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 June 30, 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 August 5, 2022, the registrant had 184,964,259 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 June 30, 2022 and December 31, 2021 (unaudited)	5
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (unaudited)	7
	Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2022 and 2021 (unaudited)	9
	Notes to Condensed Consolidated Financial Statements (unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	52
Part II. Other Information
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures	87
Item 5.	Other Information	87
Item 6.	Exhibits	88
Signatures		89

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.

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

1

“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.

“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.

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.

2

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 the ongoing COVID-19 pandemic 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

3

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 ongoing COVID-19 pandemic 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.

4

Item 1. Financial Statements

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

	June 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	43,509	$	207,602
Short-term investments	98,287		15,483
Accounts receivable, net	11,817		12,778
Inventories	61,909		22,479
Contract assets	405		274
Prepaid expenses and other current assets	6,695		9,458
Total current assets	222,622		268,074
Property and equipment, net	17,717		10,046
Equipment on lease, net	8,128		8,366
Other assets	14,948		16,231
Total assets	$	263,415	$	302,717
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	15,744	$	9,882
Accrued expenses and other current liabilities	16,485		9,414
Debt – current portion	5,119		5,114
Contract liabilities	16,175		22,252
Total current liabilities	53,523		46,662
Long-term debt – less current portion	1,889		2,956
Contingent earnout liabilities	12,493		111,487
Warrant liabilities	4,053		21,705
Other noncurrent liabilities	8,874		9,492
Total liabilities	80,832		192,302
Commitments and contingencies (Note 13)
Stockholders’ equity:
Common stock, $0.00001 par value - 500,000,000 shares authorized at June 30, 2022 and December 31, 2021, 184,909,608 and 183,232,494 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	2		2
Additional paid-in capital	350,797		340,294
Accumulated other comprehensive loss	(957)		(14)
Accumulated deficit	(167,259)		(229,867)
Total stockholders’ equity	182,583		110,415
Total liabilities and stockholders’ equity	$	263,415	$	302,717

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

5

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue
3D Printer	$	17,615	$	6,079	$	27,799	$	6,313
Recurring payment	934		372		1,859		635
Support services	1,095		695		2,204		1,370
Total Revenue	19,644		7,146		31,862		8,318
Cost of revenue
3D Printer	15,633		3,899		26,112		4,482
Recurring payment	685		257		1,403		444
Support services	2,094		806		3,100		1,598
Total cost of revenue	18,412		4,962		30,615		6,524
Gross profit	1,232		2,184		1,247		1,794
Operating expenses
Research and development	12,965		6,399		25,880		11,094
Selling and marketing	6,249		2,337		12,232		4,360
General and administrative	8,259		5,218		17,549		10,004
Total operating expenses	27,473		13,954		55,661		25,458
Loss from operations	(26,241)		(11,770)		(54,414)		(23,664)
Interest expense	(92)		(524)		(233)		(644)
Gain (loss) on fair value of warrants	23,665		(227)		17,651		(1,741)
Gain on fair value of contingent earnout liabilities	130,227		—		98,995		—
Other income (expense), net	391		(17)		609		(37)
Income (loss) before provision for income taxes	127,950		(12,538)		62,608		(26,086)
Provision for income taxes	—		—		—		—
Net income (loss)	$	127,950	$	(12,538)	$	62,608	$	(26,086)
Net income (loss) per share:
Basic	$	0.69	$	(0.78)	$	0.34	$	(1.62)
Diluted	$	0.63	$	(0.78)	$	0.31	$	(1.62)
Shares used in computing net income (loss) per share:
Basic	184,282,194		16,150,202		183,892,304		16,085,750
Diluted	202,326,053		16,150,202		203,026,468		16,085,750
Net income (loss)	$	127,950	$	(12,538)	$	62,608	$	(26,086)
Net unrealized holding loss on available-for-sale investments	(335)		—		(943)		—
Total comprehensive income (loss)	$	127,615	$	(12,538)	$	61,665	$	(26,086)

