and is realigning its strategy to focus on cash flow optimization - Velo3D produces fully integrated hardware and software solutions based on proprietary laser powder bed fusion (L-PBF) technology for high-value metal parts, enabling complex designs without support structures[167](index=167&type=chunk)[169](index=169&type=chunk) - The company employs a **'land and expand' strategy**, where customers initially validate the technology with a single machine and then purchase additional systems as the technology is integrated into their product roadmaps[170](index=170&type=chunk) - In October 2023, Velo3D initiated a strategic realignment to **pivot from emphasizing revenue growth to optimizing free cash flow**, maximizing customer success, reducing expenditures, and improving operational efficiency[172](index=172&type=chunk) [Recent Trends and Strategic Realignment](index=35&type=section&id=Recent%20Trends%20and%20Strategic%20Realignment) The company faces challenges from order delays and financial instability, prompting significant cost-reduction measures - Delayed shipments and customer order delays in the second half of 2023 led to **decreased system sales and backlog**, resulting in lower-than-expected annual revenue growth[171](index=171&type=chunk) - The strategic realignment includes **expense reduction and cash savings initiatives** such as workforce reductions (October 2023 and August 2024), streamlining facilities, managing working capital, and reducing capital expenditures and SG&A[172](index=172&type=chunk)[173](index=173&type=chunk)[176](index=176&type=chunk) - As of September 30, 2024, the company had approximately **$1.6 million in cash** and short-term investments and $10.2 million in accounts receivable, which is **insufficient to meet short-term obligations** of $17.7 million in accounts payable and $29.6 million in Secured Notes[174](index=174&type=chunk) - Financial instability has caused customers to delay orders and made it difficult to secure credit terms and volume discounts with suppliers, **negatively impacting product margins**[175](index=175&type=chunk) [Recent Debt and Equity Transactions](index=36&type=section&id=Recent%20Debt%20and%20Equity%20Transactions) The company has engaged in significant debt restructuring and equity financing to manage its liquidity crisis - In November 2023, the company repaid $12.5 million of Secured Convertible Notes with a $15.0 million cash payment and exchanged the remaining notes for **$57.5 million in Secured Notes** and 285,715 shares of common stock[177](index=177&type=chunk) - In December 2023, the company sold approximately 255,472 shares for **$5.0 million via an 'at-the-market' offering** and issued 1,028,572 shares and warrants for **$18.0 million in a registered direct offering**[177](index=177&type=chunk) - On April 1, 2024, the company made cash payments totaling **$10.5 million to redeem $8.8 million of Secured Notes principal** and issued warrants to purchase 627,117 shares of common stock[177](index=177&type=chunk) - On April 10, 2024, the company sold 979,592 shares of common stock and accompanying warrants for $12.25 per share, generating approximately **$12 million in gross proceeds**[177](index=177&type=chunk) - On December 24, 2024, a **debt-for-equity exchange with Arrayed Acquisition Corp. cancelled $22.4 million in Secured Notes** principal and $0.4 million in accrued interest in exchange for 185,151,333 shares of common stock, making **Arrayed a 95% owner**[179](index=179&type=chunk) - On January 7, 2025, a **$5.0 million Senior Secured Convertible Promissory Note** was issued to Thieneman Properties, LLC, due April 7, 2025, with a $5.75 million repayment amount[180](index=180&type=chunk) [Key Financial and Operational Metrics](index=37&type=section&id=Key%20Financial%20and%20Operational%20Metrics) Revenue and bookings have declined, while customer concentration has significantly increased Key Metrics | Metric | Three Months Ended Sep 30, 2024 (In millions) | Three Months Ended Sep 30, 2023 (In millions) | Nine Months Ended Sep 30, 2024 (In millions) | Nine Months Ended Sep 30, 2023 (In millions) | | :--------------- | :------------------------------------------ | :------------------------------------------ | :----------------------------------------- | :----------------------------------------- | | Revenue | $8 | $23 | $28 | $75 | | Bookings | $6 | $11 | $28 | $47 | | Backlog | $21 | $6 | $21 | $6 | - For the three months ended September 30, 2024, sales to the **top three customers accounted for 82.0% of revenue**, compared to 51.1% in the prior year, indicating increased customer concentration[186](index=186&type=chunk) - For the nine months ended September 30, 2024, sales to the **top three customers accounted for 51.7% of revenue**, compared to 22.1% in the prior year, with all top three customers being different from the comparable period in 2023[186](index=186&type=chunk) [Continued Investment and Innovation](index=38&type=section&id=Continued%20Investment%20and%20Innovation) The company continues to invest in customer-focused research and development despite financial challenges - The company remains customer-focused, **investing in research and development** to enhance its AM solutions and develop new product platforms and consumables based on customer demand[188](index=188&type=chunk) [Macroeconomic Conditions and Other World Events](index=38&type=section&id=Macroeconomic%20Conditions%20and%20Other%20World%20Events) Economic uncertainty and supply chain issues continue to pose risks to customer orders and gross margins - General economic and political conditions, including recessions, interest rates, inflation, and geopolitical conflicts, have introduced **uncertainty in customer orders and supply chain constraints**[189](index=189&type=chunk) - In 2022, supply chain challenges increased material and shipping costs, leading to delays and impacting gross margins; the company implemented improvements in 2023 and continues to focus on operational enhancements and strategic realignment in 2024[189](index=189&type=chunk) [Climate Change](index=38&type=section&id=Climate%20Change) Climate-related regulations and physical events could adversely affect business operations and costs - Material climate change-related legislation, regulations, and international accords could adversely affect the business through **increased capital expenditures**, indirect consequences (e.g., demand shifts, competition), and compliance costs[190](index=190&type=chunk) - Extreme weather and natural disasters, potentially increasing in intensity or frequency, may **disrupt the company's operations** or those of its suppliers and customers[190](index=190&type=chunk) [Components of Results of Operations](index=38&type=section&id=Components%20of%20Results%20of%20Operations) This section breaks down the key drivers of revenue, cost of revenue, operating expenses, and other financial items - **Revenue is primarily derived from 3D Printer sales** (structured fixed purchase price or sale and utilization fee model), recurring payment transactions (operating leases), and support services[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk) - **Cost of revenue includes manufacturing costs** for 3D Printers, depreciation of leased equipment for recurring payments, and costs for spare parts, installation, and field service engineering for support services[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - **Gross profit and gross margin are influenced by** product mix, average selling prices, material and shipping costs, production volumes, system reliability, and new product introductions[203](index=203&type=chunk) - **Operating expenses are categorized into** Research and Development, Selling and Marketing, and General and Administrative, primarily