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 March 31, 2022

OR

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

Commission File Number:        001-39757       

______________________________

Velo3D, Inc.

______________________________

(Exact name of registrant as specified in its charter)

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

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 every Interactive Data File required to be submitted 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 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.

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 May 10, 2022, the registrant had 183,859,249  shares of common stock, $0.00001 per share outstanding.

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1.	Financial Statements (unaudited)	5
	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021 (unaudited)	6
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2022 and 2021 (unaudited)	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (unaudited)	8
	Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2022 and 2021 (unaudited)	10
	Notes to Condensed Consolidated Financial Statements (unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
Part II. Other Information
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79
Item 3.	Defaults Upon Senior Securities	79
Item 4.	Mine Safety Disclosures	79
Item 5.	Other Information	79
Item 6.	Exhibits	80
Signatures		81

Explanatory Note – Certain Defined Terms

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

“Board” or “Board of Directors” means the board of directors of the Company.

“Bylaws” means the restated bylaws of the Company.

“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.

“Certificate of Incorporation” means the restated certificate of incorporation of the Company.

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

“Class A ordinary shares” means the Class A ordinary shares, par value $0.0001 per share, of JAWS Spitfire, prior to the Domestication, which automatically converted, on a one-for-one basis, into shares of common stock in connection with the Closing.

“Class B ordinary shares” means the Class B ordinary shares, par value $0.0001 per share, of JAWS Spitfire, prior to the Domestication, which automatically converted, on a one-for-one basis, into shares of common stock in connection with the Closing.

“Closing” means the closing of the Merger.

“Closing Date” means September 29, 2021.

“Code” means the Internal Revenue Code of 1986, as amended.

“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.

“DGCL” means the General Corporation Law of 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.

“Equity Incentive Plan” means the Velo3D, Inc. 2021 Equity Incentive Plan.

“ESPP” means the Velo3D, Inc. 2021 Employee Stock Purchase Plan.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“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.

“GAAP” means United States generally accepted accounting principles.

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“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.

“NYSE” means the New York Stock Exchange.

“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.

“PIPE Shares” means the 15,500,000 shares of our common stock issued in the PIPE Financing.

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

“public shares” means the Class A ordinary shares included in the units issued in our IPO.

“public shareholders” means holders of public shares.

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

“Sarbanes-Oxley Act” or “SOX” means the Sarbanes-Oxley Act of 2002.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

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

“Subscription Agreements” means, collectively, those certain subscription agreements, entered into on March 22, 2021, between the Company and the PIPE Investors.

“Trust Account” means the trust account of the Company that held the proceeds from the IPO and a portion of the proceeds from the sale of the private placement warrants.

“Velo3D” refers 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.

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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

Forward-looking Statements

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. 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 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;

•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, and variant strains of the virus, 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 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

4

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.

5

Item 1. Financial Statements

Velo3D, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)

	March 31,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	104,426	$	207,602
Short-term investments	81,725		15,483
Accounts receivable, net	10,196		12,778
Inventories	42,820		22,479
Contract assets	1,430		274
Prepaid expenses and other current assets	9,449		9,458
Total current assets	250,046		268,074
Property and equipment, net	12,438		10,046
Equipment on lease, net	9,601		8,366
Other assets	15,389		16,231
Total assets	$	287,474	$	302,717
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	19,609	$	9,882
Accrued expenses and other current liabilities	12,121		9,414
Debt – current portion	5,116		5,114
Contract liabilities	19,386		22,252
Total current liabilities	56,232		46,662
Long-term debt – less current portion	2,422		2,956
Contingent earnout liabilities (Note 10)	142,719		111,487
Warrant liabilities (Note 10)	27,719		21,705
Other noncurrent liabilities	8,778		9,492
Total liabilities	237,870		192,302
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.00001 par value - 500,000,000 shares authorized at March 31, 2022 and December 31, 2021, 183,557,946 and 183,232,494 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	2		2
Additional paid-in capital	345,418		340,294
Accumulated other comprehensive loss	(608)		(14)
Accumulated deficit	(295,208)		(229,867)
Total stockholders’ equity	49,604		110,415
Total liabilities and stockholders’ equity	$	287,474	$	302,717

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

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Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except share and per share data)

