Velo3D, Inc.

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, 2024 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, 2024, 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 unaudited condensed consolidated interim 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 fiscal year ended December 31, 2024 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 fiscal year ended December 31, 2024, 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 unaudited condensed consolidated interim financial statements included in Part I of this Quarterly Report on Form 10-Q for additional information.

Previous wording

On December 24, 2024, the Company and Arrayed Note Acquisition Corp., a subsidiary of Arrayed Additive, Inc. (“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 $22.4 million in principal amount of the Company’s Secured Notes (the "Notes") plus $0.4 million of accrued interest on the Notes. As of March 31, 2025, Arrayed held $5.0 million in principal amount of the Notes, and as a result of the exchange transaction, became the owner of approximately 95% of the Company’s issued and outstanding common stock.

Current wording

On December 24, 2024, the Company and Arrayed Note Acquisition Corp., a subsidiary of Arrayed Additive, Inc. (“Arrayed”), entered into a debt for equity exchange transaction where the Company issued 12,343,423 shares of the Company’s common stock, in exchange for the cancellation of $22.4 million in principal amount of the Company’s Secured Notes (the “Notes”) plus $0.4 million of accrued interest on the Notes. Arrayed continues to hold $5.0 million in principal amount of the Secured Notes, and as a result of the December 2024 Exchange, became, at the time of the transaction, the owner of approximately 95% of our issued and outstanding common stock.

Previous wording

(v) High Trail Investments ON LLC (“HTI”), and (vi) HB SPV I Master LLC (together with HTI, the “High Trail Holders”), pursuant to which: (a) the Highbridge Holders and the Anson Holders agreed to exchange an aggregate of 902,247 registered warrants issued in April 2024 and an aggregate of 1,485,714 registered warrants issued in August 2024, and (b) the High Trail Holders agreed to exchange an aggregate of 2,277,117 unregistered warrants issued in April 2024 and July 2024, and an aggregate of 285,715 registered warrants issued in December 2023, for an aggregate of 14,852,379 shares (the “Acquired Shares”) of Company’s common stock, respectively, equating in each case to an exchange ratio of three Acquired Shares for each warrant.

Current wording

On February 24, 2025, the Company entered into February Warrant Exchange Agreements with each of: (i) Highbridge Tactical Credit Master Fund, L.P. (“HM”); (ii) Highbridge Tactical Credit Institutional Fund, Ltd. (collectively with HM, the “Highbridge Holders”); (iii) Anson Investments Master Fund LP (“AMF”); (iv) Anson East Master Fund LP (collectively with AMF, the “Anson Holders”); (v) High Trail Investments ON LLC (“HTI”), and (vi) HB SPV I Master LLC (together with HTI, the “High Trail Holders”), pursuant to which: (a) the Highbridge Holders and the Anson Holders agreed to exchange an aggregate of 60,150 registered warrants issued in April 2024 and an aggregate of 99,048 registered warrants issued in August 2024, and (b) the High Trail Holders agreed to exchange an aggregate of 151,808 unregistered warrants issued in April 2024 and July 2024, and an aggregate of 19,048 registered warrants issued in December 2023, for an aggregate of 990,159 shares (the “Acquired Shares”) of Company’s common stock, respectively, equating in each case to an exchange ratio of three Acquired Shares for each warrant.

Previous wording

On January 7, 2025, the Company issued a Senior Secured Convertible Promissory Note in the principal amount of $5,000,000 (the "January Note") to Thieneman Properties, LLC, an Indiana limited liability company. The January Note bears interest at a rate of 60.0% per annum, 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 January 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.On April 7, 2025, the Company paid an interest payment of $750,000, covering the first three months of interest on the January Note.

