S-1: Velo3D Files S-1 for $15.0M Offering Amidst Going Concern

Velo3D, a metal 3D printing company, is offering 2.78 million common shares to raise $15.0 million, while facing substantial doubt about its ability to continue as a going concern and reporting significant operating losses.

Summary

• Velo3D is offering 2,777,777 shares of common stock at an assumed public offering price of $5.40 per share, aiming to raise approximately $13.2 million in net proceeds, or $15.2 million if the over-allotment option is fully exercised.
• The company's common stock is currently quoted on the OTCQX Best Market under the symbol VLDX, and it has applied to list on the Nasdaq Capital Market under the symbol VELO, with the offering contingent on conditional Nasdaq approval.
• Velo3D reported a net loss of $39.2 million for the six months ended June 30, 2025, compared to $28.5 million for the same period in 2024, and a net loss of $73.3 million for the year ended December 31, 2024, versus $135.1 million in 2023.
• Revenue for the six months ended June 30, 2025, increased to $22.9 million from $20.1 million in 2024, primarily driven by 3D Printer sales, which rose to $19.6 million from $16.3 million.
• Total revenue for the year ended December 31, 2024, decreased by 47.1% to $41.0 million from $77.4 million in 2023, mainly due to a significant decrease in 3D Printer sales.
• The company has identified material weaknesses in its internal control over financial reporting, including issues with the control environment, segregation of duties, accounting for debt/equity instruments, inventory, contract assets/liabilities, financial statement preparation, and IT general controls.
• A 1-for-15 reverse stock split of common stock became effective on July 28, 2025, following a 1-for-35 reverse stock split effective June 13, 2024, primarily to meet Nasdaq's minimum bid price requirement.
• As of June 30, 2025, cash and cash equivalents were $0.9 million, and the company had an accumulated deficit of $469.5 million, indicating substantial doubt about its ability to continue as a going concern.
• In December 2024, a debt-for-equity exchange transaction with Arrayed Notes Acquisition Corp. resulted in the cancellation of $22.4 million in principal amount of Secured Notes in exchange for 12,343,423 common shares, making Arrayed the owner of approximately 95% of outstanding common stock.
• New Senior Secured Convertible Promissory Notes totaling $15.0 million were issued in January and February 2025 to Thieneman Properties, LLC and Thieneman Construction, Inc., bearing interest rates of 60.0% and 30.0% per annum, respectively.

Sentiment

Score: 3

Explanation: The sentiment is predominantly negative due to the explicit 'going concern' warning, significant accumulated deficit, and continued net losses. While there are positive operational improvements and strategic shifts, the severe liquidity issues, reliance on further financing, and material weaknesses in internal controls overshadow these, indicating a high-risk investment.

Positives

• Revenue for the six months ended June 30, 2025, increased by 13.7% to $22.9 million compared to $20.1 million in the same period of 2024, driven by a 20.0% increase in 3D Printer sales.
• Gross loss significantly improved for the six months ended June 30, 2025, to $(0.9) million from $(5.7) million in 2024, and gross margin improved to (3.9)% from (28.4)%.
• Operating expenses decreased by 36.2% for the six months ended June 30, 2025, to $23.1 million, primarily due to reductions in R&D, selling & marketing, and general & administrative expenses.
• The company's strategic realignment in October 2023 shifted focus from revenue growth to optimizing free cash flow, maximizing customer success, reducing expenditures, and improving operational efficiency.
• Velo3D's proprietary Laser Powder Bed Fusion (L-PBF) technology significantly reduces or eliminates the need for support structures, enabling the production of highly complex, mission-critical metal parts that competitors cannot produce.
• The company has a 'land and expand' strategy, where initial single machine purchases lead to additional system sales as customers integrate the technology into their product roadmaps.
• Velo3D has established relationships with 'blue chip' customers across space, aviation, defense, automotive, energy, and industrial markets, including SpaceX, RTX, Lockheed Martin, and Kratos.
• The Sapphire XC system offers 400% larger part capacity and reduces production costs per part by approximately 65% to 80% compared to the original Sapphire system.
• The company holds a strong, multi-layered intellectual property portfolio with 63 issued patents (43 U.S., 20 foreign) and 51 pending patent applications, with earliest patent expiry in 2035.
• The business model is capital-efficient, with manufacturing primarily limited to final assembly, testing, and shipment, reducing heavy capital expenditures for increased production capacity.