	Three months ended March 31,
	2022		2021
Revenue
3D Printer	$	10,184	$	234
Recurring payment	925		263
Support services	1,109		675
Total Revenue	12,218		1,172
Cost of revenue
3D Printer	10,479		583
Recurring payment	718		187
Support services	1,006		792
Total cost of revenue	12,203		1,562
Gross profit/(loss)	15		(390)
Operating expenses
Research and development	12,915		4,695
Selling and marketing	5,983		2,023
General and administrative	9,290		4,786
Total operating expenses	28,188		11,504
Loss from operations	(28,173)		(11,894)
Interest expense	(141)		(120)
Loss on fair value of warrants	(6,014)		(1,514)
Loss on fair value of contingent earnout liabilities	(31,232)		—
Other income/(expense), net	219		(20)
Loss before provision for income taxes	(65,341)		(13,548)
Provision for income taxes	—		—
Net loss	$	(65,341)	$	(13,548)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.36)	$	(0.85)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	183,498,082		16,019,559
Net loss	$	(65,341)	$	(13,548)
Net unrealized holding loss on available-for-sale investments	(594)		—
Total comprehensive loss	$	(65,935)	$	(13,548)

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

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Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

	Three months ended March 31,
	2022		2021
Cash flows from operating activities
Net loss	$	(65,341)	$	(13,548)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	1,019		363
Amortization of deferred loan costs	2		—
Stock-based compensation	4,957		315
Loss on fair value of warrants	6,014		1,514
Loss on fair value of contingent earnout liabilities	31,232		—
Changes in assets and liabilities
Accounts receivable	2,582		(4,814)
Inventories	(16,302)		374
Contract assets	(1,156)		2,549
Prepaid expenses and other current assets	5,036		324
Other assets	842		20
Accounts payable	1,880		2,894
Accrued expenses and other liabilities	2,707		979
Contract liabilities	(2,866)		6,155
Other noncurrent liabilities	(713)		233
Net cash used in operating activities	(30,107)		(2,642)
Cash flows from investing activities
Purchase of property and equipment	(4,060)		(120)
Production of equipment for lease to customers	(1,707)		(3,326)
Purchases of available-for-sale investments	(66,942)		—
Net cash used in investing activities	(72,709)		(3,446)
Cash flows from financing activities
Proceeds from loan issuance	—		2,400
Repayment of property and equipment loan	—		(992)
Proceeds from convertible notes	—		5,000
Repayment of equipment loans	(534)		—
Issuance of common stock upon exercise of stock options	167		39
Net cash (used in) provided by financing activities	(367)		6,447
Effect of exchange rate changes on cash and cash equivalents	7		—
Net change in cash and cash equivalents	(103,176)		359
Cash and cash equivalents and restricted cash at beginning of period	208,402		15,517
Cash and cash equivalents and restricted cash at end of period	$	105,226	$	15,876
Supplemental disclosure of cash flow information
Cash paid for interest	$	86	$	120
Supplemental disclosure of non-cash information
Issuance of common stock warrants in connection with financing	$	—	$	68
Unpaid liabilities related to property and equipment	$	(636)	$	—
Transfers between inventories and property and equipment	$	150	$	—

The following table provides a reconciliation of cash, cash equivalents, and restricted cash shown on the condensed consolidated statements of cash flows:

8

	March 31,
	2022		2021
	(In thousands)
Cash and cash equivalents	$	104,426	$	15,876
Restricted cash (Other assets)	800		—
Total cash and cash equivalents and restricted cash	$	105,226	$	15,876

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

9

Velo3D, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(In thousands, except share data)

	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount
Balance as of December 31, 2020	117,734,383	$	123,704	16,003,558	$	1	$	14,954	$	—	$	(122,776)	$	(107,821)
Issuance of common stock upon exercise of stock options	—	—		39,387	—		39		—		—		39
Issuance of common stock warrants in connection with financing	—	—		—	—		68		—		—		68
Stock-based compensation	—	—		—	—		315		—		—		315
Net loss	—	—		—	—		—		—		(13,548)		(13,548)
Balance as of March 31, 2021	117,734,383	$	123,704	16,042,945	$	1	$	15,376	$	—	$	(136,324)	$	(120,947)
Balance as of December 31, 2021	—	$	—	183,232,494	$	2	$	340,294	$	(14)	$	(229,867)	$	110,415
Issuance of common stock upon exercise of stock options	—	—		325,452	—		167		—		—		$	167
Stock-based compensation	—	—		—	—		4,957		—		—		$	4,957
Net loss	—	—		—	—		—		—		(65,341)		$	(65,341)
Other comprehensive loss	—	—		—	—		—		(594)		—		(594)
Balance as of March 31, 2022	—	$	—	183,557,946	$	2	$	345,418	$	(608)	$	(295,208)	$	49,604

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

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

Note 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.”

