Financial Performance - Revenue for Q2 2023 was $25 million, up 25% from $20 million in Q2 2022[157] - Total revenue for the three months ended June 30, 2023, was $25.1 million, an increase of $5.5 million or 27.9% compared to $19.6 million in 2022[191] - Total revenue for the six months ended June 30, 2023, was $51.9 million, an increase of $20.1 million or 63.0% compared to $31.9 million in 2022[221] - 3D Printer sales increased to $23.2 million in Q2 2023 from $17.6 million in Q2 2022, reflecting a growth of $5.6 million or 31.6%[192] - 3D Printer sales contributed $47.8 million, representing a 71.8% increase from $27.8 million in the same period last year[222] Bookings and Backlog - Bookings for Q2 2023 were $16 million, down 11% from $18 million in Q2 2022, while total bookings for the first half of 2023 remained flat at $36 million compared to the same period in 2022[157] - Backlog as of June 30, 2023, was $15 million, significantly down from $55 million as of June 30, 2022[157] - The company expects demand for the Sapphire family of systems to drive future revenue growth, with a backlog of $15 million for 3D Printers as of June 30, 2023[195] Profitability and Expenses - Gross profit for the three months ended June 30, 2023, was $3.0 million, with a gross margin of 11.9%, compared to a gross profit of $1.2 million and a margin of 6.3% in 2022[204] - Total cost of revenue for Q2 2023 was $22.2 million, an increase of $3.7 million or 20.3% from $18.4 million in Q2 2022[198] - Gross profit for the six months ended June 30, 2023, was $5.9 million, with a gross margin of 11.4%, up from $1.2 million and 3.9% in 2022[231] - Total cost of revenue increased to $46.0 million, a rise of $15.4 million or 50.4% from $30.6 million in 2022[226] - The company reported a net loss of $59.4 million for the six months ended June 30, 2023, compared to a net income of $62.6 million in 2022, reflecting a change of $122.0 million[219] Research and Development - Research and development expenses are expected to increase, which may adversely affect near-term profitability as the company focuses on innovation[161] - Research and development expenses decreased to $12.5 million in Q2 2023 from $13.0 million in Q2 2022, a reduction of $0.5 million[206] - Research and development expenses decreased to $23.0 million, down $2.9 million from $25.9 million in the prior year[232] - Continued investment in product development is seen as crucial for future growth, with a focus on addressing customer needs and enhancing AM solutions[161] Customer Concentration and Diversification - Sales to the top three customers accounted for 47.0% of total sales in Q2 2023, a decrease from 65.1% in Q2 2022, indicating improved customer diversification[159] - The company aims to diversify its customer base but remains susceptible to risks associated with customer concentration[160] Cash Flow and Financing - As of June 30, 2023, the company had $47.3 million in cash and cash equivalents, down from $80.2 million at the end of 2022[240] - The company entered into a securities purchase agreement to issue up to $105 million in senior secured convertible notes, with $70 million issued on August 14, 2023, generating approximately $66 million in net proceeds[241] - Net cash used in operating activities for the six months ended June 30, 2023, was $58.8 million, a decrease of $10.0 million compared to $68.8 million in the same period of 2022[253] - Net cash provided by investing activities for the six months ended June 30, 2023, was $25.6 million, a significant improvement from a net cash outflow of $94.8 million in the same period of 2022[257] - Net cash provided by financing activities during the six months ended June 30, 2023, was $30.1 million, compared to a net cash outflow of $0.5 million in the same period of 2022[260] - The company believes its cash and cash equivalents, along with expected future cash generation, will be sufficient to meet working capital and capital expenditure requirements for at least twelve months[245] Operational Challenges - The company continues to face supply chain challenges that have increased material and shipping costs, impacting gross margins[164] - The timeframe from order to completion of the site acceptance test is expected to be reduced as production scales[169] - The company expects cash used in operating activities to decrease due to stabilizing working capital requirements and cost reduction initiatives for the remainder of 2023[256] - The company anticipates a decrease in capital expenditures for the remainder of 2023, limiting the number of 3D Printer systems for lease to customers[259] Interest and Liabilities - Interest expense increased to $0.3 million in Q2 2023 from $0.1 million in Q2 2022, reflecting the impact of recent financing activities[212] - Interest expense increased to $0.6 million for the six months ended June 30, 2023, compared to $0.2 million in 2022[235] - The gain on fair value of contingent earnout liabilities decreased significantly to $1.8 million in Q2 2023 from $130.2 million in Q2 2022, a decline of 98.6%[189] - The change in fair value of contingent earnout liabilities resulted in a loss of $7.8 million for the six months ended June 30, 2023, compared to a gain of $99.0 million in 2022[237] Regulatory and Compliance - The company is classified as a smaller reporting company under Rule 12b-2 of the Exchange Act, thus exempt from providing certain market risk disclosures[273]

[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].