Current wording

On January 7, 2025, the Company issued a Senior Secured Convertible Promissory Note in the principal amount of $5,000,000 (the “January Note”) to Thieneman Properties, LLC, an Indiana limited liability company. The January Note bears interest at a rate of 60.0% per annum, was payable in full on April 7, 2025 in the amount of $5,750,000 and if not paid on or prior to such date, would continue to accrue interest at the same rate until paid. The January 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 $23.40 per share. On April 7, 2025, the Company made a payment of $750,000, covering the first three months of interest on the January Note.

Previous wording

On February 10, 2025, the Company issued a Senior Secured Convertible Promissory Note in the principal amount of $10,000,000 (the "February Note") to Thieneman Construction, Inc, an Indiana corporation, to be funded in two tranches of $5,000,000. The February Note bears interest at a rate of 30.0% per annum, is payable in full on the date that is six months from the date such tranche was funded, 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 outstanding principal amount of the February Note is convertible into shares of the Company's common stock upon the occurrence of the Company’s successful listing of shares of its common stock on a national securities exchange or the occurrence and during the continuation of an event of default, into common stock at a fixed conversion price of $1.00 per share.

Current wording

On February 10, 2025, the Company issued a Senior Secured Convertible Promissory Note in the principal amount of $10,000,000 (the “February Note”) to Thieneman Construction, Inc, an Indiana corporation, to be funded in two tranches of $5,000,000. The February Note bears interest at a rate of 30.0% per annum, is payable in full on the date that is six months from the date such tranche was funded, (the first tranche and second tranche were received by the Company on February 10, 2025 and March 20, 2025, respectively), 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 outstanding principal amount of the February Note is convertible into shares of the Company’s common stock upon the occurrence of the Company’s successful listing of shares of its common stock on a national securities exchange or the occurrence and during the continuation of an event of default, into common stock at a fixed conversion price of $15.00 per share.

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 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.

Current wording

Notwithstanding the recent debt and equity transactions, as described in “—Liquidity and Capital Resources” and in Note 1Description 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, 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. 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 March 31, 2025 and 2024, sales to the top three customers accounted for 70.7% and 49.9%, respectively, of our revenue. Of the top three customers for the three months ended March 31, 2025, two customers were different from the top three customers for the comparable period in 2024.

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 June 30, 2025 and 2024, sales to the top three customers accounted for 65.2% and 66.4%, respectively, of our revenue. Of the top three customers for the three months ended June 30, 2025, two customers were different from the top three customers for the comparable period in 2024. For the six months ended June 30, 2025 and 2024, sales to the top three customers accounted for 54.6% and 53.7%, respectively, of our revenue. Of the top three customers for the six months ended June 31, 2025, two customers were different from the top three customers for the comparable period in 2024.

Previous wording

Rapid Production Solutions (RPS) - RPS utilizes our deep engineering expertise, cutting-edge technology and a fleet of Sapphire XC large-format metal 3D printers to manufacture custom metal components in order to accelerate path to production for our customers.

Current wording

Rapid Production Solutions (“RPS”) - RPS utilizes our deep engineering expertise, cutting-edge technology and a fleet of Sapphire XC large-format metal 3D printers to manufacture custom metal components in order to accelerate path to production for our customers. RPS revenue is included under 3D Printer revenue.

Previous wording

Cost of RPS includes cost of raw materials, typically metal powder feedstock, direct and indirect labor, depreciation of 3D printers and other related equipment and facilities, utilities such as electricity and specialty gases, shipping costs and other directly associated costs.

Current wording

Cost of RPS includes cost of raw materials, typically metal powder feedstock, direct and indirect labor, depreciation of 3D printers and other related equipment and facilities, utilities such as electricity and specialty gases, shipping costs and other directly associated costs. Cost of RPS is included under 3D Printer cost of revenue.

Previous wording

Loss on warrant cancellation relates to the loss recognized in conjunction with the February 2025 Warrant Exchange Agreement.

Current wording

Loss on warrant cancellation relates to the loss recognized in conjunction with the February 2025 Warrant Exchange Agreements.

Previous wording

3D Printer sales were $7.5 million and $7.7 million for the three months ended March 31, 2025 and 2024, respectively, a decrease of $0.2 million. The decrease in revenue was primarily attributed to the lower number of systems sold. The 3D Printer sales also included printed parts and consumables revenue.

Current wording

3D Printer sales were $12.1 million and $8.7 million for the three months ended June 30, 2025 and 2024, respectively, an increase of $3.4 million. The increase in revenue was primarily attributed to the product mix and the number of systems sold. The 3D Printer sales also included printed parts and consumables revenue.

Previous wording

Recurring Payment revenue, structured as an operating lease, was $0 for the three months ended March 31, 2025 and $0.5 million for the three months ended March 31, 2024. The decrease was primarily attributable to a revenue reduction related to fewer operating lease transactions.

Current wording

Recurring Payment revenue, structured as an operating lease, was less than $0.1 million for the three months ended June 30, 2025 and $0.3 million for the three months ended June 30, 2024. The decrease was primarily attributable to a revenue reduction related to fewer operating lease transactions.

Previous wording

Other revenue was less than $0.1 million and $0 for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Other revenue was less than $0.1 million and $0.0 for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Cost of 3D Printers was $7.5 million and $9.4 million for the three months ended March 31, 2025 and 2024, respectively. The decrease of $1.9 million was due to a decrease in number of systems sold for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Current wording

Cost of 3D Printers was $14.0 million and $10.7 million for the three months ended June 30, 2025 and 2024, respectively. The increase of $3.3 million was due to the higher overhead and labor absorption to manufacture the systems which were started in 2024 and sold in 2025 for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. We expect the cost to manufacture new systems in 2025 to improve as a result of overhead and fixed cost reduction efforts implement in late 2024.

Previous wording

Cost of Recurring Payment was less than $0.1 million and $0.3 million for the three months ended March 31, 2025 and 2024, respectively. This decrease of $0.3 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 March 31, 2025, compared to the three months March 31, 2024.

Current wording

Cost of Recurring Payment was $0.0 and $0.2 million for the three months ended June 30, 2025 and 2024, respectively. This decrease of $0.2 million was primarily due to a decrease in depreciation of the equipment subject to operating lease and allocable Cost of Support Services as a result of fewer 3D Printers in service in the three months ended June 30, 2025, compared to the three months June 30, 2024.

Previous wording

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.

Current wording

Cost of Support Services was $1.2 million and $2.3 million for the three months ended June 30, 2025 and 2024, respectively. Cost of Support Services decreased by $1.1 million, due to reliability improvement efforts that the Company undertook in 2024 leading to lower field service engineering labor and overhead in June 30, 2025, compared to June 30, 2024. We expect this to decrease on a per unit basis as the Sapphire XC, Sapphire 1MZ and Sapphire XC 1MZ system reliability improves. We also expect our Cost of Support Services will increase with the delivery of more 3D Printer systems to customers.

Previous wording

Cost of revenue as a percentage of revenue was 92.5% and 128.8% for the three months ended March 31, 2025 and 2024, respectively. The decrease in the cost of revenue as a percentage of revenue was primarily driven by lower cost associated with raw materials and direct labor efficiency improvements.

Current wording

Cost of revenue as a percentage of revenue was 111.7% and 128.0% for the three months ended June 30, 2025 and 2024, respectively. The decrease in the cost of revenue as a percentage of revenue was primarily driven by product mix and improvements in the average selling price of 3D Printers.

Previous wording

We may experience increasing component costs from our suppliers due to international tarriffs and our current financial situation. We are currently 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 and will continue to negatively impact our cost of revenue until our financial conditions improve and costs associated with tariffs ease.

Current wording

We may experience increasing component costs from our suppliers due to international tariffs and our current financial situation. We are currently 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 and will continue to negatively impact our cost of revenue until our financial conditions improve and costs associated with tariffs ease.

