10-Q: Velo3D Faces Going Concern Doubt Amid Q3 Losses, Seeks Funding

Velo3D reported increased Q3 revenue but continues to face substantial doubt about its ability to continue as a going concern, necessitating further financing.

Summary

• Total revenue for the three months ended September 30, 2025, increased by 65.4% to $13.6 million, up from $8.2 million in the prior year period.
• 3D Printer and parts sales surged by 1043.3% to $12.0 million for the three months ended September 30, 2025, compared to $1.0 million in the same period of 2024.
• Net loss for the three months ended September 30, 2025, improved by 48.9% to $(11.8) million, from $(23.1) million in the prior year.
• For the nine months ended September 30, 2025, total revenue increased by 28.7% to $36.5 million, up from $28.4 million in the prior year period.
• Net loss for the nine months ended September 30, 2025, was $(51.0) million, a slight improvement from $(51.6) million in the prior year.
• The company has an accumulated deficit of $(481.3) million as of September 30, 2025, and cash and cash equivalents of $11.8 million.
• Management believes substantial doubt exists about the company's ability to continue as a going concern due to insufficient liquidity for the next 12 months.
• Material weaknesses in internal control over financial reporting have not been remediated as of September 30, 2025.
• Velo3D completed an August 2025 public offering, raising approximately $17.8 million in net proceeds for working capital and general corporate purposes.
• The company amended its January and February Senior Secured Convertible Promissory Notes, extending maturity dates to February 14, 2027, and reducing interest rates to 12%.

Sentiment

Score: 2

Explanation: The company faces severe financial distress, evidenced by the 'going concern' warning, persistent net losses, and un-remediated material weaknesses in internal controls. While revenue increased and operating expenses decreased, these positives are overshadowed by the fundamental liquidity issues and the continuous need for external financing to sustain operations. The debt amendments provide temporary relief but do not resolve the underlying financial instability.

Positives

• Total revenue increased by 65.4% for the three months ended September 30, 2025, and by 28.7% for the nine months ended September 30, 2025, driven primarily by a significant increase in 3D Printer and parts sales.
• Net loss improved by 48.9% for the three months ended September 30, 2025, and by 1.2% for the nine months ended September 30, 2025, indicating some progress in reducing losses.
• Operating expenses decreased significantly by 51.8% for the three months and 42.3% for the nine months ended September 30, 2025, reflecting cost reduction efforts.
• Interest expense decreased by 66.3% for the three months and 70.3% for the nine months ended September 30, 2025, due to debt reduction and favorable amendments to convertible notes.
• Successfully raised approximately $17.8 million in net proceeds from an August 2025 public offering, providing much-needed working capital.
• Secured amendments to the January and February Notes, extending maturity dates to February 14, 2027, and reducing interest rates to 12%, which improves debt management.
• Commenced trading on the Nasdaq Capital Market on August 19, 2025, which could enhance market visibility and liquidity compared to OTCQX.

Negatives

• Substantial doubt exists about the company's ability to continue as a going concern, as it lacks sufficient liquidity to meet operating needs and satisfy obligations for at least the next 12 months.
• Gross profit decreased by 89.4% for the three months ended September 30, 2025, and the company reported a gross loss of $(0.5) million for the nine months ended September 30, 2025, with a negative gross margin of (1.3)%.
• Material weaknesses in internal control over financial reporting have not been remediated, posing significant risks to financial reporting accuracy and reliability.
• The company continues to incur significant net losses, with an accumulated deficit of $(481.3) million as of September 30, 2025.
• Customer concentration remains a risk, with the top three customers accounting for 50.9% of revenue for the three months and 36.7% for the nine months ended September 30, 2025.
• Inability to secure credit terms and volume discounts with suppliers due to financial condition, leading to premium payments or unfavorable terms for components.
• The company will need to engage in additional financings in the near-term, with no assurance of obtaining funds on acceptable terms or at all.

Risks

• Inability to generate positive cash flow and liquidity sufficient to meet operating needs and satisfy obligations, leading to substantial doubt about continuing as a going concern.
• Difficulty in raising additional financing on acceptable terms, or at all, which could lead to inability to continue operations, asset sales, liquidation, or bankruptcy.
• Adverse impact on business due to unfavorable perception by investors, analysts, and creditors regarding the going concern conclusion.
• Customer delays in 3D printer orders until financial condition improves, impacting bookings and backlog.
• Inability to secure credit terms and volume discounts with suppliers, leading to higher costs and potential termination of business relationships or legal action.
• Need for significant cost-cutting measures, including further reductions in force, which may limit business growth and lead to employee attrition.
• Potential for significant dilution of existing stockholders if additional funds are raised through equity or convertible debt issuances.
• Restrictive covenants from future debt financing that could limit capital raising activities and business opportunities.
• Uncertainty regarding U.S. tariffs and trade relationships, potentially increasing costs or reducing sales.
• Disruptions to operations, supply chain, and customer relationships due to government shutdowns.
• Risks related to U.S. and other anti-corruption laws, trade controls, and economic sanctions, with potential for civil, criminal, and administrative penalties.
• Exposure to heightened risk of violating anti-corruption and trade control laws in foreign countries and with foreign customers.
• Potential liability for actions of joint venture partners in violation of anti-corruption laws.
• Impact of climate change-related legislation, regulations, and extreme weather events on business, financial condition, and results of operations.
• Dependence on a small group of customers for a significant portion of operating results.

