Velo3D, Inc.
For the period ended Sep 30, 2024. Filed Jan 14, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Jan 14, 2025
VELO$5.58+15.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0000950170-24-097212
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2025-01-14.
0000950170-25-005443
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 201 previous paragraphs and 206 current paragraphs.
131 unchanged; 55 reworded; 19 added; 12 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
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.
Current report
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.
Current report
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.
Current report
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%.
Current report
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.
Current report
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%.
Current report
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
Current report
$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.
Current report
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.
Current report
Comparison of the Nine Months Ended September 30, 2024 and 2023:
Current report
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%.
Current report
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.
Current report
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%.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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
Removed paragraphs (12)
Previous report
NM = Not Meaningful
Previous report
Total revenue for the three months ended June 30, 2024 and 2023 was $10.3 million and $25.1 million, respectively, a decrease of $14.8 million, or 58.8%.
Previous report
Total cost of revenue for the three months ended June 30, 2024 and 2023 was $13.2 million and $22.6 million, respectively, a decrease of $9.4 million, or 41.4%.
Previous report
Selling and marketing expenses were $4.3 million and $6.1 million for the three months ended June 30, 2024 and 2023, respectively, a decrease of $1.8 million. The decrease was attributable to a decrease of $0.7 million in stock-based compensation, an $1.1 million decrease in European marketing costs, and a $0.6 million decrease in general marketing initiatives, offset by a $0.6 million increase in headcount, salaries and employee-related expenses.
Previous report
General and administrative expenses were $8.8 million and $9.9 million for the three months ended June 30, 2024 and 2023, respectively, a decrease of $1.1 million. The decrease was attributable to a $0.2 million decrease in facilities expenses, and a $0.9 million decrease in headcount, salaries and employee-related expenses, and a $0.2 million increase in public company-related expenses in advisory, legal and accounting fees and insurance, offset by a $0.2 million increase in stock-based compensation.
Previous report
Comparison of the Six Months Ended June 30, 2024 and 2023:
Previous report
NM = Not Meaningful
Previous report
Total revenue for the six months ended June 30, 2024 and 2023 was $20.1 million and $51.8 million, respectively, a decrease of $31.7 million, or 61.2%.
Previous report
Total cost of revenue for the six months ended June 30, 2024 and 2023 was $25.8 million and $46.8 million, respectively, a decrease of $20.9 million, or 44.7%.
Previous report
Selling and marketing expenses were $9.1 million and $12.3 million for the six months ended June 30, 2024 and 2023, respectively, a decrease of $3.2 million. The decrease was attributable to a decrease of $1.1 million in stock-based compensation, an $2.1 million decrease in European marketing costs, and a $1.2 million decrease in general marketing initiatives, offset by a $1.2 million increase in headcount, salaries and employee-related expenses.
Previous report
As of June 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 June 30, 2024. As of August 2, 2024, the Company had approximately $8.7 million in accounts receivable, $1.1 million in cash and short-term investments, $17.5 million of accounts payable, and $24.6 million in Secured Notes.
Previous report
As of June 30, 2024, we had raised net proceeds of $529.1 million, comprised of approximately $12.0 million from the BEPO Offering, which closed on April 12, 2024, $18.0 million from the Registered Direct Offering, which closed on December 28, 2023, approximately $66.0 million from the offering of $70.0 million aggregate principal amount of Notes (the “Initial Notes”), which closed on August 10, 2023, $22.8 million from the ATM offering (described below), $278.3 million from the Merger and related private placement of shares of our common stock (the “PIPE Financing”), which closed on September 29, 2021, and $150.0 million from the issuance of redeemable convertible preferred stock (series A to series D), third-party financing and convertible notes. We have incurred net losses of $28.5 million and $59.5 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024 and December 31, 2023, we had $3.2 million and $31.1 million in cash, cash equivalents and short-term investments, respectively, and an accumulated deficit of $385.5 million and $357.0 million, respectively. Our business requires substantial amounts of cash for operating activities, including salaries and wages paid to our employees, component and sub-assembly purchases, general and administrative expenses, and others.
Reworded paragraphs (55)
Previous wording
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 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 financial statements included in Part I of this Quarterly Report on Form 10-Q for additional information.
Current wording
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.
Previous wording
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 June 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 June 30, 2024. As of August 2, 2024, the Company had approximately $8.7 million in accounts receivable, $1.1 million in cash and short-term investments, $17.5 million of accounts payable, and $24.6 million in Secured Notes.
Current wording
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.
Previous wording
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”). Since September 30, 2023 through July 31, 2024, we took the following steps to repay and restructure our indebtedness and raise additional capital:
Current wording
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:
Previous wording
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
Current wording
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.
Previous wording
1,650,000 shares of common stock. See Note 17 Subsequent Events in the notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for additional information.
Current wording
See Note 17 Subsequent Eventsin the notes to our unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report for additional information.
Previous wording
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 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. As of June 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 June 30, 2024. The Company will need to consider and implement significant cost cutting measures, including further reductions in force. We 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.
Current wording
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.
Previous wording
Our operating results for the foreseeable future will continue to depend on sales to a small group of customers. For the three months ended June 30, 2024 and 2023, sales to the top three customers accounted for 66.4% and 47.0%, respectively, of our revenue. Of the top three customers for the three months ended June 30, 2024, one customer was different from the top three customers for the comparable period in 2023. For the six months ended June 30, 2024 and 2023, sales to the top three customers accounted for 53.7% and 33.0%, respectively. Of the top three customers for the three months ended June 30, 2024 all customers were different from the top three customers for the comparable period in 2023.
Current wording
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.
Previous wording
The timeframe from order to completion of the site acceptance test usually occurs over three to six months. As we scale our production, we expect to reduce this timeframe. Contract consideration allocated to the 3D Printer is recognized at a point in time, which occurs upon transfer of control to the customer at shipment.
Current wording
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.
Previous wording
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 BEPO Offering and other miscellaneous income/expenses.
Current wording
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.
Previous wording
3D Printer sales were $16.3 million and $47.6 million for the six months ended June 30, 2024 and 2023, respectively, a decrease of $31.3 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.
Current wording
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.
Previous wording
Recurring Payment revenue, structured as an operating lease, was $0.3 million for the three months ended June 30, 2024 and was an immaterial amount for the three months ended June 30, 2023. The increase was primarily attributable to a revenue reduction related to increased bad debt expense in the three months ended June 30, 2023.
Current wording
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.
Previous wording
Our Support Services revenue was $1.4 million and $1.9 million for the three months ended June 30, 2024 and 2023, respectively, a decrease of $0.5 million. 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 June 30, 2023.
Current wording
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.
Previous wording
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 June 30, 2024, our backlog for firm orders was $17 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 help us improve our results in the second half of 2024.
Current wording
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.
Previous wording
Cost of 3D Printers was $10.7 million and $20.1 million for the three months ended June 30, 2024 and 2023, respectively. The decrease of $9.3 million was due to a decrease in number of systems sold for the three months ended June 30, 2024, compared to the three months ended June 30, 2023.
Current wording
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.
Previous wording
Cost of Recurring Payment was $0.2 million and $0.3 million for the three months ended June 30, 2024 and 2023, respectively. This decrease 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 June 30, 2024, compared to the three months June 30, 2023.
Current wording
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.
Previous wording
Cost of Support Services was $2.3 million and $2.2 million for the three months ended June 30, 2024 and 2023, respectively. Cost of Support Services increased by less than $0.1 million, due to the fixed costs associated with field service engineering labor and overhead in June 30, 2024, compared to June 30, 2023.
Current wording
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.
Previous wording
Cost of revenue as a percentage of revenue was 128.4% and 90.2% for the six months ended June 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.
Current wording
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.
Previous wording
Total gross profit (loss) was $(2.9) million and $2.5 million for the three months ended June 30, 2024 and 2023, respectively. As a percentage of revenue, the gross margin was (28.0)% and 10.1% for the three months ended June 30, 2024 and 2023, respectively. The decrease in gross profit for the three months ended June 30, 2024 was primarily attributable to the outsized impact of fixed costs on lower volume of 3D printer sales, to the change in the mix of Sapphire and Sapphire XC system sales, the 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 three months ended June 30, 2024, as compared to the three months ended June 30, 2023.
Current wording
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.
Previous wording
Research and development expenses were $4.5 million and $12.2 million for the three months ended June 30, 2024 and 2023, respectively, a decrease of $7.7 million. The decrease in research and development expenses was driven by a $3.4 million decrease in purchased materials, a $2.3 million decrease in headcount, salaries and employee-related expenses, a decrease of $0.3 million in miscellaneous expenses, and a decrease of $1.7 million in stock-based compensation .
Current wording
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 .
Previous wording
Interest expense was $5.5 million and $0.3 million for the three months ended June 30, 2024 and 2023, respectively, due to the issuance of the Secured Notes.
Current wording
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.
Previous wording
The change in fair value of warrants resulted in a gain of $25.3 million and $0.8 million for the three months ended June 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.
Current wording
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.
Previous wording
The gain on fair value of the contingent earnout liability was consistent for the three months ended June 30, 2024 and 2023, respectively.
Current wording
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.
Previous wording
Other expense and income, net was $(1.3) million and $0.2 million for the three months ended June 30, 2024 and 2023, respectively. The increase in other expense was due to transaction costs related to the BEPO Offering.
Current wording
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.
