UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________

FORM 10-Q

_____________________________

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:        001-39757       

______________________________

Velo3D, Inc.

______________________________

(Exact name of registrant as specified in its charter)

Delaware	98-1556965
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
511 Division Street, Campbell, CA	95008
(Address of Principal Executive Offices)	(Zip Code)

(408) 610-3915

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.00001 per share	VLD	New York Stock Exchange
Warrants to purchase one share of common stock, each at an exercise price of $11.50 per share	VLD WS	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.     Yes ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes ☐     No ☒

As of November 12, 2021, the registrant had 183,163,826  shares of common stock, $0.0001 per share outstanding.

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1.	Financial Statements	5
	Condensed Balance Sheets as of September 30, 2021 and December 31, 2020 (unaudited)	5
	Condensed Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	6
	Condensed Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three Months and Nine Months Ended September 30, 2021 and 2020 (unaudited)	7
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)	10
	Notes to Condensed Financial Statements (unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4.	Controls and Procedures	63
Part II. Other Information
Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	67
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	98
Item 3.	Defaults Upon Senior Securities	98
Item 4.	Mine Safety Disclosures	98
Item 5.	Other Information	98
Item 6.	Exhibits	99
Signatures		100

Explanatory Note – Certain Defined Terms

Unless otherwise stated in this Quarterly Report or the context otherwise requires, references to:

“Business Combination Agreement” means that certain Business Combination Agreement, dated as of March 22, 2021, by and among JAWS Spitfire, Merger Sub and Legacy Velo3D, as amended by Amendment #1 to Business Combination Agreement dated as of July 20, 2021.

“Common Stock” means the shares of common stock, par value $0.00001 per share, of the Company.

“Closing” means the closing of the Merger.

“Closing Date” means September 29, 2021.

“Domestication” means the domestication contemplated by the Business Combination Agreement, whereby JAWS Spitfire effected a deregistration and a transfer by way of continuation from the Cayman Islands to the State of Delaware, pursuant to which JAWS Spitfire’s jurisdiction of incorporation was changed from the Cayman Islands to the State of Delaware.

“Earnout Shares” means up to 21,758,148 shares of our common stock issuable pursuant to the Business Combination Agreement to certain Legacy Velo3D equity holders upon the achievement of certain vesting conditions.

“Founder Shares” means the 8,625,000 shares of our common stock issued to the Sponsor and the other Initial Stockholders in connection with the automatic conversion of the Class B ordinary shares in connection with the Closing.

“Initial Stockholders” means the Sponsor together with Andy Appelbaum, Mark Vallely and Serena J. Williams.

“IPO” means the Company’s initial public offering, consummated on December 7, 2020, of 34,500,000 units (including 4,500,000 units that were issued to the underwriters in connection with the exercise in full of their over-allotment option) at $10.00 per unit.

"JAWS Spitfire” refers to JAWS Spitfire Acquisition Corporation, a Cayman Islands exempted company, prior to the Closing.

“Legacy Velo3D” means Velo3D, Inc., a Delaware corporation (n/k/a Velo3D US, Inc.), prior to the Closing.

“Legacy Velo3D equity holder” means certain former stockholders and equity award holders of Legacy Velo3D.

“Merger” and “Reverse Recapitalization” mean the merger contemplated by the Business Combination Agreement, whereby Merger Sub merged with and into Legacy Velo3D, with Legacy Velo3D surviving the merger as a wholly-owned subsidiary of the Company on the Closing Date.

“Merger Sub” means Spitfire Merger Sub, Inc., a Delaware corporation.

“PIPE Financing” means the private placement pursuant to which the PIPE Investors collectively subscribed for 15,500,000 shares of our common stock at $10.00 per share, for an aggregate purchase price of $155,000,000, on the Closing.

“PIPE Investors” means certain institutional investors that invested in the PIPE Financing.

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“private placement warrants” means the 4,450,000 warrants originally issued to the Sponsor in a private placement in connection with our IPO.

“public warrants” means the 8,625,000 warrants included in the units issued in our IPO.

“Sponsor” means Spitfire Sponsor LLC, a Delaware limited liability company.

“Velo3D” refer to Velo3D, Inc., a Delaware corporation (f/k/a JAWS Spitfire Acquisition Corporation, a Cayman Islands exempted company), and its consolidated subsidiary following the Closing.

In addition, unless otherwise indicated or the context otherwise requires, references in this Quarterly Report to the “Company,” “we,” “us,” “our,” and similar terms refer to Legacy Velo3D prior to the Merger and to Velo3D and its consolidated subsidiary after giving effect to the Merger.

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PART I. FINANCIAL INFORMATION

Certain statements in this Quarterly Report may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the Merger. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “can,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report may include, for example, statements about:

•our projected financial information, growth rate and market opportunity;

•the ability to maintain the listing of our common stock and the public warrants on the NYSE, and the potential liquidity and trading of such securities;

•the ability to recognize the anticipated benefits of the Merger, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably and retain its key employees;

•costs related to the Merger;

•changes in applicable laws or regulations;

•the inability to develop and maintain effective internal control over financial reporting;

•our ability to raise financing in the future;

•our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

•the period over which we anticipate our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements;

•the potential for our business development efforts to maximize the potential value of our portfolio;

•regulatory developments in the United States and foreign countries;

•the impact of laws and regulations;

•our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•our financial performance;

•the effect of COVID-19 on the foregoing; and

•other factors detailed under the section entitled “Risk Factors”.