Accordingly, all historical financial information prior to the Closing Date presented in the unaudited condensed consolidated 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, par value $0.00001 (the “common stock”) for 1 share of Legacy Velo3D common stock). All fractional shares were rounded.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries 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. Intercompany balances and transactions have been eliminated in consolidation. 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 consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) and the related notes, which provide a more complete discussion of the Company’s accounting policies and certain other information. The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements of the Company. These condensed consolidated financial statements have been prepared on the same basis as the Company’s 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, 2022, or for any other interim period or for any other future year.

Financial Condition and Liquidity and Capital Resources

The condensed consolidated 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 private placement of

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

15,500,000 shares of common stock at $10.00 per share (the “PIPE Financing”). 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 March 31, 2022, the Company had an accumulated deficit of $295.2 million.

As of May 16, 2022, the issuance date of the unaudited condensed consolidated 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.

Note 2. Summary of Significant Accounting Policies

For a detailed discussion about the Company’s significant accounting policies and for further information on accounting updates adopted in the prior year, see Note 2, Summary of Significant Accounting Policies, to the audited consolidated financial statements in the 2021 Form 10-K. During the three months ended March 31, 2022, there were no significant updates to the Company’s significant accounting policies other than as described below.

Revenue - Variable Consideration

The sales of 3D Printer systems under certain contracts may include variable consideration such that the Company is entitled to a rate per print hour used on the 3D Printer systems. The Company makes certain estimates in calculating the variable consideration, including amount of hours, the estimated life of the equipment and the discount rate. Although estimates may be made on a contract-by-contract basis, whenever possible, the Company uses all available information including historical customer usage and collection patterns to estimate variable consideration.

The Company intends to update its estimates of variable consideration on a quarterly basis based on the latest data available, and adjust the transaction price accordingly by recording an adjustment to net revenue and contract assets. The Company has recognized the estimate of variable consideration to the extent that it is probable that a significant reversal will not occur as a result from a change in estimation.

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 consolidated 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 adopted the new guidance in the first quarter of 2022. The effect on the consolidated financial statements and related disclosures is not material.

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

Note 3. 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 attributable to common stockholders:

	Three months ended March 31,
	2022		2021
	(In thousands, except share and per share data)
Numerator:
Net loss	$	(65,341)	$	(13,548)
Denominator:
Weighted average shares used in computing net loss per share – basic and diluted	183,498,082		16,019,559
Net loss per share – basic and diluted.	$	(0.36)	$	(0.85)

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:

	Three months ended March 31,
	2022	2021
	(share data)
Redeemable convertible preferred stock	—	147,876,672
Convertible promissory note	—	6,756,757
Redeemable convertible preferred stock warrants	—	408,729
Common stock warrants	13,075,000	229,297
Restricted stock units issued and outstanding	4,549,179	—
Common stock options issued and outstanding	20,786,579	21,183,188
Total potentially dilutive common share equivalents	38,410,758	176,454,643

Total potentially dilutive common share equivalents for the three months ended March 31, 2022, excludes 21,758,148 shares related to the earnout liability as these shares are contingently issuable upon meeting certain triggering events.

13

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

Note 4. Fair Value Measurements

The Company’s assets and liabilities that were measured at fair value on a recurring basis were as follows:

