ENVX 10-K & 10-Q changes, risk factors and insider trading

Although we have developed our lithium-ion battery technology, we rely heavily on a new and complex manufacturing process for the production of our lithium-ion battery cells, which is not currently operating at scale. To meet our projected future demand, we need to increase our manufacturing throughput and yield metrics. We expect that meeting our goals to improve throughput and yield will be a multi-quarter or potentially longer endeavor. We have in the past, and may in the future, experience delays in meeting these goals. We have more than one solution to improve manufacturing throughput and yield metrics, and it is uncertain which solution will be optimized for commercial scale. We use numerous vendors for subcomponents of the battery; changes in materials or vendor selection, or the failure of our solutions to improve yield, could negatively impact our ability to meet our throughput and yield metric goals.

The work required to develop these manufacturing processes and integrate equipment into the production of our lithium-ion battery cells, including achieving our goals for throughput and yield, is time intensive and requires us to work closely with numerous equipment and tooling providers to ensure that the equipment works properly for our unique battery technology. The integration of new equipment into our production process involves a significant degree of uncertainty and risk, and we have not in the past and may not in the future be able to achieve our goals for throughput and yield. Further, the integration work may result in the delay in the scaling up of production or result in additional costs to our battery cells, particularly if we encounter issues with performance or if we are unable to customize products for certain of our customers. We expect that certainCertain customers maywill likely require several months or longer to complete technology qualification before acceptingdetermining whether to accept a product that is manufactured at high volume on the Gen2 lines,volume, if at all. In addition, even if we are able to achieve volume production for the existing uses of our batteries, we may face challenges relating to the scaling up of production for new uses of our batteries, including in the EV market.market and the market for AI-powered devices.

In addition, unexpected malfunctions of our production equipment have in the past significantly affected, and may in the future significantly affect, the intended operational efficiency. Qualified labor is needed to remedy any such equipment malfunction, which may not be readily available. Because this equipment has not previously been used to build lithium-ion battery cells, the operational performance and costs associated with the maintenance and repair of this equipment can be difficult to predict and may be influenced by factors outside of our control, such as, but not limited to, (i) failures by suppliers to deliver necessary components of our products in a timely manner and at prices and volumes acceptable to us, (ii) environmental hazards and remediation, (iii) difficulty or delays in obtaining governmental permits, (iv) damages or defects in systems, (v) cybersecurity intrusion and related disruptions; and (vi) industrial accidents, fires, seismic activity and other natural disasters. Further, we have in the past experienced power outages at our facilities,facilities and may again in the future. If outages are more frequent or longer in duration than expected, it could impact our ability to manufacture batteries in a timely manner. If our production equipment does not achieve the projected levels of its output or our production equipment becomes obsolete, it may be necessary to record an impairment charge to reduce the carrying value of our machinery and equipment, which would adversely affect our results of operations and financial condition.

If we cannot successfully scale our manufacturing facilities to produce our lithium-ion battery cell in sufficient quantities to meet expected demand, improve productivity and bring additional facilities online, we may be unable to achieve our profitability targetstargets, and our business will be negatively impacted and could fail.

In May 2024, we initiated a restructuring plan to relocaterelocated our Fab1 manufacturing operations infrom Fremont, California to Malaysia and to accelerate manufacturing operations at Fab2 in Malaysia. InWe 2024 wealso completed site acceptance testing (“SAT”) and began production of batteries on our Agility line,line and completed factory acceptance testing (“FAT”), and SAT, for our High-Volume Manufacturing (“HVM”) line in Malaysia. However, our profitability targets rely on our ability to aggressively reduce the capital costs of our production lines and implement productivity improvements. If such efficiency gains are unsuccessful, we may be unable to achieve our target margin and profitability goals. We expect that our current manufacturing lines will be sufficient to produce batteries inon a commercial scale, but not in high enough volumes to meet our long-term expected customer demand. Therefore, we anticipateare bringingworking to bring additional facilities online at Fab2 and in Korea, including evaluating additional or alternative manufacturing locations, as well as further refiningrefine our approach to improve yields over time. To the extent we continue to experience challenges with improving yields, we may have difficulty accepting additional customers due to capacity constraints, which could delay our growth. If we are unable to successfully build and manage such additional manufacturing lines, or otherwise further refine our approach to improve yields, our business will be negatively impacted and could fail.

Even if we overcome the manufacturing challenges and achieve volume production of our lithium-ion battery, if the cost, performance characteristics or other specifications of the battery fall short of our or our customers’ expectations and targets, our sales, product pricing and margins would likely be adversely affected. Our long-term target economics at scale assume we are able to obtain certain pricing levels for our batteries. If these assumptions are incorrect and/or customer demand is lower than expected, we may fail to achieve our target revenue and profitability goals.goals and our results of operations and financial condition could be materially adversely affected.

In July 2023, we entered into a 10-year manufacturing agreement (as amended, the “YBS Agreement”) with YBS International Berhad (“YBS”), a Malaysia-based investment holding company with operational segments including electronic manufacturing and assembly, high-precision engineering, precision machining and stamping, among others. If we are able to overcome the challenges in designing and refining our manufacturing process, YBSwe willexpect haveto operate multiple linesmanufacturing tolines, producewith commercialYBS volumesproviding ofcertain ourfacility, lithium-ionstaffing, batteriesand procurement support services, to meet our expected customer demands.

OnIn October 29, 2024, we entered into an amendment to the YBS Agreement, which modified certain payment terms and responsibilities of the parties. Pricing under the YBS Agreement is set on a cost-plus basis and we are subject to a minimum purchase commitment,commitment. which was mutually agreed to be reduced by the parties. Regardless of the level of manufacturing services YBS provides to us under the Agreement, weWe are obligated to pay a certain threshold amount each month duringover the term of the YBS Agreement.Agreement depending on the level of orders we make to YBS for manufacturing. The ten-year term of the YBS Agreement expires in July 2033, subject to customary termination provisions.

