# Velo3D, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Velo3D, Inc.](/companies/velo.md) (CIK 1825079)
- Form: 10-Q
- Filed: 2025-01-14
- Accepted by EDGAR: Jan 14, 2025, 22:05 ET
- Period: 2024-09-30
- Accession: 0000950170-25-005443
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1825079/000095017025005443/vldx-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1825079/000095017025005443/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $4.2m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $30.0m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | $4.1m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-09-30 | −$1.6m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $4.4m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-01-01 to 2024-09-30 | $14.0m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$18.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$60.7m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-07-01 to 2024-09-30 | $10.9m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2024-01-01 to 2024-09-30 | $20.3m | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2024-01-01 to 2024-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$22.9m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$51.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$2.47 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$6.09 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$2.47 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$6.09 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 9,240,453 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 8,431,298 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$30.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $28.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $1.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $79.8m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $110.8m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $63.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $76.1m | us-gaap:Liabilities |
| Long-term debt | at 2024-09-30 | $32.3m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2024-09-30 | $34.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 77,833 characters.

*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, 2023 and our unaudited condensed consolidated interim 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. During the year ended December 31, 2023, we identified immaterial errors in our previously issued financial statements. We have corrected the amounts as presented in this Item 2 accordingly. Refer to Notes 1 and 16 to the condensed consolidated interim financial statements included in Part I of this Quarterly Report on Form 10-Q for additional information.*

### 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 fully integrated hardware and software solution based on our proprietary laser powder bed fusion ("*L-PBF*") technology, which greatly reduces and often eliminates the need for support structures. 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 Sapphire Family of Printers give our customers who are in space, aviation, defense, automotive, 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 ("*CMs*") 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 other 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.

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.

### Recent Trends and Strategic Realignment

During the second half of 2023, we experienced delayed shipments and customer order delays, resulting in an overall decrease in system sales and backlog in the fourth quarter of 2023 and, as a result, lower annual revenue growth than expected. As a result, we believe that our historical focus on revenue growth came at the expense of our cash flow and profitability and our commitment to the highest level of customer service.

Accordingly, in October 2023, we made a strategic decision to realign our operations to pivot from emphasizing revenue growth to optimizing our free cash flow, maximizing customer success, reducing expenditures, and improving our operational efficiency. Since then, we have been undertaking expense reduction and cash savings initiatives as part of a company-wide restructuring and strategic realignment plan (the “*Strategic Realignment”*) to help conserve working capital. The expense reduction and cash saving initiatives included an October 2023 reduction in force, as well as ongoing efforts to streamline facilities, manage working capital, reduce capital expenditures, and reduce overall selling, general and administrative expenses. In addition, we also implemented new go-to-market and service strategies to rebuild our bookings and backlog pipeline.

As discussed elsewhere in this Quarterly Report, there continues to be a substantial doubt about our ability to continue as a going concern. We do not have sufficient liquidity to meet our operating needs and satisfy our debt obligations for at least the next 12 months. As of September 30, 2024, the Company had approximately $1.6 million in cash and short-term investments and $10.2 million in accounts receivable. This amount is insufficient to satisfy the Company's short term obligations including accounts payable of $17.7 million and $29.6 million in Secured Notes as of September 30, 2024.

Our financial condition has caused customers to delay 3D printer orders until our financial condition improves, resulting in delays in 3D printer sales and difficulty building our bookings and backlog pipeline. Timing of customer orders have also been impacted by our customers' ability to secure financing to purchase our products, which continues to be challenging in the current interest rate environment. Additionally, due to our inability to satisfy our accounts payable obligations, we are unable to secure credit terms and volume discounts with our suppliers, causing us to have to pay a premium and/or in advance, for components of our products and/or source components from alternate suppliers at unfavorable terms. Our product margins are negatively impacted by these trends, and will continue to negatively impact our business until our financial condition improves and we can re-establish relationships with our suppliers.

On August 9, 2024, the Company commenced a reduction in force plan to streamline its business operations, reduce costs and create further operating efficiencies, which affected 63 employees, representing approximately 30% of the Company’s workforce. In connection with the reduction in force, the Company currently estimates it will incur approximately $1.1 million to $1.7 million of costs, consisting primarily of personnel expenses such as salaries and wages, one-time severance payments, and other benefits. The majority of the cash payments related to these expenses will be paid out during the fourth quarter of 2024.

### Recent Debt and Equity Transactions

As of September 30, 2023, we did not satisfy the minimum revenue covenant for the quarter ended September 30, 2023 in our then outstanding $70.0 million aggregate principal amount of senior secured convertible notes due 2026 (the “*Secured Convertible Notes”*). From September 30, 2023 through July 31, 2024, we took the following steps to repay and restructure our indebtedness and raise additional capital:

- On November 28, 2023, we (i) made a $15.0 million cash payment, together with accrued and unpaid interest, to the holders of the Secured Convertible Notes to repay $12.5 million of aggregate principal amount thereof, (ii) exchanged the remaining Secured Convertible Notes for (A) $57.5 million aggregate principal amount of senior secured notes due 2026 (the “*Secured Notes”*) and (B) 285,715 shares of common stock, and (iii) made a cash payment of accrued and unpaid interest on the remaining Secured Convertible Notes that were exchanged;
- During December 2023, we offered and sold approximately 255,472 shares of our common stock for gross proceeds of approximately $5.0 million pursuant to our “at-the-market” offering sales agreement (the “*ATM Sales Agreement”*) with Needham & Company, LLC (“*Needham”*), as agent;
- On December 29, 2023, we issued 1,028,572 shares of common stock and warrants to purchase 1,028,572 shares of common stock (the “*RDO warrants”*) for gross proceeds of $18.0 million in a registered direct offering (our “*Registered Direct Offering”*); and
- On December 29, 2023, we made a $25.0 million cash payment, together with accrued and unpaid interest, to the holders of the Secured Notes to repay approximately $20.8 million of aggregate principal amount thereof, and (ii) amended certain terms of the Secured Notes
- On April 1, 2024, we made a cash payment of $5.0 million to redeem approximately $4.2 million of aggregate principal amount of the Secured Notes, together with accrued and unpaid interest, we made a cash payment of $5.5 million on April 15, 2024 to repay approximately $4.6 million of principal of the Secured Notes, together with accrued and unpaid interest, we amended certain other terms of the Secured Notes, and we issued the holders of the Secured Notes warrants to purchase up to an aggregate of 627,117 shares of common stock.
- On April 10, 2024, we sold an aggregate of: (i) 979,592 shares of common stock and (ii) immediately exercisable warrants to purchase up to 979,592 shares of common stock at $12.25 per share. The offering price per share of common stock and accompanying warrant was $12.25 and resulted in gross proceeds to us of approximately $12 million.

On July 1, 2024, we entered into a third note amendment with the holders of the Secured Notes (the "Third Note Amendment"), which deferred the July 1, 2024 partial redemption payment of $10.5 million over a period of ten equal monthly payments commencing August 1, 2024. Additionally, we issued the holders of the Secured Notes warrants to purchase up to an aggregate of 1,650,000 shares of common stock.

On December 9, 2024, Arrayed Notes Acquisition Corp., a subsidiary of Arrayed Additive, Inc. "Arrayed" purchased the Secured Notes from High Trail Investments ON LLC and HB SPV I Master Sub LLC, the Note Holders.

On December 24, 2024, the Company and Arrayed entered into a debt for equity exchange transaction where the Company issued 185,151,333 shares of the Company’s common stock, in exchange for the cancellation of $22,382,000.00 in principal amount of the Company’s Secured Notes plus $369,303.00 of accrued interest on the Notes. Arrayed continues to hold $4,999,969.30 in principal amount of the Notes, and became the owner of 95% of the Company’s issued and outstanding common stock.

On January 7, 2025, the Company issued a Senior Secured Convertible Promissory Note in the principal amount of $5,000,000 to Thieneman Properties, LLC, an Indiana limited liability company. The Note is payable in full on April 7, 2025 in the amount of $5,750,000 and if not paid on or prior to such date, will continue to accrue interest at the same rate until paid. The Note may be prepaid in whole or in part at any time without penalty or premium and is convertible in the event of default into shares of the Company’s common stock, at a fixed conversion price of $1.56 per share.

See Note 17 *Subsequent Events* in the notes to our unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report for additional information.