Future Outlook

Management believes substantial doubt exists about the company's ability to continue as a going concern, as it does not have sufficient liquidity to meet operating needs and satisfy obligations for at least the next 12 months. The company will need to engage in additional financings to fund operations, continue payroll, and satisfy debt obligations in the near-term. Research and development costs are expected to remain similar for the remainder of 2025 due to system maturation and current product line investments, but increase in the long term. Selling and marketing expenses are expected to increase for the remainder of 2025 to re-engage customers and drive Rapid Production Solutions (RPS) traction. General and administrative expenses are expected to decrease due to savings from a reduction in force and ongoing cost reduction initiatives. Interest expense is expected to continue to decrease due to recent debt amendments.

Management Comments

• Management believes that substantial doubt exists about the Company’s 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.
• We expect research and development costs to remain at similar levels for the remainder of 2025 due to the maturation of our Sapphire family of systems and certain investments in improvements in our current product line, and to increase in the long term as we continue to invest in enhancing and advancing our portfolio of AM solutions.
• We expect selling and marketing expenses to increase for the remainder of 2025 as we re-engage with key customers and drive RPS traction.
• We expect general and administrative expenses to decrease as a result of savings from our reduction in force implemented in late 2024.
• We expect our interest expense will continue to decrease as a result of our amendments to the interest rates.

Industry Context

Velo3D operates in the metal additive manufacturing (3D printing) industry, providing integrated hardware and software solutions for complex, mission-critical parts in sectors like space, aviation, defense, automotive, energy, and industrial markets. The company emphasizes its proprietary laser powder bed fusion (L-PBF) technology, which reduces the need for support structures and enables complex geometries. The industry is characterized by a shift from traditional manufacturing to AM for lighter, stronger, and more reliable parts, especially for low-volume production and shorter lead times. Velo3D's 'land and expand' strategy, where customers validate technology with a single machine before purchasing more, suggests a focus on demonstrating value and deep integration. Macroeconomic conditions, including government shutdowns, interest rate fluctuations, and supply chain shortages, are noted as factors impacting customer orders and operational costs across the industry.

Comparison to Industry Standards

• NA

Corporate Governance

Related Party Transactions

• Arrayed Notes Acquisition Corp., a subsidiary of Arrayed Additive, Inc., purchased Senior Secured Notes and, through a debt-for-equity exchange on December 24, 2024, became the owner of approximately 95% of the company's issued and outstanding common stock.
• Thieneman Properties, LLC, an Indiana limited liability company, provided a $5,000,000 Senior Secured Convertible Promissory Note (January Note) on January 7, 2025.
• Thieneman Construction, Inc., an Indiana corporation, provided a $10,000,000 Senior Secured Convertible Promissory Note (February Note) on February 10, 2025.

Stakeholder Impact

• Shareholders face significant dilution risk from future equity raises and potential loss of investment due to the 'going concern' warning.
• Employees may face further reductions in force and increased attrition due to cost-cutting measures and financial instability.
• Customers may delay orders due to concerns about the company's financial condition, impacting future sales and relationships.
• Suppliers are negatively impacted by the company's inability to secure credit terms, requiring advance payments or leading to unfavorable terms, and potentially facing delayed payments or legal action.
• Creditors (holders of Secured Notes and Convertible Notes) are exposed to the company's liquidity challenges, although recent debt amendments provide some maturity extension and interest rate reduction.

Next Steps

• Engage in additional financings to fund operations and satisfy debt obligations in the near-term.
• Continue efforts to stabilize working capital requirements through expense reduction and enterprise efficiency improvement programs.
• Continue investments in enhancing and advancing the portfolio of AM solutions through research and development projects.
• Re-engage with key customers and drive Rapid Production Solutions (RPS) traction, focusing on markets with strong attendance at additive manufacturing conferences.
• Continue company-wide initiatives to reduce operating costs, including reducing reliance on outside consultants, managing facility costs, and negotiating with vendors.
• Remediate material weaknesses in internal control over financial reporting by hiring and training additional accounting and IT personnel, designing and implementing controls over various accounting areas, and improving IT general controls.
• Continue to review conclusions about the appropriate amount of the valuation allowance on deferred tax assets quarterly.

Key Dates

Recommendation

The company explicitly states 'substantial doubt exists about our ability to continue as a going concern' and acknowledges insufficient liquidity for the next 12 months. This fundamental risk, coupled with persistent net losses, negative gross margins, and un-remediated material weaknesses in internal controls, indicates severe financial distress. While recent capital raises and debt amendments provide temporary relief, they are reactive measures to stave off immediate collapse rather than indicators of sustainable growth. The continuous need for additional financing, with no guarantee of favorable terms, presents an extremely high risk for investors. The stock is highly speculative, and the probability of significant capital loss is substantial.

Keywords

Additive Manufacturing, 3D Printing, Metal AM, Velo3D, SEC Filing, 10-Q, Financial Results, Going Concern, Liquidity, Capital Raise, Debt Financing, Internal Controls, Risk Factors, Nasdaq Listing, Aerospace, Defense, Automotive, Energy