Our manufacturing arrangement with YBS creates risks due to our reliance on YBS for certainvarious aspects of our manufacturing facility operations, including staffing, procurement and personnel.certain support services. Further, manufacturing in Malaysia is subject to possible disruptions due to power outages, equipment malfunction and failures, and supply chain disruptions relating to raw materials or components, among others. Our manufacturing operations may also be adversely affected by natural disasters and climate change. Other events, including political or public health crises, may affect our production capabilities or that of our suppliers, including lack of supplies. As a result, in addition to disruptions to operations, our insurance premiums may increase, or we may not be able to fully recover any sustained losses through insurance. If this manufacturing arrangement does not perform as expected, it may materially and adversely affect our results of operations, financial condition and prospects.

In addition, the YBS Agreement exposes us to risks because itcertain limitsoperational aspects are managed by YBS, which may reduce our direct control and oversight over the management of manufacturing processes, capacity constraints, delivery timetables, product quality assurance and costs. If we fail to effectively manage our relationship with YBS; if YBS is unable to meet our manufacturing requirements in a timely manner; or if we experience delays, disruptions or quality control problems, it may materially and adversely affect our business, prospects, financial condition and results of operations.

InOver 2023the last three years, we have expanded our global footprint through acquisitions as well as a restructuring of our manufacturing operations. Namely, in South Korea, we acquired Routejade, a battery manufacturer in South2023, Korea,Routejade, as well as a second manufacturing facility and certain other related assets in 2025. During this time, we have also established a research and development center in Hyderabad, India, which supports the product and manufacturing teams in our other locations.locations, In the second half of 2024, weand relocated all of our manufacturing activities from Fremont, California to MalaysiaMalaysia, andas well as established a subsidiary in Shenzhen, China. Following the shift of our manufacturing facilities to Malaysia and a reduction in force that primarily affected our U.S. operations, a higher percentage of our employees and a significant portion of our business operations are located overseas, while our leadership team is primarily located in the U.S. Additionally, relationships with customers and potential customers outside of the U.S. accounted for a significant portion of our revenues during 2024.2025.

While we are continuing to adapt to and develop strategies to address international markets and to manage our international activities and geographically diverse workforce, there is no guarantee that such efforts will have the desired effect. We have in the past and may continue to experience operational challenges associated with global business operations and a globally dispersed workforce, such as coordinating activities across multiple time zones and cultures and maintaining consistent operations standards across diverse locations. In addition, effective collaboration between R&D and manufacturing teams located overseas, and other parts of the organization, may be hindered by distance, language and cultural differences, which may have a negative impact on product innovation.innovation and overall operational efficacy.

The current geopolitical climate and certain actions by the U.S. administration have created uncertainty regarding and fluctuations in trade policies, and our operations and business are subject to these uncertainties given the extent of our international operations and dependencies on international supply chains and access to international employees. These factors and risks could negatively affect our international business operations, increase the difficulty or cost of selling our products in (or restrict our access to) certain foreign markets, divert management’s attention, and increase our costs, which would adversely affect our business, operating results, growth prospects and financial condition.

CurrencyThe fluctuations, trade barriers, trade sanctions, export restrictions, tariffs, embargoes or shortages and other general economic or political conditions may limit our ability to obtain key components for our lithium-ion batteries or significantly increase freight charges, raw material costs and other expenses associated with our business, which could further materially and adversely affect our results of operations, financial condition and prospects. For example, the recentoverall tension in U.S.-China trade relations and the possibility of additional tariffs has created uncertainty in our industry and may negatively affect certain of our suppliers.suppliers, Itas iswell difficultas our ability to predictsource whatcomponents furtheror trader-relatedraw actions governments may take and our business may be negatively impacted if we are unable to quickly and effectively react to such actions.materials. In particular, our facilities are located in Malaysia, India and South Korea and our products require materials and equipment manufactured outside these countries, including China. If tariffs are placed on thesesuch materials and equipment,equipment do not fall under any exemption to the newly imposed tariffs or ifreciprocal tariffs, or are subject to other trade barriers or restrictionsrestrictions, aresuch imposed,as China’s Regulation on Export Control of Dual-Use Items, it could materially impact our ability to obtain materials and equipment, or effective alternative sources of such items, on commercially reasonable terms.terms or at all.

AnyWe ofrely theon foregoingthird-party suppliers for critical components and equipment, and disruptions in these relationships could materiallydelay production and adversely affectharm our business, results of operations, financial condition and prospects.cash flows.

Our cell architecture is different than other batteries and may behave differently in certain customer use applications that we have not evaluated. This could limit our ability to deliver to certain applications, including, but not limited to smartphones, IoT, smart eyewear, action cameras, portable gaming and smartwatchessmartwatches, designedand forother children.AI-powered devices. In addition, we have limited historical data on the performance and reliability of our batteries over time. If our batteries fail unexpectedly in the field, such failures could result in significant warranty costs and/or reputational harm. For example, the electrodes and separator structure of our battery are different from traditional lithium-ion batteries and therefore could be susceptible to different and unknown failure modes, leading our batteries to fail and cause a safety event in the field, which could further result in the failure of our end customers’ products as well as the loss of life or property. Any safety event in the field, but in particular, one in which the end product failure results in significant loss, could result in severe financial penalties for us, including the loss of revenue, cancellation of supply contracts and the inability to win new business due to the reputational harm that results. In addition, some of our supply agreements require us to fund some or all of the cost of a recall and replacement of end products affected by our batteries.

We have asignificant customer concentration of customer accounts in thekey defensemarket sectorsectors and dependence on these customercustomers accounts may createcreates a risk to our business and financial stability.condition.