The forward-looking statements contained in this Quarterly Report are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking

3

statements. These risks and uncertainties include, but are not limited to, those factors described under the section entitled “Risk Factors”. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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Item 1. Financial Statements

Velo3D, Inc.
Condensed Balance Sheets
(Unaudited)

	September 30,		December 31,
	2021		2020
	(in thousands, except share and per share data)
Assets
Current assets:
Cash and cash equivalents	$	296,826	$	15,517
Accounts receivable, net	6,558		1,232
Inventories	15,220		7,309
Contract assets	1,510		3,033
Prepaid expenses and other current assets	9,069		807
Total current assets	329,183		27,898
Property and equipment, net	5,001		1,006
Equipment on lease, net	7,748		2,855
Other assets	5,858		932
Total assets	$	347,790	$	32,691
Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	33,343	$	1,226
Accrued expenses and other current liabilities	6,552		2,512
Debt – current portion	13,731		3,687
Contract liabilities	17,116		4,702
Total current liabilities	70,742		12,127
Long-term debt – less current portion	14,322		4,316
Contingent earnout liabilities (Note 16)	118,749		—
Warrant liabilities (Note 16)	20,136		181
Other noncurrent liabilities	1,673		184
Total liabilities	225,622		16,808
Commitments and contingencies (Note 19)
Redeemable convertible preferred stock, $0.00001 par value, 10,000,000 and 125,419,265 shares authorized as of September 30, 2021 and December 31, 2020, respectively; 0 and 117,734,383 shares issued as of September 30, 2021 and December 31, 2020, respectively, 0 and 117,734,383 shares outstanding as of September 30, 2021 and December 31, 2020; liquidation preference of $0 and $133,762 as of September 30, 2021 and December 31, 2020, respectively	—		123,704
Stockholders’ equity (deficit):
Common stock, $0.00001 par value – 500,000,000 and 216,000,000 shares authorized at September 30, 2021 and December 31, 2020, 183,163,826 and 16,003,558 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	2		1
Additional paid-in capital	337,605		14,954
Accumulated deficit	(215,439)		(122,776)
Total stockholders’ equity (deficit)	122,168		(107,821)
Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	347,790	$	32,691

The accompanying notes are an integral part of these condensed financial statements.

5

Velo3D, Inc.
Condensed Statements of Operations and Comprehensive Loss
(Unaudited)

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
	(in thousands, except share and per share data)
Revenue
3D Printer	$	7,281	$	1,738	$	13,594	$	11,038
Recurring payment	596		146		1,231		146
Support services	834		389		2,204		1,049
Total Revenue	8,711		2,273		17,029		12,233
Cost of revenue
3D Printer	5,692		1,142		10,174		6,852
Recurring payment	418		102		862		102
Support services	1,127		541		2,725		1,286
Total cost of revenue	7,237		1,785		13,761		8,240
Gross profit	1,474		488		3,268		3,993
Operating expenses
Research and development	7,987		4,043		19,081		10,917
Selling and marketing	3,346		1,526		7,706		4,401
General and administrative	5,158		1,941		15,162		6,069
Total operating expenses	16,491		7,510		41,949		21,387
Loss from operations	(15,017)		(7,022)		(38,681)		(17,394)
Interest expense	(986)		(48)		(1,630)		(200)
Loss on the convertible note modification	(50,577)		—		(50,577)		—
Gain/(loss) on fair value of warrants	(1,892)		(2)		(3,633)		5
Gain on fair value of contingent earnout liabilities	2,014		—		2,014		—
Other income (expense), net	(120)		(35)		(156)		(2)
Loss before provision for income taxes	(66,578)		(7,107)		(92,663)		(17,591)
Provision for income taxes	—		—		—		—
Net loss and comprehensive loss	$	(66,578)	$	(7,107)	$	(92,663)	$	(17,591)
Net loss per share attributable to common stockholders, basic and diluted	$	(3.36)	$	(0.44)	$	(5.34)	$	(1.13)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	19,793,863		15,994,154		17,348,557		15,503,475

The accompanying notes are an integral part of these condensed financial statements.

6

Velo3D, Inc.
Condensed Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(Unaudited)