	Fair Value Measured as of March 31, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Money market funds (i)	$	104,352	$	—	$	—	$	104,352
U.S. Treasury securities (ii)	43,471		—		—		43,471
Corporate bonds (ii)	—		38,254		—		38,254
Total financial assets	$	147,823	$	38,254	$	—	$	186,077
Liabilities
Common stock warrant liabilities (Public) (iii)	$	18,285	$	—	$	—	$	18,285
Common stock warrant liabilities (Private Placement) (iii)	—		—		9,434		9,434
Contingent earnout liabilities	—		—		142,719		142,719
Total financial liabilities	$	18,285	$	—	$	152,153	$	170,438
	Fair Value Measured as of December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Money market funds (i)	$	207,471	$	—	$	—	$	207,471
U.S. Treasury securities (ii)	8,141		—		—		8,141
Corporate bonds (ii)	—		7,342		—		7,342
Total financial assets	$	215,612	$	7,342	$	—	$	222,954
Liabilities
Common stock warrant liabilities (Public) (iii)	$	14,318	$	—	$	—	$	14,318
Common stock warrant liabilities (Private Placement) (iii)	—		—		7,387		7,387
Contingent earnout liabilities	—		—		111,487		111,487
Total financial liabilities	$	14,318	$	—	$	118,874	$	133,192

(i)     Included in cash and cash equivalents on the condensed consolidated balance sheets.

(ii)     Included in short-term investments on the condensed consolidated balance sheets.

(iii)    Included in warrant liabilities on the condensed consolidated balance sheets.

The money market funds were classified as cash and cash equivalents on the condensed consolidated balance sheets. The aggregate fair value of the Company’s money market funds approximated amortized cost and, as such, there were no unrealized gains or losses on money market funds as of March 31, 2022 and December 31, 2021. Realized gains and losses, net of tax, were not material for any of the periods presented.

As of March 31, 2022 and December 31, 2021, the Company had no investments with a contractual maturity of greater than one year.

14

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

The following table presents a rollforward of the Level 3 assets and liabilities measured fair value on a recurring basis:

	Redeemable convertible preferred stock warrant liabilities		Private placement warrant liabilities		Contingent earnout liabilities
	(In thousands)
Fair value as of January 1, 2022	$	—	$	7,387	$	111,487
Change in fair value			2,047		31,232
Fair value as of March 31, 2022	$	—	$	9,434	$	142,719
	Redeemable convertible preferred stock warrant liabilities		Private placement warrant liabilities		Contingent earnout liabilities
	(In thousands)
Fair value as of January 1, 2021	$	181	$	—	$	—
Change in fair value	1,514		—		—
Fair value as of March 31, 2021	$	1,695	$	—	$	—

The fair value of the private placement warrant liability, redeemable convertible preferred stock warrant liability and contingent earnout liability are based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. In determining the fair value of the private placement warrant liability, the Company used the Binomial-Lattice Model that assumes optimal exercise of the Company’s redemption option at the earliest possible date. In determining the fair value of the redeemable convertible preferred stock warrant liability, the Company used the Black-Scholes option pricing model to estimate the fair value using unobservable inputs including the expected term, expected volatility, risk-free interest rate and dividend yield (see Note 10, Equity Instruments). In determining the fair value of the contingent earnout liability, the Company used the Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis over the applicable earnout period using the most reliable information available (see Note 10, Equity Instruments).

15

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

Note 5. Investments

Available-for-sale Investments

The Company began investing in available-for-sale (“AFS”) investments in the fourth quarter of 2021. The following table summarizes our AFS investments. These are classified as "Short-term investments" on the condensed consolidated balance sheets.

	March 31, 2022
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(In thousands)
U.S. Treasury securities	$	43,790	$	—	$	(319)	$	43,471
Corporate bonds	38,529		1		(276)		38,254
Total available-for-sale investments	$	82,319	$	1	$	(595)	$	81,725

	December 31, 2021
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(In thousands)
U.S. Treasury securities	$	8,154	$	—	$	(13)	$	8,141
Corporate bonds	7,343		1		(2)		7,342
Total available-for-sale investments	$	15,497	$	1	$	(15)	$	15,483

The following table presents the breakdown of the available-for-sale investments in an unrealized loss position as of March 31, 2022 and December 31, 2021, respectively.

	March 31, 2022				December 31, 2021
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
	(In thousands)
U.S. Treasury securities
Less than 12 months	$	43,471	$	319	$	8,141	$	13
Total	$	43,471	$	319	$	8,141	$	13
Corporate bonds
Less than 12 months	$	36,753	$	276	$	5,640	$	2
Total	$	36,753	$	276	$	5,640	$	2

The Company does not believe these AFS investments to be other-than-temporarily impaired as of March 31, 2022 and December 31, 2021.

