Filed pursuant to Rule 424(b)(3)

Registration No. 333-260415

PROSPECTUS SUPPLEMENT NO. 5
(to Prospectus dated April 5, 2022)

Velo3D, Inc.

161,028,936 Shares of Common Stock

4,450,000 Warrants to Purchase Shares of Common Stock

13,075,000 Shares of Common Stock Underlying Warrants

This prospectus supplement supplements the prospectus dated April 5, 2022 (the “Prospectus”), which forms a part of our registration statement on Form S-1 (No. 333-260415), as amended. This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our quarterly report on Form 10-Q for the period ended June 30, 2022, filed with the Securities and Exchange Commission on August 12, 2022 (the “Q2 2022 Quarterly Report”). Accordingly, we have attached the Q2 2022 Quarterly Report to this prospectus supplement.

The Prospectus and this prospectus supplement relate to the offer and sale from time to time by the selling securityholders named in the Prospectus (the “Selling Securityholders”) of (A) up to 161,028,936 shares of our common stock, par value $0.00001 per share (our “common stock”), consisting of (i) up to 7,381,428 shares of our common stock issued in a private placement of 15,500,000 shares of our common stock (the “PIPE shares”) pursuant to subscription agreements each entered into on March 22, 2021 (the “PIPE Financing”); (ii) up to 8,625,000 shares of our common stock (the “Founder Shares”) issued in connection with the consummation of the Merger (as defined in the Prospectus), in exchange for our Class B ordinary shares originally issued in a private placement to Spitfire Sponsor LLC (the “Sponsor”); (iii) up to 140,572,508 shares of our common stock issued or issuable to certain former stockholders and equity award holders of Legacy Velo3D (the “Legacy Velo3D equity holders”) in connection with or as a result of the consummation of the Merger, consisting of (a) up to 123,058,076 shares of our common stock; (b) up to 1,902,945 shares of our common stock issuable upon the exercise of certain options; and (c) up to 15,611,487 shares of our common stock (the “Earn-Out Shares”) that certain Legacy Velo3D equity holders have the contingent right to receive upon the achievement of certain vesting conditions; and (iv) up to 4,450,000 shares of our common stock issuable upon the exercise of the private placement warrants (as defined below); and (B) up to 4,450,000 warrants (the “private placement warrants”) originally issued in a private placement to the Sponsor.

In addition, the Prospectus and this prospectus supplement relate to the offer and sale of: (i) up to 8,625,000 shares of our common stock that are issuable by us upon the exercise of 8,625,000 warrants (the “public warrants”) originally issued in our initial public offering (the “IPO”); and (ii) up to 4,450,000 shares of our common stock that are issuable by us upon the exercise of the private placement warrants.

Our common stock and public warrants are listed on the New York Stock Exchange (the “NYSE”) under the symbols “VLD” and “VLD WS”, respectively. On August 10, 2022, the last reported sales price of our common stock was $5.07 per share and the last reported sales price of our public warrants was $0.90 per warrant.

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

Investing in our securities involves risks. See the section entitled “Risk Factors” beginning on page 10 of the Prospectus to read about factors you should consider before buying our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement is August 12, 2022

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.

10

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.

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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.

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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).

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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.

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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
	(In thousands)
Corporate bonds	$	45,583	$	(432)
U.S. Treasury securities	52,704		(525)
Total	$	98,287	$	(957)

There were no AFS investments with maturities greater than 12 months at June 30, 2022. 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:

	June 30,		December 31,
	2022		2021
	(In thousands)
Trade Receivables	$	11,884	$	12,845
Less: Allowances for Doubtful Accounts	(67)		(67)
Total	$	11,817	$	12,778

Inventories

Inventories consisted of the following:

	June 30,		December 31,
	2022		2021
	(In thousands)
Raw materials	$	44,682	$	16,594
Work-in-progress	17,227		5,885
Total	$	61,909	$	22,479

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	June 30,		December 31,
	2022		2021
	(In thousands)
Prepaid insurance and other	$	2,320	$	5,326
Vendor prepayments	4,375		4,132
Total	$	6,695	$	9,458

17

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

Property and Equipment, Net

Property and equipment, net consisted of the following:

	June 30,		December 31,
	2022		2021
	(In thousands)
Computers and software	$	1,848	$	1,397
R&D lab equipment	6,079		2,283
Equipment and other	114		—
Furniture and fixtures	95		88
Leasehold improvements	13,635		2,771
Construction in progress	—		6,273
Total property, plant and equipment	21,771		12,812
Less accumulated depreciation and amortization	(4,054)		(2,766)
Property, plant and equipment, net	$	17,717	$	10,046

Depreciation expense for the three months ended June 30, 2022 and 2021 was $0.7 million and $0.2 million, respectively. Depreciation expense for the six months ended June 30, 2022 and 2021 was $1.2 million and $0.4 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	June 30,		December 31,
	2022		2021
	(In thousands)
Accrued expenses	$	7,586	$	3,015
Accrued salaries and benefits	6,289		4,143
Lease liability – current portion	2,610		2,256
Total Accrued expenses and other current liabilities	$	16,485	$	9,414

Other noncurrent liabilities consisted of the following:

	June 30,		December 31,
	2022		2021
	(In thousands)
Lease liabilities - noncurrent portion	$	7,891	$	9,184
Other noncurrent liabilities	983		308
Total other noncurrent liabilities	$	8,874	$	9,492

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

18

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

Note 7. Equipment on Lease, Net

The equipment leased to customers had a cost basis of $9.3 million and accumulated depreciation of $1.2 million as of June 30, 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.

Total lease revenue earned for the three months ended June 30, 2022 and 2021 was $0.8 million and $0.2 million, respectively. Total lease revenue earned for the six months ended June 30, 2022 and 2021 was $1.7 million and $0.6 million, respectively. The total depreciation expense was $0.5 million and $0.1 million included in cost of revenue for the three months ended June 30, 2022 and 2021, respectively. The total depreciation expense was $0.9 million and $0.3 million included in cost of revenue for the six months ended June 30, 2022 and 2021, respectively.

During the three months ended June 30, 2022, the Company had two equipment on lease returned at the end of their operating lease terms and one system was sold through the exercise of the lease's purchase option. One returned equipment on lease was subsequently leased to another customer, and the other equipment on lease was converted to a demo unit at the Company’s European headquarters in Augsburg, Germany.

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:

	June 30,		December 31,
	2022		2021
	(In thousands)
Right-of-use assets:
Net book value (Other assets)	$	9,737	$	11,073
Operating lease liabilities:
Current (Accrued expense and other current liabilities)	$	2,576	$	2,222
Noncurrent (Other noncurrent liabilities)	7,867		9,143
	10,443		11,365
Financing lease liabilities:
Current (Accrued expense and other current liabilities)	$	34	$	33
Noncurrent (Other noncurrent liabilities)	24		41
	$	58	$	74
Total lease liabilities	$	10,501	$	11,439

There were no impairments recorded related to these assets as of June 30, 2022 and December 31, 2021.

19

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

Information about lease-related balances were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands, except years and percentages)
Operating lease expense	$	717	$	161	$	1,434	$	304
Financing lease expense	9		10		18		13
Short-term lease expense	68		10		167		25
Total lease expense	$	794	$	181	$	1,619	$	342
Cash paid for leases	$	683	$	465	$	964	$	628
Weighted – average remaining lease term – operating leases (years)	4.4		3.20		4.4		3.20
Weighted – average discount rate – operating leases	4.4%		4.4%		4.4%		4.4%

Maturity of operating lease liabilities as of June 30, 2022 are as follows:

	(In thousands)
Remainder of 2022	$	1,344
2023	2,708
2024	2,676
2025	2,232
2026	2,315
Thereafter	598
Total operating lease payments	$	11,873
Less portion representing imputed interest	(1,430)
Total operating lease liabilities	$	10,443
Less current portion	2,576
Long-term portion	$	7,867

Note 9. Long-Term Debt

Long-term debt consisted of the following:

	June 30,		December 31,
	2022		2021
	(In thousands)
Revolving credit line	$	3,000	$	3,000
Equipment loan	4,022		5,089
Deferred financing costs	(14)		(19)
Total	$	7,008	$	8,070
Debt – current portion	5,119		5,114
Long-term debt – less current portion	$	1,889	$	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, and Note 16, Subsequent Events, to these condensed consolidated financial statements. 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.

20

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

The Company amortizes deferred financing costs over the life of the borrowing. As of June 30, 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 June 30, 2022. The effective interest rate was 5.2% and 4.9% for the three and six months ended June 30, 2022, respectively. The loan fees were less than $0.1 million as of June 30, 2022.

Loan Modification Agreements - On May 13, 2022, the Company entered into a first loan modification agreement that made certain modifications to the third amended and restated loan and security agreement. In particular, the first loan modification agreement extended the maturity date of the revolving line of credit from May 14, 2022 to June 13, 2022, and included a limited waiver of a default related to the Company’s failure to maintain revenue of at least $25 million for the six month period ending March 31, 2022. The other material terms of the third amended and restated loan and security agreement remained unchanged.

On June 13, 2022, the Company entered into a second loan modification agreement that made certain modifications to the third amended and restated loan and security agreement, as amended. In particular, the second loan modification agreement extended the maturity date of the revolving line of credit from June 13, 2022 to July 14, 2022. The other material terms of the third amended and restated loan and security agreement remained unchanged.

Subsequent to June 30, 2022, the third amended and restated loan and agreement was further amended on July 11, 2022 pursuant to a third loan modification agreement and on July 25, 2022 pursuant to a joinder and fourth loan modification agreement. Following these further amendments, among other things, the maturity date of the Company’s revolving line of credit has been extended to December 31, 2024. See Note 16, Subsequent Events.

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 six months ended June 30, 2022, $1.1 million in principal payments were paid. As of June 30, 2022, the outstanding balance was $4.0 million. As of June 30, 2022, the deferred loans fees associated with the debt issuance was less than $0.1 million. The effective interest rate was 3.9% and 3.2% for the three months ended June 30, 2022 and 2021, respectively, and 3.5% and 3.2% for the six months ended June 30, 2022 and 2021, respectively.

The future minimum aggregate payments for the above borrowings are as follows as of June 30, 2022:

	(In thousands)
Less than 1 year	$	5,119
1-3 years	1,889
	$	7,008

On July 25, 2022, the Company entered into a joinder and fourth loan modification agreement to the third amended and restated loan and security agreement, which, among other things, established a secured equipment loan facility of up to $15.0 million available through December 31, 2023. See Note 16, Subsequent Events.

21

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

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:

	June 30,	December 31,
	2022	2021
	(share data)
Common stock warrants	13,075,000	13,075,000
Restricted stock units issued and outstanding	5,355,860	4,041,346
Stock options issued and outstanding	19,537,006	21,191,226
Shares available for future grant under 2021 Equity Incentive Plan	25,288,973	17,533,471
Reserved for employee stock purchase plan	5,495,601	3,663,277
Total shares of common stock reserved	68,752,440	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 June 30, 2022 and December 31, 2021.

Warrant liabilities

Warrants for common stock of 13,075,000 were exercisable 1-to-1 as of June 30, 2022 and December 31, 2021. 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

22

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

classified and recorded at fair value on the issue date with periodic remeasurement. Warrants for shares of common stock consisted of the following:

	June 30, 2022
	Issue Date	Expiration Date	Number of Warrants	Exercise Price per warrant	Fair Value on Issue Date per warrant	Fair Value on June 30, 2022
						(In thousands)
Private placement warrants - Common Stock	12/02/2020	09/29/2026	4,450,000	$11.50	$2.00	1,380
Public warrants - Common Stock	12/02/2020	09/29/2026	8,625,000	$11.50	$3.30	2,673
			13,075,000			$	4,053

	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 June 30, 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 June 30, 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.

23

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:

	Six Months Ended June 30,
	2022
	(In thousands)
Beginning Balance	$	21,704
Gain on fair value of warrants	(17,651)
Ending Balance	$	4,053

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 were subject to remeasurement at each balance sheet date using Level 1 fair value inputs for the three and six months ended June 30, 2022.

As of June 30, 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:

	As of June 30, 2022			As of December 31, 2021
Current stock price	$	1.38		$	7.81
Expected volatility	91.0		%	40.5		%
Risk-free interest rate	3.0		%	1.2		%
Dividend rate	—		%	—		%
Expected Term (years)	4.25			4.75

Expected volatility: The volatility is determined iteratively, such that the concluded value of the Public Warrant is equal to the traded price.

Risk-free interest rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities corresponding to the expected term of the common stock warrants.

Expected dividend yield: The expected dividend rate is zero as the Company currently has no history or expectation of declaring dividends on its common stock.

Expected term: The expected term represents the period that the Company’s common stock warrants are expected to be outstanding and is determined using the simplified method, which deems the term to be the average of the time to vesting and the contractual life of the common stock warrants.

24

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

Redeemable Convertible Preferred Stock Warrants

Warrants on redeemable convertible preferred stock of Legacy Velo3D were issued to lenders in connection with borrowings. The fair value on the date of issue is recorded as a debt issue cost (contra-liability) and a liability because the warrant was liability classified. The fair value of the warrants are remeasured each reporting period using Level 3 inputs with the increase or decrease recorded in other income (expense), net in the statements of operations.

The liability for warrants on redeemable convertible preferred stock (carried at fair value) was as follows:

	Six Months Ended June 30,
	2021
Beginning Balance	$	181
Change in fair value (Other income (expense), net)	1,741
Ending Balance	$	1,922

Contingent Earnout Liabilities

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”). See Note 18, Equity Incentive Plans & Stock-Based Compensation, in the audited consolidated financial statements included in the 2021 Form 10-K for further discussion on the contingent earnout liability.

The change in fair value of contingent earnout liabilities are recognized in the condensed consolidated statement of operations. The rollforward for the contingent earnout liabilities was as follows:

	Six Months ended June 30,
	2022
Beginning Balance	$	111,488
Gain on fair value of contingent earnout liabilities	(98,995)
Ending Balance	$	12,493

Assumptions used in the fair value of the contingent earnout liabilities are described below.

	As of June 30, 2022	As of December 31, 2021
Current stock price	$1.38	$7.81
Expected volatility	85.7%	52.5%
Risk-free interest rate	3.0%	1.2%
Dividend yield	—%	—%
Expected Term (years)	4.25	4.75

Expected volatility: The expected volatility was derived from the implied volatility of Velo3D’s Public Warrants. The implied volatility is determined iteratively, such that the concluded value of the Public Warrant is equal to the traded price using a Monte Carlo Simulation. Additionally, the historical traded prices of the Guideline Public Comparables (“GPC”) are relied upon to calculate an estimate of volatility for the Company. Volatility for each comparable is calculated as the annualized standard deviation of continuously compounded returns. The

25

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

selected GPC have been identified as comparables as they operate in a similar industry to that of Velo3D. Additionally, the Company’s trading volatility was considered for the three months ended June 30, 2022, with a 25% weighting as there is limited trading data available as of the valuation date. A blended weighting of the three different volatility scenarios is utilized to arrive at the conclusion. The Company intends to reevaluate this assumption in subsequent quarters.

Risk-free interest rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities corresponding to the expected term of the Earnout Shares.

Expected dividend yield: The expected dividend rate is zero as the Company currently has no history or expectation of declaring dividends on its common stock.

Expected term: The expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method, which deems the term to be the average of the time to vesting and the contractual life of the Earnout Shares.

Note 11. Equity Incentive Plans and Stock-Based Compensation

In 2014, the Company adopted its 2014 equity incentive plan (the “2014 Plan”), which provided for the granting of stock options, restricted stock awards and stock appreciation rights to employees, directors, and consultants of the Company.

Awards granted under the 2014 Plan generally expire 10 years from the date of grant, or earlier if services are terminated. The exercise price of stock options grants shall not be less than 110% of the estimated fair value of the shares on the date of grant, respectively, as determined by Legacy Velo3D’s Board of directors. Awards generally vest based on continuous service over four years. Awards forfeited, cancelled, or repurchased generally are returned to the pool of shares of common stock available for issuance under the 2021 Plan (as defined below).

In 2021, the Company adopted its 2021 Equity Incentive Plan (the “2021 EIP”), which provides for the granting of stock options, restricted stock units (“RSUs”) and stock appreciation rights to employees, directors, and consultants of the Company. The Company initially reserved 42,766,043 shares of its common stock for issuance under the 2021 EIP. In March 2022, pursuant to the evergreen provisions of the 2021 EIP, the Company registered an additional 9,161,624 shares of common stock for issuance under the 2021 EIP.

As of June 30, 2022, the Company has an allocated reserve of 51,927,667 shares of its common stock for issuance under the 2021 EIP.

In addition, in 2021, the Company adopted its 2021 Employee Stock Purchase Plan (“2021 ESPP”). The Company initially reserved 3,663,277 shares of its common stock for issuance under the 2021 ESPP. In March 2022, pursuant to the evergreen provisions of the 2021 ESPP, the Company registered an additional 1,832,324 shares of common stock for issuance under the 2021 ESPP.

As of June 30, 2022, the Company has an allocated reserve of 5,495,601 shares of its common stock for issuance under the 2021 ESPP. As of June 30, 2022, the Company had not begun any offering periods for the 2021 ESPP.

Awards granted under both the 2021 EIP generally expire 10 years from the date of grant, or earlier if services are terminated. The exercise price of stock options grants shall not be less than 110% of the estimated fair value of the shares on the date of grant, respectively, as determined by the Company’s Board of Directors. Awards generally vest based on continuous service over 4 years. Awards forfeited, cancelled, or repurchased generally are returned to the pool of shares of common stock available for issuance under the 2021 Plan.

26

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

Stock options

Activity under the Company’s stock option plans is set forth below:

	Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term in years
	(In thousands)	(Per share data)		(Years)
Outstanding as of December 31, 2020	21,471	$	0.33	9.3
Granted	967	$	6.63
Exercised	(165)	$	1.72
Forfeited or expired	(271)	$	0.40
Outstanding as of June 30, 2021	22,002	$	0.59	8.7
Options vested and expected to vest as of June 30, 2021	22,002	$	0.59
Vested and exercisable as of June 30, 2021	5,948	$	0.63
Outstanding as of December 31, 2021	21,191	$	0.58	8.2
Granted	—	$	—
Exercised	(1,547)	$	0.36
Forfeited or expired	(107)	$	5.67
Outstanding as of June 30, 2022	19,537	$	0.57	7.4
Options vested and expected to vest as of June 30, 2022	19,537	$	0.57
Vested and exercisable as of June 30, 2022	10,345	$	0.66

The aggregate intrinsic value of options outstanding was $20.1 million and $153.2 million, respectively, as of June 30, 2022 and December 31, 2021. Intrinsic value of options exercised for the six months ended June 30, 2022 and 2021 was$5.0 million and $0.2 million, respectively. The weighted-average grant date fair value of options granted in the six months ended June 30, 2022 and 2021 was $1.83 per share and $2.91 per share, respectively. The total grant date fair value of options vested was $1.1 million and $0.7 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, total unrecognized compensation cost related to options was $2.3 million related to 9.2 million unvested options and is expected to be recognized over a weighted-average period of 1.8 years.