Previous wording

Total gross profit (loss) was $0.7 million and $(2.8) million for the three months ended March 31, 2025 and 2024, respectively. As a percentage of revenue, the gross margin was 7.5% and (28.8)% for the three months ended March 31, 2025 and 2024, respectively. The increase in gross profit for the three months ended March 31, 2025 was primarily attributable to the lower cost associated with system revenue during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.

Current wording

Total gross profit (loss) was $(1.6) million and $(2.9) million for the three months ended June 30, 2025 and 2024, respectively. As a percentage of revenue, the gross margin was (11.7)% and (28.0)% for the three months ended June 30, 2025 and 2024, respectively. The increase in gross profit for the three months ended June 30, 2025 was primarily attributable to product mix and improvements in the average selling price of 3D Printers, offset by the historical higher manufacturing cost of systems started in 2024 but sold in 2025 during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

Previous wording

Research and development expenses were $1.2 million and $5.0 million for the three months ended March 31, 2025 and 2024, respectively, a decrease of $3.8 million. The decrease in research and development expenses was driven by a $2.8 million decrease in headcount, salaries and employee-related expenses, a decrease of $0.8 million in stock-based compensation, a decrease of $0.2 million in miscellaneous expenses.

Current wording

Research and development expenses were $2.8 million and $4.5 million for the three months ended June 30, 2025 and 2024, respectively, a decrease of $1.7 million. The decrease in research and development expenses was driven by a $1.0 million decrease in headcount, salaries and employee-related expenses, a decrease of $0.5 million in stock-based compensation, a decrease of $0.2 million in research and development expenses.

Previous wording

General and administrative expenses were $9.1 million and $8.8 million for the three months ended March 31, 2025 and 2024, respectively, an increase of $0.3 million. The increase was attributable to a $0.3 million increase in legal and other professional fees.

Current wording

General and administrative expenses were $6.0 million and $8.8 million for the three months ended June 30, 2025 and 2024, respectively, a decrease of $2.8 million. The decrease was attributable to a decrease of $0.6 million in headcount, salaries and employee-related expenses, a $1.0 million decrease in stock-based compensation, and a decrease of $1.2 million in legal, professional fees and general and administrative expenses.

Previous wording

Interest expense was $1.1 million and $3.9 million for the three months ended March 31, 2025 and 2024, respectively, due to the reduction in Senior Secured Notes and offset by the issuance of the Secured Secured Convertible Notes.

Current wording

Interest expense was $1.6 million and $5.5 million for the three months ended June 30, 2025 and 2024, respectively, due to the reduction in Senior Secured Notes and offset by the issuance of the Secured Convertible Notes.

Previous wording

The change in fair value of the contingent earnout liability was $0 and $0.4 million for the three months ended March 31, 2025 and 2024, respectively, and was related to the non-cash fair value change of the earnout liabilities driven by the relative change in our stock price

Current wording

The change in fair value of the contingent earnout liability was $0.0 and $1.8 million for the three months ended June 30, 2025 and 2024, 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

Our Support Services revenue was $1.8 million and $1.7 million for the three months ended March 31, 2025 and 2024, respectively, a increase of $0.1 million. The increase in Support Services revenue was primarily due to services provided to customers as a result of increased installed base.

Current wording

Our Support Services revenue was $3.1 million and $3.0 million for the six months ended June 30, 2025 and 2024, respectively, an increase of $0.1 million. The increase in Support Services revenue was primarily due to services provided to customers as a result of the increased installed base.

Previous wording

Total cost of revenue for the three months ended March 31, 2025 and 2024 was $8.6 million and $12.6 million, respectively, a decrease of $4.0 million, or 31.6%.

Current wording

Total cost of revenue for the six months ended June 30, 2025 and 2024 was $23.8 million and $25.8 million, respectively, a decrease of $2.1 million, or 8.0%.