There were no realized gains or losses on AFS investments during the three months ended March 31, 2022 and March 31, 2021.

16

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

All remaining contractual maturities of AFS investments held at March 31, 2022 are as follows:

	March 31, 2022
	Amortized Cost		Fair Value
	(In thousands)
Due in 1 year or less	$	48,223	$	48,134
Due in 1-2 years	34,096		33,591
Total	$	82,319	$	81,725

Actual maturities may differ from the contractual maturities because the Company may sell these investments prematurely.

Note 6. Balance Sheet Components

Accounts Receivable, Net

Accounts receivable, net consisted of the following:

	March 31,		December 31,
	2022		2021
	(In thousands)
Trade Receivables	$	10,263	$	12,845
Less: Allowances for Doubtful Accounts	(67)		(67)
Total	$	10,196	$	12,778

Inventories

Inventories consisted of the following:

	March 31,		December 31,
	2022		2021
	(In thousands)
Raw materials	$	32,089	$	16,594
Work-in-progress	10,731		5,885
Total	$	42,820	$	22,479

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	March 31,		December 31,
	2022		2021
	(In thousands)
Prepaid insurance and other	$	3,780	$	5,326
Vendor prepayments	5,669		4,132
Total	$	9,449	$	9,458

17

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

Property and Equipment, Net

Property and equipment, net consisted of the following:

	March 31,		December 31,
	2022		2021
	(In thousands)
Computers and software	$	1,677	$	1,397
R&D lab equipment	2,609		2,283
Equipment and other	114		—
Furniture and fixtures	88		88
Leasehold improvements	10,948		2,771
Construction in progress	210		6,273
Total property, plant and equipment	15,646		12,812
Less accumulated depreciation and amortization	(3,208)		(2,766)
Property, plant and equipment, net	$	12,438	$	10,046

Depreciation expense for the three months ended March 31, 2022 and 2021 was $0.5 million and $0.2 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	March 31,		December 31,
	2022		2021
	(In thousands)
Accrued expenses	$	5,344	$	3,015
Accrued salaries and benefits	4,142		4,143
Lease liability – current portion	2,635		2,256
Total Accrued expenses and other current liabilities	$	12,121	$	9,414

Other noncurrent liabilities consisted of the following:

	March 31,		December 31,
	2022		2021
	(In thousands)
Lease liabilities - noncurrent portion	$	8,531	$	9,184
Other noncurrent liabilities	247		308
Total other noncurrent liabilities	$	8,778	$	9,492

Please refer to Note 10, Equity Instruments, for further details of the contingent earnout liability and warrant liabilities.

Note 7. Equipment on Lease, Net

The equipment leased to customers had a cost basis of $10.9 million and accumulated depreciation of $1.4 million as of March 31, 2022. The equipment leased to customers had a cost basis of $9.3 million and accumulated depreciation of $0.9 million as of December 31, 2021.

18

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

Total lease revenue earned for the three months ended March 31, 2022 and 2021 was $0.9 million and $0.4 million, respectively. The total depreciation expense was $0.5 million and $0.2 million included in cost of revenue for the three months ended March 31, 2022 and 2021, respectively.

The Company entered into debt secured by certain leased equipment to customers. See Note 9, Long-term Debt, for a description of these financing arrangements.

Note 8. Leases

The Company leases its office and manufacturing facilities under four non-cancellable operating leases which expire in 2023 to 2027 and one month to-month operating lease. The agreements include a provision for renewal at the then market rate for terms specified in each lease.

Total right-of-use (“ROU”) assets and lease liabilities are as follows:

	March 31,		December 31,
	2022		2021
	(In thousands)
Right-of-use assets:
Net book value (Other assets)	$	10,400	$	11,073
Operating lease liabilities:
Current (Accrued expense and other current liabilities)	$	2,601	$	2,222
Noncurrent (Other noncurrent liabilities)	8,499		9,143
	11,100		11,365
Financing lease liabilities:
Current (Accrued expense and other current liabilities)	$	34	$	33
Noncurrent (Other noncurrent liabilities)	32		41
	$	66	$	74
Total lease liabilities	$	11,166	$	11,439

There were no impairments recorded related to these assets as of March 31, 2022 and December 31, 2021.