Revenue and Bookings - Revenue for the three months ended September 30, 2022, was $19 million, a 111% increase from $9 million in the same period in 2021[204]. - Bookings for the three months ended September 30, 2022, reached $27 million, up 125% from $12 million in the prior year[204]. - Total revenue for the three months ended September 30, 2022, was $19.1 million, an increase of $10.4 million or 119.4% compared to $8.7 million in 2021[234]. - Total revenue for the nine months ended September 30, 2022, was $50.977 million, an increase of $33.948 million or 199.4% compared to $17.029 million in 2021[265]. Sales Performance - 3D Printer sales reached $16.5 million for the three months ended September 30, 2022, up 127.1% from $7.3 million in 2021, primarily due to the launch of the Sapphire® XC system[235]. - 3D Printer sales reached $44.336 million for the nine months ended September 30, 2022, up 226.1% from $13.594 million in 2021, primarily due to the launch of the Sapphire® XC system[266]. Backlog and Demand - Backlog as of September 30, 2022, was $66 million, compared to $34 million in the same period in 2021, indicating strong demand[204]. - The company expects a backlog of firm orders for 3D Printers to be $66 million as of September 30, 2022, indicating strong future demand[237]. Expenses and Profitability - Research and development expenses are expected to continue increasing, which may adversely affect near-term profitability as the company invests in innovative AM technologies[207]. - Research and development expenses rose to $12.6 million in Q3 2022, an increase of $4.6 million from $8.0 million in Q3 2021, driven by the development of new systems[249]. - Selling and marketing expenses increased to $5.6 million in Q3 2022 from $3.3 million in Q3 2021, reflecting a $2.3 million rise due to additional headcount and marketing initiatives[252]. - General and administrative expenses were $9.6 million for Q3 2022, up from $5.2 million in Q3 2021, an increase of $4.4 million attributed to higher headcount and public company-related expenses[254]. - Gross profit for Q3 2022 was $(0.1) million, resulting in a gross margin of (0.6)%, down from a gross profit of $1.5 million and a margin of 16.9% in Q3 2021[246]. - Gross profit for the nine months ended September 30, 2022, was $1.126 million, with a gross margin of 2.2%, down from $3.268 million and 19.2% in 2021[276]. Costs and Financial Impact - General economic conditions, including inflation and supply chain challenges, have increased material costs and impacted gross margins[209]. - The cost of revenue as a percentage of revenue was 100.6% for Q3 2022, up from 83.1% in Q3 2021, primarily due to a shift in product mix towards more Sapphire® XC systems[244]. - Total cost of revenue for the three months ended September 30, 2022, was $19.2 million, an increase of $12.0 million or 166% compared to $7.2 million in 2021[240]. - Cost of revenue for the nine months ended September 30, 2022, was $49.851 million, an increase of $36.090 million or 262.3% compared to $13.761 million in 2021[270]. Tax and Valuation - No provision for federal and state income taxes was recorded due to projected losses, maintaining a full valuation allowance on deferred tax assets as of September 30, 2022[230]. - No provision for federal and state income taxes was recorded for both the nine months ended September 30, 2022, and 2021, due to projected losses[285]. Cash Flow and Financing - Cash and cash equivalents as of September 30, 2022, were $112.8 million, down from $223.1 million as of December 31, 2021, with an accumulated deficit of $242.5 million[286]. - Net cash used in operating activities for the nine months ended September 30, 2022, was $92.2 million, an increase of $60.9 million compared to $31.3 million for the same period in 2021[296]. - Net cash used in investing activities during the nine months ended September 30, 2022, was $74.5 million, primarily due to property and equipment purchases and investments[300]. - Net cash provided by financing activities for the nine months ended September 30, 2022, was $323.5 million, primarily from the Merger and PIPE financing[303]. - The company may require additional funds for working capital, product development, and potential acquisitions, indicating a need for future equity or debt financing[288]. - The company has a revolving credit line increased to $30.0 million, with a maturity date extended to December 31, 2024[292]. Other Financial Metrics - The company recorded a gain of $58.110 million on the fair value of contingent earnout liabilities for the nine months ended September 30, 2022, compared to a gain of $2.014 million in 2021[283]. - Other income (expense), net was $0.993 million for the nine months ended September 30, 2022, compared to a loss of $0.156 million in 2021[284]. - The company incurred a net loss of $12.6 million for the nine months ended September 30, 2022, compared to a net loss of $92.7 million for the same period in 2021[286].