We face risks associated with customer concentration, which could adversely affect our financial condition, results of operations, and business prospects. As a result of our Routejade acquisition in October 2023, ourOur current revenue stream is derived largely from a limited number of key customers, includingparticularly those in the defense contractors.sector. A singleOne customer, who is a defense subcontractor in South Korea, accounted for approximatelythe 50%majority of our total revenue for the fiscal year 2024.2025. AnyAs adversea changesresult of this customer concentration, our financial performance is highly sensitive to the retention, performance, and ongoing demand from our significant customers. The loss, or material reduction in thebusiness, purchasingfrom behavior,any significant customer, whether due to strategic shifts, sourcing decisions, financial stability,distress, bankruptcy, or strategicother direction of these key customersfactors, could significantlyresult impactin a sudden and material decline in our revenue.revenue Theand cash flows. Moreover, the terms and conditions of contracts with these key customers may not provide us with sufficient protection against fluctuations in demand, changes in pricing, or competitive pressures.pressures, Forwhich example,could wehave relya material adverse impact on a single supplier for components to manufacture products for our defensebusiness, customersfinancial condition, and any disruption in the supplyresults of components would negatively impact our ability to perform under such contracts and significantly negatively impact our revenues and profit margin. Further, should we have to replace our single supplier, or renegotiate the terms of our current supplier agreement, we may be unable to establish or obtain competitively favorable terms, which would also negatively impact our revenues and profit margin under our defense customer contracts.operations.

Moreover,Lack of diversification increases our susceptibility to adverse events affecting our key customers. For example, the expiration, termination, or renegotiation of contracts, whether from the integration of these customers as a result of the acquisition or otherwise, could lead to uncertainty and volatility in our revenue stream. Lack of diversification increases our susceptibility to adverse events affecting our key customers. The loss of a significant customer or a substantial reduction in business volume from key accounts could have a material adverse effect on our financial performance, cash flows, and ability to fund our operations, capital expenditures, and strategic initiatives. While we may seek to mitigate the risks associated with customer concentration through diversification efforts, expanded market reach, and enhanced customer relationship management, there can be no assurance that such measures will be successful in offsetting the potential adverse impacts of customer concentration. The loss of a significant customer or a substantial reduction in business volume from key accounts could have a material adverse effect on our financial performance, cash flows, and ability to fund our operations, capital expenditures, and strategic initiatives.

Our future growth and success depend on our ability to sell effectively to, and manage relationships with,with large enterprise and defense customers.

The development of our lithium-ion battery cells is dependent, in part, upon successfully identifying and meeting our customers’ specifications for those products. Developing and manufacturing lithium-ion batteries with specifications unique to a customer increases our reliance upon that customer for purchasing our products at sufficient volumes and prices in a timely manner. If we fail to identify or develop products on a timely basis, or at all, that comply with our customers’ specifications or achieve design wins with customers, we may experience a significant adverse impact on our revenue and margins. Even if we are successful in selling lithium-ion batteries to our customers in sufficient volume, we may be unable to generate sufficient profit if per-unit manufacturing costs exceed per-unit selling prices. Manufacturing lithium-ion batteries to customer specifications requires a longer development cycle, as compared to discrete products, to design, test and qualify, which may increase our costs. We have limited experience with this customer design process and currently have limited capacity at Fab2.our manufacturing facilities. If we are unsuccessful in meeting customer specificationsspecifications, scaling our manufacturing capabilities and/or providing anticipated post-delivery product support services, we may be unable to effectively manage and grow our business, including to developdeveloping products for multiple customers’ design specifications in a timely manner, which could harm our business, prospects, financial condition and operating results.

Producing lithium-ion batteries that meet the requirements for wide adoption by industrial and consumer applications is a difficult undertaking. We are still in the early stagestages of commercialization and face significant challenges achieving the long-term energy density targets for our products and producing our products in commercial volumes. Some of the challenges that could prevent the widespread adoption of our lithium-ion batteries include difficulties with (i) increasing the volume, yield and reliability of our cells, (ii) increasing manufacturing capacity to produce the volume of cells needed to meet demand, (iii) optimizing higher volume manufacturing equipment for scale, (iv) packaging our batteries to ensure adequate cycle life, (v) material cost reductions, (vi) qualifying new vendors, (vii) expanding supply chain capacity, (viii) the completion of rigorous and challenging battery safety testing required by our customers or partners, including but not limited to, performance, cycle life and abuse testing and (x) the development of the final manufacturing processes for optimal yield and throughput.

We have accelerated our manufacturing operations at Fab2 in Malaysia. In the second quarter of 2024, we completed SAT and began production of batteries on our Agility line, and in the fourth quarter of 2024, we shipped samples to customers. We also completed FAT for our HVM line, and subsequently completed SAT for our HVM line at the end of 2024. We have shipped customers EX-1M and EX-2M samples from Fab2; however, we may encounter yield, material cost, performance and manufacturing process challenges prioras we develop products from the AI-1 platform and ramp to volume commercial production. Further, we are likely to encounter engineering challenges as we increase the capacity of our batteries and efficiency of our manufacturing process. If we are unable to overcome these challenges in producing our batteries, our business could fail.

In October 2023, we acquired Routejade, a manufacturer of lithium-ion batteries in South Korea.Korea, and in April 2025, acquired a second manufacturing facility in South Korea from SolarEdge. Although we have limited experience with acquisitions, we may in the future undertake acquisitions of other companies, products or technologies for the ongoing development and expansion of our operations. We may be unable to identify suitable acquisition candidates and/or complete acquisitions on favorable terms, if at all. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any acquisitions we complete could be viewed negatively by existing and potential customers, vendors, suppliers, business partners or investors. For example, while we believe that the SolarEdge assets and facility expansion in South Korea will support capacity expansion at Fab2 and add production capacity for South Korean defense programs, there is no assurance that we will be able to realize these strategic benefits from the SolarEdge acquisition. In addition, we may not be able to integrate acquired businesses successfully or effectively manage the combined company following an acquisition. If we fail to successfully integrate our acquisitions, or the people or technologies associated with those acquisitions, into our company, the results of operations of the combined company could be adversely affected.

