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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 2022
OR
o 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.)
Delaware001-3975385-3174357
(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:
Title of each class Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.0001 per shareENVX
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 x No o
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 x No o
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 fileroAccelerated filero
Non-accelerated filerxSmaller reporting companyx
Emerging growth companyx
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
As of October 31, 2022, 157,103,967 shares of common stock, par value $0.0001 per share, were issued and outstanding.



Table of Contents

Table of Contents
Page
Condensed Consolidated Balance Sheets as of October 2, 2022 and January 2, 2022



Table of Contents

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 products, technologies, 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;
financial performance, including revenue, expenses and projections thereof;
ability to convert our revenue funnel to purchase orders and revenue;
placement of equipment orders for our next-generation manufacturing lines, the speed of and space requirements for our next-generation manufacturing lines relative to our existing lines at Fab-1 in Fremont;
factory sites and related considerations, including site selection, location and timing of build-out, and benefits thereof; 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)
October 2,
2022
January 2,
2022
Assets
Current assets:
Cash and cash equivalents $349,007 $385,293 
Accounts receivable, net6  
Inventory452  
Deferred contract costs 1,539 4,554 
Prepaid expenses and other current assets 4,507 8,274 
Total current assets 355,511 398,121 
Property and equipment, net 103,991 76,613 
Operating lease, right-of-use assets 6,270 6,669 
Other assets, non-current 1,787 1,162 
Total assets $467,559 $482,565 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $6,816 $3,144 
Accrued expenses 2,476 7,109 
Accrued compensation 6,169 4,101 
Deferred revenue 1,373 5,575 
Other liabilities 695 707 
Total current liabilities 17,529 20,636 
Warrant liability80,220 124,260 
Operating lease liabilities, non-current 8,449 9,071 
Deferred revenue, non-current 2,964 2,290 
Other liabilities, non-current 114 191 
Total liabilities 109,276 156,448 
Commitments and Contingencies (Note 7)
Stockholders’ equity:
Common stock, $0.0001 par value; authorized shares of 1,000,000,000; issued and outstanding shares of 157,077,599 and 152,272,287 as of October 2, 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 October 2, 2022 and January 2, 2022, respectively
  
Additional paid-in-capital 731,861 659,254 
Accumulated deficit (373,593)(333,152)
Total stockholders’ equity 358,283 326,117 
Total liabilities and stockholders’ equity $467,559 $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)
Quarters EndedFiscal Years-to-Date Ended
October 2, 2022October 3, 2021October 2, 2022October 3, 2021
Revenue $8 $ $5,109 $ 
Cost of revenue6,629 104 12,883 1,847 
Gross margin(6,621)(104)(7,774)(1,847)
Operating expenses:
Research and development 13,948 10,301 42,506 25,413 
Selling, general and administrative 13,110 8,791 36,545 17,500 
Total operating expenses 27,058 19,092 79,051 42,913 
Loss from operations (33,679)(19,196)(86,825)(44,760)
Other income (expense):
Change in fair value of convertible preferred stock warrants and common stock warrants(50,160)8,460 44,040 3,679 
Interest expense, net (52) (187)
Other income (expense), net 1,826 (50)2,344 (38)
Total other income (expense), net (48,334)8,358 46,384 3,454 
Net loss$(82,013)$(10,838)$(40,441)$(41,306)
Net loss per share, basic$(0.53)$(0.08)$(0.27)$(0.38)
Weighted average number of common shares outstanding, basic153,332,007 133,492,216 152,497,010 109,317,614 
Net loss per share, diluted$(0.53)$(0.14)$(0.55)$(0.45)
Weighted average number of common shares outstanding, diluted153,332,007 135,052,128 153,773,271 109,854,540 
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
Capital
Accumulated
Deficit
Total
Stockholders' Equity
Shares Amount
Balance as of January 2, 2022
152,272,287 $15 $659,254 $(333,152)$326,117 
Issuance of common stock upon exercise of stock options91,910 — 200 — 200 
Issuance of common stock upon exercise of common stock warrants4,126,466 — 47,452 — 47,452 
Vesting of early exercised stock options— — 42 — 42 
Vesting of restricted stock units34,941 — — — — 
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, 2022156,419,718 15 711,484 (290,445)421,054 
Issuance of common stock upon exercise of stock options46,807 — 77 — 77 
Issuance of common stock under employee stock purchase plan126,574 — 1,113 — 1,113 
Vesting of early exercised stock options— — 28 — 28 
Vesting of restricted stock units115,990 — — — — 
Repurchase of unvested restricted common stock(30,399)— — — — 
Stock-based compensation— — 7,603 — 7,603 
Net loss— — — (1,135)(1,135)
Balance as of July 3, 2022156,678,690 15 720,305 (291,580)428,740 
Issuance of common stock upon exercise of stock options204,483 — 1,775 — 1,775 
Vesting of early exercised stock options— — 28 — 28 
Vesting of restricted stock units209,156 — — — — 
Repurchase of unvested restricted common stock(14,730)— — — — 
Stock-based compensation— — 9,753 — 9,753 
Net loss— — — (82,013)(82,013)
Balance as of October 2, 2022
157,077,599 $15 $731,861 $(373,593)$358,283 
See accompanying notes to these condensed consolidated financial statements.