Revenue and Sales Performance - Revenue for the three months ended June 30, 2022, was $20 million, compared to $7 million for the same period in 2021, representing a 185.7% increase[187] - Bookings for the three months ended June 30, 2022, were $18 million, up from $6 million in the same period in 2021, marking a 200% increase[187] - Total revenue for the three months ended June 30, 2022, was $19.6 million, an increase of $12.5 million or 174.9% compared to $7.1 million in the same period of 2021[219] - 3D Printer sales reached $17.6 million for the three months ended June 30, 2022, up 189.8% from $6.1 million in 2021, primarily due to the launch of the Sapphire® XC system[220] - Total revenue for the six months ended June 30, 2022, was $31.9 million, an increase of $23.6 million or 283.0% compared to $8.3 million in 2021[249] - 3D Printer sales reached $27.8 million, up 340.3% from $6.3 million in the same period of 2021, primarily due to the launch of the Sapphire® XC system[250] Cost and Profitability - Total cost of revenue for the three months ended June 30, 2022, was $18.4 million, an increase of $13.5 million or 271% compared to $5.0 million in 2021[226] - Gross profit for the three months ended June 30, 2022, was $1.2 million, with a gross margin of 6.3%, down from $2.2 million and 30.6% in 2021[231] - Total cost of revenue for the six months ended June 30, 2022, was $30.6 million, an increase of $24.1 million or 369% compared to $6.5 million in 2021[254] - Gross profit for the six months ended June 30, 2022, was $1.2 million, with a gross margin of 3.9%, down from $1.8 million and 21.6% in 2021[260] Expenses - Research and development expenses increased to $13.0 million for the three months ended June 30, 2022, up $6.6 million from $6.4 million in 2021, driven by the development of the Sapphire® XC system[233] - Selling and marketing expenses rose to $6.2 million for the three months ended June 30, 2022, an increase of $3.9 million from $2.3 million in 2021[236] - General and administrative expenses were $8.3 million for the three months ended June 30, 2022, up $3.0 million from $5.2 million in 2021[238] - Research and development expenses increased to $25.9 million, up $14.8 million from $11.1 million in 2021, driven by the development of the Sapphire® XC system[261] - Selling and marketing expenses rose to $12.2 million, an increase of $7.8 million from $4.4 million in 2021, attributed to higher headcount and marketing initiatives[263] - General and administrative expenses were $17.5 million, up $7.5 million from $10.0 million in 2021, primarily due to increased headcount and employee-related expenses[264] Customer and Market Dynamics - Backlog as of June 30, 2022, stood at $55 million, unchanged from the previous year, indicating stable demand[188] - Sales to the top three customers accounted for 65.1% of revenue for the three months ended June 30, 2022, slightly up from 64.7% in 2021, highlighting customer concentration risks[189] - The company has shifted its customer mix towards existing customers, resulting in higher recurring purchasing rates[186] - The company expects to continue its "land and expand" strategy, initially selling one machine to validate technology before increasing sales to key customers[183] Financial Position and Cash Flow - As of June 30, 2022, the company had $141.8 million in cash and cash equivalents, down from $223.1 million at the end of 2021[270] - The company maintained a full valuation allowance on deferred tax assets as of June 30, 2022, due to projected losses[269] - The company may require additional funds for working capital, product enhancement, and potential acquisitions, which could involve equity or debt financing[272] - Cash and cash equivalents, along with funds from the Merger and PIPE Financing, are expected to meet working capital and capital expenditure needs for at least twelve months[273] - As of June 30, 2022, the company had $3.0 million outstanding on its revolving credit line, with a variable interest rate[276] - Net cash provided by operating activities for the six months ended June 30, 2022, was $68.8 million, a change of $81.8 million from a net cash used of $13.0 million in the same period of 2021[281] - Net cash used in investing activities for the six months ended June 30, 2022, was $94.8 million, primarily due to purchases of available-for-sale investments totaling $87.7 million[286] - The company expects an increase in cash used in operating activities for the remainder of 2022 due to working capital requirements and operating expenses[285] - Net cash used in financing activities during the six months ended June 30, 2022, was $0.5 million, consisting mainly of equipment loan repayments[288] - The company anticipates providing cash through financing activities by issuing new equity or incurring new debt to support operations[290] - As of June 30, 2022, the company had no off-balance sheet arrangements[291] Other Notable Events - The impact of COVID-19 has led to longer lead times for sales and marketing, affecting order timing and supply chain constraints[192] - The company’s technology allows for the production of complex high-value metal parts without redesign, differentiating it from competitors[182] - The change in fair value of warrants resulted in a gain of $23.7 million for the three months ended June 30, 2022, related to the non-cash fair value change driven by stock price fluctuations[241] - The company reported a net income of $62.6 million for the six months ended June 30, 2022, compared to a net loss of $26.1 million in 2021[270] - The company invested $12 million in lab equipment and leasehold improvements for the Sapphire® XC manufacturing facility, with an additional $2.0 million to $3.0 million expected for completion[280]

Revenue and Sales Performance - Revenue for the three months ended March 31, 2022, was $12.2 million, a significant increase from $1.2 million in the same period of 2021, representing a growth of 916.7%[174] - Total revenue for the three months ended March 31, 2022, was $12.2 million, an increase of $11.0 million or 942.5% compared to $1.2 million in the same period of 2021[206] - 3D Printer sales accounted for $10.2 million, representing 83.3% of total revenue, a significant increase from $0.2 million in 2021, attributed to six 3D Printer sales compared to zero in the prior year[207] - Recurring payment revenue increased to $0.9 million, or 7.6% of total revenue, from $0.3 million in 2021, due to an increase in the number of 3D Printer systems in service[208] - Support services revenue rose to $1.1 million, or 9.1% of total revenue, from $0.7 million in 2021, driven by an increase in the number of 3D Printers in service[209] - Bookings for the three months ended March 31, 2022, were 7, up from 6 in the same period of 2021, indicating a 16.7% increase[175] Customer and Market Dynamics - Sales to the top three customers accounted for 87.5% of revenue in Q1 2022, compared to 83.9% in Q1 2021, highlighting continued customer concentration risks[178] - The company shipped a total of 54 3D printer systems to 20 cumulative customers as of March 31, 2022, compared to 11 cumulative customers in the same period of 2021[177] - The company expects demand for the Sapphire® and Sapphire® XC to increase revenue, with a backlog of firm orders totaling $55.0 million for 3D Printers as of March 31, 2022[210] Financial Performance and Expenses - The loss on fair value of contingent earnout liabilities was $31.2 million for the three months ended March 31, 2022, with no similar expense recorded in Q1 2021[200] - The company incurred net losses of $65.3 million for the three months ended March 31, 2022, compared to a net loss of $13.6 million for the same period in 2021[234] - Gross profit for the period was less than $0.1 million, with a gross margin of 0.0%, compared to a gross loss of $(0.4) million and a margin of (33.3%) in 2021[218] - Total cost of revenue for the three months ended March 31, 2022, was $12.2 million, an increase of $10.6 million or 681.2% compared to $1.6 million in 2021[212] - Research and development expenses increased to $12.9 million, up $8.2 million from $4.7 million in 2021, primarily due to the development of the Sapphire® XC system[221] - Selling and marketing expenses rose to $6.0 million, an increase of $4.0 million from $2.0 million in 2021, driven by additional headcount and marketing initiatives[224] - General and administrative expenses were $9.3 million, up $4.5 million from $4.8 million in 2021, largely due to increased headcount and public company-related expenses[226] Cash Flow and Capital Management - Cash and cash equivalents as of March 31, 2022, were $186.2 million, down from $223.1 million as of December 31, 2021[234] - Net cash used in operating activities for the three months ended March 31, 2022, was $30.1 million, an increase of $27.5 million compared to $2.6 million in the same period of 2021[241] - Net cash used in investing activities during the three months ended March 31, 2022, was $72.7 million, compared to $3.4 million in the same period of 2021[246] - The company expects cash used in operating activities to increase for the remainder of 2022 due to working capital requirements and operating expenses[245] - The company anticipates raising additional capital through equity or debt financings to support operations and growth initiatives[236] - The company has an accumulated deficit of $295.2 million as of March 31, 2022, compared to $229.9 million as of December 31, 2021[234] Operational Challenges - The company continues to face supply chain constraints due to the COVID-19 pandemic, impacting the timing of customer orders and product shipments[181] - Research and development expenses are expected to increase as the company focuses on advancing its additive manufacturing technologies, which may adversely affect near-term profitability[180] - The gross profit and gross margin are expected to vary due to the mix of products sold and operational cost optimization efforts[194] - The company invested $8.2 million in lab equipment and leasehold improvements for the Sapphire® XC manufacturing facility, with an additional investment of $2.0 million to $3.0 million planned[240] - As of March 31, 2022, the outstanding balance on the working capital revolver line of credit was $3.0 million[238]

Financial Performance - The company has incurred net losses of $107.1 million and $21.8 million for the years ended December 31, 2021 and 2020, respectively, and expects to continue experiencing operating losses and negative cash flow in the near term [116]. - The company’s financial performance may fluctuate based on the mix of transaction models, with lower gross margin transactions potentially reducing profitability [138]. - Economic uncertainty, including factors like inflation and rising interest rates, could adversely affect business and operating results [185]. - Changes in tax laws and regulations could materially affect the company's financial position and results of operations [175]. - The company may face volatility in stock prices due to various market and industry factors, including changes in operating performance and economic conditions [240]. Customer Concentration and Revenue Risks - Sales to the top three customers accounted for 62.0% and 71.8% of total revenue for the years ended December 31, 2021 and 2020, respectively, with SpaceX being the largest customer, contributing 27.8% and 41.1% of revenue in those years [120][121]. - The company relies on a limited number of customers for a significant portion of its near-term revenue, increasing credit risk if these customers face financial difficulties [123]. - The company faces challenges in maintaining and increasing sales of its additive manufacturing products and service contracts, which are crucial for generating recurring revenues [139]. Competition and Market Challenges - The company may face increased competition in the additive manufacturing industry, which could adversely affect its operating results [115]. - The company is experiencing increased competition in the additive manufacturing industry, which may adversely affect its operating results and market share [153]. - The company’s business model is sensitive to price competition, and failure to meet customer price expectations could negatively impact demand for its products [142]. Operational and Logistical Challenges - There are significant technological and logistical challenges associated with producing and commercializing additive manufacturing solutions, which may lead to delays in product launches [126]. - The ongoing COVID-19 pandemic has disrupted the company's operations, leading to increased costs and delays in product installations, particularly affecting the Sapphire® and Sapphire® XC printers [134]. - The construction of planned production facilities may face delays or cost overruns, impacting business operations and financial condition [202]. - The company operates primarily at two facilities, and disruptions at either location could adversely affect operations and results [201]. Research and Development - The company has invested significantly in research and development, which may affect operating results and liquidity if the returns on these investments are lower than expected [125]. - The company is committed to investing in research and development to remain competitive in a rapidly changing technological landscape, but faces challenges in effectively addressing customer needs and emerging industry standards [151]. - The company plans to continue product development and expand its distribution network to enhance its competitive position [156]. Regulatory and Compliance Risks - The company is subject to various regulatory rules and regulations, which may increase costs and the risk of non-compliance [253]. - Compliance with U.S. and international anti-corruption laws is critical, as violations could lead to civil, criminal, and administrative penalties, harming the company's reputation [208]. - The company is subject to various environmental laws and regulations, which could result in compliance costs and potential liabilities [212]. Intellectual Property and Confidentiality - The company relies on proprietary information and intellectual property, and failure to protect these rights could harm competitive advantages and financial performance [218]. - The company may face challenges in securing patent protections, which could limit its ability to commercialize products and technologies [221]. - Breaches of confidentiality agreements could harm the company's competitive position and result in decreased sales and operating results [222]. - The company's ability to protect its IP rights is crucial for future revenue growth, relying on a combination of registered and unregistered IP [227]. Management and Internal Controls - Material weaknesses in internal control over financial reporting have been identified, which could lead to misstatements and regulatory consequences [177]. - There is insufficient segregation of duties in finance and accounting functions, contributing to material weaknesses [181]. - Management acknowledges that remediation of these material weaknesses may not occur in a timely manner, potentially affecting the accuracy of financial reporting [182]. Growth and Capital Requirements - The company may require additional capital to support business growth, which might not be available on acceptable terms, potentially impacting its ability to develop new features or enhance products [124]. - The company has experienced rapid growth and is making significant investments in infrastructure, technology, and market expansion, but must generate sufficient revenue to support these investments [163]. - Effective management of anticipated growth is crucial, requiring enhancements in operational, financial, and management controls [164]. Shareholder and Market Dynamics - Approximately 77.9% of the outstanding common stock is owned by former holders of Legacy Velo3D capital stock immediately after the closing [242]. - The public and private placement warrants will become exercisable for common stock, increasing the number of shares eligible for future resale and resulting in dilution for stockholders [244]. - A significant portion of total outstanding shares is restricted from immediate resale, which could lead to a drop in market price if sold in large quantities [241]. - The company may not satisfy the continued listing standards of the NYSE, which could lead to delisting and adversely affect liquidity and market price [250].