consisting of personnel costs, prototypes, marketing, professional fees, and allocated overhead[204](index=204&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - **Non-operating items include** interest expense, gains/losses on fair value of warrants and contingent earnout liabilities, and other income/expense[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk) - **No provision for federal and state income taxes** was recorded due to projected losses, with a full valuation allowance maintained on deferred tax assets[212](index=212&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of operational results for the three and nine months ended September 30, 2024 and 2023 [Comparison of the Three Months Ended September 30, 2024 and 2023](index=41&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030%2C%202024%20and%202023) Quarterly results show a sharp revenue decline offset by new licensing income, leading to higher gross profit but a larger net loss Three-Month Operational Comparison | Metric | Sep 30, 2024 (In thousands) | Sep 30, 2023 (In thousands) | Change (In thousands) | % Change | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | 3D Printer Revenue | $1,049 | $20,787 | $(19,738) | -95.0% | | Recurring Payment Revenue | $192 | $531 | $(339) | -63.8% | | Licensing Revenue | $5,000 | — | $5,000 | 100.0% | | Support Services Revenue | $2,006 | $1,849 | $157 | 8.5% | | Total Revenue | $8,247 | $23,167 | $(14,920) | -64.4% | | Cost of 3D Printer | $2,224 | $20,772 | $(18,548) | -89.3% | | Cost of Recurring Payment | $195 | $111 | $84 | 75.7% | | Cost of Support Services | $1,757 | $2,121 | $(364) | -17.2% | | Total Cost of Revenue | $4,176 | $23,004 | $(18,828) | -81.8% | | Gross Profit (Loss) | $4,071 | $163 | $3,908 | 2397.5% | | Research and Development | $4,438 | $9,490 | $(5,052) | -53.2% | | Selling and Marketing | $3,099 | $5,772 | $(2,673) | -46.3% | | General and Administrative | $15,279 | $10,763 | $4,516 | 42.0% | | Loss from Operations | $(18,745) | $(25,862) | $7,117 | -27.5% | | Interest Expense | $(10,949) | $(3,018) | $(7,931) | 262.8% | | Gain on Fair Value of Warrants | $9,221 | $1,587 | $7,634 | 481.0% | | Net Income (Loss) | $(22,858) | $(19,464) | $(3,394) | 17.4% | - **Total revenue decreased by 64.4% to $8.2 million**, primarily due to a 95.0% decrease in 3D Printer sales, partially offset by **$5.0 million in new licensing revenue** from SpaceX[218](index=218&type=chunk)[220](index=220&type=chunk) - **Gross profit increased significantly by 2397.5% to $4.1 million**, driven by the lower cost associated with license revenue[232](index=232&type=chunk) - **Research and development expenses decreased by 53.2% to $4.4 million**, mainly due to reductions in purchased materials, headcount, and stock-based compensation[234](index=234&type=chunk) - **General and administrative expenses increased by 42.0% to $15.3 million**, primarily due to a **$6.7 million increase in bad debt expense**[238](index=238&type=chunk) - **Interest expense surged by 262.8% to $10.9 million** due to the issuance of Secured Notes[240](index=240&type=chunk) [Comparison of the Nine Months Ended September 30, 2024 and 2023](index=45&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030%2C%202024%20and%202023) Nine-month results show a significant revenue drop leading to a gross loss, despite reduced operating expenses and a lower net loss Nine-Month Operational Comparison | Metric | Sep 30, 2024 (In thousands) | Sep 30, 2023 (In thousands) | Change (In thousands) | % Change | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | 3D Printer Revenue | $17,388 | $68,425 | $(51,037) | -74.6% | | Recurring Payment Revenue | $954 | $1,141 | $(187) | -16.4% | | Licensing Revenue | $5,000 | — | $5,000 | 100.0% | | Support Services Revenue | $5,035 | $5,422 | $(387) | -7.1% | | Total Revenue | $28,377 | $74,988 | $(46,611) | -62.2% | | Cost of 3D Printer | $22,362 | $62,992 | $(40,630) | -64.5% | | Cost of Recurring Payment | $742 | $893 | $(151) | -16.9% | | Cost of Support Services | $6,914 | $5,872 | $1,042 | 17.7% | | Total Cost of Revenue | $30,018 | $69,757 | $(39,739) | -57.0% | | Gross Profit (Loss) | $(1,641) | $5,231 | $(6,872) | -131.4% | | Research and Development | $14,026 | $32,145 | $(18,119) | -56.4% | | Selling and Marketing | $12,181 | $18,054 | $(5,873) | -32.5% | | General and Administrative | $32,867 | $30,850 | $2,017 | 6.5% | | Loss from Operations | $(60,715) | $(75,818) | $15,103 | -19.9% | | Interest Expense | $(20,309) | $(3,582) | $(16,727) | 467.0% | | Gain on Fair Value of Warrants | $31,911 | $(138) | $32,049 | -23223.9% | | Net Income (Loss) | $(51,344) | $(78,990) | $27,646 | -35.0% | - **Total revenue decreased by 62.2% to $28.4 million**, primarily due to a 74.6% decrease in 3D Printer sales, partially offset by $5.0 million in new licensing revenue[249](index=249&type=chunk)[250](index=250&type=chunk)[252](index=252&type=chunk) - **Gross profit shifted from a gain of $5.2 million to a loss of $(1.6) million**, a 131.4% decrease, mainly due to the outsized impact of fixed costs on lower 3D printer sales volume and higher production costs[263](index=263&type=chunk) - **Research and development expenses decreased by 56.4% to $14.0 million**, driven by reductions in purchased materials, headcount, and stock-based compensation[265](index=265&type=chunk) - **Interest expense increased by 467.0% to $20.3 million** due to the issuance of Secured Notes[272](index=272&type=chunk) - The change in fair value of warrants resulted in a **significant gain of $31.9 million**, compared to a loss of $0.1 million in the prior year, driven by changes in the company's stock price[274](index=274&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces a severe liquidity crisis with insufficient cash to meet short-term obligations, raising substantial doubt about its ability to continue as a going concern - As of September 30, 2024, the company had **$1.6 million in cash** and short-term investments and $10.2 million in accounts receivable, which is **insufficient to cover short-term obligations** of $17.7 million in accounts payable and $29.6 million in Secured Notes[279](index=279&type=chunk) - There is **substantial doubt about the company's ability to continue as a going concern** for the next twelve months, necessitating additional funding to sustain operations and satisfy obligations[282](index=282&type=chunk) - The company will need to engage in **additional equity or debt financings** to fund operations, provide working capital, and repay Secured Notes, but securing such financing may be difficult due to its financial condition[287](index=287&type=chunk)[288](index=288&type=chunk) - **Purchase commitments** for parts and assemblies totaled **$18.7 million**, expected to be delivered throughout the remainder of 2024[283](index=283&type=chunk) [Debt Facilities](index=49&type=section&id=Debt%20Facilities) The company's outstanding Secured Notes carry a 6% interest rate and require significant redemption payments - As of September 30, 2024, the company had approximately **$29.6 million in Secured Notes outstanding**, bearing 6.00% interest per annum and maturing on August 1, 2026[290](index=290&type=chunk) - Repayment terms require paying **120% of the principal amount** (Repayment Price) plus accrued interest, with quarterly redemption payments of $10.5 million for an $8.75 million principal amount[290](index=290&type=chunk)[291](index=291&type=chunk) - The Third Note Amendment on July 1, 2024, **deferred a $10.5 million partial redemption payment** over ten equal monthly payments starting August 1, 2024[292](index=292&type=chunk) - On April 1, 2024, the company made cash payments totaling **$10.5 million to redeem $8.8 million of Secured Notes principal** and issued warrants to purchase 