Negatives

• There is substantial doubt about the company's ability to continue as a going concern for at least the next 12 months, due to a history of operating losses and negative cash flows.
• The company reported a net loss of $39.2 million for the six months ended June 30, 2025, an increase from $28.5 million in the comparable 2024 period.
• Total revenue for the year ended December 31, 2024, significantly decreased by 47.1% to $41.0 million from $77.4 million in 2023, primarily due to lower system sales and backlog.
• Cash and cash equivalents were critically low at $0.9 million as of June 30, 2025.
• The company has an accumulated deficit of $469.5 million as of June 30, 2025, reflecting significant historical losses.
• Sales to the top three customers accounted for a high percentage of revenue: 65.2% for Q2 2025 and 54.6% for H1 2025, indicating significant customer concentration risk.
• The company has identified material weaknesses in its internal control over financial reporting, which could lead to material misstatements and impact access to capital markets.
• Interest expense remains high, at $2.6 million for H1 2025, despite a reduction from $9.4 million in H1 2024, due to new high-interest convertible notes.
• The company is currently unable to secure credit terms and volume discounts with suppliers, leading to premium payments or unfavorable terms, negatively impacting cost of revenue.
• The company incurred a loss on warrant cancellation of $11.4 million for the six months ended June 30, 2025, due to warrant exchange agreements.

Risks

• Substantial doubt about the ability to continue as a going concern, which could make it difficult to raise financing, sell products, or retain employees.
• History of operating losses and may not achieve or maintain profitability in the future, with significant ongoing investments in the business.
• Reliance on a limited number of customers for a significant portion of near-term revenue, posing risks if these relationships deteriorate or orders decrease.
• Need for additional capital to fund operations and satisfy debt obligations in the near-term, with no assurance of availability on acceptable terms.
• Potential for significant delays in the design, production, launch, manufacture, shipment, and installation of additive manufacturing solutions.
• Risks associated with acquisitions or investments in other businesses, patents, technologies, products, or services, including diversion of management attention and unanticipated costs.
• Changes in transaction models and product mix may negatively impact gross margins and financial performance.
• If demand for additive manufacturing products does not grow as expected, or if market adoption is slower than anticipated, revenues may stagnate or decline.
• Failure to meet customer price expectations could negatively impact demand and financial results.
• Declines in product/service prices or sales volume, combined with an inflexible cost structure, may adversely affect financial results.
• Defects in additive manufacturing systems could lead to product liability, warranty claims, material expenses, and reputational damage.
• Rapid technological change in the additive manufacturing industry requires continuous development, and failure to keep pace could adversely affect market adoption.
• Intense competition in the additive manufacturing industry from companies with greater resources could cause operating results to suffer.
• Risks associated with global operations, including limited IP protection, longer sales cycles, foreign laws, trade barriers, and political instability.
• Dependence on management and key personnel, with a risk of business suffering if key personnel are not retained or new skilled employees are not attracted.
• Inability to effectively manage anticipated growth and expansion, leading to strain on resources and potential harm to business.
• Inability to realize anticipated benefits from restructuring operations, potentially impacting business and results.
• Material weaknesses in internal control over financial reporting, which could result in material misstatements or failure to meet reporting obligations.
• Potential for personal injury, property damage, product liability, and warranty claims due to the use of products in hazardous or critical applications.
• Dependence on independent contractors and third parties for key services, with risks of disruption or increased costs.
• Reliance on future collaborative and supply chain partners, with risks if suitable arrangements are not established or maintained.
• Supplier unavailability or inadequacy could adversely affect customer relationships and financial condition.
• Vulnerability of facilities (company, suppliers, customers) to disruption from natural disasters, strikes, or other events beyond control.
• Subject to U.S. and other anti-corruption laws, trade controls, and economic sanctions, with potential for civil, criminal, and administrative penalties for non-compliance.
• Subject to environmental, health, and safety laws and regulations, which could lead to compliance costs or liabilities.
• Privacy, data use, and data security regulations could increase costs and affect marketing ability.
• Failure to protect intellectual property rights could harm competitive advantages.
• Third-party lawsuits alleging infringement of patents, trade secrets, or other IP rights could have a significant adverse effect.
• Terms of the Secured Notes restrict current and future operations, and an event of default could lead to accelerated payments.
• Servicing debt requires significant cash, and insufficient cash flow could impact obligations.
• Conversion of Secured Convertible Notes may dilute existing stockholders or depress common stock price.
• No assurance that the reverse stock split will maintain the market price high enough for Nasdaq listing compliance.
• Purchasers in the offering will experience immediate dilution in net tangible book value.
• Substantial sales of common stock in the market following the offering could depress the market price.
• Broad discretion in using offering proceeds, which may not enhance operating results or stock price.