Revenue and Sales Performance - Total revenue for the three months ended September 30, 2021, was $8.7 million, an increase of $6.4 million, or 283.2%, compared to $2.3 million in the same period of 2020 [251]. - Total revenue for the nine months ended September 30, 2021, was $17.0 million, an increase of $4.8 million or 39.2% compared to $12.2 million in 2020 [289]. - Revenues for the three months ended September 30, 2021, were $8.7 million, a 282.5% increase from $2.3 million in the same period of 2020 [325]. - 3D Printer sales accounted for $7.3 million, representing 83.6% of total revenue, with a significant increase of $5.5 million attributed to five 3D Printer sales compared to one in the prior year [253]. - Recurring payment revenue increased to $0.6 million, up 308.2% from $0.1 million, due to an increase in the number of 3D Printer systems in service from three to nine [254]. - Support service revenue rose to $0.8 million, a 114.4% increase from $0.4 million, driven by an increase in 3D Printer systems in service from 20 to 38 [256]. - Recurring payment revenue increased significantly to $1.2 million for the nine months ended September 30, 2021, compared to $146,000 in 2020, reflecting a growth of 743.2% [288]. Customer and Market Dynamics - Sales to the top three customers accounted for more than 86.2% of revenue for the three months ended September 30, 2021, and 48.0% for the nine months ended September 30, 2021, indicating significant customer concentration risk [227]. - The company has received 14 firm orders and 21 reservations for the Sapphire XC, indicating strong future demand and revenue potential [258]. - The company’s "land and expand" strategy involves initial sales of a single machine followed by additional purchases as customers integrate the technology into their operations [212]. Costs and Expenses - Total cost of revenue for the three months ended September 30, 2021, was $7.2 million, an increase of $5.5 million, or 305.4%, compared to $1.8 million in 2020 [263]. - Cost of 3D Printers was $5.7 million, up from $1.1 million, due to the increase in sales volume and higher factory overhead costs [264]. - Total cost of revenue for the nine months ended September 30, 2021, was $13.8 million, an increase of $5.5 million or 67.0% from $8.2 million in 2020 [296]. - The cost of revenue for 3D Printer sales was $10.2 million, representing 59.7% of total revenue for the nine months ended September 30, 2021 [288]. - Operating expenses for the three months ended September 30, 2021, totaled $16.5 million, which is 189.3% of revenues, compared to $7.5 million or 330.4% of revenues in the same period of 2020 [327]. Research and Development - The company’s research and development expenses are expected to continue increasing, which may adversely affect near-term profitability [228]. - Research and development expenses were $8.0 million, a 97.6% increase from $4.0 million, reflecting the company's commitment to advancing innovative technologies [250]. - Research and development expenses increased to $19.1 million for the nine months ended September 30, 2021, up $8.2 million or 74.8% from $10.9 million in 2020 [288]. - The company expects research and development costs to continue increasing as it invests in enhancing its portfolio of additive manufacturing solutions [272]. - The company expects research and development costs to continue increasing as it invests in enhancing its AM solutions portfolio, particularly for the Sapphire XC system anticipated for delivery in late 2021 [304]. Financial Position and Cash Flow - The company incurred $19.9 million in transaction costs related to the merger, with total net cash proceeds amounting to $278.3 million [215]. - Cash and cash equivalents as of September 30, 2021, were $296.8 million, with an accumulated deficit of $215.4 million [335]. - Net cash used in operating activities for the nine months ended September 30, 2021, was $(31.3) million, an increase of $(11.4) million from $(19.9) million in the same period of 2020 [343]. - Net cash used in investing activities during the nine months ended September 30, 2021, was $8.5 million, consisting of $1.5 million for property and equipment purchases and $6.9 million for production of equipment on lease to customers [347]. - Net cash provided by financing activities during the nine months ended September 30, 2021, was $323.5 million, primarily from net proceeds of $143.2 million from the Merger and $155.0 million from PIPE Financing [349]. Losses and Financial Challenges - Loss from operations for the three months ended September 30, 2021, was $(15.0) million, compared to $(7.0) million in the same period of 2020, representing a 113.9% increase in losses [250]. - Net loss for the three months ended September 30, 2021, was $(66.6) million, compared to $(7.1) million in the same period of 2020, representing a 837.7% increase in loss [325]. - Adjusted EBITDA for the three months ended September 30, 2021, was $(13.0) million, a 107.0% increase in loss from $(6.3) million in the same period of 2020 [325]. - The loss on the convertible note modification was $50.6 million for the three months ended September 30, 2021, with no such loss recorded in the same period in 2020 [281]. - The loss on the convertible note modification was $50.6 million for the nine months ended September 30, 2021, with no such loss recorded in 2020 [313]. Future Outlook and Investments - The company expects the new Sapphire XC system to reduce production costs per part by approximately 65% to 80% compared to the existing Sapphire system, with commercial shipments scheduled for the end of fiscal year 2021 [222]. - The company plans to invest an additional $4.0 million to $7.0 million in factory equipment and leasehold improvements for the Sapphire XC systems [222]. - The company has a contractual obligation of $10.9 million in base rent for a new 80,000+ square foot manufacturing facility [222]. - The company plans to expand its markets through new distributor agreements and expects selling and marketing expenses to rise as it initiates new marketing campaigns [307].

PART I – FINANCIAL INFORMATION [Item 1. Condensed Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Financial%20Statements) Unaudited condensed financial statements as of June 30, 2021, show **$345.5 million** in assets and **$13.4 million** net income, influenced by warrant reclassification [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2021, the balance sheet shows **$345.5 million** in assets and **$40.6 million** in liabilities, primarily due to warrant revaluation Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $145,200 | $1,667,600 | | Marketable securities held in Trust Account | $345,009,910 | $345,000,000 | | **Total Assets** | **$345,529,674** | **$347,394,817** | | **Liabilities & Equity** | | | | Warrant liabilities | $25,104,000 | $43,147,500 | | Deferred underwriting fee payable | $12,075,000 | $12,075,000 | | **Total Liabilities** | **$40,638,405** | **$55,927,140** | | Class A ordinary shares subject to possible redemption | $299,891,260 | $286,467,670 | | **Total Shareholders' Equity** | **$5,000,009** | **$5,000,007** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended June 30, 2021, the company reported **$13.4 million** net income, primarily from an **$18.0 million** non-cash gain on warrant liabilities Condensed Consolidated Statements of Operations (Unaudited) | Account | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | General and administrative expenses | $3,188,504 | $4,629,818 | | Loss from operations | ($3,188,504) | ($4,629,818) | | Change in fair value of warrant liabilities | $523,000 | $18,043,500 | | Interest earned on marketable securities | $5,210 | $9,910 | | **Net Income (Loss)** | **($2,660,294)** | **$13,423,592** | [Condensed Consolidated Statement of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended June 30, 2021, net cash used in operating activities was **$1.3 million**, reducing cash from **$1.7 million** to **$145,200** Cash Flow Summary for Six Months Ended June 30, 2021 (Unaudited) | Category | Amount | | :--- | :--- | | Net cash used in operating activities | ($1,254,632) | | Net cash used in financing activities | ($267,768) | | **Net Change in Cash** | **($1,522,400)** | | Cash – Beginning of period | $1,667,600 | | **Cash – End of period** | **$145,200** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's blank check status, Velo3D agreement, and financial restatement due to warrant reclassification - The company is a blank check company formed to effect a business combination and has until **December 7, 2022**, to do so[16](index=16&type=chunk)[28](index=28&type=chunk) - On **March 22, 2021**, the Company entered into a Business Combination Agreement with Velo3D, Inc[72](index=72&type=chunk) - Financials were revised to correct the classification of additional paid-in capital and retained earnings as of **March 31, 2021**[31](index=31&type=chunk) - Warrants are classified as liabilities and measured at fair value, with Public Warrants moving from Level 3 to Level 1 inputs and Private Placement Warrants moving from Level 3 to Level 2 inputs during the period[46](index=46&type=chunk)[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's pre-business combination SPAC status, results driven by warrant fair value changes, liquidity concerns, and critical accounting policies - The company is a blank check company seeking to complete a business combination, with activities limited to formation, IPO, and target search[104](index=104&type=chunk)[107](index=107&type=chunk) Results of Operations Summary | Period | Net Income / (Loss) | Key Drivers | | :--- | :--- | :--- | | Three months ended June 30, 2021 | ($2,660,294) | General & admin expenses of $3.2M, offset by a $0.5M gain on warrant liabilities | | Six months ended June 30, 2021 | $13,423,592 | A $18.0M gain on warrant liabilities, offset by $4.6M in general & admin expenses | - As of **June 30, 2021**, the company had **$145,200** in cash held outside the Trust Account and will need to raise additional capital, raising substantial doubt about its ability to continue as a going concern[115](index=115&type=chunk)[117](index=117&type=chunk) - Critical accounting policies include classifying outstanding warrants as derivative liabilities measured at fair value and classifying ordinary shares subject to redemption as temporary equity[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company faces no material market or interest rate risk, with Trust Account funds invested in short-term U.S. government securities - The company is not subject to any material market or interest rate risk as of **June 30, 2021**[142](index=142&type=chunk) - Proceeds from the IPO held in the Trust Account are invested in short-term U.S. government securities or money market funds, believed to have no material exposure to interest rate risk[142](index=142&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) The company restated December 31, 2020, financials due to warrant misclassification, identifying a material weakness in disclosure controls and procedures - Following an SEC staff statement on **April 12, 2021**, the company re-evaluated its accounting for warrants and concluded they should be classified as liabilities