Information about lease-related balances were as follows:

	Three months ended March 31,
	2022		2021
	(In thousands)
Operating lease expense	$	717	$	143
Financing lease expense	9		3
Short-term lease expense	99		15
Total lease expense	$	825	$	161
Cash paid for leases	$	281	$	163
Weighted – average remaining lease term – operating leases (years)	4.6		1.63
Weighted – average discount rate – operating leases	4.4%		4.5%

Maturity of operating lease liabilities as of March 31, 2022 are as follows:

	(In thousands)
Remainder of 2022	$	2,342
2023	2,732
2024	2,676
2025	2,232

19

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

2026	2,315
Thereafter	598
Total operating lease payments	$	12,895
Less portion representing imputed interest	(1,729)
Total operating lease liabilities	$	11,166
Less current portion	2,635
Long-term portion	$	8,531

Note 9. Long-Term Debt

Long-term debt consisted of the following:

	March 31,		December 31,
	2022		2021
	(In thousands)
Revolving credit line	$	3,000	$	3,000
Equipment loan	4,555		5,089
Deferred financing costs	(17)		(19)
Total	$	7,538	$	8,070
Debt – current portion	5,116		5,114
Long-term debt – less current portion	$	2,422	$	2,956

The Company’s banking arrangements include three facilities and a revolving credit line with its primary bank. For a full description of these banking arrangements, see Note 15, Long-Term Debt, in the audited consolidated financial statements included in the 2021 Form 10-K. These loans contain customary representations and warranties, reporting covenants, events of default and termination provisions. The affirmative covenants include, among other things, that the Company furnish monthly financial statements, a yearly budget, timely files taxes, maintains good standing and government compliance, maintains liability and other insurance and furnishes audited financial statements no later than the date of delivery to the Board of Directors.

The Company amortizes deferred financing costs over the life of the borrowing. As of March 31, 2022 and December 31, 2021, the remaining unamortized balance of deferred financing costs was less than $0.1 million for both periods and was included in Debt — current portion on the balance sheets.

Revolving Credit Line — In May 2021, the Company executed the third amended and restated loan and security agreement and a mezzanine loan and security agreement, which included a $10.0 million revolving credit line and an $8.5 million secured equipment loan facility (see below).

In August 2021, the Company drew $3.0 million on the $10.0 million revolving credit facility, with a variable interest rate of the greater of 5.75% or Prime plus 2.50% and a term of 10 months. The Company has $7.0 million of the revolving credit line undrawn as of March 31, 2022. The effective interest rate was 4.6% for the three months ended March 31, 2022. The deferred loan fees were less than $0.1 million as of March 31, 2022.

Equipment Loan — On December 17, 2020, the Company executed the second amended and restated loan and security agreement, which included an equipment loan facility for up to $8.5 million secured by the equipment leased to customers. The facility has a variable interest rate of the greater of Prime rate or 3.25%.

During the year ended December 31, 2021, the Company executed seven additional advances on the facility for $5.6 million secured by equipment leased to customers. For the three months ended March 31, 2022, $0.5 million in principal payments were paid. As of March 31, 2022, the outstanding balance was $4.6 million. As of March 31, 2022, the deferred loans fees associated with the debt issuance was less than $0.1 million. The effective interest rate was 3.24% and 2.7% for the three months ended March 31, 2022 and 2021, respectively.

20

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

The future minimum aggregate payments for the above borrowings are as follows as of March 31, 2022:

	(In thousands)
Less than 1 year	$	5,116
1-3 years	2,422
	$	7,538

Note 10. Equity Instruments

Common stock

The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders but are not entitled to cumulative voting rights, have the right to appoint two directors to the Company’s Board of Directors, are entitled to receive ratably such dividends as may be declared by the Company’s Board of Directors out of funds legally available therefor subject to preferences that may be applicable to any shares of redeemable convertible preferred stock currently outstanding or issued in the future, are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preference of any then outstanding redeemable convertible preferred stock in the event of the Company’s liquidation, dissolution, or winding up, have no preemptive rights and no right to convert their common stock into any other securities, and have no redemption or sinking fund provisions applicable to the common stock.