Notwithstanding the recent debt and equity transactions, as described in “—*Liquidity and Capital Resources”* and in Note 1 *Description of Business and Basis of Presentation—Going Concern, Financial Condition and Liquidity and Capital Resources* in the notes to the unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report, there continues to be a substantial doubt about our ability to continue as a going concern. We do not have sufficient liquidity to meet our operating needs and satisfy our debt obligations for at least the next 12 months. The Company will need to engage in additional financings to fund our operations, continue to fund payroll for employees, and satisfy our obligations in the near-term. Without such additional funding, we will not be able to continue operations and may be required to sell assets, liquidate and/or file for bankruptcy.

### 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 herein and in the section of the 2023 Form 10-K 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.

|  | As of and for the Three Months Ended September 30, 2024 | 2023 | As of and for the Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Revenue ($ in millions) | $8 | $23 | $28 | $75 |
| Bookings ($ in millions) | $6 | $11 | $28 | $47 |
| Backlog ($ in millions) | $21 | $6 | $21 | $6 |

*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 September 30, 2024 and 2023, sales to the top three customers accounted for 82.0% and 51.1%, respectively, of our revenue. Of the top three customers for the three months ended September 30, 2024, one customer was different from the top three customers for the comparable period in 2023. For the nine months ended September 30, 2024 and 2023, sales to the top three customers accounted for 51.7% and 22.1%, respectively. Of the top three customers for the three months ended September 30, 2024 all customers were different from the top three customers for the comparable period in 2023.

While our objective is to diversify our customer base, we continue to be susceptible to risks associated with customer concentration.

#### Continued Investment and Innovation

We continue to be a customer-focused company working to develop innovative solutions to address customers’ needs and focus on our customers to identify the most impactful areas for research and development as we seek to further improve the capabilities of our AM solutions. We believe this process has contributed significantly to our development of the most advanced metal AM systems in the world. We believe that continued investments in our products are important to our future growth and, as a result, we will invest in enhancing our portfolio of AM solutions through certain research and development projects based on customer demand.

### Macroeconomic Conditions and Other World Events

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 conflicts in Israel and in Ukraine and the economic sanctions related thereto), have added uncertainty in timing of customer orders and supply chain constraints. In 2022, supply chain challenges increased our material and shipping costs, resulted in shipping delays and impacted our gross margins. In 2023, we implemented a number of supply chain and manufacturing improvements in response and intend to continue to focus on driving further operational improvements during the remainder of 2024 as well as our Strategic Realignment to reduce operating costs.

### 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. In addition, extreme weather and other natural disasters may become more intense or more frequent, which may disrupt our operations or the operations of our suppliers and customers.

### Components of Results of Operations

#### Revenue

Our revenue is primarily derived from our AM fully integrated hardware and software solution based on our proprietary L-PBF technology. Our products include Sapphire, Sapphire 1MZ, Sapphire XC and Sapphire XC 1MZ metal AM printer using our 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 fully integrated hardware and software AM solutions through two types of transaction models: a 3D Printer sale transaction and a recurring payment transaction (“Recurring Payment”). Support services are included with a 3D Printer sale transaction and a Recurring Payment transaction. For 3D Printer sale transactions where the support service period has expired, customers may purchase extended support service contracts.

**3D Printer sale transactions -** can be divided into two categories: structured fixed purchase price and sale and utilization (variable consideration) fee model. In the sale and utilization fee model, customers pay a partial amount upfront to acquire the system, which is less than the full purchase price. This amount is then complemented by an hourly usage fee for the duration of the system's life. The variable payments are recognized when there is an event that determines the amount of variable consideration to be paid.

The timeframe from order to completion of the site acceptance test usually occurs over three to nine 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 judgment and is periodically updated as new relevant information becomes available.

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 upon transfer of control to the customer at shipment.

**Recurring Payment transactions -** are our leased 3D Printer transactions. We define our Recurring Payment transactions as operating leases. Under the leased 3D Printer transaction, the customer typically pays an amount for a lease which entitles the customer to a base number of hours of usage. For usage above that level, the customer typically pays an hourly usage fee. Most of our leases have a 12-month term, though in some instances the lease term is longer.

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 Extended Support Agreement 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.

#### 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.

#### 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 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, transaction costs related to the warrant inducement transaction 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 September 30, 2024 and 2023.

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.

### Results of Operations

### Comparison of the Three Months Ended September 30, 2024 and 2023:

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

*(In thousands, except for percentages)*

| Revenue | Three Months Ended September 30, 2024 | 2023 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| 3D Printer | $1,049 | $20,787 | $(19,738) | (95.0)% |
| Recurring payment | 192 | 531 | (339) | (63.8)% |
| Licensing | 5,000 | — | 5,000 | 100.0% |
| Support services | 2,006 | 1,849 | 157 | 8.5% |
| Total Revenue | 8,247 | 23,167 | (14,920) | (64.4)% |
| Cost of revenue |  |  |  |  |
| 3D Printer | 2,224 | 20,772 | (18,548) | (89.3)% |
| Recurring payment | 195 | 111 | 84 | 75.7% |
| Support services | 1,757 | 2,121 | (364) | (17.2)% |
| Total cost of revenue | 4,176 | 23,004 | (18,828) | (81.8)% |
| Gross profit (loss) | 4,071 | 163 | 3,908 | 2397.5% |
| Operating expenses |  |  |  |  |
| Research and development | 4,438 | 9,490 | (5,052) | (53.2)% |
| Selling and marketing | 3,099 | 5,772 | (2,673) | (46.3)% |
| General and administrative | 15,279 | 10,763 | 4,516 | 42.0% |
| Total operating expenses | 22,816 | 26,025 | (3,209) | (12.3)% |
| Loss from operations | (18,745) | (25,862) | 7,117 | (27.5)% |
| Interest expense | (10,949) | (3,018) | (7,931) | 262.8% |
| Gain on fair value of warrants | 9,221 | 1,587 | 7,634 | 481.0% |
| Gain on fair value of contingent earnout liabilities | 58 | 10,810 | (10,752) | (99.5)% |
| Loss on fair value of debt derivatives | — | (3,164) | 3,164 | (100.0)% |
| Loss on debt derivative | — | (253) | 253 | (100.0)% |
| Other income (expense), net | (2,443) | 436 | (2,879) | (660.3)% |
| Income (loss) before provision for income taxes | (22,858) | (19,464) | (3,394) | 17.4% |
| Provision for income taxes | — | — | — | — |
| Net income (loss) | $(22,858) | $(19,464) | $(3,394) | 17.4% |

#### Revenue

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

*(In thousands, except for percentages)*

| ​ ​ ​ | Three Months Ended September 30, 2024 |  | 2023 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| 3D Printer sales | $1,049 | 12.7% | $20,787 | 89.7% | $(19,738) | (95.0)% |
| Recurring payment | 192 | 2.3% | 531 | 2.3% | (339) | (63.8)% |
| Licensing | 5,000 | 60.6% | — | — | 5,000 | 100.0% |
| Support services | 2,006 | 24.3% | 1,849 | 8.0% | 157 | 8.5% |
| Total Revenue | $8,247 | 100.0% | $23,167 | 100.0% | $(14,920) | (64.4)% |

39

Total revenue for the three months ended September 30, 2024 and 2023 was $8.2 million and $23.2 million, respectively, a decrease of $14.9 million, or 64.4%.

3D Printer sales were $1.0 million and $20.8 million for the three months ended September 30, 2024 and 2023, respectively, a decrease of $19.7 million. The decrease in revenue was primarily attributed to the fewer number of systems sold. The 3D Printer sales also included parts and consumables revenue.

Recurring Payment revenue, structured as an operating lease, was $0.2 million for the three months ended September 30, 2024 and $0.5 million for the three months ended September 30, 2023. The decrease was primarily attributable to a revenue reduction related to fewer operating lease transactions.

Licensing revenue was $5.0 million and $0 for the three months ended September 30, 2024 and 2023, respectively. The increase in licensing revenue was attributed to a licensing agreement with SpaceX where SpaceX obtained a non-exclusive license to certain Velo3D patents and technologies for its internal uses only.

Our Support Services revenue was $2.0 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively, an increase of $0.2 million. The increase in Support Services revenue was primarily due to services provided to SpaceX in connection with the licensing transaction, offset by a decrease in Support Service contracts from the fewer number of systems sold.

As discussed above, due to the impact of customer order delays and our bookings to date, we expect additional contraction of revenue growth in the near term, as we focus on the implementation of our operational realignment initiatives and go-to-market and service strategies. In addition, we believe customers may be hesitant to do business with us because of the uncertainty regarding our current financial situation. In the medium term, we expect the demand for the Sapphire family of systems, primarily the Sapphire XC to drive future revenue growth. We also expect our Recurring Payment and Support Service revenue to increase as the number of systems we have in service increases. As of September 30, 2024, our backlog for firm orders was $21 million for 3D Printers compared to $13 million as of December 31, 2023.

In connection with our realignment strategy, we are taking a strategic approach to our marketing and selling efforts to provide an improved customer experience, which we expect will enhance our efforts to introduce our technology to new customers and expand our existing customer network to increase demand.

#### Cost of Revenue

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

*(In thousands, except for percentages)*

| ​ ​ Cost of Revenue | Three Months Ended September 30, 2024 |  | 2023 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of 3D Printers | $2,224 | 53.3% | $20,772 | 90.3% | $(18,548) | (89.3)% |
| Cost of Recurring Payment | 195 | 4.7% | 111 | 0.5% | 84 | 75.7% |
| Cost of Support Services | 1,757 | 42.1% | 2,121 | 9.2% | (364) | (17.2)% |
| Total Cost of Revenue | $4,176 | 100.0% | $23,004 | 100.0% | $(18,828) | (81.8)% |

Total cost of revenue for the three months ended September 30, 2024 and 2023 was $4.2 million and $23.0 million, respectively, a decrease of $18.8 million, or 81.8%.

Cost of 3D Printers was $2.2 million and $20.8 million for the three months ended September 30, 2024 and 2023, respectively. The decrease of $18.5 million was due to a decrease in number of systems sold for the three months ended September 30, 2024, compared to the three months ended September 30, 2023.

Cost of Recurring Payment was $0.2 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively. This increase of $0.1 million was primarily due to a decrease in depreciation of the equipment on lease and allocable Cost of Support Services as a result of fewer 3D Printers in service in the three months ended September 30, 2024, compared to the three months September 30, 2023.

Cost of Support Services was $1.8 million and $2.1 million for the three months ended September 30, 2024 and 2023, respectively. Cost of Support Services decreased by $0.4 million, due to the fixed costs associated with field service engineering labor and overhead in September 30, 2024, compared to September 30, 2023.

In addition, field service engineering support cost has increased specifically with regard to increasing sales of Sapphire XC systems and introduction of the Sapphire 1MZ and Sapphire XC 1MZ systems in the field. We expect this to decrease on a per unit basis as the Sapphire XC, Sapphire 1MZ and Sapphire XC 1MZ system performance improves. We also 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 50.6% and 99.3% for the three months ended September 30, 2024 and 2023, respectively. The decrease in the cost of revenue as a percentage of revenue was primarily driven by lower cost associated with license revenue.

As discussed above, we are experiencing increasing component costs from our suppliers due to our current financial situation. We are unable to secure credit terms and volume discounts with our suppliers, causing us to pay a premium, in advance, or source from alternate suppliers at unfavorable terms for our products. This has negatively impacted our cost of revenue across all segments and will continue to negatively impact our cost of revenue until our financial conditions improve.

#### Gross Profit and Gross Margin

Total gross profit (loss) was $4.1 million and $0.2 million for the three months ended September 30, 2024 and 2023, respectively. As a percentage of revenue, the gross margin was 49.4% and 0.7% for the three months ended September 30, 2024 and 2023, respectively. The decrease in gross profit for the three months ended September 30, 2024 was primarily attributable to the lower cost associated with license revenue during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

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

- Product mix of Sapphire, and Sapphire XC systems;
- Average selling prices for our systems;
- Trends in materials and shipping costs;
- Production volumes that may impact factory overhead absorption;
- System reliability performance; and
- Impact of product mix changes, including new product introductions, and other factors, on our Cost of Support Services

Due to the aforementioned trends in customer orders and component costs, our gross profit and gross margin have been and will continue to be negatively impacted until our financial conditions improve.

#### Research and Development Expenses

Research and development expenses were $4.4 million and $9.5 million for the three months ended September 30, 2024 and 2023, respectively, a decrease of $5.1 million. The decrease in research and development expenses was driven by a $1.0 million decrease in purchased materials, a $2.1 million decrease in headcount, salaries and employee-related expenses, a decrease of $0.4 million in miscellaneous expenses, and a decrease of $1.6 million in stock-based compensation .

We expect research and development costs to continue to decrease in the remainder of 2024 due to the maturation of our Sapphire family of systems and reduction in research and development projects due to our Strategic Realignment and to increase in the long term as we continue to invest in enhancing and advancing our portfolio of AM solutions.

#### Selling and Marketing Expenses

Selling and marketing expenses were $3.1 million and $5.8 million for the three months ended September 30, 2024 and 2023, respectively, a decrease of $2.7 million. The decrease was attributable to a decrease of $1.0 million in stock-based compensation, a

$0.5 million decrease in marketing costs, a $0.5 million decrease in general marketing initiatives, and a $0.7 million increase in headcount, salaries and employee-related expenses.

We expect selling and marketing expenses to continue to decrease during the remainder of 2024 as we continue to implement our realignment strategy. During the remainder of 2024, we intend to continue our focus on certain markets that show strong attendance at additive manufacturing conferences to build product awareness.

#### General and Administrative Expenses

General and administrative expenses were $15.3 million and $10.8 million for the three months ended September 30, 2024 and 2023, respectively, an increase of $4.5 million. The increase was attributable to a $6.7 million increase in bad debt expense offset by a $0.6 million decrease in facilities expenses, a $1.0 million decrease in headcount, salaries and employee-related expenses and a $0.2 million dollar decrease in stock-based compensation.

We expect general and administrative expenses to decrease as a result of savings from our reduction in force and consolidation of our facilities in late 2023. We continue to focus on our company-wide initiatives to reduce operating costs for the remainder of 2024 as we continue to implement our Strategic Realignment by reducing our general and administrative expenses through reducing our reliance on outside consultants, additional reduction in force activities, managing facility costs and negotiating with vendors for improved pricing.

#### Interest Expense

Interest expense was $10.9 million and $3.0 million for the three months ended September 30, 2024 and 2023, respectively, due to the issuance of the Secured Notes.

We expect our interest expense will continue to increase as a result of our Secured Notes.

#### Gain on Fair Value of Warrants

The change in fair value of warrants resulted in a gain of $9.2 million and $1.6 million for the three months ended September 30, 2024 and 2023, respectively, and was related to the non-cash fair value change of the warrant liabilities driven by the relative change in our stock price.

#### Gain on Fair value of Contingent Earnout Liabilities

The gain on fair value of the contingent earnout liability was less than $0.1 million and $10.8 million for the three months ended September 30, 2024 and 2023, respectively, and was related to the non-cash fair value change of the earnout liabilities driven by the relative change in our stock price.

#### Other Income (Expense), Net

Other (expense) and income, net was ($2.4) million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively. The increase in other expense was due to costs related to warrant issuances.

#### Income Taxes

No provision for federal and state income taxes was recorded for both the three months ended September 30, 2024 and 2023 due to projected losses, and we maintained a full valuation allowance on the deferred tax assets as of September 30, 2024 and December 31, 2023.

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 in the remainder of 2024 and beyond, 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.

### Comparison of the Nine Months Ended September 30, 2024 and 2023:

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

*(In thousands, except for percentages)*

| Revenue | Nine Months Ended September 30, 2024 | 2023 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| 3D Printer | $17,388 | $68,425 | $(51,037) | (74.6)% |
| Recurring payment | 954 | 1,141 | (187) | (16.4)% |
| Licensing | 5,000 | — | 5,000 | 100.0% |
| Support services | 5,035 | 5,422 | (387) | (7.1)% |
| Total Revenue | 28,377 | 74,988 | (46,611) | (62.2)% |
| Cost of revenue |  |  |  |  |
| 3D Printer | 22,362 | 62,992 | (40,630) | (64.5)% |
| Recurring payment | 742 | 893 | (151) | (16.9)% |
| Support services | 6,914 | 5,872 | 1,042 | 17.7% |
| Total cost of revenue | 30,018 | 69,757 | (39,739) | (57.0)% |
| Gross profit (loss) | (1,641) | 5,231 | (6,872) | (131.4)% |
| Operating expenses |  |  |  |  |
| Research and development | 14,026 | 32,145 | (18,119) | (56.4)% |
| Selling and marketing | 12,181 | 18,054 | (5,873) | (32.5)% |
| General and administrative | 32,867 | 30,850 | 2,017 | 6.5% |
| Total operating expenses | 59,074 | 81,049 | (21,975) | (27.1)% |
| Loss from operations | (60,715) | (75,818) | 15,103 | (19.9)% |
| Interest expense | (20,309) | (3,582) | (16,727) | 467.0% |
| Gain (loss) on fair value of warrants | 31,911 | (138) | 32,049 | (23223.9)% |
| Gain (loss) on fair value of contingent earnout liabilities | 1,445 | 3,000 | (1,555) | (51.8)% |
| Loss on fair value of debt derivatives | — | (3,164) | 3,164 | (100.0)% |
| Loss on debt derivative | — | (253) | 253 | (100.0)% |
| Other income (expense), net | (3,676) | 965 | (4,641) | (480.9)% |
| Income (loss) before provision for income taxes | (51,344) | (78,990) | 27,646 | (35.0)% |
| Provision for income taxes | — | — | — | — |
| Net income (loss) | $(51,344) | $(78,990) | $27,646 | (35.0)% |

#### Revenue

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

*(In thousands, except for percentages)*

| ​ ​ ​ | Nine Months Ended September 30, 2024 |  | 2023 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| 3D Printer sales | $17,388 | 61.3% | $68,425 | 91.2% | $(51,037) | (74.6)% |
| Recurring payment | 954 | 3.4% | 1,141 | 1.5% | (187) | (16.4)% |
| Licensing | 5,000 | 17.6% | — | — | 5,000 | 100.0% |
| Support services | 5,035 | 17.7% | 5,422 | 7.2% | (387) | (7.1)% |
| Total Revenue | $28,377 | 100.0% | $74,988 | 100.0% | $(46,611) | (62.2)% |

Total revenue for the nine months ended September 30, 2024 and 2023 was $28.4 million and $75.0 million, respectively, a decrease of $46.6 million, or 62.2%.

3D Printer sales were $17.4 million and $68.4 million for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $51.0 million. The decrease in revenue was primarily attributed to a fewer number of systems sold, offset by a change in product mix to include more higher priced systems. The 3D Printer sales also included parts and consumables revenue.

Recurring Payment, structured as an operating lease, was $1.0 million and $1.1 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease was primarily attributable to a revenue reduction related to increased bad debt expense in the nine months ended September 30, 2023.

Licensing revenue was $5.0 million and $0 for the nine months ended September 30, 2024 and 2023, respectively. The increase in licensing revenue was attributed to a licensing agreement with SpaceX where SpaceX obtained a non-exclusive license to certain Velo3D patents and technologies for its internal uses only.

Our Support Services revenue was $5.0 million and $5.4 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in Support Services revenue was primarily due to a decrease in Support Service contracts from a fewer number of systems sold and the non-renewal of Support Service contracts of systems sold prior to September 30, 2023

As discussed above, due to the impact of customer order delays and our bookings to date, we expect additional contraction of revenue growth in the near term, as we focus on the implementation of our operational realignment initiatives and go-to-market and service strategies. In addition, we believe customers may be hesitant to do business with us because of the uncertainty regarding our financial situation as a result of the Secured Notes. In the medium term, we expect the demand for the Sapphire family of systems, primarily the Sapphire XC to drive future revenue growth. 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 September 30, 2024, our backlog for firm orders was $21 million for 3D Printers compared to $13 million as of December 31, 2023. We expect our new sales strategy, especially in the defense and aerospace industries, will improve results in the second half of 2024.

In connection with our realignment strategy, we are taking a strategic approach to our marketing and selling efforts to provide an improved customer experience, which we expect will enhance our efforts to introduce our technology to new customers and expand our existing customer network to increase demand.

#### Cost of Revenue

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

*(In thousands, except for percentages)*

| ​ ​ Cost of Revenue | Nine Months Ended September 30, 2024 |  | 2023 |  | Change% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of 3D Printers | $22,362 | 74.5% | $62,992 | 90.3% | $(40,630) | (64.5)% |
| Cost of Recurring Payment | 742 | 2.5% | 893 | 1.3% | (151) | (16.9)% |
| Cost of Support Services | 6,914 | 23.0% | 5,872 | 8.4% | 1,042 | 17.7% |
| Total Cost of Revenue | $30,018 | 100.0% | $69,757 | 100.0% | $(39,739) | (57.0)% |

Total cost of revenue for the nine months ended September 30, 2024 and 2023 was $30.0 million and $69.8 million, respectively, a decrease of $39.7 million, or 57.0%.

Cost of 3D Printers was $22.4 million and $63.0 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease of $40.6 million was due to a decrease in number of systems sold for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, offset by consistent fixed manufacturing costs, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Cost of Recurring Payment was $0.7 million and $0.9 million for the nine months ended September 30, 2024 and 2023, respectively. This decrease of $0.2 million was due to a decrease in depreciation of the equipment on lease and allocable Cost of Support Services as a result of fewer 3D Printers in service in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

Cost of Support Services was $6.9 million and $5.9 million for the nine months ended September 30, 2024 and 2023, respectively. The increase of $1.0 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 more 3D Printers in service in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

In addition, field service engineering support cost has increased, specifically with regard to increasing sales of Sapphire XC systems and introduction of the Sapphire 1MZ and Sapphire XC 1MZ systems in the field. We expect this to decrease on a per unit basis as the Sapphire XC, Sapphire 1MZ and Sapphire XC 1MZ system performance improves. We also 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 105.8% and 93.0% for the nine months ended September 30, 2024 and 2023, respectively. The increase in the cost of revenue as a percentage of revenue was primarily driven by lower system sales offset by consistent fixed manufacturing costs.

As described above, we are experiencing increased costs from our suppliers due to our current financial situation. We are unable to secure credit terms and volume discounts with our suppliers, causing us to pay a premium, in advance, or source from alternate suppliers at unfavorable terms for our products. This has negatively impacted our cost of revenue across all segments and will continue to negatively impact our cost of revenue until our financial conditions improve.

#### Gross Profit and Gross Margin

Total gross profit (loss) was $(1.6) million and $5.2 million for the nine months ended September 30, 2024 and 2023, respectively. As a percentage of revenue, the gross margin was (5.8)% and 7.0% for the nine months ended September 30, 2024 and 2023, respectively. The decrease in gross profit for the nine months ended September 30, 2024 was primarily attributable to the outsized impact of fixed costs on lower volume of 3D printer sales, the change in the mix of Sapphire and Sapphire XC system sales, the impact of launch customer pricing for Sapphire XC, higher than expected costs associated with the production of the Sapphire XC, Sapphire 1MZ and Sapphire XC 1MZ systems, and higher material, labor and overhead costs, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

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

- Product mix of Sapphire, and Sapphire XC systems;
- Average selling prices for our systems;
- Trends in materials and shipping costs;
- Production volumes that may impact factory overhead absorption;
- System reliability performance; and
- Impact of product mix changes, including new product introductions, and other factors, on our Cost of Support Services

Due to the aforementioned trends in customer orders and component costs, our gross profit and gross margin have been and will continue to be negatively impacted until our financial conditions improve.

#### Research and Development Expenses

Research and development expenses were $14.0 million and $32.1 million for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $18.1 million. The decrease in research and development expenses in the nine months ended September 30, 2024 was driven by a $5.0 millidon decrease in purchased materials, a $7.0 million decrease in headcount, salaries and employee-related expenses, a decrease of $1.6 million in professional and miscellaneous expenses, and a decrease of $4.5 million in stock-based compensation .

We expect research and development costs to continue to decrease in the remainder of 2024 due to the maturation of our Sapphire family of systems and reduction in research and development projects due to our Strategic Realignment and to increase in the long term as we continue to invest in enhancing and advancing our portfolio of AM solutions.

#### Selling and Marketing Expenses

Selling and marketing expenses were $12.2 million and $18.1 million for the nine months ended September 30, 2024 and 2023, respectively, a decrease of $5.9 million. The decrease was attributable to a decrease of $2.2 million in stock-based compensation, a $1.0 million decrease in travel costs, a $1.6 million decrease in general marketing initiatives, a $1.0 million decrease in headcount, salaries and employee-related expenses and a $.1 million decrease in miscellaneous expenses.

We expect selling and marketing expenses to continue to decrease during the remainder of 2024 as we continue to implement our realignment strategy. During the remainder of 2024, we intend to continue our focus on certain markets that show strong attendance at additive manufacturing conferences to build product awareness.

#### General and Administrative Expenses

General and administrative expenses were $32.9 million and $30.9 million for the nine months ended September 30, 2024 and 2023, respectively, an increase of $2.0 million. The increase was attributable to a $6.7 million increase in bad debt expense offset by a $1.7 million decrease in facilities expenses, a $2.8 million decrease in headcount, salaries and employee-related expenses and a $0.2 million dollar decrease in stock-based compensation.

We expect general and administrative expenses to decrease as a result of savings from our reduction in force and consolidation of our facilities in late 2023. We continue to focus on our company-wide initiatives to reduce operating costs for the remainder of 2024 as we continue to implement our Strategic Realignment by reducing our general and administrative expenses through reducing our reliance on outside consultants, managing facility costs and negotiating with vendors for improved pricing.

#### Interest Expense

Interest expense was $20.3 million and $3.6 million for the nine months ended September 30, 2024 and 2023, respectively, due to the issuance of the Secured Notes.

We expect our interest expense will increase as a result of our Secured Notes.

#### Gain (loss) on Fair Value of Warrants

The change in fair value of warrants resulted in a gain of $31.9 million and a loss of $0.1 million for the nine months ended September 30, 2024 and 2023, respectively, and was related to the non-cash fair value change of the warrant liabilities driven by the relative change in our stock price.

#### Gain (loss) on Fair value of Contingent Earnout Liabilities

The change in fair value of the contingent earnout liability was a gain of $1.4 million and $3.0 million for the nine months ended September 30, 2024 and 2023, respectively, and was related to the non-cash fair value change of the contingent earnout liabilities driven by the relative change in our stock price.

#### Other Income (Expense), Net

Other (expense) and income, net was $(3.7) million and $1.0 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in other expense was due to costs related to warrant issuances.

#### Income Taxes

No provision for federal and state income taxes was recorded for both the nine months ended September 30, 2024 and 2023 due to projected losses, and we maintained a full valuation allowance on the deferred tax assets as of September 30, 2024 and December 31, 2023.

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 in the remainder of 2024 and beyond, 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.

### Liquidity and Capital Resources

As of September 30, 2024, the Company had approximately $1.6 million in cash and short-term investments and $10.2 million in accounts receivable. This amount is insufficient to satisfy the Company's short term obligations including accounts payable of $17.7 million and $29.6 million in Secured Notes as of September 30, 2024.

We require additional funding to continue operations and satisfy our obligations, including ensuring we have sufficient liquidity for payroll. Without such additional funding, we will not be able to continue operations and may be required to sell assets, liquidate and/or file for bankruptcy. The Company will need to consider and implement significant cost cutting measures, including further reductions in force in order to continue operations.

During the nine months ended September 30, 2024, we experienced less revenue growth than expected due to the impact of delayed shipments and customer order delays, resulting in an overall decrease in system sales in 2024. As of September 30, 2024, we do not have sufficient working capital to meet our financial needs for the twelve-month period following the filing date of these unaudited condensed consolidated interim financial statements. As such, we believe that there is substantial doubt about our ability to continue as a going concern for the twelve-month period following the issuance of these condensed consolidated interim financial statements. See Note 1 *Description of Business and Basis of Presentation—Going Concern, Financial Condition and Liquidity and Capital Resources* in the unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report.

Our purchase commitments per terms and conditions with suppliers and vendors are cancellable in whole or in part prior to shipment. Purchase commitments (purchase orders) of $18.7 million for parts and assemblies are due upon receipt and will primarily be delivered throughout the remainder of 2024. If inventory is shipped, we will accrue a liability under accrued expenses. We have no other commitments and contingencies, except for the operating leases and Secured Notes. See Note 8, *Leases*, in the unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report for further discussion.

On December 9, 2024, Arrayed Notes Acquisition Corp., a subsidiary of Arrayed Additive, Inc. purchased the Senior Secured Notes due 2026 from High Trail Investments ON LLC and HB SPV I Master Sub LLC, the Note holders.

On December 24, 2024, the Company and Arrayed Notes Acquisition Corp. (“Arrayed”) entered into a debt for equity exchange transaction where the Company issued 185,151,333 shares of the Company’s common stock, in exchange for the cancellation of $22,382,000.00 in principal amount of the Company’s Senior Secured Notes due 2026 plus $369,303.00 of accrued interest on the Notes. Arrayed continues to hold $4,999,969.30 in principal amount of the Notes, and became the owner of 95% of the Company’s issued and outstanding common stock.

On January 7, 2025, the Company issued a Senior Secured Convertible Promissory Note in the principal amount of $5,000,000 to Thieneman Properties, LLC, an Indiana limited liability company. The Note is payable in full on April 7, 2025 in the amount of $5,750,000 and if not paid on or prior to such date, will continue to accrue interest at the same rate until paid. The Note may be prepaid in whole or in part at any time without penalty or premium and is convertible in the event of default into shares of the Company’s common stock, at a fixed conversion price of $1.56 per share.

We will need to engage in additional financings to fund our operations and satisfy our debt obligations in the near-term as well as to respond to business challenges and opportunities, including the need to repay the Secured Notes, provide working capital, continue to fund payroll for employees, improve our operating infrastructure, and continue to sustain operations. Accordingly, subject to our compliance with the covenants in the Secured Notes, to fund our operations, we will need to engage in equity or debt financings to secure additional funds, including seeking additional capital from public or private offerings of our equity or debt securities, electing to repay, restructure or refinance our existing indebtedness, or electing to borrow additional amounts under new credit lines or from other sources. We may also seek to raise additional capital, including from offerings of our equity or debt securities, on an opportunistic basis when we believe there are suitable opportunities for doing so.

Additionally, our recent and projected financial results, and the related conditions that raise substantial doubt about our ability to continue as a going concern, and general concerns among potential investors and creditors about our financial well-being, may make securing additional financing and cost cutting activities on commercially reasonable terms or in an amount sufficient to fund our operations for at least 12 months especially difficult.

More generally, our ability to meet our cash requirements depends on, among other things, our operating performance, competitive and industry developments, and financial market conditions, all of which are significantly affected by business, financial, economic, political, and other factors, many of which we may not be able to control or influence. To the extent that our actual operating results or other developments differ from our expectations, our liquidity will continue to be adversely affected.

#### Debt Facilities

As of September 30, 2024, our debt arrangements comprised the Secured Notes, of which we had approximately $29.6 million aggregate principal amount outstanding as of September 30, 2024. The Secured Notes bear interest at 6.00% per annum, payable quarterly in cash on January 1, April 1, and October 1 of each year, commencing on January 1, 2024, and will mature on August 1, 2026. When we repay principal on the Secured Notes pursuant to the terms of the Secured Notes, we will be required to pay 120% of the principal amount repaid plus accrued and unpaid interest. On the first day of each three-month period beginning on April 1, 2024 (a “Partial Redemption Date”), we will redeem a portion of the principal amount of the Secured Notes at the Repayment Price plus accrued and unpaid interest, unless the investors cancel such redemption. The aggregate principal amount of the Secured Notes that will be redeemable on a Partial Redemption Date will be $8,750,000 for a Repayment Price of $10,500,000.

On July 1, 2024, we entered into a third note amendment to the Secured Notes with the Investors (the “Third Note Amendment”). Pursuant to the Third Note Amendment, the Company and the Investors agreed to defer the July 1, 2024 partial redemption payment of $10.5 million (the “July Redemption Payment”) over a period of ten equal monthly payments commencing August 1, 2024. During August and September 2024 we received extensions from the Investors for the July Redemption Payment through October 4, 2024

On April 1, 2024, we entered into the Second Note Amendment to our Secured Notes and agreed to make a cash payment of $5.0 million on April 1, 2024 to redeem approximately $4.2 million of aggregate principal amount of the Notes, together with accrued and unpaid interest, and a cash payment of $5.5 million on April 15, 2024 to repay approximately $4.6 million of principal of the Secured Notes, together with accrued and unpaid interest. In connection with the Second Note Amendment, we issued warrants to purchase 21,949,079 shares of our common stock that become exercisable 45 days after the original issuance date at an exercise price of $0.4556 per share. The investors may exercise the warrants by paying the exercise in cash or by reducing the outstanding principal amount under the Notes by an amount equal to the quotient of (A) the amount of the exercise price divided by (B) 1.20.