For the six months ended June 30, 2021, the Company used the Black-Scholes option pricing model to determine the fair value of stock options. The fair value of each stock option grant is estimated on the date of the grant. The fair value of the Legacy Velo3D common stock underlying the stock options had historically been determined by the Legacy Velo3D board of directors, as there was no public market for Legacy Velo3D’s common stock prior to Merger closing. Therefore, the Legacy Velo3D board of directors had determined the fair value of the common stock at the time of the stock option grant by considering a number of objective and subjective factors including independent third-party valuation reports, valuations of comparable companies, sales of convertible

27

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

preferred stock and common stock to unrelated third parties, operating and financial performance, lack of liquidity of capital stock and general and industry-specific economic outlook, among other factors.

For the six months ended June 30, 2022, there were no options granted. The weighted-average assumptions in the Black-Scholes option-pricing model used to determine the fair value of stock options granted were as follows:

	Six months ended June 30,
	2021
Expected volatility	60	%
Risk-free interest rate	0.9% -1.0%
Dividend yield	—	%
Expected term (in years)	5.71
Discount for Lack of Marketability	23.5	%

Expected volatility: As Legacy Velo3D was not publicly traded at the time the awards were granted, the expected volatility for the Company’s stock options was determined by using a review of historical volatilities of selected industry peers deemed to be comparable to the Company’s business corresponding to the expected term of the awards.

Risk-free interest rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities corresponding to the expected term of the awards.

Expected dividend yield: The expected dividend rate is zero as the Company currently has no history or expectation of declaring dividends on its common stock.

Expected term: The Company uses the simplified method available under U.S. GAAP to determine the expected term due to having insufficient history upon which to base an assumption about the term.

Discount for Lack of Marketability ("DLOM"): The DLOM is meant to account for the lack of marketability of stock that was not publicly traded and therefore does not apply for the three and six months ended June 30, 2022.

28

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

Restricted Stock Units

The fair value of RSUs under the Company’s 2021 EIP is estimated using the value of the Company’s common stock on the date of grant.

The following table summarizes outstanding and expected to vest RSUs as of June 30, 2022 and their activity during the six months ended June 30, 2022:

	Number of Shares	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
	(In thousands)	(Per share data)		(In thousands)
Balance as of December 31, 2021	4,041	$	7.26	$	31,563
Granted	1,489	4.87		7,334
Released	(130)	7.21		789
Cancelled	(44)	7.26		259
Balance as of June 30, 2022	5,356	$	6.60	$	7,391
Expected to vest as of June 30, 2022	5,356	$	6.60	$	7,391

The aggregate intrinsic value of outstanding RSUs is calculated based on the closing price of the Company’s common stock as of the date outstanding. As of June 30, 2022, there was $31.0 million of unrecognized compensation cost related to 5.4 million unvested RSUs, which is expected to be recognized over a weighted average period of approximately 3.3 years.

Earnout Shares - Employees

The Earnout Shares issuable to holders of employee stock options are accounted as stock-based compensation expense as they are subject to forfeiture based on the satisfaction of certain employment conditions. The estimated fair values of the Earnout Shares associated with vested stock options are recognized as an expense and determined by the Monte Carlo simulation valuation model using a distribution of potential outcomes on a monthly basis over the five-year earnout period. The portion of the Earnout Shares associated with unvested stock options are recognized as an expense and considers the vesting continuing employment requirements.

Stock-based Compensation Expense

The following sets forth the total stock-based compensation expense by type of award included in the statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands)
Restricted stock units	$	2,550	$	—	$	4,990	$	—
Stock options	484		760		1,059		1,075
Earnout shares - employees	1,942		—		3,884		—
	$	4,976	$	760	$	9,933	$	1,075

29

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

The following sets forth the total stock-based compensation expense for the stock options included in the statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands)
Research and development	$	2,488	$	222	$	5,079	$	387
Selling and marketing	1,142		109		2,255		174
General and administrative	1,346		429		2,599		514
	$	4,976	$	760	$	9,933	$	1,075

Note 12. Income Taxes

The income tax provision is calculated for an interim period by distinguishing between elements recognized in the income tax provision through applying an estimated annual effective tax rate (the “ETR”) to a measure of year-to-date operating results referred to as “ordinary income (or loss),” and discretely recognizing specific events referred to as “discrete items” as they occur. The income tax provision or benefit for each interim period is the difference between the year-to-date amount for the current period and the year-to date amount for the period prior. Under ASC 740-270-30-36, entities subject to income taxes in multiple jurisdictions should apply one overall ETR instead of separate ETRs for each jurisdiction when calculating the interim-period income tax or benefit related to ordinary income (or loss) for the year-to-date interim period, except in certain circumstances. The Company’s effective tax rates for the three and six months ended June 30, 2022 and 2021 differ from the federal statutory rate of 21% principally as a result of valuation allowances expected to be applied to net operating loss carry-forwards which will not meet the threshold for recognition as deferred tax assets.

Note 13. Commitments and Contingencies

The Company may be involved in various lawsuits, claims, and proceedings, including intellectual property, commercial, securities, and employment matters that arise in the normal course of business. The Company accrues a liability when management believes information available prior to the issuance of the condensed consolidated financial statements indicates it is probable a loss has been incurred as of the date of the condensed consolidated financial statements and the amount of loss can be reasonably estimated. The Company adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Legal costs are expensed as incurred. As of June 30, 2022 and December 31, 2021, the Company is not aware of any litigation, claim or assessment in which the outcome, individually or in the aggregate, would have a material adverse effect on its financial positions, results of operations, cash flows or future earnings.

The Company’s purchase obligations per terms and conditions with suppliers and vendors are cancellable in whole or in part prior to shipment. If inventory is shipped, the Company will accrue a liability under accrued expenses. The Company has no other commitment and contingencies, except for the operating leases. See Note 8, Leases, for further discussion.

Purchase commitments (purchase orders) of $53.2 million for parts and assemblies are non-cancellable and are due upon receipts with standard payment terms and will primarily be delivered in the second half of 2022.