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

6

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

	Six months ended June 30,
	2022		2021
Cash flows from operating activities
Net income (loss)	$	62,608	$	(26,086)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization	2,108		692
Stock-based compensation	9,933		1,075
(Gain) Loss on fair value of warrants	(17,651)		1,741
(Gain) on fair value of contingent earnout liabilities	(98,995)		—
Changes in assets and liabilities
Accounts receivable	961		(2,648)
Inventories	(34,826)		(1,279)
Contract assets	(131)		2,873
Prepaid expenses and other current assets	7,049		(1,748)
Other assets	1,283		(2,156)
Accounts payable	(415)		5,296
Accrued expenses and other liabilities	5,977		779
Contract liabilities	(6,077)		7,190
Other noncurrent liabilities	(617)		1,249
Net cash used in operating activities	(68,793)		(13,022)
Cash flows from investing activities
Purchase of property and equipment	(8,578)		(601)
Production of equipment for lease to customers	(2,563)		(5,044)
Purchases of available-for-sale investments	(87,655)		—
Proceeds from maturity of available-for-sale investments	4,000		—
Net cash used in investing activities	(94,796)		(5,645)
Cash flows from financing activities
Proceeds from loan issuance	—		14,339
Repayment of term loan	—		(4,888)
Proceeds from convertible notes	—		5,000
Proceeds from equipment loans	—		3,200
Repayment of equipment loans	(1,067)		(1,636)
Issuance of common stock upon exercise of stock options	570		283
Net cash (used in) provided by financing activities	(497)		16,298
Effect of exchange rate changes on cash and cash equivalents	(7)		—
Net change in cash and cash equivalents	(164,093)		(2,369)
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	$	44,309	$	13,148
Supplemental disclosure of cash flow information
Cash paid for interest	$	152	$	280

7

Supplemental disclosure of non-cash information
Issuance of common stock warrants in connection with financing	$	—	$	134

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

	June 30,
	2022		2021
	(In thousands)
Cash and cash equivalents	$	43,509	$	13,148
Restricted cash (Other assets)	800		—
Total cash and cash equivalents and restricted cash	$	44,309	$	13,148

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

8

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 March 31, 2021	117,734,383	$	123,704	16,042,945	$	1	$	15,376	$	—	$	(136,324)	$	(120,947)
Issuance of common stock upon exercise of stock options	—	$	—	125,633	$	—	$	244	$	—	$	—	$	244
Issuance of common stock warrants in connection with financing	—	$	—	—	$	—	$	66	$	—	$	—	$	66
Stock-based compensation	—	$	—	—	$	—	$	760	$	—	$	—	$	760
Net loss	—	$	—	—	$	—	$	—	$	—	$	(12,538)	$	(12,538)
Balance as of June 30, 2021	117,734,383	123,704		16,168,578	1		16,446		—		(148,862)		(132,415)
Balance as of March 31, 2022	—	$	—	183,557,946	$	2	$	345,418	$	(608)	$	(295,209)	$	49,603
Issuance of common stock upon exercise of stock options and release of restricted stock units	—	$	—	1,221,179	$	—	$	403	$	—	$	—	$	403
Stock-based compensation	—	$	—	130,483	$	—	$	4,976	$	—	$	—	$	4,976
Net income	—	$	—	—	$	—	$	—	$	—	$	127,950	$	127,950
Other comprehensive loss	—	$	—	—	$	—	$	—	$	(349)	$	—	$	(349)
Balance as of June 30, 2022	—	—		184,909,608	2		350,797		(957)		(167,259)		182,583

9

	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	—	—		165,020	—		283		—		—		283
Issuance of common stock warrants in connection with financing	—	—		—	—		134		—		—		134
Stock-based compensation	—	—		—	—		1,075		—		—		1,075
Net loss	—	—		—	—		—		—		(26,086)		(26,086)
Balance as of June 30, 2021	117,734,383	$	123,704	16,168,578	$	1	$	16,446	$	—	$	(148,862)	$	(132,415)
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 and release of restricted stock units	—	—		1,546,631	—		570		—		—		$	570
Stock-based compensation	—	—		130,483	—		9,933		—		—		$	9,933
Net income	—	—		—	—		—		—		62,608		$	62,608
Other comprehensive loss	—	—		—	—		—		(943)		—		(943)
Balance as of June 30, 2022	—	$	—	184,909,608	$	2	$	350,797	$	(957)	$	(167,259)	$	182,583

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

11

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 June 30, 2022, the Company had an accumulated deficit of $167.3 million.

As of August 12, 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 six months ended June 30, 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.