21,949,079 shares of common stock[292](index=292&type=chunk) [Cash Flow Summary](index=50&type=section&id=Cash%20Flow%20Summary) Cash used in operations decreased, while cash from investing and financing activities fell sharply Nine-Month Cash Flow Summary | Cash Flow Activity | Nine Months Ended Sep 30, 2024 (In thousands) | Nine Months Ended Sep 30, 2023 (In thousands) | Change (In thousands) | | :--------------------------------- | :------------------------------------ | :------------------------------------ | :-------------------- | | Net cash used in operating activities | $(30,465) | $(81,109) | $50,644 | | Net cash provided by investing activities | $6,644 | $31,055 | $(24,411) | | Net cash provided by financing activities | $958 | $76,213 | $(75,255) | - **Net cash used in operating activities decreased by $50.6 million to $(30.5) million**, driven by a lower net loss and an increase in net operating assets[298](index=298&type=chunk)[299](index=299&type=chunk) - **Net cash provided by investing activities decreased by $24.4 million to $6.6 million**, primarily due to lower proceeds from maturities of available-for-sale investment securities[302](index=302&type=chunk)[303](index=303&type=chunk) - **Net cash provided by financing activities decreased by $75.3 million to $1.0 million**, reflecting reduced proceeds from capital raises and debt facilities compared to the prior year[305](index=305&type=chunk)[306](index=306&type=chunk) [Off-Balance Sheet Arrangements](index=51&type=section&id=Off-Balance%20Sheet%20Arrangements) The company had no off-balance sheet arrangements during the reporting periods - As of September 30, 2024, and December 31, 2023, the company **did not have any off-balance sheet arrangements**[308](index=308&type=chunk) [Recent Accounting Pronouncements](index=52&type=section&id=Recent%20Accounting%20Pronouncements) Information on recent accounting pronouncements is available in Note 2 of the financial statements - For a description of recent accounting pronouncements, including adoption dates and estimated effects, refer to **Note 2, Summary of Significant Accounting Policies**[310](index=310&type=chunk) [Implications of Being an Emerging Growth Company](index=52&type=section&id=Implications%20of%20Being%20an%20Emerging%20Growth%20Company) The company utilizes the extended transition period for new accounting standards as an emerging growth company - The company is an **'emerging growth company' (EGC)** and has elected to use the extended transition period for complying with new or revised financial accounting standards[311](index=311&type=chunk) - This EGC status allows for **delayed compliance with certain accounting standards**, potentially making financial results difficult to compare with non-EGCs or EGCs that opted out of the extended transition period[312](index=312&type=chunk) [Implications of Being a Smaller Reporting Company](index=52&type=section&id=Implications%20of%20Being%20a%20Smaller%20Reporting%20Company) The company's status as a smaller reporting company allows for reduced disclosure obligations - The company is a **'smaller reporting company' (SRC)** and can take advantage of reduced disclosure obligations, including providing only two years of audited consolidated financial statements[314](index=314&type=chunk) [Critical Accounting Policies and Significant Estimates](index=52&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Estimates) Details on critical accounting policies are provided in Note 2 and the annual report - For critical accounting policies and significant estimates, refer to **Note 2, Summary of Significant Accounting Policies**, in this report and Part II, Item 7 of the Annual Report on Form 10-K for the year ended December 31, 2023[316](index=316&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exempt from market risk disclosures as a smaller reporting company - The company is a smaller reporting company and is therefore **not required to provide** quantitative and qualitative disclosures about market risk[318](index=318&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concludes disclosure controls were ineffective due to material weaknesses in internal financial reporting controls - As of September 30, 2024, the company's disclosure controls and procedures were deemed **not effective due to material weaknesses** in internal control over financial reporting[320](index=320&type=chunk) - Identified material weaknesses include an **ineffective control environment** (insufficient personnel with accounting knowledge, inadequate segregation of duties), and **ineffective controls** over accounting for debt/equity instruments, inventory, and contract assets/liabilities[321](index=321&type=chunk)[322](index=322&type=chunk) - These material weaknesses led to **adjustments and revisions in previously issued financial statements** and could result in material misstatements[323](index=323&type=chunk) - **Remediation efforts include** hiring additional accounting and IT personnel, providing training, engaging third-party assistance for control design, and formalizing roles and review responsibilities[325](index=325&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings that would significantly impact its business - The company is **not currently a party to any material legal proceedings** that arise in the ordinary course of business[330](index=330&type=chunk) [Item 1A. Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, emphasizing going concern doubts and the critical need for additional capital - There is **substantial doubt about the company's ability to continue as a going concern**, which negatively impacts its ability to raise financing, sell products, and retain employees[332](index=332&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) - The company **requires significant additional funding** to execute its business plan and continue operations, which may not be available on acceptable terms, if at all, leading to potential liquidation or bankruptcy[338](index=338&type=chunk)[339](index=339&type=chunk) - The Secured Notes contain **restrictive covenants** that limit the company's operations and require maintaining minimum cash levels, with a breach potentially leading to acceleration of indebtedness[340](index=340&type=chunk)[341](index=341&type=chunk) - **Servicing the Secured Notes requires significant cash**, and the company's current operations do not generate sufficient cash flow to meet these obligations, necessitating additional financing or restructuring[345](index=345&type=chunk)[347](index=347&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no sales under its ATM agreement and no unregistered sales of equity securities during the quarter - During the three months ended September 30, 2024, the company **sold no shares** pursuant to its At-the-Market (ATM) Sales Agreement[348](index=348&type=chunk) - There were **no unregistered sales of equity securities** or issuer purchases of equity securities reported[349](index=349&type=chunk)[350](index=350&type=chunk) [Item 3. Defaults Upon Senior Securities](index=57&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - This item is **not applicable**[351](index=351&type=chunk) [Item 4. Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - This item is **not applicable**[352](index=352&type=chunk) [Item 5. Other Information](index=58&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No director or Section 16 officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended September 30, 2024[353](index=353&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including bylaws, warrant forms, and other agreements - The exhibits include various agreements and certifications, such as the Second Amended and Restated Bylaws, Form of New Warrant (July 1, 2024 and August 12, 2024), Letter Agreement (July 1, 2024), Warrant Inducement Agreement, Licensing and Support Services Agreement with SpaceX, Forbearance Agreement, Exchange Agreement, Senior Secured Convertible Promissory Note, Secured Guaranty, and Offer Letter for Arun Jeldi[355](index=355&type=chunk) [Signatures](index=60&type=section&id=Signatures) The report is officially signed by the Chief Financial Officer of Velo3D, Inc - The report was signed by **Hull Xu, Chief Financial Officer**, Principal Financial Officer, and Authorized Officer of Velo3D, Inc. on January 14, 2025[359](index=359&type=chunk)[361](index=361&type=chunk)