Common Stock Reserved for Future Issuance

Shares of common stock reserved for issuance on an “as if converted” basis were as follows:

	March 31,	December 31,
	2022	2021
	(share data)
Common stock warrants	13,075,000	13,075,000
Restricted stock units issued and outstanding	4,549,179	4,041,346
Stock options issued and outstanding	20,786,579	21,191,226
Shares available for future grant under 2021 Equity Incentive Plan	26,207,150	17,533,471
Reserved for employee stock purchase plan	5,495,601	3,663,277
Total shares of common stock reserved	70,113,509	59,504,320

    

The shares available for future grant under the Company’s 2021 Equity Incentive Plan include un-exercised stock options (vested and unvested) and unvested restricted stock units (RSUs) as of March 31, 2022 and December 31, 2021.

21

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

Warrant liabilities

Warrants for common stock of 13,075,000 were exercisable 1-to-1 as of March 31, 2022 and December 31, 2021, respectively. Warrants - Common Stock are equity classified and recorded at fair value on the issue date without further remeasurement. Private Placement Warrants and Public Warrants on common stock (as defined below) are liability classified and recorded at fair value on the issue date with periodic remeasurement. Warrants for shares of common stock consisted of the following:

	March 31, 2022
	Issue Date	Expiration Date	Number of Warrants	Exercise Price per warrant	Fair Value on Issue Date per warrant	Fair Value on March 31, 2022
						(In thousands)
Private placement warrants - Common Stock	12/02/2020	09/29/2026	4,450,000	$11.50	$2.00	9,434
Public warrants - Common Stock	12/02/2020	09/29/2026	8,625,000	$11.50	$3.30	18,285
			13,075,000			$	27,719

	December 31, 2021
	Issue Date	Expiration Date	Number of Warrants	Exercise Price per warrant	Fair Value on Issue Date per warrant	Fair Value on December 31, 2021
						(In thousands)
Private placement warrants - Common Stock	12/02/2020	09/29/2026	4,450,000	$11.50	$2.00	7,387
Public warrants - Common Stock	12/02/2020	09/29/2026	8,625,000	$11.50	$3.30	14,318
			13,075,000			$	21,705

Private Placement Warrants - Common Stock

Concurrently with JAWS Spitfire’s initial public offering (“IPO”), 4,450,000 warrants (the “Private Placement Warrants”) were issued to Spitfire Sponsor LLC (the “Sponsor”) at $2.00 per warrant. Each Private Placement Warrant is exercisable to purchase one share of common stock at a price of $11.50 per share. Subject to certain exceptions, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants. As of March 31, 2022, the number of Private Placement Warrants issued was 4,450,000.

Public Warrants - Common Stock

In conjunction with the JAWS Spitfire IPO, 34,500,000 units were issued to public investors at $10.00 per unit. Each unit consisted of one JAWS Spitfire Class A ordinary share and one-fourth of one warrant (the “Public Warrants”). Each Public Warrant is exercisable to purchase shares of common stock at $11.50 per share. As of March 31, 2022, the number of Public Warrants issued was 8,625,000.

Public Warrants may only be exercised for a whole number of shares. The Public Warrants became exercisable on December 7, 2021. The Public Warrants will expire 5 years after the completion of the Merger or earlier upon redemption or liquidation.

22

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

Private Placement Warrant and Public Warrant Liabilities - Common Stock

The issuance of the Private Placement Warrant and Public Warrant liabilities were accounted for upon the reverse recapitalization. See Note 3, Reverse Recapitalization, in the audited consolidated financial statements included in the 2021 Form 10-K for further discussion. The liability for private placement and public warrants on common stock carried at fair value was as follows for the three months ended March 31, 2022:

	March 31,
	2022
	(In thousands)
Beginning Balance	$	21,705
Loss on fair value of warrants	$	6,014
Ending Balance	$	27,719

The liability associated with the Private Placement Warrants was subject to remeasurement at each balance sheet date using the Level 3 fair value inputs and the Public Warrants was subject to remeasured at each balance sheet date using Level 1 fair value inputs for the three months ended March 31, 2022.

As of March 31, 2022, the fair value of the common stock warrant liabilities were estimated using the Monte-Carlo simulation. The fair value of the common stock warrants takes into account the traded stock price as the valuation date used as the underlying stock input, the contract terms, as well as multiple unobservable inputs such as risk-free interest rates, and expected volatility.

The fair value assumptions used in the Monte Carlo simulation model for the recurring valuation of the private placement common stock warrants and public common stock warrant liability were as follows: