Velo3D(VLD) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis of Velo3D, Inc.'s financial condition and results of operations Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements for Velo3D, Inc., including the balance sheets, statements of operations and comprehensive loss, cash flows, and stockholders' equity, along with detailed notes explaining the company's business, accounting policies, and specific financial components Condensed Consolidated Balance Sheets (unaudited) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (In thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :------------ | :------------------ | :----- | :------- | | Cash and cash equivalents | $854 | $1,212 | $(358) | (29.5)% | | Accounts receivable, net | $5,394 | $3,723 | $1,671 | 44.9% | | Inventories, net | $38,417 | $49,953 | $(11,536) | (23.1)% | | Total current assets | $48,896 | $57,724 | $(8,828) | (15.3)% | | Total assets | $78,558 | $89,180 | $(10,622) | (11.9)% | | Accounts payable | $14,853 | $18,538 | $(3,685) | (19.9)% | | Debt – current portion | $16,913 | $5,666 | $11,247 | 198.5% | | Total current liabilities | $42,741 | $38,000 | $4,741 | 12.5% | | Total liabilities | $57,023 | $49,516 | $7,507 | 15.2% | | Total stockholders' equity | $21,535 | $39,664 | $(18,129) | (45.7)% | | Accumulated deficit | $(469,501) | $(430,334) | $(39,167) | 9.1% | Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) This statement details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenue | $13,572 | $10,344 | $22,892 | $20,130 | | Gross loss | $(1,588) | $(2,897) | $(891) | $(5,712) | | Total operating expenses | $10,501 | $17,623 | $23,119 | $36,258 | | Loss from operations | $(12,089) | $(20,520) | $(24,010) | $(41,970) | | Interest expense | $(1,572) | $(5,463) | $(2,642) | $(9,360) | | Gain (loss) on fair value of warrants | $0 | $25,310 | $(1,044) | $22,690 | | Loss on warrant cancellation | $0 | $0 | $(11,357) | $0 | | Net loss | $(13,756) | $(172) | $(39,167) | $(28,486) | | Net loss per share: Basic | $(0.98) | $(0.30) | $(2.85) | $(53.31) | Condensed Consolidated Statements of Cash Flows (unaudited) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Highlights (In thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash used in operating activities | $(13,565) | $(28,492) | $14,927 | | Net cash (used in) provided by investing activities | $(1,799) | $5,966 | $(7,765) | | Net cash provided by financing activities | $15,000 | $490 | $14,510 | | Net change in cash and cash equivalents | $(358) | $(22,032) | $21,674 | | Cash and cash equivalents at end of period | $854 | $2,462 | $(1,608) | Condensed Consolidated Statements of Stockholders' Equity (unaudited) This statement outlines changes in the company's equity accounts, including common stock and accumulated deficit Stockholders' Equity Changes (In thousands, except share data) | Metric | As of December 31, 2024 | As of June 30, 2025 | Change | | :----------------------------------- | :---------------------- | :------------------ | :----- | | Common Stock Shares | 12,993,962 | 14,067,416 | 1,073,454 | | Common Stock Amount | $4 | $4 | $0 | | Additional Paid-In Capital | $469,994 | $491,032 | $21,038 | | Accumulated Deficit | $(430,334) | $(469,501) | $(39,167) | | Total Stockholders' Equity | $39,664 | $21,535 | $(18,129) | - The increase in Additional Paid-In Capital for the six months ended June 30, 2025, includes $14.555 million from the issuance of common stock in connection with warrant cancellation and $6.483 million from stock-based compensation[23] Notes to Condensed Consolidated Interim Financial Statements (unaudited) These notes provide detailed explanations and disclosures for the unaudited condensed consolidated interim financial statements, covering business description, accounting policies, fair value measurements, debt, equity instruments, and other financial commitments, highlighting significant events like reverse stock splits and going concern issues Note 1. Description of Business and Basis of Presentation This note describes Velo3D's business, its 3D printing technology, recent corporate actions, and going concern considerations - Velo3D, Inc. produces metal additive 3D printers for high-value metal parts in industries such as space, aviation, defense, and also provides support services[25] - The company completed a 1-for-35 reverse stock split on June 13, 2024, and a 1-for-15 reverse stock split effective July 28, 2025, retroactively adjusting all share and per share amounts[30][32][33] - 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[34] - Management believes there is substantial doubt about the company's ability to continue as a going concern due to an accumulated deficit of $(469.5) million and insufficient liquidity to meet operating needs for at least the next 12 months[35][36] - In late 2024 and early 2025, the company engaged in significant debt and equity transactions, including a debt-for-equity exchange of $22.4 million in Secured Notes for 12,343,423 common shares with Arrayed Notes Acquisition Corp., and the issuance of $15 million in Senior Secured Convertible Promissory