Any integration process will require significant time and resources, attention from management and will likely disrupt the ordinary functioning of our business, and we may not be able to manage the process successfully, which could harm our business. In addition, we may not successfully evaluate or utilize the acquired technology and accurately forecast the financial impact of an acquisition transaction, including accounting charges. We may not be able to fully realize the anticipated profits or other benefits of any particular transaction in the timeframe we expect or at all due to competition, market trends, additional costs or investments, the actions of advisors, suppliers or other third parties, or other factors. The Routejade acquisition resulted in, and futureFuture acquisitions may result in,in significant costs and expenses. Further, if we fail to identify significant issues with any acquisition target during the due diligence process, we may be liable for significant and unforeseen liabilities.

Fluctuations in foreign currency exchange rates orand interest rates have had, and could continue to have, an adverse impact on our financial condition and results of operations.

Operational problems with our manufacturing equipment subject us to safety risks which, if not adequately addressed, could result in the personal injury to or death of workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in production. From time to time, we have experienced fires at our manufacturing facilities. While we have retained industry experts and designed our factories with appropriate safety precautions to address the fire risk of manufacturing batteries and to minimize the impact of any such event, if these precautions are inadequate or an event larger than expected, wesuch occurrences could haveresult in significant equipmentequipment, product or facility damage that wouldcould impact our abilitylead to delivermanufacturing productdelays, adversely affect the timing of deliveries to customers and require additional cash to recover.

In addition, operational problems may result in environmental damage, administrative fines, increased insurance costs and potential legal liabilities. All of these operational problems could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects. Further, if other battery manufacturers experience fire hazards that result in personal injury or death, it may lead to public perception challenges and unfavorable conditions for the battery manufacturingall industry asparticipants, aregardless whole.of their individual safety records.

We develop lithium-ion battery cells for industrial and consumer equipment and intend to supply these lithium-ion battery cells for industrial and consumer applications. Historically, lithium-ion batteries in laptops and cellphones have been reported to catch fire or vent smoke and flames, and more recently, news reports have indicated that several EVs that use high-power lithium-ion batteries have caught on fire. Any such adverse publicity or reports reflecting fire and other safety hazards associated with the use of high-power batteries in automotive or other industrial or consumer applications will negatively affect our business and prospects. In addition, any failure of our battery cells may cause damage to the industrial or consumer equipment or lead to personal injury or death and may subject us to lawsuits.

Developments in alternative technologies, improvements in batteries technology made by competitors, or changes in our competitors’ respective business models may materially adversely affect the sales, pricing and gross margins of our batteries. For example, large battery companies are becoming increasingly vertically integrated with respect to cathode materials, with the consequence being that next generation LCO material development will be proprietary to large battery companies. If a competing technology is developed that has superior operational or price performance, our business will be harmed. Further, our financial modeling assumes that, in addition to improving our core architecture over time, we are able to retain access to state-of-the-art industry materials as they are developed. If industry battery competitors develop their own proprietary materials, we would be unable to access these and would lose our competitive advantage in the market. If we fail to accurately predict and ensure that our battery technology can address customers’ changing needs or emerging technological trends, or if our customers fail to achieve the benefits expected from our lithium-ion batteries, our business will be harmed.

Our success depends on our ability to attract and retain our executive officers, key employees and other qualified personnel on a global basis, and, as a relatively small company with key talent residing in a limited number of employees, our operations and prospects may be severely disrupted if we lose any one or more of their services. There have been, and may continue to be, changes in our management team resulting from the departure or onboarding of executives and key employees, which could disrupt our business. For example, in addition to turnover of key executive positions in 2023, our Chief Financial Officer stepped down in December 2024 and2024, we created a new role and appointed a Chief Accounting Officer at the end of December 2024.2024, appointed a new Chief Financial Officer in April 2025 and our Chief Operating Officer announced his retirement, effective February 2026. Such changes in our executive management team or workforce may be disruptive to our business, divert management’s attention, result in a loss of knowledge and negatively impact employee morale.

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. The following MD&A describes the principal factors affecting our results of operations, financial resources, liquidity, contractual obligations and commitments, and critical accounting estimates during the fiscal year 2025, compared with the fiscal year 2024. A detailed discussion of the fiscal year 2024 compared with the fiscal year 2023 is not included herein and can be found in the MD&A section in our 2024 Annual Report on Form 10-K, filed with the SEC on February 25, 2025, which is incorporated herein by reference. This discussion and analysis contain forward-looking statements based upon our current expectations, estimates and projections that involve risks and uncertainties. Actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report on Form 10-K. The management of Enovix Corporation are referred to as the “Company,” “we,” “us,” “our” and “Enovix.”

Our fiscal year is the 52 or 53-week period ending on the Sunday closest to December 31.31 depending on the calendar year. Accordingly, we will have a 53-week fiscal year every five or six years and our fiscal year 2026 will consist of 53 weeks. Our fiscal years 2025, 2024, 2023, and 20222023 consisted of 52 weeks, which ended on December 28, 2025, December 29, 2024, and December 31, 2023, and January 1, 2023, respectively. All period references are to thethese fiscal periods unless otherwise indicated.

We generate revenue from the sale of (a) batteries and battery pack products (“Product Revenue”) and (b) engineering revenue contracts (“Service Revenue”) for the development of lithium-ion battery technology.. Our performance and future success depend on several factors that present significant opportunities, but also pose risks and challenges as described in Part I, Item 1A of this Annual Report on Form 10-K.

In June 2022, we began to generate revenue from our Fab1 in Fremont, California. In October 2023, we acquired Routejade, a manufacturer of electrode coating and battery packpacks for customers worldwide. We recognize revenue within the scope of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

Our Productrevenue Revenueconsists isof primarilyproduct generatedrevenue, resulting from sellingthe sale of lithium-ion batteries orand battery packspack products (“Product Revenue”) to commercial customers and defense contractors.customers. Product Revenue is recognized once we have satisfied the performance obligations as defined in the sales agreement, which is generally satisfied upon transfer of control of goods. Control is transferred upon delivery forof ourthe products.product. For certain customized products with customer acceptance criteria specified in the sales agreement, the performance obligations are generally satisfied upon our customer’s acceptance. Payment terms can vary depending on the contract and it is generally required within 90 days or less from the delivery date or the acceptance date of our product. The amount of revenue recognized reflects the consideration for the product sold.

Cost of revenue includes materials, labor, depreciation and amortization expense, freight costs and other direct costs related to manufacturing our products and service contracts. Labor consists of personnel-related expenses such as salaries andsalaries, benefits, and stock-based compensation. We anticipate that cost of revenue will continue to increase as we optimize and bring-upexpand our production line.

Research and development expenses consist of engineering services, allocated facilities costs, depreciation, development expenses, materials, labor and stock-based compensation related primarily to our (i) technology development, and (ii) design, construction, and testing of preproduction prototypes and models, and (iii) certain costs related to the design, construction and operation of our pilot plant that are not of a scale economically feasible to us for commercial production.models. Research and development costs are expensed as incurred.

To date, research and development expenses have consisted primarily of personnel-related expenses for scientists, experienced engineers and technicians as well as costs associated with the expansion and ramp up of our engineering and manufacturing facility, materials and supplies to support the product development and process engineering efforts. As we ramp up our engineering operations to complete the development of batteries and required process engineering to meet customer specifications, we anticipate that research and development expenses will continue to increase for the foreseeable future as we expand hiring of scientists, engineers and technicians and continue to invest in additional plant and equipment for product development, building prototypes and testing of batteries. We established a research and development center in India to focus on developing machine learning algorithms, battery modeling, material screening and electrolyte optimization. We also established a research and development team in Malaysia.

Impairment of equipment was a result of our disposal of machinery and equipment that were identified to have no future or alternative usage.use.

Restructuring cost was the result of our restructuring plans in 2023 and 2024, which included workforce reductions, relocation of our Fab1 manufacturing operations from California to Malaysia and disposals of our long-lived assets located in Fremont that have no future or alternative use. Please refer to Note 15 “Restructuring Costs” of the notes to our consolidatedConsolidated financialFinancial statementsStatements in Part II, Item 8 of this Annual Report on Form 10-K for further details.

N/M –- Notnot meaningful

Revenue for fiscal years 20242025 and 20232024 waswere $23.1$31.8 million and $7.6$23.1 million, respectively. Revenue in both years primarily resulted from the product shipments from our facility in South Korea, which was acquired in October 2023. Revenue for fiscal year 20232024 includedand $7.3 million of2025 revenue fromreflected theproduct Routejadeshipments acquisition.to South Korea defense contractors and industrial and consumer electronics customers.

The $15.4$8.7 millionmillion, increaseor in revenue was primarily attributable to earning a full year of product revenue from the acquired business of Routejade in fiscal year 2024 versus only two months of revenue from the acquired business in fiscal year 2023. Of the $15.4 million38%, increase in revenue compared to fiscal year 2023,2024 $6.4was primarily attributable to higher shipment volumes to South Korean defense contractors, partially offset by changes in customer mix. Of the $8.7 million increase in revenue, $7.3 million of that increase was derived from higher shipment volumes to a South KoreaKorean defense contractor, and the remaining increase was attributable to higher shipment volumes to industrial and consumer electronics customers.

Cost of revenue for the fiscal year 20242025 was $25.1$25.7 million, compared to $63.1$25.1 million for the prior fiscal year 2023.2024. The decreaseincrease of $37.9$0.6 millionmillion, or 60%2%, was primarily attributable to the fact that there was nohigher production generatedvolumes from Fab1 during thein fiscal year 2024.2025, including increased labor costs of $1.3 million and additional manufacturing costs associated with higher revenue. With no production in Fab1 and minimal production in Fab2 in fiscal year 2025 and 2024, a majority of the factory expenses associated with Fab1 and Fab2 were classified as research and development expenses instead of cost of revenues in fiscal year 2025 and 2024. The transition from Fab1 to Fab2 was a part of the 2023 and 2024 Restructuring Plans (as defined in Note 15 “Restructuring Costs” of theour notesConsolidated toFinancial the consolidated financial statementsStatements included in Part II, Item 8 of this Annual Report on Form 10-K). These restructuring plans also included U.S. workforce reductions in the fourth quarter of fiscal year 2023 and the second half of fiscal year 2024. InThese addition, the decreases in the cost of revenueincreases were partially offset by inventorythe write-offsabsence of $1.8a $1.9 million andnon-recurring ainventory $17.1step-up millionamortization increaserecorded in manufacturing costs associated with the increase of revenue as compared to fiscal year 2023.2024 related to the Routejade acquisition.

In addition, we anticipate our factory expenses will increase as we continue to hireramp additional personnel to support the Fab2 production lines andup our Fab2 manufacturing facility.operations.

We face risks associated with customer concentration, which could adversely affect our financial condition, results of operations, and business prospects. Our current revenue stream is derived largely from a limited number of key customers, particularly those in the defense sector. One customer, a defense subcontractor in South Korea, accounted for the majority of our total revenue for the fiscal quarter ended AprilJuly 5, 2026 and fiscal year 2025. As a result of this customer concentration, our financial performance is highly sensitive to the retention, performance, and ongoing demand from our significant customers. The loss, or material reduction in business, from any significant customer, whether due to strategic shifts, sourcing decisions, financial distress, bankruptcy, or other factors, could result in a sudden and material decline in our revenue and cash flows. Moreover, the terms and conditions of contracts with these key customers may not provide us with sufficient protection against fluctuations in demand, changes in pricing, or competitive pressures, which could have a material adverse impact on our business, financial condition, and results of operations.

We incurred net loss attributable to Enovix of approximately $38.3$43.1 million and $23.5$44.5 million, respectively, for the fiscal quarters ended AprilJuly 5, 2026 and MarchJune 30,29, 2025, and had an accumulated deficit of approximately 1.02$1.06 billion as of AprilJuly 5, 2026. We believe that we will continue to incur operating and net losses each quarter until at least the time we begin significant production of our lithium-ion batteries.

Producing lithium-ion batteries that meet the requirements for wide adoption by industrial and consumer applications is a difficult undertaking. We are still in the early stages of commercialization and face significant challenges achieving the long-term energy density targets for our products and producing our products in commercial volumes. Some of the challenges that could prevent the widespread adoption of our lithium-ion batteries include difficulties with (i) increasing the volume, yield and reliability of our cells, (ii) increasing manufacturing capacity to produce the volume of cells needed to meet demand, (iii) optimizing higher volume manufacturing equipment for scale, (iv) packaging our batteries to ensure adequate cycle life, (v) material cost reductions, (vi) qualifying new vendors, (vii) expanding supply chain capacity, (viii) the completion of rigorous and challenging battery safety testing required by our customers or partners, including but not limited to, performance, cycle life and abuse testing and (xix) the development of the final manufacturing processes for optimal yield and throughput.

In October 2023, we acquired Routejade, a manufacturer of lithium-ion batteries in South Korea, and in April 2025, acquired a second manufacturing facility in South Korea from SolarEdge.SETK. Although we have limited experience with acquisitions, we may in the future undertake acquisitions of other companies, products or technologies for the ongoing development and expansion of our operations. We may be unable to identify suitable acquisition candidates and/or complete acquisitions on favorable terms, if at all. If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any acquisitions we complete could be viewed negatively by existing and potential customers, vendors, suppliers, business partners or investors. For example, while we believe that the SolarEdgeSETK assets and facility expansion in South Korea will support capacity expansion at Fab2 and add production capacity for South Korean defense programs, there is no assurance that we will be able to realize these strategic benefits from the SolarEdgeSETK acquisition. In addition, we may not be able to integrate acquired businesses successfully or effectively manage the combined company following an acquisition. If we fail to successfully integrate our acquisitions, or the people or technologies associated with acquisitions, into our company, the results of operations of the combined company could be adversely affected.

We are exposed to the effects of changes in both foreign currency exchange rates and interest rates. Because a significant portion of our cash and investments are held in U.S. Treasury securities and other interest-bearing instruments, movements in interest rates can materially affect our investment income and the fair value of our marketable securities. Rising rates generally increase interest income on new investments, while falling rates could reduce interest income. In addition, we conduct a material portion of our operations outside of the United States, including South Korea, Malaysia and other countries in Asia. Fluctuations in foreign currency exchange rates, particularly for the Korean won, Indian rupee, and Malaysian ringgit, could have an adverse impact on our financial condition and results of operations.

Our success depends on our ability to attract and retain our executive officers, key employees and other qualified personnel on a global basis, and, as a relatively small company with key talent residing in a limited number of employees, our operations and prospects may be severely disrupted if we lose any one or more of their services. There have been, and may continue to be, changes in our management team resulting from the departure or onboarding of executives and key employees, which could disrupt our business. For example, in addition to turnover of key executive positions in 2023, our Chief Financial Officer stepped down in December 2024, we created a new role and appointed a Chief Accounting Officer at the end of December 2024, appointed a new Chief Financial Officer in April 20252025, and our Chief Operating Officer announced his retirement, effective February 2026, after which we appointed a new Chief Operating Officer in the third quarter of fiscal 2026. Such changes in our executive management team or workforce may be disruptive to our business, divert management’s attention, result in a loss of knowledge and negatively impact employee morale.

We face increased legal, accounting, administrative and other costs and expenses as a public company that we would not incur as a private company. The Sarbanes-Oxley Act of 2002, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increaseincreases costs and makemakes certain activities more time consuming. A number of those requirements require us to carry out activities that we had not done previously as a private company. For example, we created new board committees and adopted new internal controls and disclosure controls and procedures.

The accounting method for reflecting the Convertible Senior Notes, including our Affiliate Notes (each as defined in Note 6 “Borrowings” of our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q,10-Q), accruing interest expense for the Convertible Senior Notes and reflecting the underlying shares of our common stock in our reported diluted earnings per share may adversely affect our reported earnings and financial condition.

We have expended significant resources as a public company to comply with Section 404(a) of the Sarbanes-Oxley Act of 2002, which compliance costs may increase as our operations expand. Any failure to maintain effective controls and procedures could negatively impact our business.

We are subject to Section 404 of the Sarbanes-Oxley Act of 2002. The standards required for a public company under Section 404(a) of the Sarbanes-Oxley Act of 2002 are significantly more stringent than those that were required of us as a privately held company. Management may not be able to maintain effective controls and procedures that adequately respond to these increased regulatory compliance and reporting requirements. Further, we need to incorporate any future acquired acquisitions into our existing system of internal controls and procedures, which will further increase our compliance costs, may require additional staff, and will likely divert the attention of management in the transition and integration period. If we are not able to maintain the requirements of Section 404(a) in a timely manner or with adequate compliance, we may not be able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our securities.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of our common stock in the public market, the market price of our common stock could decline. We have a total of 218,153,440219,448,535 shares of common stock outstanding as of MayAugust 8,7, 2026. All of our outstanding shares are eligible for sale in the public market, other than shares and options held by directors, executive officers, and other affiliates that are subject to volume limitations under Rule 144 of the Securities Act, various vesting agreements, and restrictive legends that limit sales other than under an effective registration statement. Additionally, the shares of common stock subject to outstanding options and restricted stock unit awards under our equity incentive plans and the shares reserved for future issuance under our equity incentive plans will become eligible for sale in the public market upon issuance, subject to the applicable provisions of our insider trading policy.