Future Outlook

The company expects to incur operating losses and negative cash flow in the near-term as it continues to invest significantly in sales and marketing programs. Research and development costs are expected to remain similar for the remainder of 2025 due to product maturation but will increase long-term to enhance the AM solutions portfolio. Selling and marketing expenses are expected to increase for the remainder of 2025 to re-engage with key customers and drive Rapid Production Solutions (RPS) traction. General and administrative expenses are expected to decrease due to savings from the late 2024 reduction in force and ongoing cost reduction initiatives. Interest expense is expected to decrease due to reduced debt. The company anticipates needing additional financing to fund operations and satisfy obligations in the near-term, and expects cash provided by financing activities to increase through new equity or debt issuances.

Management Comments

• Management believes that substantial doubt exists about the company's ability to continue as a going concern for the twelve-month period following the issuance of the financial statements.
• Management believes that the net proceeds from this offering, together with existing cash and cash equivalents, will be sufficient to fund operating expenses and capital expenditures for at least the next 12 months.
• Management believes that the company's technology is years ahead of competitors.
• Management considers the customer acquisition approach a 'land and expand' strategy, oriented around a demonstration of value proposition followed by increasing penetration with key customers.
• Management believes that continued investments in products are important to future growth and will invest in enhancing the portfolio of AM solutions based on customer demand.
• Management believes that the company's successes with existing customers provide meaningful proof of its proprietary technology and will enable a strategy of rapid customer acquisition.
• Management believes the capital-efficient business model will enable rapid scaling without heavy capital expenditures.
• Management believes that the company is making progress toward the effectiveness of its internal control over financial reporting and disclosure controls and procedures.

Industry Context

Velo3D operates in the additive manufacturing (AM) industry, specifically focusing on high-value metal parts using proprietary laser powder bed fusion (L-PBF) technology. This industry is characterized by rapid technological change and a shift from conventional manufacturing processes. Velo3D aims to differentiate itself by enabling complex internal geometries without support structures, addressing a niche where traditional AM solutions fall short. The company's focus on mission-critical components for aerospace, defense, and energy aligns with high-growth segments within AM. However, the industry is competitive and fragmented, with larger, more established players and new entrants. Macroeconomic conditions, including inflation and supply chain disruptions, are impacting customer orders and costs across the industrial manufacturing sector, affecting Velo3D's ability to secure credit terms and volume discounts.

Comparison to Industry Standards

• Velo3D's L-PBF technology is positioned as superior to other AM solutions due to its ability to produce complex internal features and geometries without support structures, which is often considered impossible for legacy AM methods.
• The Sapphire XC system's capacity to make parts 400% larger and reduce production costs by 65% to 80% compared to the original Sapphire system suggests a competitive advantage in cost-efficiency for larger parts.
• The company's focus on 'uncontested segments of the market' for high-performance metal parts with complex internal geometries differentiates it from competitors serving more general metal AM applications.
• Velo3D's 'land and expand' strategy, where customers validate technology with a single machine and then purchase additional systems, indicates a strong value proposition and customer satisfaction, which is a positive indicator in a competitive industry.
• The company's ability to process flow exact copies of materials and parts ensures repeatability, addressing a common variability issue that plagues traditional AM methods and potentially offering a higher standard of quality control.
• The company's intellectual property portfolio with 63 issued patents and 51 pending applications suggests a strong competitive moat compared to general industry players, though specific comparisons to competitors' patent portfolios are not provided.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not aware of any litigation, claim, or assessment as of June 30, 2025, that would have a material adverse effect on its financial positions, results of operations, cash flows, or future earnings.