Previous wording

The change in fair value of warrants resulted in a loss of $1.0 and $2.6 million for the three months ended March 31, 2025 and 2024, 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 (loss) of $(1.0) and $22.7 million for the six months ended June 30, 2025 and 2024, 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

Loss on warrant cancellation was $11.4 million and $0 for the three months ended March 31, 2025 and March 31, 2024 and related to the loss recognized in conjunction with the February 2025 Warrant Exchange transaction.

Current wording

Loss on warrant cancellation was $11.4 million and $0.0 for the six months ended June 30, 2025 and 2024 and related to the loss recognized in conjunction with the February 2025 Warrant Exchange transaction.

Previous wording

Other (expense) and income, net was less than ($0.01) million and less than $0.1 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Other (expense) and income, net was less than $(0.1) million and $(1.2) million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

As of March 31, 2025, the Company had approximately $3.9 million in cash and short-term investments and $4.6 million in accounts receivable. 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.

Current wording

As of June 30, 2025, the Company had approximately $0.9 million in cash and short-term investments and $5.4 million in accounts receivable. 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.

Previous wording

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 $1.5 million for parts and assemblies are due upon receipt and will primarily be delivered throughout the remainder of 2025. 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 the Secured Notes, the January Note, and the February Note. See Note 8, Leases, in the unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report for further discussion.

Current wording

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 $4.4 million for parts and assemblies are due upon receipt and will primarily be delivered throughout the remainder of 2025. 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 the Secured Notes, the January Note, and the February Note. See Note 8,Leases, in the unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report for further discussion.

Previous wording

During the three months ended March 31, 2025, we experienced less revenue growth than expected due to our focus on high-value customers, resulting in a small decrease in system sales as compared to the first quarter in 2024. As of March 31, 2025, 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 unaudited 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.

Current wording

During the six months ended June 30, 2025, we experienced less revenue growth than expected due to our focus on high-value customers, resulting in a small decrease in system sales as compared to the first quarter in 2025. As of June 30, 2025, 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 unaudited 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.

Previous wording

As of March 31, 2025, our debt arrangements comprised the Secured Notes, the January Notes, and the February Notes, of which we had approximately $20.0 million aggregate principal amount outstanding as of March 31, 2025.

Current wording

As of June 30, 2025, our debt arrangements comprised the Secured Notes, the January Notes, and the February Notes, of which we had approximately $22 million aggregate principal amount outstanding as of June 30, 2025.

Previous wording

The following table summarizes our cash flows for the nine months ended March 31, 2025 and 2024:

Current wording

The following table summarizes our cash flows for the six months ended June 30, 2025 and 2024:

Previous wording

Net cash used in operating activities for the three months ended March 31, 2025 was $12.5 million, consisting primarily of a net loss of $25.4 million, non-cash loss of $18.4 million described below, and a decrease in net operating assets of $5.9 million. The cash used from net operating assets was comprised of a decrease from accounts payable of $1.0 million, a decrease from contract liabilities of $2.6 million, a decrease from other net operating assets of $1.9 million, a decrease from prepaid expenses of $3.4 million related to insurance and vendor prepayments, and a decrease from inventories of $2.0 million for Sapphire XC, Sapphire 1MZ and Sapphire XC 1MZ system production, offset by an increase from other assets of $1.0 million and an increase from accrued expenses and other current liabilities of $0.2 million. The noncash loss of $18.4 million primarily consisted of the loss on cancelation of warrants of $11.4 million, stock-based compensation expense of $4.1 million, and the loss on fair value of warrants of $1.0 million