3


Table of Contents

ENOVIX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Continued)
(In thousands, except share amounts)
(Unaudited)
Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total Stockholders' Equity
Shares
Amount
Balance as of December 31, 2020, effect of reverse acquisition100,016,559 $10 $243,484 $(207,278)$36,216 
Issuance of common stock upon exercise of stock options2,112,373 — 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 warrants2,020,034 — 20,877 — 20,877 
Stock-based compensation— — 1,555 — 1,555 
Net loss— — — (16,165)(16,165)
Balance as of March 31, 2021104,061,198 10 265,970 (223,443)42,537 
Issuance of common stock upon exercise of stock options9,442 — 4 — 4 
Vesting of early exercised stock options— — 29 — 29 
Repurchase of unvested restricted common stock(75,111)— — — — 
Stock-based compensation— — 2,353 — 2,353 
Net loss— — — (14,303)(14,303)
Balance as of June 30, 2021103,995,529 10 268,356 (237,746)30,620 
Business combination, net of redemptions and equity issuance costs and PIPE financing, net41,249,985 4 300,741 — 300,745 
Vesting of early exercised stock options— — 29  29 
Repurchase of unvested restricted common stock(59,610)— — — — 
Stock-based compensation— — 3,150 — 3,150 
Net loss— — — (10,838)(10,838)
Balance as of October 3, 2021145,185,904 $14 $572,276 $(248,584)$323,706 
See accompanying notes to these condensed consolidated financial statements.
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ENOVIX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Fiscal Years-to-Date Ended
October 2, 2022October 3, 2021
Cash flows from operating activities:
Net loss$(40,441)$(41,306)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation4,388 674 
Amortization of right-of-use assets407 388 
Stock-based compensation22,117 6,717 
Changes in fair value of convertible preferred stock warrants and common stock warrants(44,040)(3,679)
Loss on early debt extinguishment 60 
Changes in operating assets and liabilities:
Accounts receivable(6) 
Inventory(452) 
Prepaid expenses and other assets(2,004)(1,645)
Deferred contract costs3,015 (1,279)
Accounts payable(192)(357)
Accrued expenses and compensation(122)3,173 
Deferred revenue(3,527)2,290 
Other liabilities(46)450 
Net cash used in operating activities(60,903)(34,514)
Cash flows from investing activities:
Purchase of property and equipment(31,366)(31,509)
Net cash used in investing activities(31,366)(31,509)
Cash flows from financing activities:
Proceeds from Business Combination and PIPE financing 405,155 
Payments of transaction costs related to Business Combination and PIPE financing (29,641)
Proceeds from exercise of common stock warrants, net52,828  
Proceeds from secured promissory notes, converted promissory notes and paycheck protection program loan 15,000 
Repayment of secured promissory note (15,000)
Payment of debt issuance costs (90)
Proceeds from exercise of convertible preferred stock warrants 102 
Proceeds from the exercise of stock options2,052 163 
Proceeds from issuance of common stock under employee stock purchase plan1,112  
Repurchase of unvested restricted common stock(9)(13)
Net cash provided by financing activities55,983 375,676 
Change in cash, cash equivalents, and restricted cash(36,286)309,653 
Cash and cash equivalents and restricted cash, beginning of period385,418 29,218 
Cash and cash equivalents, and restricted cash, end of period$349,132 $338,871 
Supplemental cash flow data (Non-cash):
Net liabilities assumed from Business Combination$ $73,400 
Purchase of property and equipment included in liabilities4,689 2,606 
Accrued transaction costs794 1,370 
See accompanying notes to these condensed consolidated financial statements.