Note 14. Employee Defined-Contribution Plans

The Company has a defined-contribution plan intended to qualify under Section 401 of the Internal Revenue Code (the “401(k) Plan”). The Company contracted with a third-party provider to act as a custodian and trustee, and to process and maintain the records of participant data. Substantially all of the expenses incurred for administering the 401(k) Plan are paid by the Company. The Company has paid all matching contributions as of June 30, 2022. Accrued salaries and benefits included accruals related to the 401(k) plans the Company offers to its employees. In order to qualify for these plans, employees must meet the minimum age requirement (21 years) and begin participating on their entry date which is the first paycheck date in the month following the month of eligibility

30

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

described above. Employee and employer contributions are immediately 100% fully vested. The plans offer employer contributions of 3.0% of an employee’s eligible compensation following safe-harbor rules. The Company’s contribution to the 401(k) plan was $0.3 million and $0.1 million for the three months ended June 30, 2022 and 2021, respectively, and $0.6 million and $0.2 million for the six months ended June 30, 2022 and 2021, respectively.

Note 15. Revenue

Customer Concentration

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

	Total Revenue								Accounts Receivable, Net
	Three Months Ended June 30,				Six Months Ended June 30,				June 30,		December 31,
	2022		2021		2022		2021		2022		2021
	(as a percentage)
Customer 1	22.7	%	<10	%	39.1	%	16.3	%	<10	%	71.2	%
Customer 2	28.6	%	24.0	%	17.9	%	21.1	%	22.2	%	16.0	%
Customer 3	<10	%	21.1	%	<10	%	18.2	%	14.6	%	<10	%
Customer 4	12.5	%	<10	%	<10	%	<10	%	<10	%	—	%
Customer 5	<10	%	—	%	<10	%	—	%	21.1	%	—	%
Customer 6	<10	%	—	%	<10	%	—	%	15.4	%	—	%
Customer 7	13.8	%	—	%	<10	%	—	%	<10	%	—	%
Customer 8	<10	%	19.5	%	<10	%	16.8	%	<10	%	<10	%
Customer 9	<10	%	16.9	%	<10	%	14.5	%	<10	%	<10	%

Revenue by Geographic Area

The Company currently sells its products in the Americas and other locations as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In thousands)
Americas	$	19,555	$	7,105	$	31,659	$	8,246
Other	89		41		203		72
Total	$	19,644	$	7,146	$	31,862	$	8,318

Contract Assets and Liabilities

The amount of revenue recognized during the three and six months ended June 30, 2022 included in contract liabilities as of December 31, 2021 was $0.8 million and $1.6 million, respectively. The amount of revenue recognized during the three and six months ended June 30, 2021 included in contract liabilities as of December 31, 2020 was $0.2 million and $0.5 million, respectively. The change in contract assets reflects the difference in timing between our satisfaction of remaining performance obligations and our contractual right to bill our customers. The Company had no material asset impairment charges related to contract assets in the periods presented.

Note 16. Subsequent Events

On July 11, 2022, the Company entered into a third loan modification agreement to its third amended and restated loan and security agreement, as amended. In particular, the third loan modification agreement extended the

31

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

maturity date of the Company’s revolving line of credit to September 11, 2022. The other material terms of the third amended and restated loan and security agreement remained unchanged.

On July 25, 2022, the Company entered into a joinder and fourth loan modification agreement that made certain modifications to its third amended and restated loan and security agreement, as amended. The joinder and fourth loan modification agreement, among other things, amended the third amended and restated loan and security agreement to (i) increase the amount of the revolving credit line to $30.0 million, (ii) extend the maturity date of the revolving credit line to December 31, 2024, and (iii) establish a secured equipment loan facility of up to $15.0 million available through December 31, 2023.

Interest on the outstanding balance of the revolving credit line is payable monthly at an annual rate of WSJ Prime plus 0.25% when the Company’s Adjusted Quick Ratio (“AQR”) is less than or equal to 1.50, and plus 0.75% when the Company’s AQR is greater than 1.50.

Under the secured equipment loan facility, Silicon Valley Bank, the Company’s primary lender, will advance up to $800,000 for every confirmed shipment of a metal additive 3D printer associated with an equipment lease contract with a minimum tenor of one year and at least $300,000 in annual revenue.

The third amended and restated loan and security agreement, as amended, contains customary representations and warranties, affirmative and negative covenants (including financial covenants), events of default, and termination provisions. The financial covenants include requirements to maintain minimum liquidity (the sum of the Company’s cash, cash equivalents and availability under the revolving credit facility) of $20.0 million and minimum levels of quarterly revenue for the 2022 fiscal year.

In conjunction with the joinder and fourth loan modification agreement, the Company issued to Silicon Valley Bank a warrant to purchase up to 70,000 shares of the Company’s common stock at an exercise price of $2.56 per warrant share. The warrant is exercisable for a term of ten years and allows cashless exercise in whole or part.

32

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information which our management believes is relevant to an assessment and understanding of our results of operations and financial condition. This discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021 and our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report. This discussion contains forward-looking statements based upon our current expectations, estimates and projections, and involves numerous risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements due to, among other considerations, the matters discussed in the sections titled “Risk Factors” and “Forward-looking Statements” herein.

Overview

We seek to fulfill the promise of additive manufacturing, also referred to as 3D printing (“AM”), to deliver breakthroughs in performance, cost and lead time in the production of high-value metal parts.

We produce a full-stack hardware and software solution based on our proprietary laser powder bed fusion (“L-PBF”) technology, which enables support-free production. Our technology enables the production of highly complex, mission-critical parts that existing AM solutions cannot produce without the need for redesign or additional assembly. Our products give our customers who are in space, aviation, defense, energy, and industrial markets the freedom to design and produce metal parts with complex internal features and geometries that had previously been considered impossible for AM. We believe our technology is years ahead of competitors

Our technology is novel compared to other AM technologies based on its ability to deliver high-value metal parts that have complex internal channels, structures and geometries. This affords a wide breadth of design freedom for creating new metal parts and it enables replication of existing parts without the need to redesign the part to be manufacturable with AM. Because of these features, we believe our technology and product capabilities are highly valued by our customers. Our customers are primarily original equipment manufacturers (“OEMs”) and contract manufacturers who look to AM to solve issues with traditional metal parts manufacturing technologies. Those traditional manufacturing technologies rely on processes, including casting, stamping and forging, that typically require high volumes to drive competitive costs and have long lead times for production. Our customers look to AM solutions to produce assemblies that are lighter, stronger and more reliable than those manufactured with traditional technologies. Our customers also expect AM solutions to drive lower costs for low-volume parts and substantially shorter lead times. However, many of our customers have found that legacy AM technologies failed to produce the required designs for the high-value metal parts and assemblies that our customers wanted to produce with AM. As a result, other AM solutions often require that parts be redesigned so that they can be produced and frequently incur performance losses for high-value applications. For these reasons, AM solutions of our competitors have been largely relegated to tooling and prototyping or the production of less complex, lower-value metal parts.