	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’Equity (Deficit)
(in thousands, except share data)	Shares	Amount		Shares	Amount
Balance as of June 30, 2020	103,201,832	$	118,374	15,972,659	$	1	$	14,234	$	(111,452)	$	(97,217)
Issuance of common stock upon exercise of stock options	—	—		30,900	—		14		—		14
Stock-based compensation	—	—		—	—		466		—		466
Net loss	—	—		—	—		—		(7,107)		(7,107)
Balance as of September 30, 2020	103,201,832	$	118,374	16,003,559	$	1	$	14,714	$	(118,559)	$	(103,844)
Balance as of June 30, 2021	117,734,383	$	123,704	16,168,582	$	1	$	16,446	$	(148,861)	$	(132,414)
Conversion of warrants into preferred stock, net settlement	126,802	899		—	—		—		—		—
Conversion of convertible notes into preferred stock	6,820,022	55,577		—	—		—		—		—
Conversion of convertible preferred stock into common stock in connection with the reverse recapitalization	(124,681,207)	(180,180)		126,310,700	—		180,180		—		180,180
Conversion of warrants into common stock, net settlement	—	—		239,992	—		3,635		—		3,635
Issuance of contingent earnout liability upon the reverse recapitalization	—	—		—	—		(120,763)		—		(120,763)
Issuance of warrants upon the reverse recapitalization	—	—		—	—		(21,051)		—		(21,051)
Issuance of common stock upon the reverse recapitalization, net of issuance costs	—	—		40,409,132	1		278,270		—		278,271
Issuance of common stock upon exercise of stock options	—	—		35,420	—		30		—		30
Issuance of common stock warrants in connection with financing	—	—		—	—		182		—		182
Stock-based compensation	—	—		—	—		676		—		676
Net loss	—	—		—	—		—		(66,578)		$	(66,578)
Balance as of September 30, 2021	—	$	—	183,163,826	$	2	$	337,605	$	(215,439)	$	122,168

The accompanying notes are an integral part of these condensed financial statements.

7

Velo3D, Inc.
Condensed Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity Deficit
(Unaudited)

	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Deficit		Total Stockholders’ (Deficit)
(in thousands, except share data)	Shares	Amount		Shares	Amount
Balance as of December 31, 2019	27,967,896	$	101,858	14,721,524	$	1	$	13,195	$	(114,019)	$	(100,823)
Issuance of Series D redeemable convertible preferred stock, net of issuance costs	75,660,962	28,278		—	—		—		—		—
Exchange of convertible notes and accrued interest for Series D redeemable convertible preferred stock	4,029,222	1,512		—	—		—		—		—
Extinguishment of redeemable convertible preferred stock	(4,456,248)	(13,274)		1,210,513	—		223		13,051		13,274
Issuance of common stock upon exercise of stock options	—	—		71,522	—		53		—		53
Stock-based compensation	—	—		—	—		1,243		—		1,243
Net loss	—	—		—	—		—		(17,591)		(17,591)
Balance as of September 30, 2020	103,201,832	$	118,374	16,003,559	$	1	$	14,714	$	(118,559)	$	(103,844)
Balance as of December 31, 2020	117,734,383	$	123,704	16,003,558	$	1	$	14,954	$	(122,776)	$	(107,821)
Conversion of warrants into preferred stock, net settlement	126,802	899		—	—		—		—		$	—
Conversion of convertible notes into preferred stock	6,820,022	55,577		—	—		—		—		$	—
Conversion of convertible preferred stock into common stock in connection with the reverse recapitalization	(124,681,207)	(180,180)		126,310,700	—		180,180		—		$	180,180
Conversion of warrants into common stock, net settlement	—	—		239,992	—		3,635		—		$	3,635
Issuance of contingent earnout liability upon the reverse recapitalization	—	—		—	—		(120,763)		—		$	(120,763)
Issuance of warrants upon the reverse recapitalization	—	—		—	—		(21,051)		—		$	(21,051)
Issuance of common stock upon the reverse recapitalization, net of issuance costs	—	—		40,409,132	1		278,270		—		$	278,271
Issuance of common stock upon exercise of stock options	—	—		200,444	—		313		—		$	313

8

Issuance of common stock warrants in connection with financing	—	—		—	—		316		—		$	316
Stock-based compensation	—	—		—	—		1,751		—		$	1,751
Net loss	—	—		—	—		—		(92,663)		$	(92,663)
Balance as of September 30, 2021	—	$	—	183,163,826	$	2	$	337,605	$	(215,439)	$	122,168

The accompanying notes are an integral part of these condensed financial statements.

9

Velo3D, Inc.
Condensed Statements of Cash Flows
(Unaudited)

	Nine months ended September 30,
	2021		2020
	(In thousands)
Cash flows from operating activities
Net loss	$	(92,663)	$	(17,591)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation	1,276		851
Stock-based compensation	1,751		1,243
Loss on the convertible note modification	50,577		—
Gain/(loss) on fair value of warrants	3,633		(5)
Gain on fair value of contingent earnout liabilities	(2,014)		—
Changes in assets and liabilities
Accounts receivable	(5,326)		(790)
Inventories	(3,022)		(1,383)
Contract assets	1,523		(133)
Prepaid expenses and other assets	(4,174)		491
Accounts payable	(252)		(624)
Accrued expenses and other liabilities	3,400		(1,239)
Contract liabilities	12,414		(669)
Other noncurrent liabilities	1,611		(46)
Net cash used in operating activities	(31,266)		(19,895)
Cash flows from investing activities
Purchase of property and equipment	(1,534)		(225)
Production of equipment for lease to customers	(6,919)		(2,954)
Net cash used in investing activities	(8,453)		(3,179)
Cash flows from financing activities
Proceeds from issuance of Series D redeemable convertible preferred stock, net of issuance costs	—		28,278
Proceeds from Merger	143,183		—
Proceeds from PIPE financing	155,000		—
Proceeds from loan refinance	19,339		—
Repayment of term loan	(4,997)
Repayment of property and equipment loan	(833)		—
Proceeds from term loan revolver facility	3,000		—
Proceeds from equipment loans	5,419		1,550
Repayment of equipment loans	(1,878)		(370)
Proceeds from convertible notes	5,000		5,415
Issuance of common stock upon exercise of stock options	313		53
Net cash provided by financing activities	323,546		34,926
Net change in cash and cash equivalents	283,827		11,852
Cash and cash equivalents and restricted cash at beginning of period	15,517		9,815
Cash and cash equivalents and restricted cash at end of period	$	299,344	$	21,667
Supplemental disclosure of cash flow information
Cash paid for interest	$	857	$	187
Supplemental disclosure of non-cash information
Extinguishment of redeemable convertible preferred stock	$	—	$	13,274
Conversion of warrants into redeemable convertible preferred stock, net settlement	$	899	$	—