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was $13.6 million, consisting primarily of a net loss of $39.2 million, non-cash loss of $25.9 million described below, and a decrease in net operating assets of less than $0.3 million. The cash used from net operating assets was comprised of a decrease from accounts receivable of $1.7 million, a decrease from contract liabilities of $3.6 million, a decrease from accounts payable of $0.9 million, a decrease from other net operating assets of $1.8 million, and offset by an increase from inventories of $5.7 million, and an increase from other assets of $2.0 million. The non-cash loss of $25.9 million primarily consisted of the loss on cancellation of warrants of $11.4 million, stock-based compensation expense of $6.5 million, the loss on the disposal of fixed assets of $2.7 million, and the loss on fair value of warrants of $1.0 million.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024 was $20.5 million, consisting primarily of a net loss of $28.3 million, non-cash loss of $12.7 million described below, and a decrease in net operating assets of $4.9 million. The decrease in net operating assets was comprised of a decrease from accounts payable of $4.2 million, a decrease from contract liabilities of $0.4 million, a decrease from other net operating assets of $1.7 million, a decrease in accrued expenses and other current liabilities of $0.2 million and a decrease from inventories of $2.6 million for Sapphire XC, Sapphire 1MZ and Sapphire XC 1MZ system production, offset by an increase from accounts receivable of $2.1 million due to timing of customer payments, and an increase from prepaid expenses of $1.1 million related to insurance and vendor prepayments. The noncash loss of $12.7 million primarily consisted of the stock-based compensation expense of $5.1 million, depreciation and amortization of $4.6 million and the loss on fair value of warrants of $2.6 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024 was $28.5 million, consisting primarily of a net loss of $28.5 million, non-cash gain of $2.4 million described below, and an increase in net operating assets of $2.3 million. The increase in net operating assets was comprised of an increase from accounts receivable of $1.2 million due to timing of customer payments, an increase from inventories of $3.9 million for Sapphire XC, Sapphire 1MZ and Sapphire XC 1MZ system production, and an increase from prepaid expenses of $1.9 million related to insurance and vendor prepayments, offset by a decrease from accounts payable of $2.4 million, a decrease from contract liabilities of $0.3 million, a decrease from other net operating assets of $1.3 million, and a decrease in accrued expenses and other current liabilities of $0.6 million. The noncash gain of $2.4 million primarily consisted of the gain on fair value of warrants of $22.7 million, and the gain on fair value of contingent earnout liabilities of $1.4 million, offset by the stock-based compensation expense of $9.3 million, depreciation and amortization of $2.7 million, amortization of debt discount and deferred financing costs of $8.3 million and non-cash cost of issuance of common stock warrants in connection with the BEPO Offering of $1.3 million.

Previous wording

Net cash provided by investing activities during the three months ended March 31, 2024 was $3.5 million, consisting of maturities of available-for-sale investment securities of $3.5 million.

Current wording

Net cash provided by investing activities during the six months ended June 30, 2024 was $6.0 million, consisting of the sale of available for sale securities of $2.5 million, and maturities of available-for-sale investment securities of $3.5 million.

Previous wording

Net cash provided by financing activities during the three months ended March 31, 2025 was $15.0 million, consisting of proceeds of $15.0 million from the issuance of the January Note and the February Note.

Current wording

Net cash provided by financing activities during the six months ended June 30, 2025 was $15.0 million, consisting of proceeds of $15.0 million from the issuance of the January Note and the February Note.

Previous wording

Net cash provided by financing activities during the three months ended March 31, 2024 was $0.3 million, consisting of proceeds of $0.3 million from the issuance of common stock upon exercise of stock options.

Current wording

Net cash provided by financing activities during the six months ended June 30, 2024 was $0.5 million, consisting of proceeds of $10.7 million from 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 $10.5 million.

Previous wording

As of March 31, 2025 and December 31, 2024, we did not have any off-balance sheet arrangements.

Current wording

As of June 30, 2025 and December 31, 2024, except as discussed below, we did not have any off-balance sheet arrangements.

Previous wording

See Note 16 Subsequent Eventsin the notes to our unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report for additional information.

Current wording

See Note 16,*Momentus Master Service Agreement,*in the notes to our unaudited condensed consolidated interim financial statements included elsewhere in this Quarterly Report for additional information.