Part I. Financial Information [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents Velo3D's unaudited condensed consolidated financial statements for Q1 2024, including balance sheets, income, cash flow, and equity statements, noting management's substantial doubt about the company's going concern ability - The company has incurred significant losses and negative cash flows since inception, leading to an accumulated deficit of **$385.4 million** as of March 31, 2024, with management concluding there is **substantial doubt** about the company's ability to continue as a going concern[38](index=38&type=chunk)[39](index=39&type=chunk) - On December 28, 2023, the company received a NYSE non-compliance notice for its average closing stock price being below **$1.00** for over 30 consecutive trading days, with a deadline of **June 28, 2024**, to regain compliance[35](index=35&type=chunk)[36](index=36&type=chunk) - Subsequent to the quarter end, in April 2024, the company amended its secured notes, making cash repayments of **$11.0 million**, and raised approximately **$12 million** in gross proceeds through an offering of common stock and warrants to fund working capital and repay debt[40](index=40&type=chunk)[41](index=41&type=chunk)[149](index=149&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$136.1 million** from **$153.8 million** by March 31, 2024, due to reduced cash, with liabilities rising and equity declining Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $7,754 | $24,494 | | Inventories | $62,799 | $60,816 | | Total current assets | $98,345 | $113,024 | | Total assets | $136,148 | $153,799 | | **Liabilities & Equity** | | | | Debt – current portion | $34,300 | $21,191 | | Total liabilities | $90,698 | $85,459 | | Total stockholders' equity | $45,450 | $68,340 | | Total liabilities and stockholders' equity | $136,148 | $153,799 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) For Q1 2024, revenue significantly declined to **$9.8 million** from **$26.7 million** year-over-year, resulting in a gross loss of **$2.8 million** and a net loss of **$28.3 million**, an improvement from the prior year's **$36.3 million** net loss Q1 2024 vs. Q1 2023 Statement of Operations (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenue | $9,786 | $26,687 | | Gross profit (loss) | $(2,815) | $2,532 | | Loss from operations | $(21,450) | $(24,250) | | Net loss | $(28,314) | $(36,325) | | Net loss per share (Basic & Diluted) | $(0.11) | $(0.19) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2024, net cash used in operating activities improved to **$20.5 million**, while investing activities provided **$3.5 million**, and financing activities provided a minimal **$0.3 million**, resulting in a net cash decrease of **$16.7 million** Q1 2024 vs. Q1 2023 Cash Flows (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(20,523) | $(30,834) | | Net cash provided by investing activities | $3,493 | $20,962 | | Net cash provided by financing activities | $285 | $15,034 | | **Net change in cash and cash equivalents** | **$(16,740)** | **$5,156** | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) These notes provide critical context, including the basis of presentation, substantial doubt about going concern, details on debt agreements, valuation of warrants and earnout liabilities, and significant post-quarter financing events - The company is undertaking a strategic business review to explore alternatives, including a potential merger, business combination, or sale, to maximize stockholder value[45](index=45&type=chunk) - As of March 31, 2024, the company had **$36.8 million** in secured notes outstanding, bearing **6.00%** interest, requiring quarterly redemptions at **120%** of the principal amount, with the first **$8.75 million** principal redemption due on April 1, 2024[89](index=89&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - In April 2024, the company entered into a Second Note Amendment to its Secured Notes, agreeing to make cash payments totaling **$11.0 million** to redeem principal and interest, and issued new warrants to purchase up to **21.9 million** shares[149](index=149&type=chunk)[150](index=150&type=chunk) - On April 10, 2024, the company raised approximately **$12 million** in gross proceeds through a securities purchase agreement, selling **34.3 million** shares of common stock and warrants to purchase an additional **34.3 million** shares[151](index=151&type=chunk)[152](index=152&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the **63.3%** year-over-year revenue decrease in Q1 2024 due to fewer system sales and order delays, highlighting a strategic shift towards optimizing free cash flow and reducing expenses, while reiterating substantial doubt about the company's ability to continue as a going concern - The company has pivoted its strategy from emphasizing revenue growth to optimizing free cash flow, maximizing customer success, and reducing expenditures through a 'Strategic Realignment' plan[167](index=167&type=chunk) Key Operational Metrics | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue ($ in millions) | $10 | $27 | | Bookings ($ in millions) | $17 | $20 | | Backlog ($ in millions) | $22 | $24 | Results of Operations Summary (in thousands) | Line Item | Q1 2024 | Q1 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $9,786 | $26,687 | $(16,901) | (63.3)% | | Gross profit (loss) | $(2,815) | $2,532 | $(5,347) | (211.2)% | | Loss from operations | $(21,450) | $(24,250) | $2,800 | (11.5)% | | Net loss | $(28,314) | $(36,325) | $8,011 | (22.1)% | - Gross margin was negative **(28.8)%** for Q1 2024, compared to **9.5%** in Q1 2023, attributed to product mix, launch customer pricing for Sapphire XC, and higher production costs[220](index=220&type=chunk)[221](index=221&type=chunk) - Operating expenses decreased by **30.4%** year-over-year, driven by significant reductions in Research & Development (**-51.6%**) and Selling & Marketing (**-22.1%**) as part of the Strategic Realignment[203](index=203&type=chunk)[223](index=223&type=chunk)[225](index=225&type=chunk) - The company lacks sufficient liquidity to meet operating needs and debt obligations for at least the next 12 months, necessitating additional financings, without which it may be required to sell assets, liquidate, or file for bankruptcy[171](index=171&type=chunk)[240](index=240&type=chunk)[249](index=249&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Velo3D is not required to provide the information for this item - The company is a smaller reporting company as defined in Rule 12b-2 under the Exchange Act and is not required to provide the information required by this Item[275](index=275&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of March 31, 2024, due to un-remediated material weaknesses in internal control over financial reporting, with remediation efforts ongoing - The CEO and CFO concluded that as of March 31, 2024, the company's disclosure controls and procedures were not effective[277](index=277&type=chunk) - Material weaknesses in internal control over financial reporting, first identified in the 2023 10-K, have not been remediated as of March 31, 