Velo3D (VELO) risk factors, FY2024 10-K

Risks Related to Our Financial Position and Need for Additional Capital

1. 01We are an early-stage company with a history of operating losses and may not maintain profitability in the future
2. 02There is substantial doubt about our ability to continue as a going concern, which could have a material adverse impact on our business
3. 03Our limited operating history and rapid growth makes evaluating our current business and future prospects difficult and may increase the investment risk
4. 04We expect to rely on a limited number of customers for a significant portion of our near-term revenue
5. 05We expect to require additional capital to fund our operations in the near-term, and this capital might not be available on acceptable terms, if at all
6. 06We have historically invested in research and development efforts that further enhance our products. Such investments may affect our operating results and liquidity, and, if the return on these investments is lower or develops more slowly than we expect, our revenue and operating results may suffer

Risks Related to Our Business and Industry

1. 07We have in the past and may in the future experience significant delays in the design, production, launch, manufacture, shipment and installation of our additive manufacturing solutions, and we may be unable to successfully commercialize products on our planned timelines
2. 08customers, our assumptions may prove to be incorrect, and we may be unable to consistently produce additive manufacturing products in an economical manner in commercial quantities
3. 09We have also experienced, and may experience in the future, delay in the manufacture, shipment and installation of products we have launched
4. 10We may acquire or make investments in other businesses, patents, technologies, products or services. Our failure to do so successfully could disrupt our business and have an adverse impact on our financial condition
5. 11use of substantial portions of our available cash or the incurrence of debt to consummate the acquisition
6. 12We have limited experience in making investments in other entities, and any such investments may not result in strategic benefits for our business or could expose us to other risks
7. 13Changes in our transaction models and product mix may impact our gross margins and financial performance
8. 14If demand for additive manufacturing products does not grow as expected, or if market adoption of additive manufacturing technology does not continue to develop, or develops more slowly than expected, our revenues may stagnate or decline, and our business may be adversely affected
9. 15If we fail to meet our customers’ price expectations, demand for our products and product lines could be negatively impacted and our business and results of operations could suffer
10. 16Declines in the prices of our products and services, or in our volume of sales, together with our relatively inflexible cost structure, may adversely affect our financial results
11. 17The additive manufacturing industry in which we operate is characterized by rapid technological change, which requires us to continue to develop new products and innovations to meet constantly evolving customer demands and which could adversely affect market adoption of our products
12. 18ensure the availability of cash resources to fund R&D
13. 19The additive manufacturing industry is competitive. We expect to face increasing competition in many aspects of our business, which could cause our operating results to suffer
14. 20Future competition may arise from the development of allied or related techniques for equipment, materials and services that are not encompassed by our patents, from the issuance of patents to other companies that may inhibit our ability to develop certain products and from improvements to existing technologies
15. 21Our existing and planned global operations subject us to a variety of risks and uncertainties that could adversely affect our business and operating results. Our business is subject to risks associated with selling machines and other products in non-United States locations
16. 22political or civil unrest or instability, terrorism or epidemics and other similar outbreaks or events
17. 23Our failure to effectively manage the risks and uncertainties associated with our global operations could limit the future growth of our business and adversely affect our business and operating results
18. 24We are dependent on management and key personnel, and our business would suffer if we fail to retain our key personnel and attract additional highly skilled employees
19. 25If we fail to grow our business as anticipated, our net sales, gross margin and operating margin will be adversely affected. If we grow as anticipated but fail to manage our growth and expand our operations accordingly, our business may be harmed and our results of operation may suffer
20. 26We may be unable to realize the level of the anticipated benefits that we expect from restructuring our operations, which may adversely impact our business and results of operations
21. 27We did not design and maintain effective controls over the accounting and disclosure for debt and equity instruments. Specifically, we did not design and maintain effective controls over the accounting for the issuance and extinguishment of convertible note arrangements, warrants and common stock
22. 28We did not design and maintain effective controls over the accounting for contract assets and liabilities. Specifically, we did not design and maintain effective controls over the accuracy and the financial statement presentation of contract assets and liabilities, including variable consideration
23. 29program change management controls to ensure that information technology program and data changes affecting certain financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately
24. 30Some of our arrangements for additive manufacturing solutions contain customer-specific provisions that may impact the period in which we recognize the related revenues under GAAP
25. 31We rely on our information technology systems to manage numerous aspects of our business and a disruption of these systems could adversely affect our business
26. 32we otherwise incur significant litigation or other costs
27. 33Our current levels of insurance may not be adequate for our potential liabilities
28. 34Changes in tax laws or tax rulings could materially affect our financial position, results of operations and cash flows
29. 35Some members of our management have limited experience in operating a public company
30. 36Market conditions, economic uncertainty or downturns could adversely affect our business and operating results
31. 37We may be adversely affected by the effects of inflation or possible stagflation
32. 38Changes in financial accounting standards or practices as well as interpretations thereof may cause adverse, unexpected financial reporting fluctuations and affect our results of operations

