Company: VLDXW
Filing Date: 2025-08-07
Form Type: S-1
Source: 0001641172-25-022475
Chunk: 112

Company: Velo3D, Inc.
Filing Date: 2025-08-07
Form: S-1
Chunk 112
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 compensation expense previously recognized on
unvested shares will be reversed.

We estimate the fair value of stock option
awards subject to only a service condition on the date of grant using the Black-Scholes valuation model. The Black-Scholes model requires
the use of highly subjective and complex assumptions, including the option’s expected term, price volatility of the underlying
stock, risk-free interest rate, and the expected dividend yield of the underlying common stock, as well as an estimate of the fair value
of the common stock underlying the award.

We estimate the fair value of restricted share
unit awards using the value of the Company’s common stock on the date of grant.

We estimate the fair value of Earnout Shares
awards underlying stock options to employees, which is considered a compensatory award and accounted for under ASC 718, Share-Based Compensation, using the Monte-Carlo simulation model.The Monte-Carlo simulation model was selected as the valuation methodology
for the Earnout Shares due to the path-dependent nature of triggering events. Under ASC 718, the award is measured at fair value at the
grant date and expense is recognized over the time-based vesting period (the triggering event is a market condition and does not impact
expense recognition). The Monte-Carlo model requires the use of highly subjective and complex assumptions, including the current stock
price, volatility of the underlying stock, expected term, and the risk-free interest rate.

Application of these approaches involves the
use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our risk-free interest rates,
the selection of comparable companies, and the probability of possible future events. Changes in any or all of these estimates and assumptions
or the relationships between those assumptions impact our valuations as of each valuation date and may have a material impact on the
valuation of our common stock. An increase of 100-basis points in interest rates would not have a material impact on our stock-based
compensation.

Common Stock Warrants

Prior to the Merger, warrants to purchase
shares of common stock were classified as equity and recognized within additional paid-in capital with no subsequent remeasurement. The
amount recognized within additional paid-in capital was determined by allocating the proceeds received and issuance costs incurred between
the instruments issued based on their relative fair value. All common stock warrants outstanding prior to the Merger were converted into
common stock as part of the Merger.

Following the Merger, 16,429 publicly-traded
warrants (the