In contrast, our technology can deliver complex high-value metal parts with the design advantages, lower costs and faster lead times associated with AM, and generally avoids the need to redesign the parts. As a result, our customers have increasingly adopted our technology into their design and production processes. We believe our value is reflected in our sales patterns, as most customers purchase a single machine to validate our technology and purchase additional systems over time as they embed our technology in their product roadmap and manufacturing infrastructure. We consider this approach a “land and expand” strategy, oriented around a demonstration of our value proposition followed by increasing penetration with key customers.

The unaudited condensed consolidated financial statements and disclosures reflect the effects of the Reverse Recapitalization which was consummated on September 29, 2021. The number of shares of redeemable convertible preferred stock and common stock presented in the financial statements and elsewhere in this Quarterly Report for periods prior to the Reverse Recapitalization have been retroactively adjusted to reflect the Merger’s exchange ratio similar to the presentation of a stock-split.

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See “Explanatory Note- Certain Defined Terms” for the definitions of certain terms used throughout this Quarterly Report.

Key Financial and Operational Metrics

We believe that our performance and future success depend on many factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this Quarterly Report titled “Risk Factors.”

We regularly evaluate several metrics, including the metrics presented in the table below, to measure our performance, identify trends affecting our business, prepare financial projections, make strategic decisions and establish performance goals for compensation and we periodically review and revise these metrics to reflect changes in our business. During 2022, our business has continued to evolve based on new product introductions and changing customer demand trends, including significantly higher average selling prices driven by higher demand for our higher priced Sapphire® XC systems versus our Sapphire® systems, offset by lower unit growth, as well as a material shift in our customer mix toward existing customers versus new customers as recurring purchasing rates from our existing customers is significantly higher, in both cases, relative to our initial plan for fiscal 2022. We have determined to no longer report our Bookings, Total Shipments and New Customers (by shipments) and to report instead the dollar value of our Bookings and Backlog.

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Revenue ($ in millions)	$	20	$	7	$	32	$	8
Bookings ($ in millions)	$	18	$	6	$	36	$	16
Backlog ($ in millions)	$	55	$	28	$	55	$	28

Bookings ($ in millions): Bookings ($ in millions) are defined as a confirmed order for a 3D printer system in contracted dollars.

Backlog ($ in millions): Backlog ($ in millions) is defined as the unfulfilled 3D printer systems to be delivered to customers in contracted dollars as of period end.

Customer Concentration

Our operating results for the foreseeable future will continue to depend on sales to a small group of customers. For the three months ended June 30, 2022 and 2021, sales to the top three customers accounted for 65.1% and 64.7%, respectively. Of the top three customers for the three months ended June 30, 2022, two customers were different from the top three customers for the comparable period in 2021. For the six months ended June 30, 2022 and 2021, sales to the top three customers accounted for 65.6% and 56.0% of our revenue, respectively. Of the top three customers for the six months ended June 30, 2022, two customers were different from the top three customers for the comparable period in 2021. While our objective is to diversify our customer base, we believe that we could continue to be susceptible to risks associated with customer concentration. See “Risk Factors - Risks Related to Our Business - Risks Related to Our Financial Position and Need for Additional Capital - We expect to rely on a limited number of customers for a significant portion of our near-term revenue” in this Quarterly Report and see Note 2, Summary of Significant Accounting Policies - Concentration of Credit Risk and Other Risks and Uncertainties, in the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Continued Investment and Innovation

Since our founding, we have been a customer-focused company working to develop innovative solutions to address customers’ needs. We believe this process has contributed significantly to our development of the most advanced metal AM systems in the world. We focus on our customers to identify the most impactful areas for

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research and development as we seek to further improve the capabilities of our AM solutions. We believe that continued investments in our products are important to our future growth and, as a result, we expect our research and development expenses to continue to increase, which may adversely affect our near-term profitability.

Impact of COVID-19 and Other World Events

We continue to operate our business through the ongoing COVID-19 pandemic and have taken additional precautions to ensure the safety of our employees, customers, and vendors with which we operate. The impact of COVID-19 on our operating results has added uncertainty in timing of customer orders creating longer lead times for sales and marketing. We continue to experience various supply chain constraints due to the pandemic, which could lead to delays in shipment of our products to our customers. Furthermore, if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures, remote working or other restrictions in connection with the ongoing COVID-19 pandemic, our operations will likely be adversely impacted.

General economic and political conditions such as recessions, interest rates, fuel prices, inflation, foreign currency fluctuations, international tariffs, social, political and economic risks and acts of war or terrorism (including, for example, the ongoing military conflict between Ukraine and Russia and the economic sanctions related thereto), have added uncertainty in timing of customer orders and supply chain constraints.

Climate Change

Material pending or existing climate change-related legislation, regulations, and international accords could have an adverse effect on our business, financial condition, and results of operations, including: (1) material past and/or future capital expenditures for climate-related projects; (2) material indirect consequences of climate-related regulation or business trends, such as the following: decreased/increased demand for goods or services that produce significant greenhouse gas emissions or are related to carbon-based energy sources; increased competition to develop innovative new products that result in lower emissions; increased demand for generation and transmission of energy from alternative energy sources; and any anticipated reputational risks resulting from operations or products that produce material greenhouse gas emissions; and (3) material increased compliance costs related to climate change.

Components of Results of Operations

Revenue

Our revenue is primarily derived from our AM full-stack solution product, which includes the Flow™ print preparation software, Sapphire® and Sapphire® XC metal AM printers using our support-free L-PBF technology and Assure™ quality validation software (collectively referred to as the “3D Printer”). Contracts for 3D Printers also include post-sale customer support services (“Support Services”), except for our distributor partners, which are qualified to perform support services.