Previous wording
3D Printer sales were $8.7 million and $23.2 million for the three months ended June 30, 2024 and 2023, respectively, a decrease of $14.5 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.
Current wording
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.
Previous wording
Recurring Payment, structured as an operating lease, was $0.8 million and $0.6 million for the six months ended June 30, 2024 and 2023, respectively. The increase was primarily attributable to a revenue reduction related to increased bad debt expense in the six months ended June 30, 2023.
Current wording
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.
Previous wording
Our Support Services revenue was $3.0 million and $3.6 million for the six months ended June 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 June 30, 2023
Current wording
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
Previous wording
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 June 30, 2024, our backlog for firm orders was $17 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.
Current wording
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.
Previous wording
Cost of 3D Printers was $20.1 million and $42.2 million for the six months ended June 30, 2024 and 2023, respectively. The decrease of $22.1 million was due to a decrease in number of systems sold for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, offset by consistent fixed manufacturing costs, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current wording
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.
Previous wording
Cost of Recurring Payment was $0.5 million and $0.8 million for the six months ended June 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 six months ended June 30, 2024, compared to the six months ended June 30, 2023.
Current wording
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.
Previous wording
Cost of Support Services was $5.2 million and $3.8 million for the six months ended June 30, 2024 and 2023, respectively. The increase of $1.4 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 six months ended June 30, 2024, compared to the six months ended June 30, 2023.
Current wording
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.
Previous wording
Cost of revenue as a percentage of revenue was 128.0% and 89.9% for the three months ended June 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.
Current wording
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.
Previous wording
Total gross profit (loss) was $(5.7) million and $5.1 million for the six months ended June 30, 2024 and 2023, respectively. As a percentage of revenue, the gross margin was (28.4)% and 9.8% for the six months ended June 30, 2024 and 2023, respectively. The decrease in gross profit for the six months ended June 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 six months ended June 30, 2024, as compared to the six months ended June 30, 2023.
Current wording
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.
Previous wording
Research and development expenses were $9.6 million and $22.7 million for the six months ended June 30, 2024 and 2023, respectively, a decrease of $13.1 million. The decrease in research and development expenses in the six months ended June 30, 2024 was driven by a $4.8 million decrease in purchased materials, a $4.7 million decrease in headcount, salaries and employee-related expenses, a decrease of $0.6 million in miscellaneous expenses, and a decrease of $3.0 million in stock-based compensation .
Current wording
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 .
Previous wording
General and administrative expenses were $17.6 million and $20.1 million for the six months ended June 30, 2024 and 2023, respectively, a decrease of $2.5 million. The decrease was attributable to a $1.0 million decrease in facilities expenses, and a $1.7 million decrease in headcount, salaries and employee-related expenses, and a $0.2 million increase in public company-related expenses in advisory, legal and accounting fees and insurance, offset by a $0.4 million increase in stock-based compensation.
Current wording
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.
Previous wording
Interest expense was $9.4 million and $0.6 million for the six months ended June 30, 2024 and 2023, respectively, due to the issuance of the Secured Notes.
Current wording
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.
Previous wording
The change in fair value of warrants resulted in a gain of $22.7 million and a loss of $1.7 million for the six months ended June 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.
Current wording
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.
Previous wording
The change in fair value of the contingent earnout liability was a gain of $1.4 million and a loss of $7.8 million for the six months ended June 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.
Current wording
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.
Previous wording
Other expense and income, net was $(1.2) million and $0.5 million for the six months ended June 30, 2024 and 2023, respectively. The increase in other expense was due to transaction costs related to the BEPO Offering.
Current wording
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.
Previous wording
No provision for federal and state income taxes was recorded for both the six months ended June 30, 2024 and 2023 due to projected losses, and we maintained a full valuation allowance on the deferred tax assets as of June 30, 2024 and December 31, 2023.
Current wording
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.
Previous wording
During the six months ended June 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 the 2024, however, our backlog has begun to recover with $17 million as of June 30, 2024 compared to $13 million as of December 31, 2023. As such, based our bookings to date, we expect revenue to be higher in the second half of 2024 compared to the first half of 2024. Although we expect revenue to continue to recover, 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 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 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 financial statements included elsewhere in this Quarterly Report.
Current wording
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.
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Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
$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.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
On July 1, 2024, we entered into the Third Note Amendment with the holders of the Secured Notes, 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. See Note 17, Subsequent Events for further information regarding the Third Note Amendment.
Previous report — wording carried elsewhere
As described above, we are undertaking expense reduction and cash savings initiatives as part of a company-wide restructuring and strategic realignment plan to help conserve working capital. The expense reduction and cash saving initiatives include streamlining facilities, managing working capital, reducing capital expenditures, and reducing overall selling, general and administrative expenses.