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Conversion of convertible notes to Series D redeemable convertible preferred stock	$	5,000	$	1,512
Conversion of redeemable convertible preferred stock into common stock	$	180,180	$	—
Conversion of warrants into common stock, net settlement	$	3,635	$	—
Reclassification of warrants liability upon the reverse recapitalization	$	21,051	$	—
Reclassification of contingent earnout liability upon the reverse recapitalization	$	120,763	$	—
Issuance of common stock warrants in connection with financing	$	316	$	—
Unpaid liabilities related to property and equipment	$	3,231	$	103
Unpaid merger transactional costs	$	19,913	$	—

The accompanying notes are an integral part of these condensed financial statements.

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Velo3D, Inc.
Notes to Condensed Financial Statements
(Unaudited)

1. Description of Business and Basis of Presentation

Velo3D, Inc., a Delaware corporation (“Velo3D” ), formerly known as JAWS Spitfire Acquisition Corporation (“JAWS Spitfire”), produces metal additive three dimensional printers (“3D Printers”) which enable the production of components for space rockets, jet engines, fuel delivery systems and other high value metal parts, which it sells or leases to customers for use in their businesses. The Company also provides support services (“Support Services”) for an incremental fee. Velo3D’s subsidiary, Velo3D US, Inc., formerly known as Velo3D, Inc. (“Legacy Velo3D”), was founded in June 2014 as a Delaware corporation headquartered in Campbell, California. The first commercially developed 3D Printer was delivered in the fourth quarter of 2018.

Unless otherwise stated herein or unless the context otherwise requires, references in these notes to the “Company” refer to (i) Legacy Velo3D prior to the consummation of the Merger (as defined below); and (ii) Velo3D and its consolidated subsidiary following the consummation of the Merger.

On September 29, 2021 (the “Closing Date” or the “Reverse Recapitalization Date”), JAWS Spitfire completed the previously announced merger with Legacy Velo3D, with Legacy Velo3D surviving as a wholly-owned subsidiary of JAWS Spitfire (the “Merger” or the “Reverse Recapitalization”). In connection with the Merger, JAWS Spitfire was renamed “Velo3D, Inc.”, and Legacy Velo3D was renamed “Velo3D US, Inc.”

Please refer to Note 3, Reverse Recapitalization, for further details of the Merger.

Accordingly, all historical financial information presented in the unaudited condensed financial statements of Velo3D represents the accounts of Legacy Velo3D. The shares and Net loss per share attributable to common stockholders, basic and diluted, prior to the Merger, have been retroactively restated as shares reflecting the exchange ratio (the “Exchange Ratio”) established in the Merger (0.8149 shares of Velo3D common stock for 1 share of Legacy Velo3D common stock, par value $0.00001 (the “Common Stock”). All fractional shares were rounded.

Basis of Presentation

The condensed financial statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the requirements of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2020 and the related notes included in our prospectus filed pursuant to Rule 424(b)(3) under the Securities Act of 1933, as amended, with the SEC on October 28, 2021, which provides a more complete discussion of the Company’s accounting policies and certain other information. The condensed balance sheet as of December 31, 2020 has been derived from the audited financial statements of the Company. These condensed financial statements have been prepared on the same basis as its annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2021, or for any other interim period or for any other future year.

Financial Condition and Liquidity and Capital Resources

The accompanying financial statements are unaudited and have been prepared on the basis of continuity of operations, the realization of assets and satisfaction of liabilities in the ordinary course of business. On September 29, 2021, the Company consummated the Merger, which resulted in the Company receiving approximately $278.3 million in total net proceeds, including $155.0 million from the PIPE Financing (as defined in Note 3,

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Velo3D, Inc.
Notes to Condensed Financial Statements
(Unaudited)

Reverse Recapitalization). Since inception, the Company has not achieved profitable operations or generated positive cash flows from operations. The Company’s operating plan may change as a result of many factors currently unknown and there can be no assurance that the current operating plan will be achieved in the time frame anticipated by the Company, and it may need to seek additional funds sooner than planned. If adequate funds are not available to the Company on a timely basis, it may be required to delay, limit, reduce, or terminate certain commercial efforts, or pursue merger or acquisition strategies, all of which could adversely affect the holdings or the rights of the Company’s stockholders. The Company has incurred net operating losses and negative cash flows from operations in every year since inception and expects this to continue for the foreseeable future. As of September 30, 2021, the Company had an accumulated deficit of $215.4 million.

