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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended April 3, 2022

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Enovix Corporation

(Exact Name of Registrant as Specified in Charter)

(Successor to RODGERS SILICON VALLEY ACQUISITION CORP.)

 

Delaware

 

001-39753

 

85-3174357

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

3501 W Warren Avenue

Fremont, California 94538

(Address of Principal Executive Offices) (Zip Code)

 

(510) 695-2350

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 



Trading



 

Title of each class

 

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share



ENVX



The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of May 13, 2022, 156,827,136 shares of common stock, par value $0.0001 per share, were issued and outstanding.

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

1

 

Condensed Consolidated Balance Sheets as of April 3, 2022 and January 2, 2022

1

 

Condensed Consolidated Statements of Operations for the quarters ended April 3, 2022 and March 31, 2021

2

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the quarters ended April 3, 2022 and March 31, 2021

3

 

Condensed Consolidated Statements of Cash Flows for the quarters ended April 3, 2022 and March 31, 2021

4

 

Notes to Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosure about Market Risks

23

Item 4.

Controls and Procedures

23

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

24

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

42

Item 3

Defaults Upon Senior Securities

42

Item 4

Mine Safety Disclosures

42

Item 5

Other Information

42

Item 6.

Exhibits

43

 

Signatures

45

 

 


 

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example, statements about our:

ability to build and scale our advanced silicon-anode lithium-ion battery, our production and commercialization timeline;
ability to meet milestones and deliver on our objectives and expectations, the implementation and success of our business model and growth strategy, various addressable markets, market opportunity and the expansion of our customer base;
ability to meet the expectations of new and current customers, our ability to achieve market acceptance for our products;
service revenue and projections thereof;
ability to convert our revenue funnel to purchase orders and revenue;
placement of equipment orders for our next-generation manufacturing line, the speed of and space requirements for our next-generation manufacturing line relative to our existing lines at Fab-1 in Fremont; and
ability to attract and hire additional service providers, the strength of our brand, the build out of additional production lines, our ability to optimize our manufacturing process, our future product development and roadmap and the future demand for our lithium-ion battery solutions.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those described in Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

 


Table of Contents

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

ENOVIX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and par value amounts)

(Unaudited)

 

 

 

April 3,

 

 

January 2,

 

 

 

2022

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

408,178

 

 

$

385,293

 

Deferred contract costs

 

 

4,547

 

 

 

4,554

 

Prepaid expenses and other current assets

 

 

2,824

 

 

 

8,274

 

Total current assets

 

 

415,549

 

 

 

398,121

 

Property and equipment, net

 

 

83,102

 

 

 

76,613

 

Operating lease, right-of-use assets

 

 

6,535

 

 

 

6,669

 

Other assets, non-current

 

 

1,105

 

 

 

1,162

 

Total assets

 

$

506,291

 

 

$

482,565

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,535

 

 

$

3,144

 

Accrued expenses

 

 

4,620

 

 

 

7,109

 

Accrued compensation

 

 

4,850

 

 

 

4,101

 

Deferred revenue

 

 

5,575

 

 

 

5,575

 

Other liabilities

 

 

875

 

 

 

707

 

Total current liabilities

 

 

17,455

 

 

 

20,636

 

Warrant liability

 

 

56,460

 

 

 

124,260

 

Operating lease liabilities, non-current

 

 

8,870

 

 

 

9,071

 

Deferred revenue, non-current

 

 

2,290

 

 

 

2,290

 

Other liabilities, non-current

 

 

162

 

 

 

191

 

Total liabilities

 

 

85,237

 

 

 

156,448

 

Commitments and Contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.0001 par value; authorized shares of 1,000,000,000; issued and outstanding shares of 156,419,718 and 152,272,287 as of April 3, 2022 and January 2, 2022, respectively

 

 

15

 

 

 

15

 

Preferred stock, $0.0001 par value; authorized shares of 10,000,000; no shares issued or outstanding as of April 3, 2022 and January 2, 2022, respectively

 

 

 

 

 

 

Additional paid-in-capital

 

 

711,484

 

 

 

659,254

 

Accumulated deficit

 

 

(290,445

)

 

 

(333,152

)

Total stockholders’ equity

 

 

421,054

 

 

 

326,117

 

Total liabilities and stockholders’ equity

 

$

506,291

 

 

$

482,565

 

 

See accompanying notes to these condensed consolidated financial statements.

1


Table of Contents

ENOVIX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

For the Quarters Ended

 

 

 

April 3, 2022

 

 

March 31, 2021

 

Operating expenses:

 

 

 

 

 

 

Cost of revenue

 

$

515

 

 

$

1,631

 

Research and development

 

 

12,731

 

 

 

5,589

 

Selling, general and administrative

 

 

11,869

 

 

 

4,161

 

Total operating expenses

 

 

25,115

 

 

 

11,381

 

Loss from operations

 

 

(25,115

)

 

 

(11,381

)

Other income (expense):

 

 

 

 

 

 

Change in fair value of convertible preferred stock warrants and common stock warrants

 

 

67,800

 

 

 

(4,781

)

Other income (expense), net

 

 

22

 

 

 

(3

)

Total other income (expense), net

 

 

67,822

 

 

 

(4,784

)

Net income (loss)

 

$

42,707

 

 

$

(16,165

)

 

 

 

 

 

 

 

Net income (loss) per share, basic

 

$

0.28

 

 

$

(0.17

)

Weighted average number of common shares outstanding, basic

 

 

151,648,439

 

 

 

95,816,889

 

Net loss per share, diluted

 

$

(0.16

)

 

$

(0.17

)

Weighted average number of common shares outstanding, diluted

 

 

153,338,462

 

 

 

95,816,889

 

 

See accompanying notes to these condensed consolidated financial statements.

2


Table of Contents

ENOVIX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Stockholders' Equity

 

Balance as of January 2, 2022

 

 

152,272,287

 

 

$

15

 

 

$

659,254

 

 

$

(333,152

)

 

$

326,117

 

Issuance of common stock upon exercise of stock options

 

 

91,910

 

 

 

 

 

 

200

 

 

 

 

 

 

200

 

Issuance of common stock upon exercise of common stock warrants

 

 

4,126,466

 

 

 

 

 

 

47,452

 

 

 

 

 

 

47,452

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

42

 

 

 

 

 

 

42

 

Vesting of restricted stock units

 

 

34,941

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of unvested restricted common stock

 

 

(105,886

)

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

4,536

 

 

 

 

 

 

4,536

 

Net income

 

 

 

 

 

 

 

 

 

 

 

42,707

 

 

 

42,707

 

Balance as of April 3, 2022

 

 

156,419,718

 

 

$

15

 

 

$

711,484

 

 

$

(290,445

)

 

$

421,054

 

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Stockholders' Equity

 

Balance as of December 31, 2020, effect of reverse acquisition

 

 

100,016,559

 

 

$

10

 

 

$

243,484

 

 

$

(207,278

)

 

$

36,216

 

Issuance of common stock upon exercise of stock options

 

 

2,112,373

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

24

 

Repurchase of unvested restricted common stock

 

 

(87,768

)

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series D convertible preferred stock upon exercise of warrants

 

 

2,020,034

 

 

 

 

 

 

20,877

 

 

 

 

 

 

20,877

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,555

 

 

 

 

 

 

1,555

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(16,165

)

 

 

(16,165

)

Balance as of March 31, 2021

 

 

104,061,198

 

 

$

10

 

 

$

265,970

 

 

$

(223,443

)

 

$

42,537

 

 

See accompanying notes to these condensed consolidated financial statements.

3


Table of Contents

ENOVIX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the Quarters Ended

 

 

 

April 3, 2022

 

 

March 31, 2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

42,707

 

 

$

(16,165

)

Adjustments to reconcile net income (loss) to net cash used in operating activities

 

 

 

 

 

 

Depreciation

 

 

314

 

 

 

141

 

Amortization of right-of-use assets

 

 

134

 

 

 

 

Stock-based compensation expense

 

 

5,238

 

 

 

1,555

 

Changes in fair value of convertible preferred stock warrants and common stock warrants

 

 

(67,800

)

 

 

4,781

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(51

)

 

 

1,039

 

Deferred contract costs

 

 

8

 

 

 

(816

)

Accounts payable

 

 

(959

)

 

 

1,172

 

Accrued expenses and compensation

 

 

555

 

 

 

1,260

 

Other liabilities

 

 

165

 

 

 

(1,577

)

Net cash used in operating activities

 

 

(19,689

)

 

 

(8,610

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(10,451

)

 

 

(7,141

)

Net cash used in investing activities

 

 

(10,451

)

 

 

(7,141

)

Cash flows from financing activities:

 

 

 

 

 

 

Payments of transaction costs related to Business Combination and PIPE financing

 

 

 

 

 

(332

)

Proceeds from exercise of common stock warrants, net

 

 

52,828

 

 

 

 

Proceeds from exercise of convertible preferred stock warrants

 

 

 

 

 

102

 

Proceeds from the exercise of stock options

 

 

200

 

 

 

159

 

Repurchase of unvested restricted common stock

 

 

(3

)

 

 

(5

)

Net cash provided by (used in) financing activities

 

 

53,025

 

 

 

(76

)

Change in cash, cash equivalents, and restricted cash

 

 

22,885

 

 

 

(15,827

)

Cash and cash equivalents and restricted cash, beginning of period

 

 

385,418

 

 

 

29,218

 

Cash and cash equivalents and restricted cash, end of period

 

$

408,303

 

 

$

13,391

 

 

 

 

 

 

 

 

Supplemental cash flow data (Non-cash):

 

 

 

 

 

 

Purchase of property and equipment included in liabilities

 

$

1,510

 

 

$

1,690

 

Accrued transaction costs

 

 

 

 

 

3,579

 

The following presents the Company’s cash, cash equivalents and restricted cash by category in the Company’s condensed consolidated balance sheets:

 

 

 

For the Quarters Ended

 

 

 

April 3, 2022

 

 

March 31, 2021

 

Cash and cash equivalents

 

$

408,178

 

 

$

13,266

 

Restricted cash included in prepaid expenses and other current assets

 

 

125

 

 

 

125

 

Total cash, cash equivalents, and restricted cash

 

$

408,303

 

 

$

13,391

 

 

See accompanying notes to these condensed consolidated financial statements.

4


Table of Contents

ENOVIX CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Organization and Basis of Presentation

Organization

Enovix Corporation (“Enovix” or the “Company”) was incorporated in Delaware in 2006. The Company designs, develops, and manufactures an advanced silicon-anode lithium-ion battery using proprietary 3D cell architecture that increases energy density and maintains a high cycle life. The Company is headquartered in Fremont, California.

The Company is focused on the development and commercialization of its silicon-anode lithium-ion batteries. Planned principal operations of commercial manufacturing have not yet commenced. As of April 3, 2022, the Company has not generated product revenue from its planned principal business activities.

Business Combination

On July 14, 2021 (the “Closing Date”), Enovix Corporation, a Delaware Corporation (“Legacy Enovix”), Rodgers Silicon Valley Acquisition Corp. (“RSVAC”), and RSVAC Merger Sub Inc., a Delaware Corporation and wholly owned subsidiary of RSVAC (“Merger Sub”), consummated the closing of the transactions contemplated by the Agreement and Plan of Merger, dated February 22, 2021 (the “Business Combination”), by and among RSVAC, Merger Sub and Legacy Enovix (the “Merger Agreement”), following the approval at a special meeting of the stockholders of RSVAC held on July 12, 2021 (the “Special Meeting”). Following the consummation of the Business Combination on the Closing Date, Legacy Enovix changed its name to Enovix Operations Inc., and RSVAC changed its name from Rodgers Silicon Valley Acquisition Corp. to Enovix Corporation. Please refer to Note 3 “Business Combination” to the consolidated financial statements for the year ended January 2, 2022 included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 2, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 25, 2022 (the “Annual Report”) for further details of the Business Combination.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States (“GAAP”). The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, and the Business Combination from the Closing Date. All intercompany balances and transactions have been eliminated in consolidation.

The Business Combination has been accounted for as a reverse recapitalization under GAAP. This determination is primarily based on Legacy Enovix stockholders comprising a relative majority of the voting power of Enovix and having the ability to nominate the members of the Board, Legacy Enovix’s operations prior to the acquisition comprising the only ongoing operations of Enovix, and Legacy Enovix’s senior management comprising a majority of the senior management of Enovix. Under this accounting method, RSVAC was treated as the “acquired” company and Legacy Enovix was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Enovix represent a continuation of the financial statements of Legacy Enovix with the Business Combination being treated as the equivalent of Enovix issuing common stock for the net assets of RSVAC, accompanied by a recapitalization. The net liabilities of RSVAC, other than its warrant liabilities, were stated at historical cost, which approximates to its fair values. Its warrant liabilities were stated at its fair values and no goodwill or other intangible assets were recorded. Results of operations prior to the Business Combination are presented as those of Enovix. Beginning in the third quarter of 2021, historical shares and corresponding capital amounts, as well as for net loss per share, prior to the Business Combination, have been retrospectively adjusted using the exchange ratio as defined in the Business Combination for the equivalent number of shares outstanding immediately after the Business Combination to the effect the reverse recapitalization.

The Company did not have any other comprehensive income or loss for the periods presented. Accordingly, net income (loss) and comprehensive income (loss) are the same for the periods presented. Additionally, the Company did not have any income tax expenses for the periods presented.

Liquidity and Capital Resources

The Company has incurred recurring operating losses and negative cash flows from operations since its inception through April 3, 2022 and expects to incur operating losses for the foreseeable future. As of April 3, 2022, the Company had a working capital of $398.1

5


Table of Contents

ENOVIX CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

 

million and an accumulated deficit of $290.4 million. In connection with the Business Combination in July 2021, the Company raised approximately $373.7 million of net proceeds, after deducting transaction costs and estimated offering related expenses. Please refer to Note 3 “Business Combination” of the notes to the consolidated financial statements for the year ended January 2, 2022 included in the Annual Report for more information. In December 2021, the Company received $77.2 million of gross proceeds from the exercises of the Public Warrants (as defined under the heading “Common Stock Warrants” in Note 7 “Warrants”), which were being traded in the Nasdaq Global Select Market (“Nasdaq”). In January 2022, the Company received $52.8 million of net proceeds from the exercise of the Public Warrants. The Company plans to use the proceeds from the exercises of the Public Warrants for general corporate purposes.

Based on the anticipated spending, cash received from the Business Combination and timing of expenditures, the Company currently expects that its cash will be sufficient to meet its funding requirements over the next twelve months. Going forward, the Company may require additional financing for its future operation expansion. The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

Unaudited Interim Condensed Consolidated Financial Statements

The condensed consolidated balance sheet as of April 3, 2022, the condensed consolidated statements of operations, condensed consolidated statements of changes in shareholders’ equity for the quarters ended April 3, 2022 and March 31, 2021, and the condensed consolidated statements of cash flows for the quarters ended April 3, 2022 and March 31, 2021 are unaudited. These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary to present fairly the Company’s financial condition, results of operations, stockholders’ equity and cash flows for the periods presented above. The results of operations for the quarter ended April 3, 2022 are not necessarily indicative of the operating results for the full year, and therefore should not be relied upon as an indicator of future results. The condensed consolidated balance sheet as of January 2, 2022 included herein was derived from the audited consolidated financial statements as of that date. The accompanying condensed consolidated financial statements and related notes included in the Annual Report.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the condensed consolidated financial statements and accompanying notes during the reporting periods. Estimates and assumptions include but are not limited to: depreciable lives for property and equipment, the valuation allowance on deferred tax assets, assumptions used in stock-based compensation, incremental borrowing rate for operating right-of-use assets and lease liabilities, and estimates to fair value convertible preferred stock warrants and common stock warrants. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that it believes to be reasonable under the circumstances. In the preparation of our condensed consolidated financial statements, the Company has considered potential impacts of the COVID-19 pandemic on its critical and significant accounting estimates. There was no significant impact to its condensed consolidated financial statements. The Company will continue to evaluate the nature and extent of the potential impacts to its business and its condensed consolidated financial statements.

Summary of Significant Accounting Policies

With the exception of the change for the accounting of credit losses as a result of the adoption of Accounting Standards Update (“ASU”), 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), there have been no new or material changes to the significant accounting policies disclosed in Note 2 “Summary of Significant Accounting Policies,” of the notes to the consolidated financial statements for the fiscal year ended January 2, 2022 included in the Annual Report.

Credit Losses

The Company is exposed to credit losses primarily through its available-for-sale investments. The Company invests excess cash in marketable securities with high credit ratings that are classified in Level 1 and Level 2 of the fair value hierarchy. The Company’s investment portfolio at any point in time contains investments in U.S. treasury and U.S. government agency securities, taxable and tax-exempt municipal notes, corporate notes and bonds, commercial paper, non-U.S. government agency securities and money market funds, and are classified as available-for-sale. The Company assesses whether its available-for sale investments are impaired at each reporting

6


Table of Contents

ENOVIX CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

 

period. Unrealized losses or impairments resulting from the fair value of the available-for-sale debt security being below the amortized cost basis are evaluated for identification of credit losses and non-credit related losses. Any credit losses are charged to earnings against the allowance for credit losses of the debt security, limited to the difference between the fair value and the amortized cost basis of the debt security. Any difference between the fair value of the debt security and the amortized cost basis, less the allowance for credit losses, are reported in other comprehensive income (loss). Expected cash inflows due to improvements in credit are recognized through a reversal of the allowance for credit losses subject to the total allowance previously recognized. The Company’s expected loss allowance methodology for the debt securities is developed by reviewing the extent of the unrealized loss, the size, term, geographical location, and industry of the issuer, the issuers’ credit ratings and any changes in those ratings, as well as reviewing current and future economic market conditions and the issuers’ current status and financial condition. The Company considered the current and expected future economic and market conditions and determined that the estimate of credit losses was not significantly impacted. As of April 3, 2022, the Company has not recognized an allowance for expected credit losses related to available-for-sale investments as the Company did not have available-for-sale investments for the quarter.

Emerging Growth Company Status

The Company is an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGC’s can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Other than the adoption of Accounting Standards Codification (“ASC”) 842, Leases, as discussed below, the Company has elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC.

Recently Adopted Accounting Pronouncements

Effective January 3, 2022, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changed the impairment model for most financial assets and certain other instruments. The Company adopted ASU 2016-13 using a modified retrospective transition method, which required a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. The adoption of this ASU 2016-13 did not have a material impact on its condensed consolidated financial statements. See “Credit Losses” above for a description of the Company’s credit losses accounting policy.

Note 3. Fair Value Measurement

The fair value of the Company’s financial assets and liabilities are determined in accordance with the fair value hierarchy established in ASC 820, Fair Value Measurements, issued by the Financial Accounting Standards Board. The fair value hierarchy of ASC 820 requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels:

Level 1:

Observable inputs, such as quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

Level 2:

Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3:

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our financial instruments consist primarily of cash and cash equivalents, accounts payable and the warrant liabilities. Cash and cash equivalents are reported at their respective fair values on our condensed consolidated balance sheets. The following table details the fair

7


Table of Contents

ENOVIX CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

 

value measurements of assets and liabilities that were measured at fair value on a recurring basis based on the following three-tiered fair value hierarchy per ASC 820, Fair Value Measurement, as of April 3, 2022 and January 2, 2022 (in thousands).

 

 

 

Fair Value Measurement using

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total
Fair Value

 

As of April 3, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Private Placement Warrants

 

$

 

 

$

 

 

$

56,460

 

 

$

56,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of January 2, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Private Placement Warrants

 

$

 

 

$

 

 

$

124,260

 

 

$

124,260

 

The Company’s liabilities are measured at fair value on a non-recurring basis, including 6,000,000 warrants that were assumed from the Business Combination and were held by Rodgers Capital, LLC (the “Sponsor”) and certain of its members (the “Private Placement Warrants”). The fair value of the Private Placement Warrants is considered a Level 3 valuation and is determined using the Black-Scholes valuation model. As of April 3, 2022, the fair value of the Private Placement Warrants was $9.41 per share with an exercise price of $11.50.

The changes for Level 3 items measured at fair value on a recurring basis using significant unobservable inputs are as follows (in thousands):

 

 

 

 

 

Private Placement Warrants

 

Fair value as of January 2, 2022

 

 

 

$

124,260

 

Change in fair value

 

 

 

 

(67,800

)

Fair value as of April 3, 2022

 

 

 

$

56,460

 

 

 

 

 

 

Convertible
Preferred Stock
Warrants

 

Fair value as of December 31, 2020

 

 

 

$

15,995

 

Settlements

 

 

 

 

(20,776

)

Change in fair value

 

 

 

 

4,781

 

Fair value as of March 31, 2021

 

 

 

$

 

 

The following table summarizes the key assumptions used for determining the fair value of convertible preferred stock warrants and common stock warrants.

 

 

 

Private Placement Warrants outstanding as of April 3, 2022

 

Private Placement Warrants outstanding as of January 2, 2022

 

Convertible
preferred stock
warrants
exercised
on February 22,
2021

Expected term (in years)

 

4.3

 

4.5

 

2.5 - 4.1

Expected volatility

 

75.0%

 

77.5%

 

75.0%

Risk-free interest rate

 

2.8%

 

1.2%

 

0.2% - 0.4%

Expected dividend rate

 

0.0%

 

0.0%

 

0.0%

 

8


Table of Contents

ENOVIX CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

 

Note 4. Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Property and equipment as of April 3, 2022 and January 2, 2022, consisted of the following (in thousands):

 

 

 

April 3, 2022

 

 

January 2, 2022

 

Process equipment

 

$

6,636

 

 

$

6,636

 

Office equipment

 

 

917

 

 

 

918

 

Furniture and fixtures

 

 

678

 

 

 

639

 

Leasehold improvements

 

 

1,878

 

 

 

1,878

 

Construction in progress

 

 

77,899

 

 

 

71,133

 

Total property and equipment

 

 

88,008

 

 

 

81,204

 

Less: Accumulated depreciation

 

 

(4,906

)

 

 

(4,591

)

Property and equipment, net

 

$

83,102

 

 

$

76,613

 

Depreciation and amortization expenses related to property and equipment for the quarters ended April 3, 2022 and March 31, 2021 were $0.3 million and $0.1 million, respectively.

Note 5. Leases

The Company leases its headquarters, engineering and manufacturing space in Fremont, California under a single non-cancelable operating lease, right of use asset with an expiration date of August 31, 2030. In March 2021, the Company entered into a new agreement to lease office space in Fremont, California under a noncancelable operating lease that expires in April 2026 with an option to extend for five years.

The components of lease costs were as follows (in thousands):

 

 

 

For the Quarters Ended

 

 

 

April 3, 2022

 

 

March 31, 2021

 

Operating lease cost

 

$

420

 

 

$

292

 

 

Supplemental lease information:

 

 

 

As of

Operating leases

 

April 3, 2022

 

March 31, 2021

Weighted-average remaining lease term

 

8.4 years

 

9.3 years

Weighted-average discount rate

 

6.8%

 

6.8%

Supplemental cash flow information related to leases are as follows (in thousands):

 

 

 

For the Quarters Ended

 

 

 

April 3, 2022

 

 

March 31, 2021

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

336

 

 

$

312

 

Lease liabilities arising from obtaining ROU assets:

 

 

 

 

 

 

Operating leases

 

 

 

 

 

8,763

 

 

9


Table of Contents

ENOVIX CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

 

Maturities of Lease Liabilities

The following is a schedule of maturities of lease liabilities as of April 3, 2022 (in thousands).

 

 

 

 

 

Operating lease

 

2022 (remaining nine months)

 

 

 

$

1,029

 

2023

 

 

 

 

1,406

 

2024

 

 

 

 

1,449

 

2025

 

 

 

 

1,492

 

2026

 

 

 

 

1,491

 

Thereafter

 

 

 

 

5,774

 

Total

 

 

 

 

12,641

 

Less: imputed interest

 

 

 

 

(3,220

)

Present value of lease liabilities

 

 

 

$

9,421

 

 

Note 6. Commitments and Contingencies

Purchase Commitments

As of April 3, 2022 and January 2, 2022, the Company’s commitments included an estimated amount of approximately $11.5 million and $17.4 million, respectively, relating to the Company’s open purchase orders and contractual obligations that occurred in the ordinary course of business, including commitments with contract manufacturers and suppliers for which the Company has not received the goods or services, commitments for capital expenditures and construction-related activities for which the Company has not received the services. Although open purchase orders are considered enforceable and legally binding, the terms generally allow the Company the option to cancel, reschedule, and adjust its requirements based on its business needs prior to the delivery of goods or performance of services. For lease obligations, please refer to Note 5 “Leases” for more details.

Litigation

Michael Costello v. Rodgers Silicon Valley Acquisition Corp., et al., 21-CV-01536, Superior Court of California, San Mateo County

On March 22, 2021, Michael Costello filed a complaint in the Superior Court of California, San Mateo County, against RSVAC and RSVAC’s board of directors. The plaintiff alleged, among other things, that the RSVAC directors breached their fiduciary duties in connection with the terms of a proposed transaction, and that the disclosures in RSVAC’s registration statement regarding the proposed transaction were materially deficient. The plaintiff sought, among other things, unspecified monetary damages, attorney’s fees and costs and injunctive relief, including enjoining the Business Combination. The case was voluntarily dismissed on August 24, 2021.

Derek Boxhorn v. Rodgers Silicon Valley Acquisition Corp., et al., 1:21-cv-02900 (SDNY)

On April 5, 2021, Derek Boxhorn filed a complaint in the United States District Court for the Southern District of New York against RSVAC and RSVAC’s board of directors. The plaintiff alleged, among other things, that the defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, and that the individual defendants breached their fiduciary duties, in connection with the terms of the Business Combination, and that RSVAC’s registration statement contained materially incomplete and misleading information regarding the Business Combination. The plaintiff sought, among other things, unspecified monetary damages, attorney’s fees and costs and injunctive relief, including enjoining the Business Combination. The case was voluntarily dismissed on October 19, 2021. After the dismissal and on December 3, 2021, the plaintiff filed a motion for attorneys’ fees and costs, which is pending before the court.

Sopheap Prak et al. v. Enovix Corporation et al., 22CV005846, Superior Court of California, Alameda County

On January 21, 2022, two former machine operator employees filed a putative wage and hour class action lawsuit against Enovix and co-defendant Legendary Staffing, Inc. in the Superior Court of California, County of Alameda. The case is captioned Sopheak Prak & Ricardo Pimentel v Enovix Corporation and Legendary Staffing, Inc., 22CV005846. The Prak complaint alleges, among other things, on a putative class-wide basis, that the defendants failed to pay all overtime wages and committed meal period, rest period and wage

10


Table of Contents

ENOVIX CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

 

statement violations under the California Labor Code and applicable Wage Orders. The plaintiffs are seeking unpaid wages, statutory penalties and interest and reasonable costs and attorney fees.

From time to time, the Company may become, involved in various legal proceedings arising in the ordinary course of its business. The Company is not currently a party to any other potentially material legal proceedings, and the Company is not aware of any pending or threatened legal proceeding against the Company that the Company believes could have a material adverse effect on the Company’s business, operating results or financial condition.

Guarantees and Indemnifications

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.

The Company also has indemnification obligations to its officers and directors for specified events or occurrences, subject to some limits, while they are serving at the Company’s request in such capacities. There have been no claims to date and the Company has director and officer insurance that may enable the Company to recover a portion of any amounts paid for future potential claims. The Company believes the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities relating to these obligations for the period presented.

Note 7. Warrants

Legacy Enovix Series D Convertible Preferred Stock Warrants

On February 22, 2021, in a transaction separate from the Merger Agreement, the then outstanding Legacy Enovix Series D convertible preferred stock warrants were exercised at $0.01 per share, resulting in the issuance of 10,160,936 shares of Legacy Enovix Series D convertible preferred stock to the holders of such warrants, for a total of $0.1 million. As of April 3, 2022 and January 2, 2022, there were no convertible preferred stock warrants outstanding.

Common Stock Warrants

In connection with the Business Combination in July 2021, the Company assumed 17,500,000 Common Stock Warrants outstanding, which consisted of 11,500,000 warrants held by third-party investors (the “Public Warrants”) and 6,000,000 Private Placement Warrants. The Public Warrants met the criteria for equity classification and the Private Placement Warrants are classified as liability.

Public Warrants

On December 7, 2021, the Company delivered the notice of redemption to the holders of the outstanding Public Warrants to redeem all of its outstanding Public Warrants. The holders of the Public Warrants had until January 7, 2022 to exercise their Public Warrants. Any pubic warrants that remained unexercised after 5:00 pm, New York City Time, on January 7, 2022 were voided and were no longer exercisable, and the holders of the Public Warrants would be entitled to receive $0.01 per warrant.

As of January 2, 2022, the Company had 4,322,106 Public Warrants outstanding. During the period from January 3, 2022 through January 7, 2022, there were 4,126,466 shares of the Public Warrants exercised with gross proceeds of $47.5 million. As of January 7, 2022 after 5:00 pm New York City time, there were 195,640 warrant remained unexercised, which were voided and were no longer exercisable. Pursuant to the warrant agreement, the holders of the Public Warrants were entitled to receive $0.01 per warrant from the Company. In addition, the Public Warrants were delisted and were no longer available for trading in the Nasdaq on January 7, 2022 after close of market.

On January 19, 2022, the Company received net proceeds of $52.8 million from the warrant exercises, including the $5.3 million of other receivable included in Prepaids and other current assets on the Consolidated Balance Sheet as of January 2, 2022. As of April 3, 2022, there were no Public Warrants outstanding.

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Table of Contents

ENOVIX CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

 

Private Placement Warrant

The 6,000,000 Private Placement Warrants were originally issued in a private placement to the initial stockholder of the Sponsor in connection with the initial public offering of RSVAC. Each whole Private Placement Warrant will become exercisable for one whole share of the Company’s common stock at a price of $11.50 per share on December 5, 2021. As of April 3, 2022, the Company had 6,000,000 Private Placement Warrants outstanding. See Note 3 “Fair Value Measurement” for more information.

Note 8. Net Earnings (Loss) per Share

The Company computes net earnings per share (“EPS”) of common stock using the two-class method. Basic EPS is computed using net income (loss) divided by the weighted-average number of common stock shares outstanding. Diluted EPS is computed using net income (loss) with an adjustment of changes in fair value of the Private Placement Warrants recorded in earnings divided by the total of weighted-average number of common stock shares outstanding and any dilutive potential common stock shares outstanding. Dilutive potential common stock shares included the assumed stock options exercises, vesting and issuance activities of restricted stock units and estimated common stock issuance under the employee stock purchase plan.

As the Company reported net loss for the quarter ended March 31, 2021, all of these potentially dilutive securities were anti-dilutive. Accordingly, the diluted net loss per share of common stock was the same as basic net loss per share of common stock. In connection with the Business Combination, shares of the Company’s common stock and all potentially dilutive securities for the prior periods were retroactively adjusted based on the exchange ratio established in the Business Combination. Please refer to Note 3 “Business Combination” to the consolidated financial statements for the year ended January 2, 2022 included in the Annual Report.

The following table sets forth the computation of the Company’s basic and diluted net EPS of common stock for the periods presented below (in thousands, except share and per share amount):

 

 

 

For the Quarters Ended

 

 

 

April 3, 2022

 

 

March 31, 2021