On April 10, 2024, we sold an aggregate of: (i) 34,285,715 shares of common stock and (ii) immediately exercisable warrants to purchase up to 34,285,715 shares of common stock at $0.35 per share. The offering price per share of common stock and accompanying warrant was $0.35 and resulted in gross proceeds of approximately $12 million. We intend to use the net proceeds from the offering primarily for funding working capital and capital expenditures and other general corporate purposes, including repayment of the Secured Notes.

On November 27, 2023, we entered into a securities exchange agreement (the “*Exchange Agreement”*) with the holders of our then outstanding Secured Convertible Notes. On November 28, 2023, pursuant to the Exchange Agreement, (i) we made a cash payment to the holders of $15.0 million to repay $12.5 million of aggregate principal amount of the Secured Convertible Notes, together with accrued and unpaid interest, (ii) the remaining Secured Convertible Notes were exchanged for (A) $57.5 million aggregate principal amount of the Secured Notes and (B) 10,000,000 shares of common stock, and (iii) we made a cash payment to the holders of accrued and unpaid interest on the remaining Secured Convertible Notes that were exchanged.

On August 10, 2023, we entered into a securities purchase agreement (as amended, the “*Securities Purchase Agreement”*) with certain affiliated institutional investors pursuant to which we agreed to issue and sell, in a registered public offering by us directly to investors, up to $105 million aggregate principal amount of our Secured Convertible Notes. On August 14, 2023, we issued $70 million aggregate principal amount of the Secured Convertible Notes to the investors for approximately $66 million in net proceeds, and used approximately $22 million of the net proceeds to repay in full indebtedness outstanding under the Loan Agreement with Silicon Valley Bank. In connection with the repayment of the debt, the Loan Agreement was terminated and is no longer available to us.

We do not hedge our exposure to changes in interest rates. A 10% change in interest rates would not have a material impact on annualized interest expense.

For more information, see Note 9, *Debt*, in the notes of the unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report.

### Cash Flow Summary

The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023:

*(In thousands)*

|  | Nine Months Ended September 30, 2024 | 2023 | Change ​ |
| --- | ---: | ---: | ---: |
| Net cash used in operating activities | $(30,465) | $(81,109) | $50,644 |
| Net cash provided by investing activities | $6,644 | $31,055 | $(24,411) |
| Net cash provided by financing activities | $958 | $76,213 | $(75,255) |

#### Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2024 was $30.5 million, consisting primarily of a net loss of $51.3 million, non-cash gain of $6.1 million described below, and an increase in net operating assets of $14.7 million. The increase in net operating assets was comprised of an increase from inventories of $1.7 million for Sapphire XC, Sapphire 1MZ and Sapphire XC 1MZ system production, an increase from accounts payable of $1.0 million, an increase from prepaid expenses of $2.2 million related to insurance and vendor prepayments, an increase from contract liabilities of $6.4 million, and an increase from other net operating assets of $7.1 million, offset by a decrease from accounts receivable of $0.6 million due to timing of customer payments, a decrease in other noncurrent liabilities of $1.9 million, and a decrease in accrued expenses and other current liabilities of $1.3 million. The noncash gain of $6.1 million primarily consisted of the the gain on fair value of warrants of $31.9 million, and the gain on fair value of contingent earnout liabilities of $1.4 million, offset by the stock-based compensation expense of $13.0 million, depreciation and amortization of $3.9 million, amortization of debt discount and deferred financing costs of $14.5 million and non-cash cost of issuance of common stock warrants of $8.0 million.

Net cash used in operating activities for the nine months ended September 30, 2023 was $81.1 million, consisting primarily of a net loss of $79.0 million, non-cash loss of $26.5 million described below, and a decrease in net operating assets of $28.6 million. The decrease in net operating assets was comprised of a decrease from accounts payable of $1.6 million, a decrease from contract liabilities of $10.3 million, a decrease from other net operating assets of $8.7 million, a decrease from accounts receivable of $3.4 million due to timing of customer payments, a decrease in accrued expenses and other current liabilities of $4.4 million, and a decrease from inventories of $3.7 million for Sapphire XC, Sapphire 1MZ and Sapphire XC 1MZ system production, offset by an increase from prepaid expenses of $3.5 million related to insurance and vendor prepayments. The noncash loss of

$26.5 million consisted of the loss on fair value of debt derivatives of $3.2 million, the loss on debt extinguishment of $0.3 million, the loss on fair value of warrants of $0.1 million, depreciation and amortization of $6.4 million and stock-based compensation expense of $19.5 million, partially offset by the gain on fair value of contingent earnout liabilities of $3.0 million.

We expect our cash used in operating activities to decrease, driven by our efforts to stabilize our working capital requirements through our expense reduction efforts and cash savings initiatives as part our Strategic Realignment.

#### Investing Activities

Net cash provided by investing activities during the nine months ended September 30, 2024 was $6.6 million, consisting of the sale of available for sale securities of $3.2 million, and maturities of available-for-sale investment securities of $3.5 million.

Net cash provided by investing activities during the nine months ended September 30, 2023 was $31.1 million, consisting of property and equipment purchases of $1.1 million and production of equipment for lease to customers of $3.0 million, offset by maturities of available-for-sale investment securities of $35.1 million.

We expect our capital expenditures to decrease in 2024 compared to 2023 as we intend to limit the number of 3D Printer systems as equipment for lease to customers and because we completed the construction of our manufacturing facility in 2022.

#### Financing Activities

Net cash provided by financing activities during the nine months ended September 30, 2024 was $1.0 million, consisting of proceeds of $10.7 million from BEPO Offering, $1.7 million of proceeds from the the capital raise, and $0.3 million from the issuance of common stock upon exercise of stock options, offset by the repayment of the secured notes of $11.8 million.

Net cash provided by financing activities during the nine months ended September 30, 2023 was $76.2 million, consisting of proceeds of $65.7 million from the issuance of the Initial Notes, net of issuance costs, proceeds of $18.4 million from the issuance of common stock, net of issuance costs, pursuant to the ATM Offering, proceeds of $14.0 million drawn from the revolver facility, proceeds of $1.6 million drawn from the secured equipment loan facility and proceeds of $0.4 million from the issuance of common stock upon exercise of stock options, partially offset by $17.0 million in repayment of the revolver facility and $7.0 million in repayment of equipment loans.

We expect cash provided by financing activities to increase by issuing new equity or incurring new debt to continue operations, subject to our compliance with the covenants in the Secured Notes. Our future cash requirements and the adequacy of available funds will depend on many factors, including our operating performance, competitive and industry developments, and financial market conditions.

### Off-Balance Sheet Arrangements

As of September 30, 2024 and December 31, 2023, we did not have any off-balance sheet arrangements.

### Recent Accounting Pronouncements

For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on Velo3D’s condensed consolidated interim financial statements, see Note 2, *Summary of Significant Accounting Policies*, in the notes to the condensed consolidated interim financial statements in this Quarterly Report.

### Implications of Being an Emerging Growth Company

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the "Securities Act") and have elected to take advantage of the benefits of this extended transition period.

We will elect to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public business entities and nonpublic business entities until the earlier of the date we (a) are no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used. Please refer to Note 2. *Summary of Significant Accounting Policies,* of the unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report for the recent accounting pronouncements adopted and the recent accounting pronouncements not yet adopted for the nine months ended September 30, 2024 and 2023.

We will remain an emerging growth company under the JOBS Act until the earliest of (a) December 31, 2025, (b) the last date of our fiscal year in which we have total annual gross revenue of at least $1.235 billion, (c) the last date of our fiscal year in which we are deemed to be a “large accelerated filer” under the rules of the SEC or (d) the date on which we have issued more than $1.0 billion in nonconvertible debt securities during the previous three years.

### Implications of Being a Smaller Reporting Company

We are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited consolidated financial statements.