As of November 16, 2021, the issuance date of the accompanying financial statements, the Company believes that the cash and cash equivalents on hand and cash the Company obtained from the Merger and the PIPE Financing, together with cash the Company expects to generate from future operations, will be sufficient to meet the Company’s working capital and capital expenditure requirements for a period of at least twelve months.

2. Summary of Significant Accounting Policies

Other than policies noted below, there have been no significant changes to the significant accounting policies disclosed in Note 2 of the audited condensed financial statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020 and 2019.

Use of Estimates

The preparation of the unaudited accompanying financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenue and expenses. Actual results and outcomes could differ significantly from the Company’s estimates, judgments, and assumptions. Significant estimates include determining useful lives of long-lived assets, the determination of the incremental borrowing rate used for operating lease liabilities, standalone selling price for performance obligations in contracts with customers, the valuation of redeemable convertible preferred stock warrants and common stock warrants, the fair value of common stock and other assumptions used to measure stock-based compensation, the fair value of contingent earnout liabilities, inventory reserves, and the valuation of deferred income tax assets and uncertain tax positions.

These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in these estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods. As future events and their effects cannot be determined with precision, actual results could materially differ from these estimates and assumptions.

Concentration of Credit Risk and Other Risks and Uncertainties

The Company’s financial instruments that potentially expose the Company to concentration of credit risk consist mainly of cash and cash equivalents and accounts receivable, net. The Company maintains its cash and cash equivalents in domestic cash accounts with large, creditworthy financial institutions. The Company has not experienced any losses on its deposits of cash and cash equivalents through deposits with federally insured commercial banks and at times cash balances may be in excess of federal insurance limits.

13

Velo3D, Inc.
Notes to Condensed Financial Statements
(Unaudited)

The customer concentration for balances greater than 10% of revenues and 10% of accounts receivables, net, respectively, are presented below:

	Total Revenue				Total Revenue				Accounts Receivable, Net
	Three months ended September 30,				Nine months ended September 30,				September 30		December 31
	2021		2020		2021		2020		2021		2020
	(as a percentage)				(as a percentage)				(as a percentage)
Customer 1	53.9	%	10.0	%	31.4	%	<10%		<10%		<10%
Customer 2	17.2	%	—	%	<10%		—	%	<10%		—	%
Customer 3	15.1	%	—	%	16.6	%	—	%	<10%		—	%
Customer 4	<10%		17.7	%	11.5	%	58.5	%	55	%	85.6	%
Customer 5	<10%		<10%		10.8	%	13.3	%	<10%		—	%
Customer 6	<10%		<10%		<10%		13.1	%	—	%	<10%
Customer 7	<10%		<10%		<10%		10.8	%	<10%		<10%
Customer 8	<10%		<10%		<10%		<10%		17.4	%	—	%

The Company relies on four key suppliers for products and services. While alternative providers could be identified, the Company is subject to supply and pricing risks.

Impact of COVID-19

The Company continues to operate its business through the COVID-19 pandemic and has taken additional precautions to ensure the safety of its employees, customers, and vendors with which it operates. The impact of COVID-19 on the Company’s operating results has added uncertainty in timing of customer orders creating longer lead times for sales and marketing.

Fair Value Measurements

The Company has applied the framework for measuring fair value which requires a fair value hierarchy to be applied to all fair value measurements. Assets and liabilities measured at fair value are classified into one of three levels in the fair value hierarchy based on the inputs used to measure fair value as follows:

Level 1 — Quoted prices observed in active markets for identical assets or liabilities;

Level 2 — Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly; and

Level 3 — Significant unobservable market inputs for the asset or liability.

As of September 30, 2021 and December 31, 2020, warrants for redeemable convertible preferred stock, common stock warrants and contingent earnout liabilities were the only liabilities measured at fair value on a recurring basis.

The carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term maturities. The long-term debt (including convertible notes) with variable interest at market rates is carried at amortized cost, which approximates its fair value and was classified as Level 2. Please refer to Note 14, Long-Term Debt and Note 15, Convertible Notes Payable, for further information. Warrants for redeemable convertible preferred stock and convertible notes payable were classified as Level 3.

14

Velo3D, Inc.
Notes to Condensed Financial Statements
(Unaudited)

Cash and Cash Equivalents and Restricted Cash

All highly liquid investments with an original maturity of three months or less, when purchased, are classified as cash equivalents. Cash equivalents may be invested in money market funds and are carried at cost, which approximates their fair value.

In June 2021, in conjunction with the new 80,000+ square foot facility to begin production of the Company’s Sapphire XC in late 2021, the Company issued a one-year letter of credit for $1.2 million to the landlord to secure the agreement. The Company has restricted cash to secure the letter of credit and the agreement will allow for reductions to the letter of credit limit based on the Company’s revenue achievements.