12

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

Note 3. Basic and Diluted Net Income (Loss) per Share

Basic net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding. Diluted net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive shares of common stock been issued. The Company applies the treasury stock method to determine the dilutive effect of potentially dilutive securities.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands, except share and per share data)
Numerator:
Net income (loss)	$	127,950	$	(12,538)	$	62,608	$	(26,086)
Denominator:
Basic weighted average shares outstanding	184,282,194		16,150,202		183,892,304		16,085,750
Effect of dilutive securities:
Common stock options	18,043,859		—		19,130,274		—
Restricted stock units	—		—		3,890		—
Diluted weighted average shares outstanding	202,326,053		16,150,202		203,026,468		16,085,750
Net income (loss) per share
Basic	$	0.69	$	(0.78)	$	0.34	$	(1.62)
Diluted	$	0.63	$	(0.78)	$	0.31	$	(1.62)

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

	Three Months Ended June 30,		Six months ended June 30,
	2022	2021	2022	2021
Redeemable convertible preferred stock	—	147,876,672	—	147,876,672
Convertible promissory note	—	6,756,757	—	6,756,757
Redeemable convertible preferred stock warrants	—	408,729	—	408,729
Common stock warrants	13,075,000	293,856	13,075,000	293,856
Restricted stock units	5,355,860	—	5,351,970	—
Common stock options	1,493,147	26,997,994	406,732	26,997,994
Total potentially dilutive common share equivalents	19,924,007	182,334,008	18,833,702	182,334,008

Total potentially dilutive common share equivalents for the three and six months ended June 30, 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 June 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets
Money market funds (i)	$	42,869	$	—	$	—	$	42,869
U.S. Treasury securities (ii)	52,704		—		—		52,704
Corporate bonds (ii)	—		45,583		—		45,583
Total financial assets	$	95,573	$	45,583	$	—	$	141,156
Liabilities
Common stock warrant liabilities (Public) (iii)	$	2,673	$	—	$	—	$	2,673
Common stock warrant liabilities (Private Placement) (iii)	—		—		1,380		1,380
Contingent earnout liabilities	—		—		12,493		12,493
Total financial liabilities	$	2,673	$	—	$	13,873	$	16,546
	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 are 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 June 30, 2022 and December 31, 2021. Realized gains and losses, net of tax, were not material for any period presented.

As of June 30, 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 at fair value on a recurring basis:

	Redeemable convertible preferred stock warrant liabilities		Private placement warrant liabilities		Contingent earnout liabilities
Three Months Ended June 30, 2022	(In thousands)
Fair value as of March 31, 2022	$	—	$	9,434	$	142,719
Change in fair value			(8,054)		(130,226)
Fair value as of June 30, 2022	$	—	$	1,380	$	12,493
Six months ended June 30, 2022
Fair value as of January 1, 2022	$	—	$	7,387	$	111,488
Change in fair value	—		(6,007)		(98,995)
Fair value as of June 30, 2022	$	—	$	1,380	$	12,493

Three Months Ended June 30, 2021
Fair value as of March 31, 2021	$	1,695	$	—	$	—
Change in fair value	227		—		—
Fair value as of June 30, 2021	$	1,922	$	—	$	—
Six months ended June 30, 2021
Fair value as of January 1, 2021	$	181	$	—	$	—
Change in fair value	1,741		—		—
Fair value as of June 30, 2021	$	1,922	$	—	$	—

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.

	June 30, 2022
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(In thousands)
U.S. Treasury securities	$	53,229	$	—	$	(525)	$	52,704
Corporate bonds	46,015		—		(432)		45,583
Total available-for-sale investments	$	99,244	$	—	$	(957)	$	98,287

	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 AFS investments in an unrealized loss position as of June 30, 2022 and December 31, 2021, respectively.

	June 30, 2022				December 31, 2021
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
	(In thousands)
U.S. Treasury securities
Less than 12 months	$	52,704	$	525	$	8,141	$	13
Total	$	52,704	$	525	$	8,141	$	13
Corporate bonds
Less than 12 months	$	45,583	$	432	$	5,640	$	2
Total	$	45,583	$	432	$	5,640	$	2

The Company does not believe these AFS investments to be other-than-temporarily impaired as of June 30, 2022 and December 31, 2021.

There were no realized gains or losses on AFS investments during the three and six months ended June 30, 2022 and June 30, 2021.

16

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

All remaining contractual maturities of AFS investments held at June 30, 2022 are as follows:

Less than 12 months
Fair value	Gross unrealized losses