Notes with high interest rates (60.0% and 30.0% per annum)[41][43][45] Note 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the financial statements, including revenue recognition and segment reporting - The company is evaluating the impact of recently issued accounting pronouncements: ASU 2023-09 (Income Taxes) effective for annual periods beginning after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosures) effective for annual periods beginning after December 15, 2026[48][49] - Revenue from perpetual software licenses is recognized upfront upon delivery, while post-contract support (PCS) and time-based subscription licenses are recognized ratably over the contract term[51][52] - Velo3D manages its operations and reports financial results as a single operating segment, with the CEO serving as the chief operating decision-maker[55] - The company revised its previously issued unaudited condensed consolidated statement of operations and comprehensive loss for Q1 2025 to correct misclassifications between research and development and selling and marketing expenses, and cash paid for interest, with no impact on total operating expenses, net loss, or net loss per share[61][62][63] Note 3. Basic and Diluted Net Loss per Share This note presents the calculation of basic and diluted net loss per share, considering the impact of potentially dilutive securities Net Loss Per Share (In thousands, except share and per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(13,756) | $(172) | $(39,167) | $(28,486) | | Basic weighted average shares outstanding | 14,041,712 | 565,026 | 13,721,680 | 534,381 | | Diluted weighted average shares outstanding | 14,041,712 | 565,026 | 13,721,680 | 534,381 | | Net loss per share: Basic | $(0.98) | $(0.30) | $(2.85) | $(53.31) | | Net loss per share: Diluted | $(0.98) | $(0.30) | $(2.85) | $(53.31) | - Potentially dilutive common stock equivalents, including warrants, options, and restricted stock units, were excluded from the computation of diluted net loss per share for all periods presented due to their antidilutive effect[64] Note 4. Fair Value Measurements This note details the fair value hierarchy and valuation methods used for financial instruments, including money market funds and warrant liabilities Fair Value Measured as of June 30, 2025 (In thousands) | Instrument | Level 1 | Level 2 | Level 3 | Total | | :----------------------------------- | :------ | :------ | :------ | :---- | | Money market funds | $379 | $0 | $0 | $379 | | Common stock warrant liabilities | $0 | $0 | $13 | $13 | | Contingent earnout liabilities | $0 | $0 | $11 | $11 | | Total financial assets | $379 | $0 | $0 | $379 | | Total financial liabilities | $0 | $0 | $24 | $24 | Fair Value Measured as of December 31, 2024 (In thousands) | Instrument | Level 1 | Level 2 | Level 3 | Total | | :----------------------------------- | :------ | :------ | :------ | :------ | | Money market funds | $215 | $0 | $0 | $215 | | Common stock warrant liabilities | $0 | $0 | $2,166 | $2,166 | | Contingent earnout liabilities | $0 | $0 | $11 | $11 | | Total financial assets | $215 | $0 | $0 | $215 | | Total financial liabilities | $0 | $0 | $2,177 | $2,177 | - The fair value of most common stock warrant liabilities and contingent earnout liabilities are based on significant unobservable inputs (Level 3 measurements), with valuation models including Monte Carlo simulation and Black-Scholes option pricing[69][70][71][72] Note 5. Investments This note confirms the absence of available-for-sale investments and material realized gains or losses during the reporting periods - There were no available-for-sale (AFS) investments held by the company as of June 30, 2025, and December 31, 2024[73] - No material realized gains or losses on AFS investments were reported for the three and six months ended June 30, 2025, and June 30, 2024[73] Note 6. Balance Sheet Components This note provides detailed breakdowns of accounts receivable, inventories, and property and equipment, including related allowances and depreciation Accounts Receivable, Net (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Trade receivables | $7,216 | $7,130 | | Less: Allowances for credit losses | $(1,822) | $(3,407) | | Total | $5,394 | $3,723 | Inventories, Net (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :------------------ | | Raw materials | $30,024 | $29,386 | | Work-in-progress | $3,076 | $9,660 | | Finished goods | $5,317 | $10,907 | | Total | $38,417 | $49,953 | - The company recorded $24.1 million in inventory reserves as of June 30, 2025, compared to $27.1 million as of December 31, 2024[75] Property and Equipment, Net (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Total property, plant and equipment | $29,593 | $27,054 | | Less accumulated depreciation and amortization | $(14,392) | $(12,784) | | Property, plant and equipment, net | $15,201 | $14,270 | - Depreciation expense for property and equipment was $1.7 million for the six months ended June 30, 2025, down from $2.2 million for the same period in 2024[77] Note 7. Equipment Subject to Operating Lease, Net This note details the net value of equipment under operating leases and the associated lease payments received from customers Equipment Subject to Operating Lease, Net (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Equipment Available for Lease | $3,566 | $4,622 | | Accumulated Depreciation | $(546) | $(949) | | Total Equipment Subject to Operating Lease, Net | $3,020 | $3,673 | Lease Payments from Customers (In thousands) | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30, | $70 | $292 | | Six Months Ended June 30, | $70 | $762 | - Depreciation expense for equipment subject to operating lease was $0 for the six months ended June 30, 2025, compared to $0.5 million for the same period in 2024[82] Note 8. Leases This note provides a breakdown of total operating and financing lease liabilities and the corresponding lease expenses Total Lease Liabilities (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Total operating lease liabilities | $9,152 | $9,973 | | Total financing lease liabilities | $186 | $256 | | Total lease liabilities | $9,338 | $10,229 | Total Lease Expense (In thousands) | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30, | $663 | $829 | | Six Months Ended June 30, | $1,322 | $1,692 | - The weighted-average remaining lease term for operating leases was 6.8 years as of June 30, 2025, with a weighted-average discount rate of 9.0%[87] Note 9. Debt This note details the composition of the company's debt, including various secured and convertible promissory notes and their respective interest rates Debt Composition (In thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | January Note | $5,700 | $0 | | February Note 1st Tranche | $5,583 | $0 | | February Note 2nd Tranche | $5,425 | $0 | | Secured Notes | $5,767 | $5,666 | | Total Debt | $22,475 | $5,666 | | Debt – current portion | $16,913 | $5,666 | | Long-term debt – less current portion | $5,562 | $0 | - The January Note, a Senior Secured Convertible Promissory Note of $5.0 million, bears interest at 60.0% per annum, with $1.5 million in interest expense incurred for the six months ended June 30, 2025[90] - The February Note, a Senior Secured Convertible Promissory Note of $10.0 million, bears interest at 30.0% per annum, with $1.0 million in interest expense incurred for the six months ended June 30, 2025[91] - The Secured Notes bear interest at 6.00% per annum, with an effective interest rate of 8.7% for the six months ended June 30, 2025[92][94] Note 10. Equity Instruments This note provides details on common stock outstanding, warrant exchange agreements, and contingent earnout liabilities - As of June 30, 2025, Velo3D had 14,067,416 shares of common stock outstanding[96] - In February 2025, the company entered into Warrant Exchange Agreements, issuing 990,159 shares of common stock in exchange for various warrants[100] Common Stock Warrants (Number of Warrants) | Warrant Type | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Private Placement Warrants | 8,477 | 8,477 | | Public Warrants | 16,429 | 16,429 | | 2022 Private Warrant | 134 | 134 | | RDO Warrants | 0 | 19,048 | | Placement Agent Warrants | 3,429 | 3,429 | | 2024 Private Warrants | 0 | 41,808 | | BEPO Warrants | 5,157 | 65,307 | | BEPO Agent Warrants | 3,266 | 3,266 | | July 2024 Private Warrants | 0 | 110,000 | | August Inducement Warrants | 0 | 99,048 | | Total Warrants | 36,892 | 366,946 | - Contingent earnout liabilities for pre-closing Legacy Velo3D equity holders could result in the issuance of up to 41,444 shares of common stock, based on two tranches[131] Note 11. Equity Incentive Plans and Stock-Based Compensation This note details the company's equity incentive plans, stock option and RSU activity, and total stock-based compensation expense - As of June 30, 2025, the company had 0 shares remaining for issuance under its 2021 Equity Incentive Plan (EIP) and 148,897 shares reserved for its 2021 Employee Stock Purchase Plan (ESPP)[137] Stock Options Activity (In thousands, except per share data) | Metric | As of December 31, 2024 | As of June 30, 2025 | | :----------------------------------- | :---------------------- | :------------------ | | Outstanding Options | 18 | 4 | | Weighted Average Exercise Price | $380.70 | $1,022.11 | Restricted Stock Units (RSUs) Activity (In thousands, except per share data) | Metric | As of December 31, 2024 | As of June 30, 2025 | | :----------------------------------- | :---------------------- | :------------------ | | Balance of RSUs | 13 | 889 | | Weighted Average Grant Date Fair Value | $714.30 | $16.51 | | Unrecognized Compensation Cost | $13.9 million (as of June 30, 2025) | $24.6 million (as of June 30, 2024) | Stock-Based Compensation Expense (In thousands) | Award Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restricted stock units | $1,834 | $3,101 | $5,425 | $6,930 | | Stock options | $1 | $39 | $5 | $99 | | Earnout shares–employees | $574 | $1,107 | $1,053 | $2,305 | | Total Stock-Based Compensation Expense | $2,409 | $4,247 | $6,483 | $9,334 | Note 12. Income Taxes This note explains that no income tax provision was recorded due to projected losses, and a full valuation allowance is maintained - No provision for federal and state income taxes was recorded for the three and six months ended June 30, 2025, and 2024, due to projected losses[146] - The company maintains a full valuation allowance on its deferred tax assets[146] Note 13. Commitments and Contingencies This note discloses the company's non-cancellable purchase commitments and confirms no material litigation as of the reporting date - As of June 30, 2025, the company is not aware of any litigation, claim, or assessment that would have a material adverse effect on its consolidated financial position, results of operations, cash flows, or future earnings[147] - Non-cancellable purchase commitments for parts and assemblies totaled $4.4 million, due upon receipt and expected to be delivered throughout the remainder of 2025[148] Note 14. Employee Defined-Contribution Plans This note outlines the company's 401(k) plan and the employer contributions made during the reporting periods - The company offers a 401(k) Plan with employer contributions of 3.0% of an employee's eligible compensation[149] 401(k) Plan Contributions (In thousands) | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30, | $0.2 | $0.3 | | Six Months Ended June 30, | $0.3 | $0.5 | Note 15. Revenue This note provides a breakdown of revenue by customer concentration and geographic area, along with contract liability recognition Customer Concentration (Percentage of Total Revenue) | Customer | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Customer 1 | 30.5% | 0% | 18.1% | <10% | | Customer 2 | 20.1% | <10% | 15.9% | <10% | | Customer 3 | 14.6% | 24.0% | 20.6% | 25.4% | Revenue by Geographic Area (In thousands) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Americas | $10,731 | $10,103 | $19,020 | $19,476 | | Europe | $2,748 | $176 | $3,684 | $501 | | Other | $65 | $93 | $188 | $153 | | Total | $13,572 | $10,344 | $22,892 | $20,130 | - The company recognized $0.9 million of revenue during the six months ended June 30, 2025, from contract liabilities as of December 31, 2024[152] Note 16. Momentus Master Service Agreement This note describes the five-year Master Service Agreement with Momentus, including consideration received and the treatment of a refund provision - On April 12, 2025, Velo3D entered into a five-year Master Service Agreement (MSA) with Momentus, Inc. to provide consulting and parts production through its Rapid Production Solutions (RPS) offering[154] - Momentus issued 477,455 shares of Class A Common Stock and 673,408 shares of non-voting Series A Convertible Preferred Stock as consideration for goods and services under the MSA[154] - The MSA includes a Refund Provision, which was determined to be an embedded derivative, but its fair value was de minimis as of June 30, 2025, and no revenue related to this MSA has been recognized for the three and six months ended June 30, 2025[157][159][160] Note 17. Subsequent Events This note confirms that no events requiring adjustment or disclosure were identified through the filing date of the Form 10-Q - No events requiring adjustment or disclosure were identified through the filing date of this Form 10-Q[161] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and operational results, highlighting recent debt and equity transactions, key performance metrics, customer concentration, and the ongoing challenges related to liquidity and internal controls, including a substantial doubt about the company's ability to continue as a going concern Overview This section introduces Velo3D's mission to revolutionize additive manufacturing with its proprietary 3D printing technology and "land and expand" strategy - Velo3D aims to revolutionize additive manufacturing (3D printing) by delivering high-performance, cost-effective, and rapid production of high-value metal parts[163] - The company's proprietary laser powder bed fusion (L-PBF) technology significantly reduces or eliminates the need for support structures, enabling the production of complex, mission-critical parts previously deemed impossible[164] - Velo3D's Sapphire Family of Printers offers design freedom for customers in space, aviation, defense, automotive, energy, and industrial markets, allowing replication of existing parts without redesign[165][166] - The company employs a 'land and expand' strategy, where customers initially validate the technology with a single machine and subsequently purchase additional systems as it integrates into their product roadmap[167] Recent Developments This section highlights key corporate actions, including debt-for-equity exchanges, warrant agreements, new debt issuances, and a reverse stock split - On December 24, 2024, Velo3D completed a debt-for-equity exchange with Arrayed Notes Acquisition Corp., issuing 12,343,423 common shares in exchange for the cancellation of $22.4 million in principal debt and $0.4 million in accrued interest, making Arrayed the owner of approximately 95% of the company's common stock[168] - In February 2025, the company entered into Warrant Exchange Agreements, resulting in the issuance of 990,159 common shares for various warrants[169] - In January and February 2025, Velo3D issued Senior Secured Convertible Promissory Notes totaling $15 million, bearing high interest rates of 60.0% and 30.0% per annum, respectively[170][171] - A 1-for-15 reverse stock split was implemented effective July 28, 2025, retroactively adjusting all share and per share amounts[172] - Management expresses substantial doubt about the company's ability to continue as a going concern due to insufficient liquidity for the next 12 months, necessitating additional financing to fund operations and satisfy debt obligations[174] Key Financial and Operational Metrics This section presents key financial and operational metrics, including revenue, bookings, and backlog, for the reporting periods Key Financial and Operational Metrics (In millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $14 | $10 | $23 | $20 | | Bookings | $12 | $5 | $20 | $22 | | Backlog | $16 | $17 | $16 | $17 | - Bookings are defined as confirmed orders for 3D printer systems and printed parts in contracted dollars[179] - Backlog represents unfulfilled 3D printer systems and printed parts to be delivered to customers in contracted dollars as of period end[179] Customer Concentration This section highlights the company's reliance on a small group of customers, which poses risks to operating results Customer Concentration (Percentage of Revenue) | Period | Top Three Customers (2025) | Top Three Customers (2024) | | :------------------------------- | :------------------------- | :------------------------- | | Three Months Ended June 30, | 65.2% | 66.4% | | Six Months Ended June 30, | 54.6% | 53.7% | - The company's operating results will continue to depend on sales to a small group of customers, making it susceptible to risks associated with customer concentration[180][181] Continued Investment and Innovation Velo3D remains committed to developing innovative additive manufacturing solutions driven by customer demand - Velo3D remains a customer-focused company, committed to developing innovative solutions and enhancing its portfolio of additive manufacturing (AM) solutions through research and development projects driven by customer demand[182] Macroeconomic Conditions and Other World Events This section discusses how global economic and political conditions, including inflation and geopolitical conflicts, impact customer orders and supply chains - General economic and political conditions, including recessions, interest rates, inflation, and geopolitical conflicts (e.g., Israel and Ukraine), introduce uncertainty in customer orders and supply chain constraints[183] - The company implemented supply chain and manufacturing improvements in 2024 and plans further operational enhancements in 2025 to reduce operating costs[183] Climate Change This section addresses the potential adverse effects of climate change-related legislation, regulations, and extreme weather on business operations - Pending or existing climate change-related legislation, regulations, and international accords could adversely affect the business through increased capital expenditures, shifts in demand, heightened competition, and compliance costs[184] - Extreme weather and natural disasters may disrupt the operations of the company, its suppliers, and customers[184] Components of Results of Operations This section defines the various revenue, cost, and expense categories that comprise the company's financial performance - Revenue is primarily derived from the sale or lease of 3D Printers (Sapphire family) and associated Support Services, including Rapid Production Solutions (RPS)[185][186][192] - Cost of revenue includes manufacturing costs for 3D Printers, depreciation of leased equipment, and costs for support services (spare parts, installation, labor), with RPS costs included under 3D Printer cost of revenue[194][195][196][197] - Gross profit and gross margin are influenced by product mix, average selling prices, material and shipping costs, production volumes, system reliability, and the impact of new product introductions on support service costs[198][229][261] - Operating expenses consist of Research and Development, Selling and Marketing, and General and Administrative expenses, primarily comprising salaries, stock-based compensation, and allocated overhead[199][200][201] - Other income and expense items include interest expense, gains/losses on fair value of warrants and contingent earnout liabilities, loss on warrant cancellation, and other miscellaneous income/expenses[202][203][204][205][206] - No provision for federal and state income taxes was recorded due to projected losses, and a full valuation allowance is maintained on deferred tax assets[207] Results of Operations This sub-section details the company's financial performance for the three and six months ended June 30, 2025, compared to 2024, showing increased revenue from 3D printer sales, improved gross loss, but a higher net loss primarily due to non-cash warrant-related items and reduced operating expenses Comparison of the Three Months Ended June 30, 2025 and 2024 This section compares the company's revenue, cost of revenue, operating expenses, and net loss for the second quarter of 2025 versus 2024 Revenue by Type (Three Months Ended June 30, In thousands) | Revenue Type | 2025 | % of Total | 2024 | % of Total | Change | % Change | | :---------------- | :--- | :--------- | :--- | :--------- | :----- | :------- | | 3D Printer | $12,082 | 89.0% | $8,679 | 83.9% | $3,403 | 39.2% | | Recurring payment | $70 | 0.5% | $292 | 2.8% | $(222) | (76.0)% | | Support services | $1,359 | 10.0% | $1,373 | 13.3% | $(14) | (1.0)% | | Other | $61 | 0.5% | $0 | 0.0% | $61 | 100.0% | | Total Revenue | $13,572 | 100.0% | $10,344 | 100.0% | $3,228 | 31.2% | Cost of Revenue by Type (Three Months Ended June 30, In thousands) | Cost of Revenue Type | 2025 | % of Total | 2024 | % of Total | Change | % Change | | :--------------------- | :--- | :--------- | :--- | :--------- | :----- | :------- | | Cost of 3D Printers | $13,994 | 92.3% | $10,744 | 81.1% | $3,250 | 30.2% | | Cost of Recurring Payment | $0 | 0.0% | $232 | 1.8% | $(232) | (100.0)% | | Cost of Support Services | $1,166 | 7.7% | $2,265 | 17.1% | $(1,099) | (48.5)% | | Total Cost of Revenue | $15,160 | 100.0% | $13,241 | 100.0% | $1,919 | 14.5% | - Gross loss improved by 45.2% to $(1.588) million in Q2 2025, with gross margin improving from (28.0)% to (11.7)%, primarily due to product mix and improved average selling prices of 3D Printers[209][223] Operating Expenses (Three Months Ended June 30, In thousands) | Expense Type | 2025 | 2024 | Change | % Change | | :-------------------------- | :--- | :--- | :----- | :------- | | Research and development | $2,845 | $4,545 | $(1,700) | (37.4)% | | Selling and marketing | $1,619 | $4,273 | $(2,654) | (62.1)% | | General and administrative | $6,037 | $8,805 | $(2,768) | (31.4)% | | Total operating expenses | $10,501 | $17,623 | $(7,122) | (40.4)% | - Net loss significantly increased to $(13.756) million in Q2 2025 from $(0.172) million in Q2 2024, largely due to the absence of a $25.310 million gain on fair value of warrants recorded in the prior year[209][234] Comparison of the Six Months Ended June 30, 2025 and 2024 This section compares the company's revenue, cost of revenue, operating expenses, and net loss for the first half of 2025 versus 2024 Revenue by Type (Six Months Ended June 30, In thousands) | Revenue Type | 2025 | % of Total | 2024 | % of Total | Change | % Change | | :---------------- | :--- | :--------- | :--- | :--------- | :----- | :------- | | 3D Printer | $19,605 | 85.6% | $16,339 | 81.2% | $3,266 | 20.0% | | Recurring payment | $70 | 0.3% | $762 | 3.8% | $(692) | (90.8)% | | Support services | $3,149 | 13.8% | $3,029 | 15.0% | $120 | 100.0% | | Other | $68 | 0.3% | $0 | 0.0% | $68 | 0.0% | | Total Revenue | $22,892 | 100.0% | $20,130 | 100.0% | $2,762 | 13.7% | Cost of Revenue by Type (Six Months Ended June 30, In thousands) | Cost of Revenue Type | 2025 | % of Total | 2024 | % of Total | Change | % Change | | :--------------------- | :--- | :--------- | :--- | :--------- | :----- | :------- | | Cost of 3D Printers | $21,534 | 90.5% | $20,138 | 77.9% | $1,396 | 6.9% | | Cost of Recurring Payment | $12 | 0.1% | $547 | 2.1% | $(535) | (97.8)% | | Cost of Support Services | $2,237 | 9.4% | $5,157 | 20.0% | $(2,920) | (56.6)% | | Total Cost of Revenue | $23,783 | 100.0% | $25,842 | 100.0% | $(2,059) | (8.0)% | - Gross loss improved by 84.4% to $(0.891) million in H1 2025, with gross margin improving from (28.4)% to (3.9)%, driven by product mix and improved average selling prices of 3D Printers[239][253] Operating Expenses (Six Months Ended June 30, In thousands) | Expense Type | 2025 | 2024 | Change | % Change | | :-------------------------- | :--- | :--- | :----- | :------- | | Research and development | $5,120 | $9,588 | $(4,468) | (46.6)% | | Selling and marketing | $2,831 | $9,082 | $(6,251) | (68.8)% | | General and administrative | $15,168 | $17,588 | $(2,420) | (13.8)% | | Total operating expenses | $23,119 | $36,258 | $(13,139) | (36.2)% | - Net loss increased by 37.5% to $(39.167) million in H1 2025, primarily due to a $11.357 million loss on warrant cancellation and a significant decrease in gain on fair value of warrants compared to H1 2024[239][264][266] Liquidity and Capital Resources This section discusses the company's cash position, debt obligations, and the substantial doubt about its ability to continue as a going concern - As of June 30, 2025, the company had $0.9 million in cash and cash equivalents and $5.4 million in accounts receivable, which is insufficient to meet short-term obligations including $14.9 million in accounts payable and $22.5 million in Secured and Convertible Notes[270][312] - Management believes there is substantial doubt about the company's ability to continue as a going concern for the next 12 months, necessitating additional equity or debt financings to fund operations and satisfy obligations[272][273][313] Cash Flow Summary (Six Months Ended June 30, In thousands) | Cash Flow Activity | 2025 | 2024 | Change | | :----------------------------------- | :----- | :----- | :----- | | Net cash used in operating activities | $(13,565) | $(28,492) | $14,927 | | Net cash (used in) provided by investing activities | $(1,799) | $5,966 | $(7,765) | | Net cash provided by financing activities | $15,000 | $490 | $14,510 | - The company's inability to secure credit terms and volume discounts with suppliers due to its financial situation negatively impacts its cost of revenue[274][315] - The ability to meet cash requirements depends on operating performance, competitive developments, and financial market conditions, with no assurance of obtaining additional financing on acceptable terms[274][275][317] Off-Balance Sheet Arrangements This section confirms that the company had no material off-balance sheet arrangements as of June 30, 2025, except for the Momentus MSA - As of June 30, 2025, the company did not have any off-balance sheet arrangements, except as discussed in Note 16 regarding the Momentus Master Service Agreement[288] Recent Accounting Pronouncements This section outlines the company's evaluation of new accounting pronouncements related to income taxes and expense disaggregation disclosures - The company is currently evaluating the impact of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures), which are effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively[289][48][49] Implications of Being an Emerging Growth Company This section explains Velo3D's status as an emerging growth company and its election to use an extended transition period for new accounting standards - Velo3D is an 'emerging growth company' (EGC) and has elected to use the extended transition period for complying with new or revised financial accounting standards, which may make its financial results difficult to compare with non-EGCs[290][291] - The company will remain an EGC until the earliest of December 31, 2025, or meeting certain revenue or filer status thresholds[292] Implications of Being a Smaller Reporting Company This section details Velo3D's status as a smaller reporting company and its utilization of reduced disclosure obligations - Velo3D is a 'smaller reporting company' (SRC) and takes advantage of reduced disclosure obligations, including providing only two years of audited consolidated financial statements[293] - The company will remain an SRC until its public float or annual revenue exceeds certain thresholds[294] Critical Accounting Policies and Significant Estimates This section emphasizes that financial statements rely on significant judgments and estimates, which could materially differ from actual results - The company's financial condition and results of operations are based on unaudited condensed consolidated interim financial statements prepared in accordance with U.S. GAAP, with critical accounting policies involving a high degree of judgment or complexity[295] - Actual results could differ materially from these estimates and assumptions, and such differences could be material to the financial statements[295] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, Velo3D is exempt from providing detailed quantitative and qualitative disclosures about market risk. The company notes that a 10% change in interest rates would not materially impact its annualized interest expense - As a smaller reporting company, Velo3D is not required to provide the information typically required by this Item[296] - The company does not hedge its exposure to changes in interest rates, and a 10% change in interest rates would not have a material impact on annualized interest expense[277] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were ineffective as of June 30, 2025, due to identified material weaknesses in internal control over financial reporting, including issues with control environment, segregation of duties, accounting for complex instruments, inventory, contract assets/liabilities, financial statement presentation, and IT general controls. Remediation efforts are underway Evaluation of Disclosure Controls and Procedures Management concluded that the company's disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to material weaknesses in internal control over financial reporting[298] Material Weaknesses in Internal Control over Financial Reporting This section identifies material weaknesses, including an ineffective control environment, lack of segregation of duties, and issues with accounting for complex instruments and IT controls - Material weaknesses include an ineffective control environment (insufficient personnel with accounting knowledge, lack of segregation of duties), ineffective controls over journal entries and account reconciliations, and ineffective controls over accounting for debt/equity instruments, inventory, and contract assets/liabilities[299][303] - Ineffective information technology (IT) general controls were identified, specifically regarding user access controls and program change management controls[304] - These material weaknesses resulted in past adjustments and revisions to financial statements and could lead to future material misstatements[300][301] Remediation Measures for Remaining Material Weaknesses in Internal Control over Financial Reporting This section outlines ongoing remediation efforts, including hiring personnel, providing training, and engaging third-party assistance to strengthen internal controls - Remediation measures include hiring additional accounting and IT personnel, providing ongoing training, engaging third-party assistance for control design and implementation (segregation of duties, IT general controls), and formalizing roles and review responsibilities[302][305] - The company is making progress but cannot conclude on full remediation until efforts are completed and evaluated, and additional measures may be required[306] Changes in Internal Control over Financial Reporting This section confirms no material changes in internal control over financial reporting during the quarter, apart from the identified weaknesses - Other than the material weaknesses described, there were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected or are reasonably likely to materially affect the company's internal control over financial reporting[307] PART II. OTHER INFORMATION This section covers legal proceedings, updated risk factors, equity sales, defaults, and other miscellaneous disclosures Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings that would significantly impact its financial position or operations - Velo3D is not currently a party to any material legal proceedings[310] Item 1A. Risk Factors This section updates the risk factors, emphasizing substantial doubt about the company's ability to continue as a going concern due to insufficient liquidity, the challenges of securing additional capital, and risks related to trade policies and compliance with anti-corruption and trade control laws Risks Related to Our Financial Position and Need for Additional Capital This section highlights the substantial doubt about the company's going concern ability and the challenges of securing necessary additional financing - Substantial doubt exists about the company's ability to continue as a going concern, with $0.9 million in cash and $5.4 million in accounts receivable insufficient to cover $14.9 million in accounts payable and $22.5 million in debt as of June 30, 2025[312][313] - The going concern conclusion negatively impacts investor and creditor perception, making it more difficult to raise financing, sell products, and retain employees[314] - The company expects to require additional capital in the near-term to fund operations and satisfy debt obligations, but obtaining such financing on acceptable terms, or at all, is uncertain[316][317] - Failure to secure adequate financing could significantly impair business operations, potentially leading to liquidation or bankruptcy protection[317] Risks Related to our Business and Industry This section addresses the uncertainties of U.S. tariffs and trade policies, which could increase costs or reduce product sales - Uncertainty regarding U.S. tariffs and trade policies could increase the cost of goods or reduce the ability to sell products, adversely affecting operating results and financial condition[318] - Political tensions resulting from trade policies could reduce trade volume, investment, and technological exchange, negatively impacting global economic conditions and financial markets, which could, in turn, materially affect the company's business[319] Risks Related to Compliance Matters This section outlines the risks associated with compliance with U.S. and foreign anti-corruption laws, trade controls, and economic sanctions programs - The company is subject to U.S. and foreign anti-corruption laws (e.g., FCPA, Bribery Act), trade controls, and economic sanctions programs (e.g., OFAC, DDTC, BIS)[320][321] - Failure to comply with these laws and regulations could result in civil, criminal, and administrative penalties, harm to reputation, and restrictions on the ability to export products[320][323][324] - Continued expansion into foreign countries and new partnerships increases the risk of FCPA, OFAC, or Bribery Act violations, and the company may be held liable for actions of joint venture partners[322][324] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds were reported for the period[325] Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - This item is not applicable[326] Item 4. Mine Safety Disclosures This item is not applicable to the company for the reporting period - This item is not applicable[327] Item 5. Other Information No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or Section 16 officers during the three months ended June 30, 2025 - 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 June 30, 2025[328] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents and certifications - The exhibits include Certificates of Amendment to the Certificate of Incorporation (3.1, 3.1.1, 3.1.2, 3.1.3, 3.1.4) and certifications from the Chief Executive Officer and Chief Financial Officer (31.1, 31.2, 32.1, 32.2)[330] Signatures The report is duly signed on behalf of Velo3D, Inc. by its Chief Financial Officer, Hull Xu, on August 6, 2025 - The report was signed by Hull Xu, Chief Financial Officer, Principal Financial Officer, and Authorized Officer of Velo3D, Inc., on August 6, 2025[335]