In September 2021, in connection with a 3D Printer system delivery, a customer requested a bank guarantee to be issued for $1.3 million as a condition of delivery acceptance to protect the customers prepayment of $1.3 million (included in Contract Liabilities). The bank guarantee expires upon the return of the bank guarantee document to the issuance bank or on October 10, 2021. Subsequent to September 30, 2021, the restricted cash in other assets was returned to operating cash and cash equivalents.

	September 30, 2021		December 31, 2020
	(In thousands)
Cash and cash equivalents	$	296,826	$	15,517
Restricted cash (Other assets)	2,518		—
Total cash and cash equivalents, and restricted cash	$	299,344	$	15,517

Information by Segment and Geography

The Company manages its operations and allocates resources as a single operating segment. Further, the Company manages, monitors, and reports its financial results as a single reportable segment. The Company’s chief operating decision-maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on an entity-wide basis for purposes of making operating decisions, assessing financial performance, and allocating resources. The Company has no segment managers who are held accountable by the CODM for operations, operating results, and planning for levels of components below the entity- wide level.

The Company currently sells its products in the United States and other locations. No long-lived assets are located outside the U.S. Revenue by geographic area based on the billing address of the customers were as follows:

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
	(In thousands)
United States	$	7,103	$	659	$	15,349	$	9,290
Other	1,608		1,614		1,680		2,943
Total	$	8,711	$	2,273	$	17,029	$	12,233

15

Velo3D, Inc.
Notes to Condensed Financial Statements
(Unaudited)

The following table summarizes revenue disaggregated by products and service type:

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
	(In thousands)
3D Printers	$	7,281	$	1,738	$	13,594	$	11,038
Recurring Payment (defined below)	596		146		1,231		146
Support services	834		389		2,204		1,049
Total	$	8,711	$	2,273	$	17,029	$	12,233

Contracts Assets and Contract Liabilities

Contract assets consist of unbilled receivables and are recorded when revenue is recognized in advance of scheduled billings to the Company’s customers. A contract asset is recognized when products or services are transferred to a customer and the right to consideration is conditional on something other than the passage of time. Contract liabilities include amounts billed or collected which is related to remaining performance obligations. Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied. It includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods

The amount of revenue recognized during the three months ended September 30, 2021 included in contract liabilities as of June 30, 2021 was $0.3 million. The amount of revenue recognized during the three months ended September 30, 2020 that was included in contract liabilities as of June 30, 2020 was $0.2 million.

The amount of revenue recognized during the nine months ended September 30, 2021 included in contract liabilities as of December 31, 2020 was $0.8 million. The amount of revenue recognized during the nine months ended September 30, 2020 that was included in contract liabilities as of December 31, 2019 was $0.7 million.

Common Stock Warrants Liabilities

The Company assumed 8,625,000 publicly-traded warrants (the “Public Warrants”) and 4,450,000 private placement warrants (the “Private Placement Warrants” and, together with the Public Warrants, the “Common Stock Warrants”) issued to Spitfire Sponsor, LLC (the “Sponsor”) upon the Merger, all of which were issued in connection with JAWS Spitfire’s initial public offering (“IPO”) and subsequent over-allotment and entitles the holder to purchase one share of the Company’s Common Stock at an exercise price of $11.50 per share. During the three and nine months ended September 30, 2021, there were no Public Warrants or Private Placement Warrants exercised. The Public Warrants are publicly traded and are exercisable for cash, unless certain conditions occur, such as redemption by the Company under certain circumstances, at which time the Public Warrants may be exercised on a cashless basis. The Private Placement Warrants are non-redeemable for cash so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants are redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

The Company evaluated the Common Stock Warrants and concluded that they do not meet the criteria to be classified within stockholders’ equity. The warrant agreement governing the Common Stock Warrants includes a provision, the application of which could result in a different settlement value for the Common Stock Warrants depending on their holder. Because the holder of an instrument is not an input into the pricing of a fixed-for-fixed option on the Common Stock, the Private Placement Warrants are not considered to be “indexed to the Company’s own stock.” In addition, the warrant agreement includes a provision that provides that in the event of a tender or exchange offer accepted by holders of more than 50.0% of the outstanding shares of the Common Stock, all holders of the Common Stock Warrants (both the Public Warrants and the Private Placement Warrants) would be entitled to receive cash for all of their Common Stock Warrants. Specifically, in the event of a qualifying cash tender offer (which could be outside of the Company’s control), all Common Stock Warrant holders would be entitled to cash,

16

Velo3D, Inc.
Notes to Condensed Financial Statements
(Unaudited)

while only certain of the holders of the Common Stock may be entitled to cash. These provisions preclude the Company from classifying the Common Stock Warrants in stockholders’ equity.

The Company classifies its Public Warrants and Private Placement Warrants as liabilities in accordance with ASC Topic 815 “Derivatives and Hedging–Contracts in Entity’s Own Equity”. As the Common Stock Warrants meet the definition of a derivative, the Company recorded these warrants within Warrant liabilities on the condensed balance sheet at fair value, with subsequent changes in their respective fair values recognized in the condensed statements of operations and comprehensive loss at each reporting date.