This exclusive-forum provision would not apply to suits brought to enforce a duty or liability created by the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) or any other claim for which the federal courts have exclusive jurisdiction, or the Securities Act of 1933, as amended (the “Securities Act”). In addition, to prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, U.S. federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, both state and federal courts have jurisdiction to entertain such claims. As noted above, our amended and restated certificate of incorporation provides that U.S. federal district courts will be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act. Due to the concurrent jurisdiction for federal and state courts created by Section 22 of the Securities Act over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, there is uncertainty as to whether a court would enforce the exclusive formforum provision. Our amended and restated certificate of incorporation further provides that any person or entity holding, owning or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions. Investors also cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

Outside the U.S., the U.K. and EU General Data Protection Regulation (“GDPR”) applies to some of our operations in Europe. Our data processing activities in Asia are subject to new and emerging data privacy regimes, including China’s Personal Information Protection Law 2021 (“PIPL”) and in India’s Digital Personal Data Protection Act (“DPDPA”).

Our employees are instructed by Enovix IT not to use unauthorized generative AI and machine learning (“ML”) technologies to perform their work. However, employees’ indirect use of generative AI in unapproved third-party software and services may still occur, risking the inadvertent disclosure of personal data and sensitive company information to third parties. As Governments have passedpassed, and are likely to passcontinue to enact additional laws regulating generative AI, our use of this technology could result in additional compliance costs, regulatory investigations and actions, and lawsuits. If we are unable to use generative AI, it could make our business less efficient and result in competitive disadvantages.

To date, we have concentrated our operational efforts on researching, developing and commercializing the next generation technology behind our silicon-anode lithium-ion battery cell architecture. MostWe recently, werecently launched the AI-1TM product platform, our Artificial Intelligence ClassTM batteries for the next generation of mobile smartphones, smart eyewear and other AI-enabled devices that require significantly higher total energy storage and power to perform AI functions locally. We also serve customers in defense and industrial markets through our conventional and silicon-dopedsilicon-blended graphite battery products across a range of battery sizes and configurations optimized for high discharge rate applications, such as drones, subsea systems, and munitions defense systems.

Drones represent anothera priority area of focus,focus for us, as we believe our products provide a strong competitive advantage for serving customers that are increasingly prioritizing higher energy density, extended flight time, and supply-chain diversification. InTo support this anticipated growth, we have invested in additional capacity in our facility and launched MX-1, our first silicon-enhanced product platform, which is designed for rugged applications requiring rapid discharge and high gravimetric energy density. Finally, in addition to the smartphone, smart eyewear and defense and industrial markets, we are pursuing deployment of our technology across other edge-AI applications, as well as computing and EVs, among others.

We generate revenue from the sale of batteries and battery pack productsproducts. (“ProductAs Revenue”).we Ourcontinue performanceto commercialize our battery technologies and expand our product offerings, our operating results and future successgrowth will depend onon, severalamong other factors, the successful qualification and adoption of our products by customers, our ability to scale manufacturing efficiently, and the development of demand across our target markets. These factors that present significant opportunities,opportunities butas alsowell poseas risks and challengesuncertainties, as described below and in the section titled “Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q.

Global Risks. Our manufacturing operations in Malaysia and South Korea, and our supply chain for raw materials and components, are subject to evolving trade policies, tariffs, export restrictions, and geopolitical tensions. We face risks related to significant changes in United States trade policy, including tariffs on products imported from China and other countries and potential retaliatory actions by those countries. Escalating geopolitical tensions, changes in tariff regimes affecting components sourced from or processed in China, or disruptions to our Malaysia-based manufacturing operations could increase our cost of production and adversely affect our margins and competitive position. Although we do not currently anticipate a material change in risk to our near-term outlook from the existing trade environment, the extent and future outcome of these global risks are highly unpredictable and uncertain and may adversely affect our future financial condition, results of operations, and cash flows.

Cost of revenue includes materials, labor, depreciation and amortization expense, freight costs and other direct costs related to manufacturing our products and service contracts. Labor consists of personnel-related expenses such as salaries, benefits, and stock-based compensation. We anticipate that cost of revenue will continue to increase as we optimize and expand our production line. Gross margin may also fluctuate from period to period as our product and customer mix evolves during this early stage of commercialization.

Comparison of the fiscal quarter and fiscal year-to-date ended AprilJuly 5, 2026 to the fiscal quarter and fiscal year-to-date ended MarchJune 30,29, 2025

Revenue for the fiscal quarter ended AprilJuly 5, 2026 was $7.6$9.0 million, compared to $5.1$7.5 million for the fiscal quarter ended MarchJune 30,29, 2025. The increase in revenue of $2.5$1.6 million, or 49%,21%, was principally due to increased product shipments from ourhigher South Korea facilitysales to defense contractors, industrial customers, and consumer electronics customers.

As of AprilJuly 5, 2026 and December 28, 2025, we had $4.6$4.0 million and $5.3 million of deferred revenue on our Condensed Consolidated Balance Sheets, respectively.Sheets.

Cost of revenue for the fiscal quarter ended AprilJuly 5, 2026 was $6.0$7.7 million, compared to $4.8$5.5 million for the fiscal quarter ended MarchJune 30,29, 2025. The increase in cost of revenue of $1.2$2.2 million, or 25%,40%, was primarily attributable to higher production volume duringsupporting the revenue growth netted with the lower cost to produce the defense product resulting from the acquisition of assets from SolarEdge Technologies Korea, Ltd. (“SETK”) in the second fiscal quarter endedof April 5, 2026.2025.