We sell our AM full-stack solution product through two types of transaction models: a 3D Printer sale transaction and a recurring payment transaction (“Recurring Payment”). We define our Recurring Payment transactions as operating leases. 3D Printer sale transactions are structured as a payment of a fixed purchase price for the system. The timeframe from order to completion of the site acceptance test occurs normally over three to six months. As we scale our production, we expect to reduce this timeframe. Contract consideration allocated to the 3D Printer is recognized at a point in time, which occurs upon transfer of control to the customer at shipment.

The initial sales of 3D Printers and Support Services are included in one contract and are invoiced together. Contract consideration is allocated between the two performance obligations based on relative fair value. This allocation involves judgement and is periodically updated as new relevant information becomes available.

In addition, the sales of 3D Printer systems under certain contracts may include variable consideration such that we are entitled to a rate per hour used on the 3D Printer systems. Sales with variable consideration represented a small percentage of revenue during the three and six months ended June 30, 2022 and none of our revenue during

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the three and six months ended June 30, 2021. For more information, see “—Critical Accounting Policies and Significant Estimates—Revenue – Variable Consideration” below.

The Recurring Payment transactions, which are structured as operating leases, represented a small percentage of revenue during the three and six months ended June 30, 2022 and 2021. Under this model, the customer typically pays a base rent and variable payments based on usage in excess of a defined threshold. Most of our leases have a 12-month term, though in certain cases the lease term is longer.

Support Services are included with most 3D Printer sale transactions and Recurring Payment transactions. Support services consist of field service engineering, phone and email support, preventative maintenance, and limited on and off-site consulting support. A subsequent Support Service contract is available for renewal after the initial contract period based on the then-fair value of the service, which is paid for separately. Support Service revenue is recognized over the contract period beginning with customer performance test acceptance.

Other revenue included under 3D Printer sales includes parts and consumables, such as filters, powder or build plates, that are sold to customers and recognized when the customer takes title to the product. Other revenue was not material for the three and six months ended June 30, 2022 and 2021.

Cost of Revenue

Our cost of revenue includes the “Cost of 3D Printers,” “Cost of Recurring Payment” and “Cost of Support Services.”

Cost of 3D Printers includes the manufacturing cost of our components and subassemblies purchased from vendors for the assembly, as well as raw materials and assemblies, shipping costs and other directly associated costs. Cost of 3D Printers also includes allocated overhead costs from headcount-related costs, such as salaries, stock-based compensation, depreciation of manufacturing related equipment and facilities, and information technology costs.

Cost of Recurring Payment includes depreciation of the leased equipment over the useful life of five years less the residual value, and an allocated portion of Cost of Support Services.

Cost of Support Services includes the cost of spare or replacement parts for preventive maintenance, installation costs, headcount-related costs such as salaries, stock-based compensation, depreciation of manufacturing related equipment and facilities, and information technology costs. The headcount-related costs are directly associated with the engineers dedicated to remote and on-site support, training, travel costs and other services costs.

Gross Profit and Gross Margin

Our gross profit is revenue less cost of revenue and our gross margin is gross profit as a percentage of revenue. The gross profit and gross margin for our products are varied and are expected to continue to vary from period to period due to the mix of products sold through either a 3D Printer sale transaction or a Recurring Payment transaction, new product introductions and efforts to optimize our operational costs. Other factors affecting our gross profit include changes to our material costs, assembly costs that are themselves dependent upon improvements to yield, and any increase in assembly overhead to support a greater number of 3D Printers sold and markets served.

Research and Development Expenses

Our research and development expenses represent costs incurred to support activities that advance the development of innovative AM technologies, new product platforms and consumables, as well as activities that enhance the capabilities of our existing product platforms. Our research and development expenses consist primarily of salaries and related personnel costs for individuals working in our research and development departments, including stock-based compensation, prototypes, design expenses, information technology costs and software license amortization, consulting and contractor costs, and an allocated portion of overhead costs, including depreciation of property and equipment used in research and development activities.

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Selling and Marketing Expenses

Sales and marketing expenses consist primarily of salaries and related personnel costs for individuals working in our sales and marketing departments, including stock-based compensation, costs related to trade shows and events, advertising, marketing promotions, travel costs and an allocated portion of overhead costs, including information technology costs and costs for customer validation.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related personnel costs for individuals associated with our executive, administrative, finance, legal, information technology and human resources functions, including stock-based compensation, professional fees for legal, audit and compliance, accounting and consulting services, general corporate costs, facilities, rent, information technology costs, insurance, bad debt expenses and an allocated portion of overhead costs, including equipment and depreciation and other general and administrative expenses.

Interest Expense

Interest expense primarily consists of interest incurred under our outstanding debt and finance leases.

Gain (Loss) on Fair Value of Warrants

Gain (loss) on valuation of warrant liabilities relates to the changes in the fair value of warrant liabilities, including liabilities related to the public warrants and private placement warrants, which are subject to remeasurement at each balance sheet date.

Gain (Loss) on Fair value of Contingent Earnout Liabilities

Gain (loss) on valuation of contingent earnout liabilities relates to the changes in fair value of the contingent earnout liabilities in connection with the Earnout Shares, which are subject to remeasurement at each balance sheet date.

Other Income (Expense), Net

Other income (expense), net includes interest earned on our bank sweep account, gains and losses on disposals of fixed assets and other miscellaneous income/expenses.

Income Taxes

No provision for federal and state income taxes was recorded for any periods presented due to projected losses, and we maintained a full valuation allowance on the deferred tax assets as of June 30, 2022 and December 31, 2021.

We will continue to review our conclusions about the appropriate amount of the valuation allowance on a quarterly basis. If we were to generate profits, the U.S. valuation allowance position could be reversed in the foreseeable future. We expect a benefit to be recorded in the period the valuation allowance reversal is recorded and a higher effective tax rate in periods following the valuation allowance reversal.