2024[278](index=278&type=chunk) - Specific material weaknesses include an ineffective control environment due to insufficient personnel with appropriate accounting knowledge, lack of segregation of duties, and ineffective controls over accounting for debt/equity instruments, inventory, contract assets/liabilities, financial statement presentation, and IT general controls[279](index=279&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk) - Remediation measures are underway, including hiring additional personnel, engaging third-party assistance, and designing and implementing new controls, though their full effectiveness is not yet confirmed[282](index=282&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk) Part II. Other Information [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) As of the filing date, Velo3D is not a party to any material legal proceedings - The company is currently not a party to any material legal proceedings[289](index=289&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) This section highlights critical risks, primarily the substantial doubt about the company's ability to continue as a going concern, which could impede capital raising, product sales, and employee retention, alongside the urgent need for additional capital and restrictive debt covenants - There is substantial doubt about the company's ability to continue as a going concern, which could make it difficult to raise necessary financing and may lead to business curtailment or bankruptcy[291](index=291&type=chunk)[292](index=292&type=chunk) - The company requires additional capital to fund near-term operations, and failure to obtain adequate financing could result in the company being unable to continue operations, potentially leading to liquidation or bankruptcy[293](index=293&type=chunk)[295](index=295&type=chunk) - The Secured Notes contain restrictive covenants that limit the company's ability to incur debt, make investments, and transfer assets, where a breach could result in an event of default and acceleration of the debt[296](index=296&type=chunk)[297](index=297&type=chunk) - Servicing the Notes requires significant cash, with quarterly redemptions of **$8.75 million** in principal (for a repayment price of **$10.5 million**) starting April 1, 2024, which the company may not generate sufficient cash flow to meet[300](index=300&type=chunk)[302](index=302&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2024, Velo3D did not sell any shares through its At-The-Market (ATM) Sales Agreement and reported no unregistered sales of equity securities or issuer purchases of its equity securities - During the three months ended March 31, 2024, the company sold no shares pursuant to its ATM sales agreement[303](index=303&type=chunk) - There were no unregistered sales of securities or issuer purchases of equity securities in the quarter[304](index=304&type=chunk)[305](index=305&type=chunk) [Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period - Not applicable[306](index=306&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period - Not applicable[307](index=307&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) On May 10, 2024, the company revised CEO Bradley Kreger's Change in Control Agreement, extending severance and health benefits, and entered into a new Change in Control Agreement with CFO Hull Xu, providing for severance, bonus, and equity acceleration upon qualifying termination - On May 10, 2024, the company revised its Change in Control Agreement with CEO Bradley Kreger to extend the severance payment and continued health benefits from nine to twelve months[309](index=309&type=chunk) - On May 10, 2024, the company entered into a Change in Control Agreement with CFO Hull Xu, providing for severance, bonus payments, equity acceleration, and continued medical benefits for up to nine months upon a qualifying termination[310](index=310&type=chunk) [Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including revised and new Change in Control Agreements for the CEO and CFO, officer certifications, and Inline XBRL data files - Exhibits filed include revised and new Change in Control Agreements for the CEO and CFO, respectively, as well as required officer certifications[312](index=312&type=chunk)

[First Quarter 2024 Financial Results Overview](index=1&type=section&id=First%20Quarter%202024%20Financial%20Results%20Overview) Velo3D's first quarter 2024 results demonstrate strong commercial momentum and significant progress in operational efficiency [Executive Summary & Key Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Highlights) Velo3D reported strong demand in Q1 2024, with $17 million in new bookings and a $22 million backlog, driven by expansion in the defense sector. The company is executing its realignment plan, achieving a 30% year-over-year reduction in operating expenses and a 35% improvement in operating cash flow, positioning it to target cash flow breakeven in the second half of 2024 - The company is seeing strong commercial momentum with significant new orders and a solid backlog, particularly noting expansion in the defense sector with **3 new customers**[2](index=2&type=chunk)[3](index=3&type=chunk) Q1 2024 Commercial and Operational Highlights | Metric | Value | Note | | :--- | :--- | :--- | | **Bookings** | $17 million | $27 million since mid-December 2023 | | **Backlog** | $22 million | Exiting Q1 2024 | | **Operating Expenses** | Down 30% YoY | Down 15% sequentially (excl. one-time charges) | | **Operating Cash Flow** | 35% YoY improvement | On track for H2 2024 breakeven | | **Q2 Revenue Outlook** | >30% sequential growth | - | - Strategic realignment efforts are showing progress through significant cost reductions and improved operational efficiency, including a more than **40% reduction in installation days and labor** for Sapphire XC printers[2](index=2&type=chunk)[6](index=6&type=chunk) - Customer confidence is reflected in the fact that approximately **50% of Q1 bookings were from existing customers**, supported by improved system reliability and resolution of **100% of high-priority service tickets**[4](index=4&type=chunk)[6](index=6&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) This section details Velo3D's Q1 2024 financial performance, including revenue, profitability, and cash flow metrics [First Quarter 2024 Financial Summary](index=2&type=section&id=First%20Quarter%202024%20Financial%20Summary) For Q1 2024, Velo3D generated $9.8 million in GAAP revenue, a significant increase from Q4 2023 but a decrease from Q1 2023. The company reported a GAAP net loss of $28.3 million, or ($0.11) per share, and a non-GAAP net loss of $20.2 million. Gross margin was negative 28.8% due to lower fixed cost absorption. The company ended the quarter with $11 million in cash and investments Q1 2024 Key Financial Metrics | Metric ($ in Millions, except per-share data) | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | **GAAP Revenue** | $9.8 | $2.5 | $26.7 | | **GAAP Gross Margin** | (28.8)% | (>100)% | 9.5% | | **GAAP Net Loss** | $(28.3) | $(56.1) | $(36.3) | | **GAAP Net Loss per Share** | $(0.11) | $(0.27) | $(0.19) | | **Non-GAAP Net Loss** | $(20.2) | $(58.6) | $(17.9) | | **Non-GAAP Net Loss per Share** | $(0.08) | $(0.28) | $(0.09) | | **Cash and Investments** | $11 | $31 | $64 | [Revenue](index=4&type=section&id=Revenue) Q1 2024 revenue increased sequentially, with continued growth expected in Q2 2024 - Revenue for Q1 was **$10 million**, showing a significant sequential increase from Q4 2023 driven by a rise in shipments[8](index=8&type=chunk) - The company anticipates continued momentum with expected revenue growth of more than **30% in the second quarter of 2024**[8](index=8&type=chunk) [Gross Margin](index=4&type=section&id=Gross%20Margin) Q1 2024 gross