Risks Related to Third Parties

1. 39We could be subject to personal injury, property damage, product liability, warranty and other claims involving allegedly defective products that we supply
2. 40We depend on subcontractors to provide cost effective and efficient services in supply chain functions, including sourcing certain subcomponents and assemblies, and in product development activities
3. 41We may rely heavily on future collaborative and supply chain partners
4. 42obtain support services and other downstream supply chain support
5. 43If our suppliers become unavailable or inadequate, our customer relationships, results of operations and financial condition may be adversely affected
6. 44Our facility as well as our suppliers’ and our customers’ facilities are vulnerable to disruption due to natural or other disasters, strikes and other events beyond our control

Risks Related to Operations

1. 45We operate primarily at one facility location, and any disruption at our facility could adversely affect our business and operating results
2. 46Maintenance, expansion and refurbishment of our facilities, the construction of new facilities and the development and implementation of new manufacturing processes involve significant risks

Risks Related to Compliance Matters

1. 47We are subject to environmental, health and safety laws and regulations related to our operations and the use of our additive manufacturing systems and consumable materials, which could subject us to compliance costs and/or potential liability in the event of non-compliance
2. 48Aspects of our business are subject to privacy, data use and data security regulations, which could increase our costs

Risks Related to Intellectual Property

1. 49becomes necessary for us to litigate to protect these IP rights, any proceedings could be burdensome and costly, could result in counterclaims challenging our IP (including validity or enforceability) or accusing us of infringement, and we may not prevail
2. 50Third-party lawsuits and assertions to which we are subject alleging our infringement of patents, trade secrets or other IP rights may have a significant adverse effect on our financial condition
3. 51We may incur substantial costs enforcing and defending our IP rights
4. 52If we are unable to adequately protect or enforce our IP rights, such information may be used by others to compete against us
5. 53Our additive manufacturing software contains third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to sell our products

Risks Related to Our Notes

1. 54The terms of the Notes restrict our current and future operations. Upon an event of default, we may not be able to make any accelerated payments under the Notes or our other permitted indebtedness
2. 55Conversion of any Secured Convertible Notes may dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock

Risks Related to Our Common Stock and Our Public Warrants

1. 56Our Chief Executive Officer has the ability to control or significantly influence all matters submitted to our stockholders for approval
2. 57Substantial sales of our common stock could cause the price of our common stock to decline
3. 58Warrant holders may only be able to exercise their public warrants on a “cashless basis” under certain circumstances, and if such warrant holders do so, they will receive fewer shares of common stock from such exercise than if they were to exercise such warrants for cash
4. 59redemption is sent to the holders of warrants, as applicable. As a result, warrant holders would receive fewer shares of common stock from such exercise than if they were to exercise such warrants for cash
5. 60The public warrants and the private placement warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results
6. 61The price of our common stock may be volatile
7. 62the volume of shares of our common stock available for public sale; and
8. 63Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that either we or the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock
9. 64As of December 31, 2024, we have 5,504,118 outstanding warrants to purchase an equal number of shares of common stock
10. 65We may redeem the unexpired public warrants prior to their exercise at a time that is disadvantageous to them, thereby making their public warrants worthless
11. 66A market for our securities may not continue, which would adversely affect the liquidity and price of our securities
12. 67Reports published by analysts, including projections in those reports that differ from our actual results, could adversely affect the price and trading volume of our common stock
13. 68We are subject to changing law and regulations regarding regulatory matters, corporate governance and public disclosure will continue to increase our costs and the risk of non-compliance
14. 69Delaware law and our Certificate of Incorporation and Amended and Restated Bylaws contain certain provisions, including anti-takeover provisions, that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
15. 70These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Board or management
16. 71Our business and operations could be negatively affected if we become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our stock price