We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We will remain a smaller reporting company and may take advantage of certain scaled disclosures available to smaller reporting companies until the last day of the fiscal year in which (a) the market value of our voting and nonvoting common stock held by non-affiliates equals or exceeds $250.0 million measured on the last business day of that year’s second fiscal quarter and (b) our annual revenue equals or exceeds $100.0 million during the most recently completed fiscal year or our voting and nonvoting common stock held by non-affiliates equals or exceeds $700.0 million measured on the last business day of that year’s second fiscal quarter.

### Critical Accounting Policies and Significant Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated interim financial statements, which have been prepared in accordance with U.S. GAAP. We evaluated the development and selection of our critical accounting policies and estimates and believe that the following involve a higher degree of judgement or complexity and are most significant to reporting our results of operations and financial position and are therefore discussed as critical. The following critical accounting policies reflect the significant estimates and judgements used in the preparation of our unaudited condensed consolidated interim financial statements. Actual results could differ materially from those estimates and assumptions, and those differences could be material to our unaudited condensed consolidated interim financial statements. We re-evaluate our estimates on an ongoing basis. For more information, see Note 2, *Summary of Significant Accounting Policies,* included in the notes to the unaudited condensed consolidated interim financial statements in this Quarterly Report, and *Critical Accounting Policies and Significant Estimates* in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2023.

## Market risk

As filed, 261 characters.

We are a smaller reporting company as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "exchange Act"). As a result, pursuant to Item 305(e) of Regulation S-K, we are not required to provide the information required by this Item.

## Controls and procedures

As filed, 11,423 characters.

### Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Our management, with participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of September 30, 2024. Based upon this evaluation our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, our disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below.

### Material Weaknesses in Internal Control over Financial Reporting

As described Part II, Item 9A. “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2023, we identified material weaknesses in our internal control over financial reporting. These material weaknesses have not been remediated as of September 30, 2024. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weaknesses are as follows:

- We did not design and maintain an effective control environment commensurate with our financial reporting requirements. Specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of internal controls and accounting knowledge, experience, and training commensurate with our accounting and financial reporting requirements. Additionally, the lack of a sufficient complement of personnel resulted in an inability to consistently establish appropriate authorities and responsibilities in pursuit of our financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions. This material weakness contributed to the following additional material weaknesses.
- We did not design and maintain effective controls over the segregation of duties related to journal entries and account reconciliations. Specifically, certain personnel have the ability to both (i) create and post journal entries within our general ledger system and (ii) prepare and review account reconciliations.
- We did not design and maintain effective controls over the accounting and disclosure for debt and equity instruments. Specifically, we did not design and maintain effective controls over the accounting for the issuance and extinguishment of convertible note arrangements, warrants, common stock, and the accounting for earnout liabilities.
- We did not design and maintain effective controls over the accounting for inventory and related accounts. Specifically, we did not design and maintain effective controls over verifying the existence of inventory, the accuracy of purchases, manufacturing costs, and write-offs and the financial statement presentation of inventory and related accounts.
- We did not design and maintain effective controls over the accounting for contract assets and liabilities. Specifically, we did not design and maintain effective controls over the accuracy and the financial statement presentation of contract assets and liabilities, including variable consideration.
- We did not design and maintain effective controls over financial statement preparation, presentation and disclosure commensurate with our financial reporting requirements. Specifically, we did not design and maintain effective controls over the appropriate classification and presentation of accounts and disclosures in the consolidated financial statements.

These material weaknesses resulted in adjustments to accounts receivable, inventory, other current assets, current and non-current contract liabilities, accrued expenses and other current liabilities which were recorded prior to the issuance of the consolidated financial statements as of and for the years ended December 31, 2019, 2020 and 2021 and as of and for the interim periods ended September 30, 2021 and December 31, 2021. These material weaknesses also resulted in the revision of our consolidated financial statements for the year ended December 31, 2022 and as of and for the interim periods ended March 31, 2022, June 30, 2022, September 30, 2022, March 31, 2023, June 30, 2023, and September 30, 2023. Also, these material weaknesses resulted in an uncorrected misstatement to inventories and cost of revenue and adjustments to debt – current portion and long-term debt, other income, additional paid in capital, gain on fair value of warrants, interest expense, revenue and contract assets, and loss on debt extinguishment which were recorded prior to the issuance of the consolidated financial statements as of and for the year ended December 31, 2023 and accounts receivable and contract assets as of and for the interim period ended September 30, 2024 . These material weaknesses also resulted in adjustments to interest expense, debt – current portion, additional paid-in capital, warrant liabilities, contingent earnout liabilities and gain (loss) on fair value of contingent earnout liabilities, which were recorded prior to the issuance of the condensed consolidated interim financial statements as of and for the interim period ended September 30, 2024. Additionally, these material weaknesses could result in a misstatement of substantially all of our accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

- We did not design and maintain effective controls over certain information technology (“*IT”*) general controls for information systems that are relevant to the preparation of our consolidated financial statements. Specifically, we did not design and maintain effective:
- user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate company personnel; and
- program change management controls to ensure that information technology program and data changes affecting certain financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately.

These IT deficiencies did not result in a misstatement to the consolidated financial statements, however, the deficiencies, when aggregated, could impact maintaining effective segregation of duties, as well as the effectiveness of IT dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and underlying data that support the effectiveness of system-generated data and reports) that could result in misstatements potentially impacting all consolidated financial statement accounts and disclosures that would not be prevented or detected. Accordingly, management has determined these deficiencies in the aggregate constitute a material weakness.

### Remediation Measures for Remaining Material Weaknesses in Internal Control over Financial Reporting

We have taken measures to remediate the material weaknesses remaining as of September 30, 2024, including the following: hired additional accounting and IT personnel to bolster our reporting, technical accounting and IT capabilities; provided ongoing training for our personnel on accounting, financial reporting and internal control over financial reporting; engaged a third-party to assist in designing and implementing controls, including controls related to segregation of duties and IT general controls; designing and implementing controls to formalize roles and review responsibilities to align with our team’s skills and experience and designing and implementing controls over segregation of duties; and designing and implementing controls over the preparation and review of journal entries and account reconciliations. Additionally, we will need to hire and train additional accounting and IT personnel to further bolster our technical accounting and IT capabilities. We have also begun planning for measures to remediate the material weaknesses related to designing and implementing controls over accounting and disclosure for debt and equity instruments, the accounting for the issuance and extinguishment of convertible note arrangements, warrants and common stock; designing and implementing controls over the accounting for inventory and related accounts, the accuracy of inventory, purchases, manufacturing costs, and write-offs and the financial statement presentation of inventory and related accounts; designing and implementing controls over the accounting for contract assets and liabilities, the accuracy and the financial statement presentation and disclosure of contract assets and liabilities, including variable consideration; designing and implementing controls over controls over financial statement preparation, presentation and disclosure commensurate with our financial reporting requirements, the appropriate classification and presentation of accounts and disclosures in the consolidated financial statements; and designing and implementing IT general controls, including controls over the review and update of user access rights and privileges and program change management controls.

We are making progress toward the effectiveness of our internal control over financial reporting and disclosure controls and procedures. The measures that we are taking are subject to continued testing, ongoing senior management review, as well as audit committee oversight. We will not be able to conclude whether the measures we are taking will fully remediate these material weaknesses in our internal control over financial reporting until we have completed our remediation efforts and subsequent evaluation of their effectiveness. We may also conclude that additional measures may be required to remediate the material weaknesses in our internal control over financial reporting, which may necessitate additional implementation and evaluation time. We will continue to assess the effectiveness of our internal control over financial reporting and take steps to remediate the known material weaknesses expeditiously.

### Changes in Internal Control over Financial Reporting

Other than as described above, there were no changes in internal control over financial reporting during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 13,672 characters.

*There are numerous factors that affect our business and results of operations, many of which are beyond our control. Refer to Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which contains descriptions of significant risks that have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. Except as set forth below, there have been no material changes to risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.*

### Risks Related to Our Financial Position and Need for Additional Capital

***There is substantial doubt about our ability to continue as a going concern, which is having a material adverse impact on our business.***

As of September 30, 2024, the Company had approximately $3.2 million in cash and short-term investments and $8.3 million in accounts receivable. This amount is insufficient to satisfy the Company's short term obligations including accounts payable of $14.0 million and $24.6 million in Secured Notes as of September 30, 2024.