margin was negative due to fixed costs, with positive margin anticipated in Q2 2024 - Gross margin was **negative 29%** for the quarter, primarily due to the impact of lower fixed cost absorption despite increased shipments[9](index=9&type=chunk) - The company expects to achieve a **positive gross margin in Q2 2024**, driven by higher system shipments, improved material costs, and greater manufacturing efficiency[9](index=9&type=chunk) [Operating Expenses](index=4&type=section&id=Operating%20Expenses) Operating expenses saw significant sequential and year-over-year reductions, with further declines projected for Q2 2024 Q1 2024 Operating Expenses | Expense Type | Amount ($M) | Sequential Change | | :--- | :--- | :--- | | **GAAP Operating Expenses** | $18.6 | Down from $25.9 in Q4 2023 | | **Non-GAAP Operating Expenses** | $14.1 | Down 15% from Q4 2023 | - The company expects non-GAAP quarterly operating expenses to decline by more than **10% in Q2 2024** compared to Q1 2024[10](index=10&type=chunk) [Net Loss and EBITDA](index=4&type=section&id=Net%20Loss%20and%20EBITDA) The company reported GAAP and non-GAAP net losses, alongside an adjusted EBITDA loss for Q1 2024 Q1 2024 Profitability Metrics | Metric | Amount ($M) | | :--- | :--- | | **Net Loss (GAAP)** | $(28.3) | | **Non-GAAP Net Loss** | $(20.2) | | **Adjusted EBITDA** | $(11.7) | [Cash Position and Cash Flow](index=4&type=section&id=Cash%20Position%20and%20Cash%20Flow) Velo3D ended Q1 with $11 million in cash, showing improved cash flow year-over-year and expected sequential improvements - The company ended Q1 with **$11 million in cash, cash equivalents, and investments**[12](index=12&type=chunk) - First quarter cash flow (excluding financing) improved by more than **35% year-over-year** and the company expects sequential quarterly improvement in cash flow throughout 2024[12](index=12&type=chunk) [Business Outlook and Guidance](index=5&type=section&id=Business%20Outlook%20and%20Guidance) Velo3D provides its financial projections and strategic goals for 2024, including revenue and profitability targets [2024 Financial Guidance](index=5&type=section&id=2024%20Financial%20Guidance) Velo3D maintains its full-year 2024 guidance, projecting revenue between $80 million and $95 million and non-GAAP operating expenses of $40 million to $50 million. The company anticipates over 30% sequential revenue growth in Q2 and expects to achieve a gross margin of approximately 30% by Q4 2024, while reiterating its goal of reaching free cash flow breakeven in the second half of the year 2024 Financial Guidance | Metric | Guidance | | :--- | :--- | | **Q2 2024 Revenue Growth** | > 30% (sequential) | | **FY 2024 Revenue** | $80 million to $95 million | | **Q4 2024 Gross Margin** | Approx. 30% | | **FY 2024 Non-GAAP OpEx** | $40 million to $50 million | - The company reaffirms its goal to achieve **free cash flow breakeven in the second half of 2024**[13](index=13&type=chunk) [Financial Statements and Reconciliations](index=10&type=section&id=Financial%20Statements%20and%20Reconciliations) This section presents Velo3D's unaudited consolidated financial statements and reconciliations of GAAP to non-GAAP measures [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP financial measures. It includes tables for Non-GAAP Net Loss, which adjusts for items like stock-based compensation and fair value changes; Non-GAAP Adjusted EBITDA, which further excludes interest, taxes, and depreciation; and Non-GAAP Operating Expenses, which excludes stock-based compensation - Non-GAAP Net Loss for Q1 2024 was **$(20.2) million**, reconciled from a GAAP Net Loss of **$(28.3) million** by excluding items such as **$5.1 million in stock-based compensation** and a **$3.1 million combined loss on fair value of warrants and contingent earnout liabilities**[25](index=25&type=chunk) - Adjusted EBITDA for Q1 2024 was a loss of **$(11.7) million**, compared to a loss of **$(16.1) million in Q1 2023**[27](index=27&type=chunk) - Adjusted Operating Expenses for Q1 2024 were **$14.1 million**, reconciled from GAAP operating expenses of **$18.6 million** primarily by excluding **$4.5 million in stock-based compensation**[29](index=29&type=chunk) [Condensed Consolidated Financial Statements](index=13&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the period ended March 31, 2024. It includes the Statement of Operations, which details revenues, costs, and net loss; the Balance Sheet, showing assets of $136.1 million and liabilities of $90.7 million; and the Statement of Cash Flows, which indicates a net cash usage of $20.5 million in operating activities Q1 2024 Statement of Operations Summary (in thousands) | Line Item | Q1 2024 | | :--- | :--- | | **Total Revenue** | $9,786 | | **Gross Profit (Loss)** | $(2,815) | | **Loss from Operations** | $(21,450) | | **Net Loss** | $(28,314) | Balance Sheet Summary as of March 31, 2024 (in thousands) | Line Item | Amount | | :--- | :--- | | **Total Current Assets** | $98,345 | | **Total Assets** | $136,148 | | **Total Current Liabilities** | $60,858 | | **Total Liabilities** | $90,698 | | **Total Stockholders' Equity** | $45,450 | - Net cash used in operating activities was **$(20.5) million** for the three months ended March 31, 2024, an improvement from **$(30.8) million** in the prior year period[34](index=34&type=chunk) [Appendix](index=6&type=section&id=Appendix) This section provides background information on Velo3D and important disclaimers regarding forward-looking statements and non-GAAP financial measures [About Velo3D](index=6&type=section&id=About%20Velo3D) Velo3D is a metal 3D printing technology company specializing in additive manufacturing (AM) for mission-critical parts. Their integrated solution, including Flow software, Sapphire printers, and Assure quality control, enables innovation in industries like space exploration, aviation, and energy. Key partners include SpaceX, Honeywell, and Lam Research - Velo3D is a metal 3D printing technology company focused on additive manufacturing for high-value metal parts, overcoming limitations of legacy AM technology[16](index=16&type=chunk) - The company's fully integrated solution includes Flow print preparation software, the Sapphire family of printers, and the Assure quality control system[17](index=17&type=chunk) - Velo3D serves customers in space exploration, aviation, power generation, energy, and semiconductor industries, with strategic partners like SpaceX, Honeywell, and Lam Research[17](index=17&type=chunk) [Forward-Looking Statements and Non-GAAP Information](index=8&type=section&id=Forward-Looking%20Statements%20and%20Non-GAAP%20Information) This section contains standard legal disclaimers. It cautions investors that the press release includes "forward-looking statements" subject to significant risks and uncertainties, and that actual results may differ materially. It also explains the company's use of non-GAAP financial measures like Adjusted EBITDA and Non-GAAP Net Loss, stating they are supplemental to GAAP results and providing a rationale for their use - The press release contains forward-looking statements regarding guidance, performance, and strategic initiatives, which are subject to significant risks and uncertainties that could cause actual results to differ materially[20](index=20&type=chunk) - The company uses non-GAAP financial measures such as Non-GAAP Net Loss, EBITDA, and Adjusted EBITDA as supplemental information and advises that they should not be considered in isolation from, or as a substitute for, GAAP measures[22](index=22&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ FORM 10-K _____________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-39757 Velo3D, Inc. ______________________________ (Exact name of registrant as specified in its charter) D ...