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ENOVIX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)
The following presents the Company’s cash, cash equivalents and restricted cash by category in the Company’s Condensed Consolidated Balance Sheets:
Fiscal Years-to-Date Ended
October 2, 2022October 3, 2021
Cash and cash equivalents$349,007 $338,746 
Restricted cash included in prepaid expenses and other current assets125 125 
Total cash, cash equivalents, and restricted cash$349,132 $338,871 
See accompanying notes to these condensed consolidated financial statements.
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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. Starting in the second quarter of 2022, the Company commenced its planned principal operations of commercial manufacturing and began to generate 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 fiscal 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 loss and comprehensive loss are the same for the periods presented. Additionally, the Company did not have any income tax expenses for the periods presented.
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Liquidity and Capital Resources
The Company has incurred operating losses and negative cash flows from operations since its inception through October 2, 2022 and expects to incur operating losses for the foreseeable future. As of October 2, 2022, the Company had a working capital of $338.0 million and an accumulated deficit of $373.6 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 fiscal 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 8 “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, net proceeds from the exercises of the Public Warrants and timing of expenditure, 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 operations and 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 October 2, 2022, the Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Changes in Shareholders’ equity for the quarters and fiscal years-to-date ended October 2, 2022 and October 3, 2021, and the Condensed Consolidated Statements of Cash Flows for the fiscal years-to-date ended October 2, 2022 and October 3, 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 and fiscal year-to-date ended October 2, 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 and the accompanying consolidated financial statements and related notes are 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
As the Company commenced its planned principal operations of commercial manufacturing in the second quarter of 2022 and adopted Accounting Standards Update (“ASU”), 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), the Company has the following new additions and updates 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.
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Revenue Recognition
In June 2022, the Company has begun to generate revenue from its planned principal business activities. The Company recognizes revenue within the scope of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The following five steps are applied to achieve that core principle:
1.Identify the contract with the customer;
2.Identify the performance obligations in the contract;
3.Determine the transaction price;
4.Allocate the transaction price to the performance obligations in the contract; and
5.Recognize revenue when the company satisfies a performance obligation.
The Company’s revenue consists of product revenue, resulting from the sale of silicon-anode lithium-ion batteries as well as battery pack products (“Product Revenue”), and service revenue, resulting from payments received from its customers based on executed engineering revenue contracts for the development of silicon-anode lithium-ion battery technology (“Service Revenue”).
Service Revenue
For more details on revenue recognition on Service Revenue, please refer to Note 2 “Summary of Significant Accounting Policies” to the consolidated financial statements for the fiscal year ended January 2, 2022 included in the Annual Report.
Product Revenue
Product Revenue is recognized once the Company has satisfied the performance obligations and the customer obtains control of the goods at a point in time under the revenue recognition criteria. Product Revenue is recognized in an amount that reflects the consideration for the corresponding performance obligations for the silicon-anode lithium-ion batteries or battery pack products transferred.
For the quarter ended October 2, 2022, the Company recognized immaterial amount of revenue. For the fiscal year-to-date ended October 2, 2022, the Company recognized $5.1 million of total revenue, of which $5.1 million represented Service Revenue and an immaterial amount was for Product Revenue. Customer A represented $5.0 million of the Company's total revenue.
As of October 2, 2022 and January 2, 2022, total deferred revenue was $4.3 million and $7.9 million, respectively, and total deferred contract costs were $1.5 million and $4.6 million, respectively.