Related Party Transactions

• On December 24, 2024, the company entered into a debt-for-equity exchange transaction with Arrayed Notes Acquisition Corp., a wholly-owned subsidiary of Arrayed Additive, Inc., which is controlled by Arun Jeldi (CEO and Director). The company issued 12,343,423 shares of common stock in exchange for the cancellation of $22.4 million in principal amount of Secured Notes plus $0.4 million of accrued interest. Arrayed became the owner of approximately 95% of the company's issued and outstanding common stock.
• On January 7, 2025, the company issued a Senior Secured Convertible Promissory Note (January Note) in the principal amount of $5.0 million to Thieneman Properties, LLC, in which Kenneth Thieneman (a Board member) holds a 30% interest.
• On February 10, 2025, the company issued a Senior Secured Convertible Promissory Note (February Note) in the principal amount of $10.0 million to Thieneman Construction, Inc., in which Kenneth Thieneman holds an 87.4% interest.
• From October 26, 2021, to November 30, 2023, Ronit Buller, wife of former CEO and Director Mr. Buller, was employed as Vice President of Intellectual Property, receiving total cash compensation of $323,032 in 2023 and $349,465 in 2022.
• On November 28, 2023, Ms. Buller, as owner of R. Buller Law, entered into an Agreement for Legal Services to provide intellectual property matters, receiving $28,313 in 2023 under this agreement.

Stakeholder Impact

• **Shareholders:** Will experience immediate dilution from the current offering. Existing shareholders faced significant dilution from the December 2024 debt-for-equity exchange and previous warrant exchanges. The substantial doubt about going concern and material weaknesses in internal controls pose significant risks to investment value. The reverse stock splits aim to maintain Nasdaq listing, which could benefit liquidity, but there's no guarantee.
• **Employees:** The company undertook a reduction in force in August and October 2024, impacting approximately 45% of its workforce, which could affect morale and retention. The company's ability to continue operations is dependent on securing additional financing, which directly impacts job security.
• **Customers:** The company's strategic realignment focuses on maximizing customer success and improving operational efficiency, which could lead to better service and product reliability. However, delays in product commercialization and potential financial instability could impact customer confidence and supply continuity.
• **Suppliers:** The company's financial situation has led to an inability to secure credit terms and volume discounts, forcing premium payments or unfavorable terms, which could strain supplier relationships and potentially lead to supply chain disruptions.
• **Creditors:** The company has engaged in multiple debt restructurings, including debt-for-equity exchanges and new high-interest convertible notes, indicating financial distress. The 'going concern' warning highlights significant risk for creditors regarding repayment of obligations.

Next Steps

• Complete the current public offering of common stock and list on the Nasdaq Capital Market, contingent on conditional approval from Nasdaq.
• Engage in additional financings to fund operations, continue payroll, and satisfy debt obligations in the near-term.
• Continue efforts to remediate identified material weaknesses in internal control over financial reporting.
• Continue to focus on driving further operational improvements during 2025 to reduce operating costs.
• Re-engage with key customers and drive Rapid Production Solutions (RPS) traction to increase selling and marketing expenses.
• Continue to focus on company-wide initiatives to reduce general and administrative expenses by reducing reliance on outside consultants, managing facility costs, and negotiating with vendors.
• Invest in printer capacity and related facilities for RPS to meet customer production level parts demand.
• Continue to invest in enhancing and advancing the portfolio of AM solutions through research and development projects based on customer demand.
• Expand direct sales force and consider establishing additional distribution partnerships globally.

Key Dates

Recommendation

The company explicitly states 'substantial doubt about our ability to continue as a going concern' and has a history of significant operating losses and negative cash flows. Its cash position is critically low, necessitating immediate additional financing with no guarantee of favorable terms. The presence of multiple material weaknesses in internal controls indicates severe financial reporting and operational deficiencies. While there are some positive operational improvements and strategic shifts, the fundamental financial instability, high customer concentration, and ongoing need for capital make the stock a highly speculative and risky investment with a significant probability of further value erosion or bankruptcy.

Keywords

Additive Manufacturing, 3D Printing, Metal 3D Printing, Laser Powder Bed Fusion, L-PBF, Aerospace, Defense, Space Industry, Financial Health, Going Concern, SEC Filing, S-1 Registration, Capital Raise, Reverse Stock Split, Corporate Governance, Internal Controls, Debt Restructuring, Proprietary Technology, Manufacturing Solutions, Industrial 3D Printing