Exhibit 99.1 Velo3D Announces Fourth Quarter and Fiscal Year 2023 Financial Results Successfully Executing on Strategic Realignment Priorities Strategic Review Remains Ongoing – Board of Directors in Discussions with Multiple Parties to Maximize Stockholder Value FREMONT, Calif., March 26, 2024 - Velo3D, Inc. (NYSE: VLD), a leading additive manufacturing technology company for mission-critical metal parts, today announced financial results for its fourth quarter and fiscal year 2023 ended December 31, 2023. ...

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 spec ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q _____________________________ (Mark One) For the transition period from ____ to ____ Commission File Number: 001-39757 Velo3D, Inc. ______________________________ (Exact name of registrant as specified in its charter) Delaware 98-1556965 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 511 Division Street, Campbell, CA 95008 (Address of Principal Executive Offices) (Zip Code) ...

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements (unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents Velo3D, Inc.'s unaudited condensed consolidated financial statements for the quarter ended March 31, 2023, reporting a **$36.2 million** net loss and sufficient liquidity for the next twelve months Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $37,139 | $31,983 | | Short-term investments | $26,870 | $48,214 | | Inventories | $73,937 | $71,202 | | Total current assets | $164,924 | $172,922 | | Total assets | $213,726 | $225,114 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $37,729 | $46,053 | | Total liabilities | $91,786 | $84,268 | | Total stockholders' equity | $121,940 | $140,846 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Total Revenue | $26,814 | $12,218 | | Gross profit | $2,925 | $15 | | Loss from operations | $(24,123) | $(28,173) | | Net loss | $(36,198) | $(65,341) | | Net loss per share (Basic & Diluted) | $(0.19) | $(0.36) | Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(30,834) | $(30,107) | | Net cash provided by (used in) investing activities | $20,962 | $(72,709) | | Net cash provided by (used in) financing activities | $15,034 | $(367) | | Net change in cash and cash equivalents | $5,156 | $(103,176) | - The company produces metal additive 3D printers for high-value parts in industries like space, aviation, and energy, also providing support services[27](index=27&type=chunk) - The company has incurred losses and negative cash flows from operations since inception, with an accumulated deficit of **$256.0 million** as of March 31, 2023[31](index=31&type=chunk) - An At-the-Market (ATM) offering initiated in February 2023 raised **$10.5 million** net of costs by March 31, 2023, with management believing current and future cash will be sufficient for at least the **next 12 months**[33](index=33&type=chunk)[35](index=35&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2023 financial performance, noting a **119.5% revenue increase** to **$26.8 million**, improved gross margin to **10.9%**, ongoing customer concentration, and sufficient liquidity for the next twelve months despite historical losses, alongside recent debt facility modifications - Velo3D produces a fully integrated hardware and software solution using proprietary laser powder bed fusion (L-PBF) technology for complex, mission-critical metal parts in industries like space, aviation, and defense[141](index=141&type=chunk)[142](index=142&type=chunk) Key Financial and Operational Metrics | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Revenue ($ in millions) | $27 | $12 | | Bookings ($ in millions) | $20 | $12 | | Backlog ($ in millions) as of March 31 | $24 | $34 | - Sales to the top three customers accounted for **44.9%** of revenue in Q1 2023, indicating significant customer concentration[149](index=149&type=chunk) Results of Operations Comparison (in thousands) | Metric | Q1 2023 | Q1 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $26,814 | $12,218 | $14,596 | 119.5% | | Gross Profit | $2,925 | $15 | $2,910 | 19400.0% | | Loss from Operations | $(24,123) | $(28,173) | $4,050 | (14.4)% | | Net Loss | $(36,198) | $(65,341) | $29,143 | (44.6)% | - The revenue increase was driven by higher production volumes and a product mix shift towards higher-priced Sapphire XC and Sapphire XC 1MZ systems[183](index=183&type=chunk) - As of March 31, 2023, the company had **$64.0 million** in cash, cash equivalents, and short-term investments, which management believes is sufficient for working capital and capital expenditure requirements for at least the **next twelve months**[210](index=210&type=chunk)[213](index=213&type=chunk) - The company has an "at-the-market" (ATM) offering program to sell up to **$40.0 million** of common stock, and in April 2023, drew an additional **$5.0 million** on its revolving credit facility, leaving **$17.0 million** undrawn[212](index=212&type=chunk)[220](index=220&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Velo3D, as a smaller reporting company, is not required to provide quantitative and qualitative disclosures about market risk under SEC regulations - As a smaller reporting company, Velo3D is not required to provide the information regarding market risk as per Item 305(e) of Regulation S-K[245](index=245&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were **not effective** as of March 31, 2023, due to un-remediated material weaknesses in internal control over financial reporting, including control environment, segregation of duties, inventory, and IT general controls - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were **not effective**[247](index=247&type=chunk) - Material weaknesses in internal control over financial reporting, initially described in the 2022 Form 10-K, remain unremediated as of March 31, 2023[248](index=248&type=chunk) - The material weaknesses include an ineffective control environment, lack of segregation of duties, and ineffective controls over inventory, contract assets/liabilities, and IT general controls (user access and program change management)[249](index=249&type=chunk)[253](index=253&type=chunk) - Remediation measures are in progress, involving additional personnel, third-party assistance, and new control design and implementation, though these are not yet complete or fully tested[252](index=252&type=chunk)[253](index=253&type=chunk) [Part II. Other Information](index=52&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - As of the report date, Velo3D is not a party to any material legal proceedings[257](index=257&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section updates previously disclosed risk factors from the 2022 Form 10-K, adding specific risks related to adverse market conditions, economic uncertainty, and U.S. banking system instability, including the failure of Silicon Valley Bank - There have been no material changes to the risk factors described in the 2022 Form 10-K, except for the addition of risks related to economic uncertainty[259](index=259&type=chunk) - The company highlights that market conditions and economic downturns, including recessions, inflation, rising interest rates, and banking system instability, could adversely affect business and operating results[260](index=260&type=chunk) - The failure of several U.S. banks, including SVB in March 2023, is cited as an example of banking system instability that could threaten the company's ability to access cash or financing[263](index=263&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales or issuer purchases of its equity securities during the quarter - There were no unregistered sales of equity securities during the reporting period[265](index=265&type=chunk) - There were no issuer purchases of equity securities during the reporting period[266](index=266&type=chunk) [Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities - None[267](index=267&type=chunk) [Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Velo3D's business operations - Not applicable[268](index=268&type=chunk) [Other Information](index=54&type=section&id=Item%205.