Product Warranties
The Company provides product warranties, which cover certain repair or replacement under the revenue contracts and they generally range from one to three years. Estimated costs related to warranties are recorded in the same period when the product sales occur. The warranty liability reflects management’s best estimates of such costs and are recognized as cost of revenue. The Company continuously monitors its product returns for warranty failures and maintains a reserve for the related warranty expenses based on various factors, including historical warranty claims, results of accelerated lab testing, field monitoring, vendor reliability estimates, and data on industry averages for similar products. Due to the potential for variability in these underlying factors, the difference between the estimated costs and the actual costs could be material to the Company’s condensed consolidated financial statements. If actual product failure rates or the frequency or severity of reported claims differ from the estimates, the Company may be required to revise its estimated warranty liability. As of October 2, 2022, the Company's warranty liability on the Condensed Consolidated Balance Sheet was immaterial.
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Trade Accounts Receivable and Allowance for Credit Losses
The Company’s accounts receivables are recorded at invoiced amounts less allowance for any credit losses. According to ASU 2016-13, the Company recognizes credit losses based on a forward-looking current expected credit losses (“CECL”). The Company makes estimates of expected credit losses based upon its assessment of various factors, including the age of accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect its ability to collect from customers. The allowance for credit losses are recognized in the Condensed Consolidated Statement of Operations. The uncollectible accounts receivables are written off in the period in which a determination is made that all commercially reasonable means of recovering them have been exhausted. The Company recognized an immaterial amount of allowance for expected credit loss as of October 2, 2022 and there was no write-off of accounts receivable for the periods presented. As of October 2, 2022, the Company's accounts receivable, net was immaterial.
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 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 October 2, 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.
Inventory
Inventory is stated at the lower of cost or net realizable value on a first-in and first-out basis. Inventory costs include direct materials, direct labor, and normal manufacturing overhead. The cost basis of the Company’s inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions. Additionally, the cost basis of the Company’s inventory does not include any unallocated fixed overhead costs associated with abnormally low utilization of its factories. See Note 5 “Inventory” for more information.
Property and Equipment
Property and equipment are stated at the Company’s original cost, net of accumulated depreciation. Construction in process is related to the construction or development of property and equipment that have not yet been placed in service for their intended use.
In the second quarter of 2022, the Company placed its leasehold improvement and machinery and equipment into service for the Company's first production line and updated the estimated useful lives for its property and equipment. As of October 2, 2022, the Company’s second production line was not yet placed into service as it remains under construction.
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Costs for capital assets not yet placed into service are capitalized as construction in process on the Condensed Consolidated Balance Sheets and will be depreciated once placed into service.
Property and equipment are depreciated or amortized using the straight-line method over the estimated useful lives of the following assets below.
Estimated Useful Life (in Years)
Machinery and equipment2-10
Office equipment and software3-5
Furniture and fixtures3-5
Leasehold improvementsShorter of the economic life or the remaining lease term
When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the Condensed Consolidated Statement of Operations in the period of disposition. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed in the Condensed Consolidated Statement of Operations in the period incurred. See Note 4 “Property and Equipment” for more information.
Emerging Growth Company Status
The Company currently qualifies as 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.
On the last business day of the second fiscal quarter of 2022, the aggregate worldwide market value of shares of common stock held by the Company's non-affiliate stockholders exceeded $700 million. As a result, as of this fiscal year end, January 1, 2023, the Company will be deemed a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934 and the Company will cease to be an EGC. The Company will no longer be exempt from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, and the independent registered public accounting firm will evaluate and report on the effectiveness of internal control over financial reporting.
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 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:
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
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.
The Company's financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and the warrant liabilities. Cash and cash equivalents are reported at their respective fair values on the Company's Condensed Consolidated Balance Sheets. The following table details the fair 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 October 2, 2022 and January 2, 2022 (in thousands).
Fair Value Measurement using
Level 1Level 2Level 3Total
Fair Value
As of October 2, 2022
Assets:
Money Market Funds$344,106 $ $ $344,106 
Liabilities:
Private Placement Warrants$ $ $80,220 $80,220 
As of January 2, 2022
Liabilities:  
Private Placement Warrants$ $ $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 October 2, 2022, the fair value of the Private Placement Warrants was $13.37 per share with an exercise price of $11.50 per share. 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(44,040)
Fair value as of October 2, 2022
$80,220 
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Private Placement Warrants
Convertible
Preferred Stock
Warrants
Fair value as of December 31, 2020
$ $15,995 
Acquired from the Business Combination72,900  
Settlements (20,776)
Change in fair value(8,460)4,781 
Fair value as of October 3, 2021
$64,440 $ 
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 October 2, 2022Private Placement Warrants Outstanding as of January 2, 2022Convertible
Preferred Stock
Warrants
Exercised
on February 22,
2021
Expected term (in years)3.84.5
2.5 - 4.1
Expected volatility90.0%77.5%75.0%
Risk-free interest rate4.2%1.2%
0.2% - 0.4%
Expected dividend rate0.0%0.0%0.0%
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 October 2, 2022 and January 2, 2022, consisted of the following (in thousands):
October 2,
2022
January 2,
2022
Machinery and equipment$47,884 $6,636 
Office equipment and software1,236 918 
Furniture and fixtures721 639 
Leasehold improvements23,297 1,878 
Construction in process39,832 71,133 
Total property and equipment112,970 81,204 
Less: accumulated depreciation(8,979)(4,591)
Property and equipment, net$103,991 $76,613 
In the second quarter of 2022, the Company placed its leasehold improvement and machinery and equipment into service for the Company's first production line and transferred the amount that was previously capitalized as construction in process into the machinery and equipment category. The Company began its depreciation using the straight-line method on the date that machinery and equipment and leasehold improvement were placed into service. As of October 2, 2022, the Company’s second production line was not yet placed into service as it remains under construction.
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following table summarizes the depreciation and amortization expenses related to property and equipment, which are recorded within cost of revenue, research and development expense and selling, general and administrative expense in the Condensed Consolidated Statements of Operations (in thousands).
Quarters EndedFiscal Years-to-Date Ended
October 2, 2022October 3, 2021October 2, 2022October 3, 2021
Depreciation expense$2,857 $299 $4,388 $674 
Note 5. Inventory
Inventory consists of the following components (in thousands).
October 2,
2022
Raw materials$331 
Work-in-process23 
Finished goods98 
Total inventory$452 
Note 6. 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 non-cancelable 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):
Quarters Ended Fiscal Years-to-Date Ended
October 2, 2022October 3, 2021 October 2, 2022October 3, 2021
Operating lease cost$453 $531 $1,292 $1,273 
Supplemental lease information:
As of
Operating leasesOctober 2, 2022January 2, 2022
Weighted-average remaining lease term7.9 years8.7 years
Weighted-average discount rate6.8%6.8%
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Supplemental cash flow information related to leases are as follows (in thousands):
Fiscal Years-to-Date Ended
October 2, 2022October 3, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$1,022 $1,084 
Lease liabilities arising from obtaining ROU assets:
Operating leases$ $8,763 
Maturities of Lease Liabilities
The following is a schedule of maturities of lease liabilities as of October 2, 2022 (in thousands).
Operating lease
2022 (remaining three months)$343 
20231,406 
20241,449 
20251,492 
20261,491 
Thereafter5,774 
Total11,955 
Less: imputed interest(2,907)
Present value of lease liabilities$9,048 
Note 7. Commitments and Contingencies
Purchase Commitments
As of October 2, 2022 and January 2, 2022, the Company’s commitments included approximately $21.2 million and $17.4 million, respectively, of 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 6 “Leases” for more details.
Litigation
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. On August 23, 2022, the court denied the plaintiff's motion for attorney's fees and the case is closed.
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
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 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. In September 2022, the Company began the mediation process. Based on the current knowledge of the legal proceeding, an estimate of possible loss liability has been recorded on the Condensed Consolidated Balance Sheet as of October 2, 2022.
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. As of October 2, 2022, the Company established an accrued liability on the Condensed Consolidated Balance Sheet and recorded a corresponding amount as an operating expense on its Condensed Consolidated Statement of Operations. The Company continues to monitor the development of its legal proceedings that could affect its previously established accrued liability and require an adjustment to it.
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 8. 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 October 2, 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 public warrants that remained unexercised after 5:00 pm, New York City Time, on
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
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 October 2, 2022, there were no Public Warrants outstanding.
Private Placement Warrants
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 became exercisable for one whole share of the Company's common stock at a price of $11.50 per share on December 5, 2021. As of October 2, 2022, the Company had 6,000,000 Private Placement Warrants outstanding. See Note 3 “Fair Value Measurement” for more information.
Note 9. Net Loss per Share
The Company computes net earnings per share (“EPS”) of common stock using the two-class method. Basic EPS is computed using net income (loss) divided by the weighted-average number of common stock shares outstanding. Diluted EPS is computed using net income (loss) with an adjustment of changes in fair value of the Private Placement Warrants recorded in earnings divided by the total of weighted-average number of common stock shares outstanding and any dilutive potential common stock shares outstanding. Dilutive potential common stock shares included the assumed stock options exercises, vesting and issuance activities of restricted stock units and estimated common stock issuance under the employee stock purchase plan.
In connection with the Business Combination, shares of the Company’s common stock and all potentially dilutive securities for the prior periods were retroactively adjusted based on the exchange ratio established in the Business Combination. Please refer to Note 3 “Business Combination” to the consolidated financial statements for the fiscal year ended January 2, 2022 included in the Annual Report.
The following table sets forth the computation of the Company’s basic and diluted net EPS of common stock for the periods presented below (in thousands, except share and per share amount):
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Quarters EndedFiscal Years-to-Date Ended
October 2, 2022October 3, 2021October 2, 2022October 3, 2021
Numerator:
Net loss attributable to common stockholders - basic$(82,013)$(10,838)$(40,441)$(41,306)
Increase in fair value of Private Placement Warrants (8,460)(44,040)(8,460)
Net loss attributable to common stockholders - diluted$(82,013)$(19,298)$(84,481)$(49,766)
Denominator:
Weighted-average shares outstanding used in computing net loss per share of common stock, basic153,332,007 133,492,216 152,497,010 109,317,614 
Dilutive effect of Private Placement Warrants 1,559,912 1,276,261 536,926 
Weighted-average shares outstanding used in computing net loss per share of common stock, diluted153,332,007 135,052,128 153,773,271 109,854,540 
Net loss per share of common stock:
Basic$(0.53)$(0.08)$(0.27)$(0.38)
Diluted$(0.53)$(0.14)$(0.55)$(0.45)
As the Company reported net loss for the periods presented above, these potentially dilutive securities were anti-dilutive and are excluded in the computation of diluted net loss per share. The following table discloses shares of the securities that were not included in the diluted EPS calculation above because they are anti-dilutive for the periods presented above.
Quarters EndedFiscal Years-to-Date Ended
October 2, 2022October 3, 2021October 2, 2022October 3, 2021
Stock options outstanding5,083,643 5,852,759 5,083,643 5,852,759 
Restricted stock units and performance restricted stock units outstanding5,933,914 117,611 5,933,914 117,611 
Private Placement Warrants outstanding6,000,000    
Public Warrants outstanding 11,500,000  11,500,000 
Employee stock purchase plan estimated shares380,847  380,847  
Note 10. Stock-based Compensation
The Company issues equity awards to employees and non-employees in the form of stock options and restricted stock units (“RSUs”). Additionally, the Company also offers an employee stock purchase plan (“ESPP”) to its eligible employees. In the second quarter of 2022, the Company began to grant performance based RSU (“PRSU”) subject to performance and service vesting conditions. The Company uses Black-Scholes option pricing model to value its stock options granted and the estimated shares to be purchased under the ESPP. For both RSUs and PRSUs, the Company uses its common stock price, which is the last reported sales price on the grant date to value those securities.
In general, the Company recognizes its stock-based compensation expense on a straight-line basis over the requisite service period and records forfeitures as they occur. For PRSUs, the Company uses the graded vesting method to calculate
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
the stock-based compensation expense. At each reporting period, the Company would recognize and adjust the stock-based compensation expense based on its probability assessment in meeting its PRSUs' performance conditions.
The following table summarizes the total stock-based compensation expense, by operating expense category, recognized in the Condensed Consolidated Statements of Operations for the periods presented below (in thousands).
Quarters EndedFiscal Years-to-Date Ended
October 2, 2022October 3, 2021October 2, 2022October 3, 2021
Cost of revenue$1,067 $ $1,317 $274 
Research and development3,372 1,290 9,705 4,197 
Selling, general and administrative4,260 1,752 11,095 2,246 
Total stock-based compensation expense$8,699 $3,042 $22,117 $6,717 
For the fiscal year-to-date ended October 2, 2022, the Company capitalized $1.2 million of stock-based compensation as property and equipment, net in the Condensed Consolidated Balance Sheet. For the fiscal year-to-date ended October 3, 2021, the Company capitalized an immaterial amount of stock-based compensation as deferred contract costs, inventory and property and equipment, net in the Condensed Consolidated Balance Sheet. There was no recognized tax benefit related to stock-based compensation for the periods presented. In addition, the Company accrued $1.4 million of bonus to be settled in equity awards as accrued compensation on the Condensed Consolidated Balance Sheet as of October 2, 2022.
As of October 2, 2022, there was approximately $93.6 million of total unrecognized stock-based compensation expense related to unvested equity awards, which are expected to be recognized over a weighted-average period of 3.6 years. As of October 2, 2022, there was approximately $1.4 million of total unrecognized stock-based compensation related to the ESPP, which is expected to be recognized over a period of 1.1 years.
Stock Option Activity
The following table summarized stock option activities for the fiscal year-to-date ended October 2, 2022 (in thousands, except share and per share amount).
Number of
Options
Outstanding
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic
Value (1) (2)
Balances as of January 3, 20215,753,005$8.88 
Granted46,19013.82 
Exercised(343,124)5.98 $4,077 
Forfeited(372,428)9.43 
Balances as of October 2, 20225,083,643$9.08 8.5$47,348 
(1)The intrinsic value of options exercised is based upon the value of the Company’s stock at exercise.
(2)
The aggregate intrinsic value of the stock options outstanding as of October 2, 2022 represents the value of the Company’s closing stock price at $18.34 on October 2, 2022 in excess of the exercise price multiplied by the number of options outstanding.
Unvested early exercised stock options which are subject to repurchase by the Company are not considered participating securities as those shares do not have non-forfeitable rights to dividends or dividend equivalents. Unvested early exercised stock options are not considered outstanding for purposes of the weighted average outstanding share calculation until they vest.
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ENOVIX CORPORATION
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
As of October 2, 2022, 3,342,128 shares remained subject to the Company’s right of repurchase as a result of early exercised stock options. The remaining liability related to early exercised shares as of October 2, 2022 was $0.2 million and was recorded in other current and non-current liabilities in the Condensed Consolidated Balance Sheets.
Restricted Stock Unit and Performance Restricted Stock Unit Activities
The Company generally grants RSUs with service vesting condition and PRSUs with both performance and service vesting conditions. Each RSU or PRSU is not considered issued and outstanding and does not have voting rights until it is converted into one share of the Company’s common stock upon vesting. The following table summarized RSUs and PRSUs activities for the fiscal year-to-date ended October 2, 2022 (in thousands, except share and per share amount).
RSUsPRSUs
Number of
Shares
Outstanding
Weighted Average
Grant Date Fair Value
Number of
Shares
Outstanding
Weighted Average
Grant Date Fair Value
Issued and unvested shares balances as of January 2, 2022535,449 $23.38  $ 
Granted4,513,171 13.63 1,500,845 13.41 
Vested(358,747)15.61   
Forfeited(256,804)16.26   
Issued and unvested shares outstanding as of October 2, 20224,433,069 $14.50 1,500,845 $13.41 
Note 11. Related Party
Founder Shares
On September 24, 2020, RSVAC issued an aggregate of 5,750,000 shares of common stock (the “Founder Shares”) to the Sponsor, Rodgers Capital LLC, for an aggregate purchase price of $25,000 in cash. The Sponsor agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of Business Combination or (B) subsequent to a Business Combination, (x) if the last reported sale price of the Company’s common stock equals or exceeds $14.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. On September 8, 2021, the Sponsor made an in-kind distribution of a portion of its Founder Shares to certain members of Rodgers Capital LLC.
Related Party Loans