Contingent Earnout Liability

In connection with the Reverse Recapitalization and pursuant to the Business Combination Agreement, eligible former Legacy Velo3D equity holders are entitled to receive additional shares of Common Stock upon the Company achieving certain Earnout Triggering Events (as described in the Business Combination Agreement) (the “Earnout Shares”). The Earnout Shares are not indexed to the Common Stock and therefore are accounted for as a liability at the Reverse Recapitalization Date and subsequently remeasured at each reporting date with changes in fair value recorded as a component of gain on fair value of contingent earnout liabilities in the condensed statements of operations and comprehensive loss. The estimated fair value of the contingent earnout liability was determined using a Monte Carlo simulation using a distribution of potential outcomes on a monthly basis over the Earnout Period (as defined in Note 16) prioritizing the most reliable information available. The assumptions utilized in the calculation are based on the achievement of certain stock price milestones, including the current Company Common Stock price, expected volatility, risk free rate, expected term and dividend rate. The contingent earnout liability is categorized as a Level 3 fair value measurement (see “Fair Value Measurements” as described above) because the Company estimates projections during the Earnout Period utilizing unobservable inputs. Contingent earnout liabilities involve certain assumptions requiring significant judgment and actual results may differ from assumed and estimated amounts.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) — Simplifying the Accounting for Income Taxes (“Topic 740”), which simplifies the accounting for income taxes by eliminating some exceptions to the general approach in Accounting Standards Codification 740, Income Taxes. It also clarifies certain aspects of the existing guidance to promote more consistent application. This standard is effective for the Company in fiscal year 2021, and early adoption is permitted. The Company adopted the new guidance effective January 1, 2020 and there is no material impact on its condensed financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“Topic 848”),” which provides optional expedients and exceptions for applying U.S. GAAP to contract modifications, hedging relationships, and other transactions, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance was effective for the Company beginning on March 12, 2020 and the amendments will be applied prospectively through December 31, 2022. The Company adopted the new guidance effective January 1, 2021 and there is no material impact on its condensed financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). This ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP.

Consequently, more convertible debt instruments will be reported as a single liability instrument and more redeemable convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted earnings per share (“EPS”) calculation in certain areas. ASU 2020-06 is effective for fiscal years

17

Velo3D, Inc.
Notes to Condensed Financial Statements
(Unaudited)

beginning after December 15, 2023 including interim periods within those fiscal years. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company early adopted the new guidance effective January 1, 2021 using the modified retrospective method. Adoption of this guidance did not have a material impact on the Company’s financial statements and disclosures.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“Topic 326”)”, and has since released various amendments including ASU No. 2019-04. The guidance modifies the measurement of expected credit losses on certain financial instruments. This guidance is effective for the Company for the fiscal year beginning after December 15, 2022. Early adoption is permitted. The Company is currently assessing the impact of the guidance on its financial statements and disclosures.

In July 2021, the FASB issued ASU 2021-05, “Leases (“Topic 842”) Lessors — Certain Leases with Variable Lease Payments”, that amends the lessor’s lease classification for leases that include any amount of variable lease payments that are not variable lease payments that do not depend on an index or a rate as an operating lease at lease commencement if classifying the lease as a sales-type lease or a direct financing lease would result in the recognition of a selling loss. This guidance is effective for the Company for the fiscal year beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact of the guidance on its financial statements and disclosures.

3. Reverse Recapitalization

On September 29, 2021, Merger Sub merged with Legacy Velo3D, with Legacy Velo3D surviving as a wholly-owned subsidiary of Velo3D. Immediately prior to the closing of the Merger:

• all issued and outstanding 6,738,651 shares of Legacy Velo3D outstanding Series A redeemable convertible preferred stock was converted into an equivalent number of shares of Legacy Velo3D common stock on a 1:2.178 basis:

• all issued and outstanding 8,386,456 shares of Legacy Velo3D outstanding Series B redeemable convertible preferred stock was converted into an equivalent number of shares of Legacy Velo3D common stock on a 1:2.273 basis:

• all issued and outstanding 8,513,343 shares of Legacy Velo3D outstanding Series C redeemable convertible preferred stock was converted into an equivalent number of shares of Legacy Velo3D common stock on a 1:2.372 basis:

• all issued and outstanding 101,042,757 shares of Legacy Velo3D outstanding Series D redeemable convertible preferred stock was converted into an equivalent number of shares of Legacy Velo3D common stock on a 1:1.000 basis:

In connection with the Merger, shares of Legacy Velo3D redeemable convertible preferred stock were converted into an equivalent number of shares of Legacy Velo3D common stock at their respective conversion ratios and concurrently recast into 126,310,700 shares of Common Stock.

As of September 30, 2021 and after giving effect to the Exchange Ratio, there were 183,163,826 shares of Common Stock outstanding, comprised of the 126,310,700 shares of Common Stock issued in respect of the Legacy Velo3D redeemable convertible preferred stock, 16,443,994 shares of Common Stock issued in respect of Legacy

18

Velo3D, Inc.
Notes to Condensed Financial Statements
(Unaudited)

Velo3D common stock, and 40,409,132 shares of Common Stock issued to public shareholders of JAWS Spitfire, the JAWS Spitfire initial shareholders, and third-party PIPE Investors (as defined below).