%20Other%20Information) The company discloses two recent amendments to its loan agreement with Silicon Valley Bank, modifying depository requirements and updating financial covenants for fiscal 2023 - On April 7, 2023, the company amended its loan agreement with New SVB to reduce the requirement to maintain operating and depository accounts with the bank from **90%** to **50%** of its dollar value[269](index=269&type=chunk) - On May 5, 2023, the company entered into a fifth loan modification agreement with New SVB, updating certain financial covenants for fiscal 2023 and establishing an inventory appraisal requirement to be conducted within **90 days**[270](index=270&type=chunk) [Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including loan agreement amendments, CEO/CFO certifications, and interactive data files - The filed exhibits include the Letter Agreement (April 7, 2023) and Fifth Loan Modification Agreement (May 5, 2023) with Silicon Valley Bank, CEO and CFO certifications, and Inline XBRL documents[274](index=274&type=chunk) [Signatures](index=56&type=section&id=Signatures) The report is duly signed on behalf of Velo3D, Inc. by its Chief Financial Officer, William McCombe, on May 10, 2023 - The report was signed by William McCombe, Chief Financial Officer, on May 10, 2023[276](index=276&type=chunk)[278](index=278&type=chunk)

Financial Performance - The company reported operating losses of $104.3 million and $57.8 million for the years ended December 31, 2022, and 2021, respectively, and anticipates continued losses in the near term due to significant investments in R&D and marketing [133]. - The company expects to continue investing in research and development to enhance products, which may impact operating results and liquidity if returns are lower than expected [130]. - The company anticipates that demand for additive manufacturing products may not grow as expected, which could lead to stagnation or decline in revenues [130]. - The company has experienced significant delays in the design, production, and commercialization of its additive manufacturing solutions, which could impact future performance [130]. - The company may require additional capital to support growth and may not be able to secure it on acceptable terms, which could impair business operations [141]. - The company has identified material weaknesses in internal controls over financial reporting, which could lead to misstatements in financial statements [132]. - The company relies on a limited number of customers, and any decline in their financial condition could increase credit risk and adversely affect revenues [140]. - The company may incur substantial costs to comply with environmental regulations, which could adversely affect its financial condition [241]. Customer and Market Dependence - Sales to the top three customers accounted for 46.4% and 62.1% of total revenue for the years ended December 31, 2022, and 2021, respectively, indicating a reliance on a limited customer base [137]. - Demand for additive manufacturing products may stagnate or decline if market adoption does not continue to grow as anticipated [164]. - The company faces challenges due to price competition and a relatively inflexible cost structure, which may adversely affect financial results if sales volumes decline [167]. Capital and Securities - The company has filed a shelf registration statement allowing for the sale of up to $300 million in securities, with the potential to raise $40 million through an "at-the-market" offering [141]. - The company has the ability to sell up to $300.0 million of additional shares or other securities under the Shelf Registration Statement [275]. - A registration statement has been filed to register the offer and sale of up to 161,028,936 shares of common stock by certain selling stockholders [274]. - The company has sold approximately $11.0 million worth of shares under the ATM Sales Agreement as of the filing date of the Annual Report [275]. Operational Risks - The company is subject to various risks related to compliance, operations, and intellectual property, which could adversely affect its financial condition and results [132]. - The ongoing COVID-19 pandemic has disrupted operations, impacting the ability to sell, install, and service additive manufacturing systems globally [206]. - Economic uncertainty, including inflation and potential recession, may adversely affect customer spending on additive manufacturing systems [210]. - The company faces risks related to reliance on subcontractors, which may lead to delays in product delivery and negatively impact financial results [221]. - Disruptions at the company's facilities or those of suppliers due to natural disasters could significantly delay operations and product shipments [226]. Regulatory and Compliance Issues - The company is subject to regulatory changes regarding export controls related to 3D printing technologies, which may require additional approvals to sell products globally [180]. - The company is subject to increased scrutiny regarding financial reporting and internal controls, which may lead to unexpected fluctuations in reported results [215]. - The company must comply with privacy laws such as GDPR and the California Privacy Rights Act, which impose increased obligations and costs related to data handling and security [243]. Intellectual Property and Technology - The company faces risks related to the protection of its intellectual property, which could harm competitive advantages and result in loss of sales or licensing opportunities [247]. - Third-party lawsuits alleging infringement of patents or trade secrets could significantly adversely affect the company's financial condition [254]. - The company may incur substantial costs in enforcing and defending its intellectual property rights, which could disrupt business operations [256]. - Significant capital investments are required for R&D of proprietary information and intellectual property, with potential underperformance impacting financial results [246]. Growth Strategy and Challenges - The company intends to continue acquiring or investing in other businesses, technologies, or products as part of its growth strategy, but faces challenges in identifying attractive opportunities [153]. - Future acquisitions may not strengthen the company's competitive position and could lead to additional risks, including increased expenses and integration challenges [154]. - The company intends to invest substantial resources in technology development and market expansion to remain competitive, but may face challenges in managing growth effectively [185]. Stockholder and Market Considerations - The company is classified as an emerging growth company, allowing it to take advantage of certain exemptions from disclosure requirements, potentially making its securities less attractive to investors [267]. - The trading price of the company's common stock and warrants may be volatile due to various market factors [272]. - The company may face challenges in satisfying the continued listing standards of the NYSE, which could lead to delisting [281]. - The company acknowledges that securities litigation or shareholder activism could negatively impact its business, leading to significant expenses and hindering growth strategies [297].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q _____________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-39757 Velo3D, Inc. ______________________________ (Exact name of registrant as specified in its charter) (State or other jurisd ...