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Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021:

The following table summarizes our historical results of operations for the periods presented:

	Three Months Ended June 30,
	2022		2021		Change		%
	(In thousands, except for percentages)
Revenue
3D Printer	$	17,615	$	6,079	$	11,536	189.8	%
Recurring payment	934		372		562		151.1	%
Support services	1,095		695		400		57.6	%
Total Revenue	19,644		7,146		12,498		174.9	%
Cost of revenue
3D Printer	15,633		3,899		11,734		300.9	%
Recurring payment	685		257		428		166.5	%
Support services	2,094		806		1,288		159.8	%
Total cost of revenue	18,412		4,962		13,450		271.1	%
Gross profit	1,232		2,184		(952)		(43.6)	%
Operating expenses
Research and development	12,965		6,399		6,566		102.6	%
Selling and marketing	6,249		2,337		3,912		167.4	%
General and administrative	8,259		5,218		3,041		58.3	%
Total operating expenses	27,473		13,954		13,519		96.9	%
Loss from operations	(26,241)		(11,770)		(14,471)		122.9	%
Interest expense	(92)		(524)		432		(82.4)	%
Gain (loss) on fair value of warrants	23,665		(227)		23,892		(10525.1)	%
Gain on fair value of contingent earnout liabilities	130,227		—		130,227		100.0	%
Other income (expense), net	391		(17)		408		(2400.0)	%
Gain (loss) before provision for income taxes	127,950		(12,538)		140,488		(1120.5)	%
Provision for income taxes	—		—		—		—	%
Net income (loss)	$	127,950	$	(12,538)	$	140,488	(1120.5)	%

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Revenue

The following table presents the revenue disaggregated by products and service type, as well as the percentage of total revenue.

	Three Months Ended June 30,
	2022				2021				Change		%
	(In thousands, except for percentages)
3D Printer sales	$	17,615	89.6	%	$	6,079	85.1	%	$	11,536	189.8	%
Recurring payment	934		4.8	%	372		5.2	%	562		151.1	%
Support services	1,095		5.6	%	695		9.7	%	400		57.6	%
Total Revenue	$	19,644	100.0	%	$	7,146	100.0	%	$	12,498	174.9	%

Total revenue for the three months ended June 30, 2022 and 2021 was $19.6 million and $7.1 million, respectively, an increase of $12.5 million, or 174.9%.

3D Printer sales were $17.6 million and $6.1 million for the three months ended June 30, 2022 and 2021, respectively, an increase of $11.5 million, which was primarily attributed to the launch of the Sapphire® XC system in late 2021 and the subsequent sales of these systems in 2022. The improvement in revenue was due to a mix of higher production volumes and our product mix between Sapphire® and Sapphire® XC systems, resulting in an increase in the average selling price and a sale of a lease Sapphire system.The 3D Printer sales included parts and consumables revenue.

Recurring Payment, structured as an operating lease, was $0.9 million and $0.4 million, for the three months ended June 30, 2022 and 2021, respectively. The increase was primarily attributed to an increase in the number of 3D Printer systems in service generating Recurring Payment revenue as of June 30, 2022, compared systems to the number of 3D Printer systems in service as of June 30, 2021. During the three months ended June 30, 2022, one operating lease purchase option was exercised.

Our Support Service revenue was $1.1 million and $0.7 million for the three months ended June 30, 2022 and 2021, respectively. The increase was primarily attributed to a significant increase in the number of 3D Printer systems in service as of June 30, 2022, compared to the number of 3D Printers in service as of June 30, 2021.

We expect the demand for the Sapphire® and Sapphire® XC to increase our revenue in the future. We also expect our Recurring Payment and Support Service revenue to increase as the number of systems we have in the field increases. As of June 30, 2022, our backlog for firm orders was $55 million for 3D Printers. Our focus for revenue remains on expanding our selling and marketing efforts and developing our existing customer network to increase demand.

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Cost of Revenue

The following table presents the Cost of Revenue disaggregated by product and service type, as well as the percentage of total revenue.

	Three Months Ended June 30,
	2022				2021
	(In thousands, except for percentages)
Cost of Revenue
Cost of 3D Printers	$	15,633	84.9	%	$	3,899	78.6	%
Cost of Recurring Payment	685		3.7	%	257		5.2	%
Cost of Support Services	2,094		11.4	%	806		16.2	%
Total Cost of Revenue	$	18,412	100.0	%	$	4,962	100.0	%

Total cost of revenue for the three months ended June 30, 2022 and 2021 was $18.4 million and $5.0 million, respectively, an increase of $13.5 million, or 271%.

Cost of 3D Printers was $15.6 million and $3.9 million for the three months ended June 30, 2022 and 2021, respectively. The increase of $11.7 million was due to an increase in the number of 3D Printers sold in the three months ended June 30, 2022, compared to the number of 3D Printers sold in the three months ended June 30, 2021. For the three months ended June 30, 2022, cost of 3D Printers increased compared to the prior quarter in 2021, due to higher material, labor and factory overhead costs associated with a mix of higher production volumes and our product mix between the Sapphire® and Sapphire® XC systems.

Cost of Recurring Payment was $0.7 million and $0.3 million for the three months ended June 30, 2022 and 2021, respectively. This increase of $0.4 million was due to an increase in depreciation of the equipment on lease and the allocable Cost of Support Services as a result of more 3D Printers in service as of June 30, 2022, compared to June 30, 2021.

Cost of Support Services was $2.1 million and $0.8 million for the three months ended June 30, 2022 and 2021, respectively. This increase of $1.3 million was primarily attributable to the costs for preventative maintenance, costs incurred to enhance system reliability performance, and field service engineering labor costs due to significantly more 3D Printers in service as of June 30, 2022, compared to June 30, 2021. In addition, field service engineering support cost has increased specifically with the ramp of the Sapphire® XC systems in the field and we expect this to decrease on a per unit basis as the Sapphire® XC system performance improves. We expect our Cost of Support Services will increase with the delivery of more 3D Printer systems to customers.

Cost of revenue as a percentage of revenue was 93.7% and 69.4%, for the three months ended June 30, 2022 and 2021, respectively. This was primarily due to the costs for preventative maintenance, costs incurred to enhance system reliability performance, and field service engineering labor costs as a result of more 3D Printers in service as of June 30, 2022, compared to June 30, 2021.

Gross Profit and Gross Margin

Total gross profit was $1.2 million and $2.2 million for the three months ended June 30, 2022 and 2021, respectively. As a percentage of revenue, the gross margin was 6.3% and 30.6%, for the three months ended June 30, 2022 and 2021, respectively. The lower gross profit for the three months ended June 30, 2022 was primarily attributable to the mix of Sapphire® and Sapphire® XC system sales, the impact of launch customer pricing for Sapphire® XC, and the higher material, labor and overhead costs for the increased number of systems sold during the three months ended June 30, 2022, as compared to sales for the three months ended June 30, 2021.

Our gross profit and gross margin are influenced by a number of factors, including:

•New product introduction pricing strategies and market conditions that may impact our pricing;

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