measured at fair value, not equity[143](index=143&type=chunk)[144](index=144&type=chunk) - Management determined that due to the warrant misclassification, its disclosure controls and procedures were not effective as of **December 31, 2020**[146](index=146&type=chunk) - The company plans to remediate this material weakness by enhancing its processes and communication regarding complex accounting applications[147](index=147&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings - There are no legal proceedings to report[150](index=150&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since previous filings - No material changes to risk factors have occurred since previous filings[151](index=151&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details **$345 million** gross proceeds from the December 7, 2020, IPO and **$8.9 million** from a private placement, with **$345 million** deposited into the Trust Account - The Initial Public Offering on **December 7, 2020**, raised gross proceeds of **$345,000,000** from the sale of **34,500,000** units[152](index=152&type=chunk) - A simultaneous private placement of **4,450,000** warrants to the Sponsor generated proceeds of **$8,900,000**[153](index=153&type=chunk) - A total of **$345,000,000** from the IPO and private placement was deposited into the Trust Account[154](index=154&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - There are no defaults upon senior securities to report[156](index=156&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[157](index=157&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) The company reported no other information - There is no other information to report[158](index=158&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and Inline XBRL data - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[160](index=160&type=chunk) - Inline XBRL Instance, Schema, Calculation, Definition, Label, and Presentation documents are filed as exhibits[160](index=160&type=chunk)

Financial Performance - For the three months ended March 31, 2021, the company reported a net income of $16,083,886, which included general and administrative expenses of $1,441,314 and a decrease in the fair value of warrant liabilities of $17,520,500 [125]. - The company incurred $19,126,250 in transaction costs related to the initial public offering, including $6,900,000 in underwriting fees [127]. - The company expects to incur increased expenses due to being a public company, including legal, financial reporting, accounting, and auditing compliance costs [124]. Initial Public Offering - The company completed its initial public offering on December 7, 2020, raising gross proceeds of $345,000,000 from the sale of 34,500,000 Units at $10.00 per Unit [127]. - The underwriter received a cash underwriting discount of 2.00% of the gross proceeds from the Initial Public Offering, totaling $6,900,000, after a reimbursement of $450,000 for expenses [143]. - A deferred fee of $0.35 per unit, amounting to $12,075,000 in total, will be payable to the underwriter only upon the completion of a business combination [143][153]. Trust Account and Cash Management - As of March 31, 2021, the company had investments held in the Trust Account amounting to $345,004,700 [129]. - The company had cash of $1,265,715 held outside of the Trust Account as of March 31, 2021, intended for identifying and evaluating target businesses [131]. - The company intends to use substantially all funds in the Trust Account to complete its initial business combination, with any remaining proceeds used for working capital [130]. - The company may need to obtain additional financing to complete its initial business combination if the transaction requires more cash than available in the Trust Account [135]. Liabilities and Financial Obligations - The company agreed to pay a monthly administrative services fee of $10,000 to an affiliate of the Sponsor, totaling $30,000 for the three months ended March 31, 2021 [141]. - The company had borrowed $267,768 under a Promissory Note from the Sponsor, which was fully repaid upon the closing of the initial public offering [139]. - As of March 31, 2021, there were no off-balance sheet arrangements or long-term liabilities, except for a monthly fee of $10,000 for office space and administrative support [144][152]. Warrant and Equity Information - The company issued 8,625,000 public warrants and 4,450,000 private placement warrants, all classified as derivative liabilities [147]. - The fair value of the private placement warrants was based on Level 3 inputs, while public warrants utilized Level 1 inputs as they were actively traded [147]. - Ordinary shares subject to possible redemption are classified as temporary equity due to certain redemption rights outside the company's control [148]. Accounting Standards and Risk Exposure - The company adopted Accounting Standard Update No. 2020-06 on January 1, 2021, which simplifies accounting for convertible instruments without impacting financial position [150]. - As of March 31, 2021, the company was not exposed to market or interest rate risk, with net proceeds invested in U.S. government obligations or money market funds [159].