Selling, general and administrative expenses for the fiscal quarter ended AprilJuly 5, 2026 were $18.9$20.2 million, compared to $16.9$17.5 million for the fiscal quarter ended MarchJune 30,29, 2025. The increase of $2.0$2.6 million, or 12%,15%, was primarily attributable to ahigher $1.2salaries, millionbenefits increase ofand stock-based compensation expense,of $0.6$1.9 million, higher consulting expenses of $0.9 million, facilities expenses of $0.4 million in professional fees and higher depreciation expense of $0.4$0.3 million related to the assets acquired from SolarEdge Technology Korea in the second fiscal quarter of 2025.million. These increases were partially offset by ahigher one-timecommon propertyexpenses taxallocated refundto R&D of $0.6$0.3 million resultedand fromacquisition acosts countyincurred auditin concluded2025 duringof fiscal$0.7 quarter ended April 5, 2026.million.

For the fiscal quarter and fiscal year-to-date ended AprilJuly 5, 2026, the changechanges in fair value of common stock warrants of $6.4$0.2 million wasand $6.6 million, respectively, were mainly attributable to a decrease in the fair value of the 5,500,000 Private Placement Warrants (as defined in Note 3 “Fair Value Measurement” of our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q). For the fiscal quarter and fiscal year-to-date ended MarchJune 30,29, 2025, the changechanges in fair value of common stock warrants of $15.8$5.9 million wasand $9.9 million, respectively, were attributable to a decreasefluctuation in the fair value of the 5,500,000 Private Placement Warrants.

The decrease in fair value of the Private Placement Warrants in each of these periods was primarily due to a decrease in our common stock price during the respective fiscal quarter. In addition, for fiscal quarter ended July 5, 2026, the fair value was also impacted by these warrants’ short remaining expected term. The Private Placement Warrants were unexercised and expired on July 14, 2026.

Interest income for fiscal quarter ended AprilJuly 5, 2026 was $5.8$5.1 million, compared to $2.4 million during the fiscal quarter ended MarchJune 30,29, 2025. The increase of $3.3$2.7 million, or 137%,112%, was primarily attributable to higher average cash balance and yields earned on short-term and long-term investments.

Interest expense for the fiscal quarter ended AprilJuly 5, 2026 was $7.0$6.5 million, compared to $1.7 million for the fiscal quarter ended MarchJune 30,29, 2025. The increase of $5.3$4.8 million, or 308%,282%, was primarily attributable to the issuance of additional convertible senior notes in the third fiscal quarter of 2025.

Other Income,Income (Expense), Net

Other income, net for the fiscal quarter ended MarchJuly 30,5, 20252026 was $2.4$1.0 million, which primarily consistsconsisted of a one-time importrealized dutyforeign forgivenessexchange ofgain $2.4related million.to the Malaysia tenancy agreement being modified.

Income tax benefit for the fiscal quarter ended AprilJuly 5, 2026 was $0.1$0.4 million compared to an income tax benefit of $0.2$0.9 million for fiscal quarter ended MarchJune 30,29, 2025. The tax benefit was calculated based on the estimated annual effective tax rate. The decrease of $0.1$0.5 million in tax benefit was primarily attributable to lower income tax benefit on the losses generated from certain foreign jurisdictions.

We have incurred operating losses and negative cash flows from operations since inception through AprilJuly 5, 2026 and expect to continue to incur operating losses for the foreseeable future. As of AprilJuly 5, 2026, we had cash, cash equivalents, restricted cash, and short-term and long-term investments of $582.7$552.1 million, working capital of $507.6$453.6 million and an accumulated deficit of $1.02$1.06 billion.

For the fiscal year-to-date ended AprilJuly 5, 2026, we used $3.2$12.8 million of our cash to fund our acquisitions of property and equipment. We will continue to increase our property and equipment purchases in the near future to support the build-out of our manufacturing facilities and our battery manufacturing production. For more information regarding our purchase commitments, please see the contractual obligations and commitments section below.

Based on the anticipated spending and timing of expenditures to support operational development and market expansion, we currently expect that our cash will be sufficient to meet our funding requirements over the next twelve months from the date this Quarterly Report on Form 10-Q is filed. We believe we will meet longer-term expected future cash requirements and obligations through a combination of available cash, cash equivalents, operating cash flow improvement as revenue scales, and access to debt or equity capital markets. As of AprilJuly 5, 2026, $76.6 million remained available under the Company’s share repurchase program and the Company intends to evaluate repurchase activity on an opportunistic basis while prioritizing liquidity to support operational growth. We have made our estimates based on historical experience and various other relevant factors and we believe that they are reasonable. Actual results may differ from our estimates, and we could utilize our available capital resources sooner than we expect.

Fiscal QuarterYear-to-Date Ended AprilJuly 5, 2026 Compared to Prior Fiscal QuarterYear-to-Date Ended MarchJune 30,29, 2025

Net cash used in operating activities was $33.1$54.9 million for the fiscal quarteryear-to-date ended AprilJuly 5, 2026. Net cash used in operating activities consisted of a net loss of $38.3$81.3 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily include the change in fair value of the Private Placement Warrants of $6.4$6.6 million, stock-based compensation expense of $11.8$24.8 million and depreciation and amortization expense, net of accretion of $9.4$19.4 million.

Net cash used in operating activities was $16.9$42.8 million for the fiscal quarteryear-to-date ended MarchJune 30,29, 2025. Net cash used in operating activities consisted of a net loss of $23.5$67.8 million, adjusted for non-cash items and the effect of changes in working capital. Non-cash adjustments primarily include the change in fair value of Private Placement Warrants of $15.8$9.9 million, stock-based compensation expense of $12.0$26.1 million and depreciation and amortization expense, net of accretion on investments of $8.4$17.3 million.

Net cash used byin investing activities was $15.3 million for the fiscal quarteryear-to-date ended MarchJuly 30,5, 2025 was $64.4 million,2026, which primarily consisted of $6.3$12.8 million of equipment purchases and $58.1$230.1 million of short-term investment purchases.purchases offset by maturities of $227.6 million of investments.