Velo3D(VLD) - 2023 Q1 - Quarterly Report

Part I. Financial Information Financial Statements (unaudited) 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] - 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] - 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][35] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2023 financial performance, noting a 119.5% revenue increase to $26.8 million, improved gross margin to 10.9%, ongoing customer concentration, and sufficient liquidity for the next twelve months despite historical losses, alongside recent debt facility modifications - Velo3D produces a fully integrated hardware and software solution using proprietary laser powder bed fusion (L-PBF) technology for complex, mission-critical metal parts in industries like space, aviation, and defense[141][142] Key Financial and Operational Metrics | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :--- | :--- | :--- | | Revenue ($ 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] 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] - 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][213] - 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][220] Quantitative and Qualitative Disclosures About Market Risk 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] Controls and Procedures 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] - Material weaknesses in internal control over financial reporting, initially described in the 2022 Form 10-K, remain unremediated as of March 31, 2023[248] - 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][253] - 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][253] Part II. Other Information Legal Proceedings 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] Risk Factors 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] - 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] - 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] Unregistered Sales of Equity Securities and Use of Proceeds 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] - There were no issuer purchases of equity securities during the reporting period[266] Defaults Upon Senior Securities The company reports no defaults upon its senior securities - None[267] Mine Safety Disclosures This item is not applicable to Velo3D's business operations - Not applicable[268] Other Information 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] - 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] Exhibits 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] 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][278]