As described in Note 1 Description of Business and Basis of Presentation—Going Concern, Financial Condition and Liquidity and Capital Resources in the notes to the consolidated interim financial statements included elsewhere in this Quarterly Report, we believe there is substantial doubt about our ability to continue as a going concern for the twelve-month period following the filing date of this Quarterly Report.

Our conclusion that there is substantial doubt about our ability to continue as a going concern may be viewed unfavorably by current and prospective investors, as well as by analysts, creditors, customers, and suppliers. As a result, this conclusion has made it more difficult for us to raise the additional financing necessary to continue to operate our business and satisfy our obligations. In addition, this conclusion has made it more difficult for us to sell our products and meet our sales forecasts and retain employees, which may further impede our ability to raise additional financing.

This conclusion has caused customers to delay 3D printer orders until our financial condition improves, resulting in delays in 3D printer sales and difficulty building our bookings and backlog pipeline. Additionally, due to our inability to satisfy our accounts payable obligations, we are unable to secure credit terms and volume discounts with our suppliers, causing us to have to pay a premium and/or in advance, for components of our products and/or source components from alternate suppliers at unfavorable terms. Further delaying payments to our suppliers may cause them to terminate our business relationship, or pursue legal action against our Company for amounts owed. The Company will need to consider and implement significant cost cutting measures, including further reductions in force. These activities may limit our ability to conduct or grow our business, and may make retaining our employees more difficult, resulting in further employee attrition.

We need significant additional funding to execute our business plan and to continue operations. If we become unable to continue as a going concern, we will find it necessary to cease or curtail our business, liquidate our assets, further reductions in headcount, and/or file a petition for reorganization under Title 11 of the U.S. Code in order to provide us additional time to identify an appropriate solution to our financial situation and implement a plan of reorganization aimed at improving our capital structure. This may further seriously harm our business, financial conditions and results of operations. Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of a dissolution, liquidation, or winding up of our Company.

***We require additional capital to fund our operations in the near-term, and this capital might not be available on acceptable terms, if at all.***

We need to engage in additional financings to fund our operations and satisfy our substantial debt obligations in the near-term as well as to respond to business challenges and opportunities, including the need to repay our Secured Notes, provide working capital, continuing to fund payroll, develop new features or enhance our products, expand our manufacturing capacity, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, subject to our compliance with the covenants in the Secured Notes, we need to engage in equity or debt financings to secure additional funds, including seeking additional capital from public or private offerings of our equity or debt securities, electing to repay, restructure or refinance our existing indebtedness, or electing to borrow additional amounts under new credit lines or from other sources. However, our recent and projected financial results, and the related conditions that raise substantial doubt about our ability to continue as a going concern, and general concerns among potential investors and creditors about our financial well-being may make taking such actions on commercially reasonable terms especially difficult.

If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt financing that we may secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. Our ability to raise additional capital may be adversely affected by external factors beyond our control, including changes in the political climate, geopolitical actions, changes in market interest rates or foreign exchange rates, market volatility in the trading prices for our common stock and other technology companies, a recession, depression, high inflation or other sustained adverse market event, and the outbreak of epidemic disease. If we are unable to obtain adequate financing or financing on terms satisfactory to us in the near term, we will not be able to continue operations. If we are otherwise unable to obtain additional financing, our ability to respond to business challenges and opportunities could be significantly impaired, and our business may be adversely affected and we may be required to liquidate and/or file for bankruptcy protection.

***The terms of the Notes restrict our current and future operations. Upon an event of default, we will not be able to make any accelerated payments under the Notes or our other permitted indebtedness.***

As of September 30, 2024, we had approximately $27.9 million aggregate principal amount of the Secured Notes outstanding. We refer to the Secured Notes and the Additional Secured Convertible Notes collectively as the “Notes.”

The Secured Notes contain, and the Additional Secured Convertible Notes if issued will contain, a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interest. In particular, the Secured Notes contain, and the Additional Secured Convertible Notes if issued will contain, customary affirmative and negative covenants (including covenants that limit our ability to incur debt, make investments, transfer assets, engage in certain transactions with affiliates and merge with other companies, in each case, other than those permitted by the Notes) and events of default. Furthermore, we will be required to maintain a minimum of $30.0 million of unrestricted cash and cash equivalents under the Additional Secured Convertible Notes, if issued. Further, the Secured Notes require us, and the Additional Secured Convertible Notes if issued will require us, to maintain minimum levels of Available Cash, calculated monthly based on a rolling three-month lookback period beginning with the three-month period ending on December 31, 2023, specified in the Notes. Our ability to meet the financial tests under the Notes can be affected by events beyond our control, and we may be unable to meet them.

A breach of the covenants or restrictions under the Notes or under the agreements governing any of our other permitted indebtedness could result in an event of default under the applicable indebtedness. Such a default may allow holders of the Notes or the holders or lenders of our other permitted indebtedness, as appropriate, to accelerate the related indebtedness, which may result in the acceleration of other indebtedness to which a cross-acceleration or cross-default provision applies. In addition, such lenders or holders could terminate commitments to lend money, if any. Furthermore, if we were unable to repay the Notes or other permitted indebtedness, then due and payable, secured lenders could proceed against the assets, if any, securing such indebtedness. In the event such lenders or holders accelerate the repayment of the Notes or our other permitted borrowings, we will not have sufficient assets to repay that indebtedness. A default would also significantly diminish the market price of our common stock and our public warrants.

In particular, as described in more detail in the section of our Annual Report on Form 10-K for the year ended December 31, 2023 entitled “Management’s Discussion and Analysis—Recent Developments,” we were not in compliance with a minimum revenue covenant under our then outstanding Secured Convertible Notes, which required us to repay and restructure our indebtedness thereunder, and we also amended certain terms of the Secured Notes. However, we may not be able to obtain any necessary waivers or amendments or otherwise restructure our outstanding indebtedness on favorable terms or at all to the extent we breach any covenants in the future.

Furthermore, as a result of these restrictions, we may be limited in how we conduct and grow our business, or unable to compete effectively or to take advantage of new business opportunities. These restrictions may affect our ability to grow and our ability to continue operations in accordance with our strategy.

***Servicing the Notes requires a significant amount of cash, and we do not currently have sufficient cash flow from our business to pay our obligations under the Notes or our other permitted indebtedness.***

Our ability to make scheduled payments of principal or to pay interest on or to refinance the Secured Notes, the up to $35.0 million of additional senior secured convertible notes due 2026, if issued (the “Additional Secured Convertible Notes” and collectively with the Secured Notes, the “Notes”), or our other permitted indebtedness depends on our future performance and our ability to obtain additional financing, which are subject to economic, financial, competitive and other factors, some of which are beyond our control. As of September 30, 2024, we had $27.9 million aggregate principal amount of the Secured Notes outstanding, and the terms of the Secured Notes require us to pay approximately $33.5 million (or 120% of the outstanding principal amount of the Secured Notes) to repay the full principal amount of the Secured Notes. Unless the holders of the Secured Notes (who are also referred to herein as the Selling Stockholders) cancel such redemptions, we are required to redeem the entire outstanding amount of the Secured Notes, plus accrued and unpaid interest with redemption payments being made on the first day of each month in varying amounts.

Further, if we issue any Additional Secured Convertible Notes, unless the Investors agree to further modify the redemption schedule or cancel such redemption payments, the terms of such Additional Secured Convertible Notes would require us to pay 120% of the outstanding principal amount of such Additional Secured Convertible Notes to repay the full principal amount of such Additional Secured Convertible Notes, with quarterly redemption payments, plus accrued and unpaid interest, beginning on the first day of the first calendar month after such Notes are issued and continuing each quarter until maturity in August 2026.

Our business is not currently generating cash flow from operations sufficient to satisfy our obligations under the Notes or our other permitted indebtedness and, in particular, we need to engage in additional financings to fund our operations in the near term, the terms of which may be onerous or highly dilutive. If we are unable to generate such cash flow and obtain such additional financing, we may be required to adopt one or more alternatives, such as further reductions in headcount, selling assets, or refinancing or restructuring our indebtedness on terms that may be unfavorable, and possibly liquidation or wind down of our Company. We may not prepay the Notes without the consent of the holders, and our ability to refinance the Notes or our other permitted indebtedness will also depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the Notes or our other indebtedness.

Filed Jan 14, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-005443. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.