At the Merger, eligible former Legacy Velo3D equity holders received or had the right to receive shares of Common Stock at a deemed value of $10.00 per share after giving effect to the Exchange Ratio of 0.8149 as defined in the Merger Agreement. Accordingly, immediately following the consummation of the Merger, Legacy Velo3D common stock exchanged into 142,754,694 shares of Common Stock, 66,830,878 shares of Common Stock were reserved for the issuance of Common Stock upon the potential future exercise of Legacy Velo3D stock options, common stock warrants, and shares of Common Stock issuable under the Company’s employee stock purchase plan.

In connection with the execution of the Merger Agreement, JAWS Spitfire entered into separate subscription agreements (each a “Subscription Agreement”) with a number of investors (each a “PIPE Investor”), pursuant to which the PIPE Investors agreed to purchase, and JAWS Spitfire agreed to sell to the PIPE Investors, an aggregate of 15,500,000 shares of Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $155.0 million, in a private placement pursuant to the Subscription Agreements (the “PIPE Financing”). The PIPE Financing closed simultaneously with the consummation of the Merger.

In connection with the Merger, 8,625,000 of JAWS Spitfire Class B ordinary shares originally purchased by the Sponsor were exchanged for shares of Common Stock prior to the Closing (the “Founder Shares”).

Pursuant to JAWS Spitfire’s Articles of Association, JAWS Spitfire’s public shareholders were entitled to elect to redeem their public shares for cash even if they had approved the Merger. As of September 24, 2021, the final day of the redemption period, public shareholders had redeemed 18,215,868 Class A ordinary shares of JAWS Spitfire for cash at the redemption price of $10.00 per share, based on funds held in the trust account for an aggregate payment of $182.2 million (the “Redemptions”).

The number of shares of Common Stock issued immediately following the consummation of the Merger was:

	Shares
Public shares, outstanding prior to Merger	34,500,000
Less redemption of public shares	(18,215,868)
Public shares following redemptions	16,284,132
Shares issued in PIPE Financing	15,500,000
Public shares and PIPE Financing Shares	31,784,132
Founder Shares	8,625,000
Legacy Velo3D shares (1)	142,754,694
Total shares of Common Stock immediately after Merger	183,163,826

(1) Upon consummation of the Merger, 175,173,445 Legacy Velo3D shares were exchanged at the Exchange Ratio and fractional shares were rounded to whole shares.

The Merger was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, JAWS Spitfire was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Velo3D are represented as a continuation of the financial statements of Legacy Velo3D, with the Merger being treated as the equivalent of Legacy Velo3D issuing stock for the net assets of JAWS Spitfire, accompanied by a recapitalization. The net assets of JAWS Spitfire are stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Merger are those of Legacy Velo3D in future reports.

Legacy Velo3D has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances as of the Closing: (1) Legacy Velo3D’s stockholders have a majority of the voting power of

19

Velo3D, Inc.
Notes to Condensed Financial Statements
(Unaudited)

Velo3D; (2) the board of directors of Velo3D initially has twelve members, and Legacy Velo3D has the ability to nominate the majority of the initial members of the board of directors; (3) Legacy Velo3D’s senior management is the senior management of Velo3D and is responsible for day-to-day operations; (4) Velo3D has assumed the Velo3D name; and; (5) the current strategy and operations of Velo3D continue to be Legacy Velo3D’s strategy and operations to develop the next generation of AM printers.

In connection with the Merger and the PIPE Financing, the Company received $298.2 million of gross proceeds including the contribution of $345.0 million of cash held in JAWS Spitfire’s trust account from its IPO, redemptions of JAWS Spitfire public shareholders of $182.2 million, and $155.0 million of cash in connection with the PIPE Financing. The gross proceeds were net of $19.6 million of costs incurred by JAWS Spitfire prior to the Closing. The Company incurred $19.9 million of transaction costs, consisting of banking, legal, and other professional fees, of which $19.1 million was recorded as a reduction to additional paid-in capital of proceeds (“APIC”), and the remaining $0.8 million was expensed in the condensed statements of operations. The total net cash proceeds to the Company were $278.3 million.

4. Basic and Diluted Net Loss per Share

The following table sets forth the computation of the Company’s basic and diluted net loss per share to common stockholders:

	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
	(In thousands, except share data)
Numerator:
Net loss	$	(66,578)	$	(7,107)	$	(92,663)	$	(17,591)
Denominator:
Weighted average shares used in computing net loss per share – basic and diluted	19,793,863		15,994,154		17,348,557		15,503,475
Net loss per share – basic and diluted.	$	(3.36)	$	(0.44)	$	(5.34)	$	(1.13)

The following potentially dilutive shares of common stock equivalents “on an as-converted basis” were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have had an antidilutive effect:

	Nine months ended September 30,
	2021	2020
	(per share data)
Redeemable convertible preferred stock	—	108,642,440
Convertible promissory note	—	3,283,548
Redeemable convertible preferred stock warrants	—	332,893
Common stock warrants	13,075,000	51,847
Common stock options issued and outstanding	21,342,660	19,134,310
Total potentially dilutive common share equivalents