Enovix Corporation — Form 10-Q Summary
Reporting period: Quarter ended June 30, 2021; filed August 13, 2021. This quarter’s financial statements are those of Rodgers Silicon Valley Acquisition Corp. (RSVAC), the blank-check company that later became Enovix Corporation—not operating results for Legacy Enovix. The merger closed on July 14, 2021.
Financial results and liquidity
RSVAC had no operating revenue or business operations through June 30. Its expenses related to formation, the IPO and the proposed business combination. The reported net loss was dominated by a non-cash increase in the fair value of warrant liabilities.
| Metric | Three months ended June 30, 2021 | Six months ended June 30, 2021 |
|---|---|---|
| Revenue | None reported | None reported |
| Formation and operational costs | $660,945 | $1,240,288 |
| Change in warrant-liability fair value | $(117,485,000) | $(168,330,000) |
| Net loss | $(118,139,039) | $(169,492,004) |
| Net loss per non-redeemable common share | $(8.39) | $(14.71) |
| Net cash used in operating activities | Not presented | $(663,989) |
At June 30, cash outside the trust was $142,943; trust assets were $230,011,447, primarily U.S. government securities and money-market holdings. Current liabilities totaled $196,790,205, including $188,110,000 of warrant liabilities and an $8,050,000 deferred underwriting fee. The warrant liability is a fair-value accounting measure, not conventional funded debt. The filing reports no long-term debt or off-balance-sheet financing arrangements for RSVAC.
Compared with December 31, 2020, warrant liabilities rose from $19,780,000 to $188,110,000, driving most of the period’s reported loss. Trust assets were broadly unchanged. The filing does not provide comparable operating results for Legacy Enovix in these financial statements.
Merger, financing and subsequent events
- At the July 14 merger closing, 15 public shares were redeemed for $150. Legacy Enovix holders received 103,995,643 shares; PIPE investors purchased 12,500,000 shares at $14 each for $175 million.
- The company reported approximately $405.2 million of gross proceeds in connection with the merger, including approximately $230.0 million from the trust and $175 million from the PIPE. It incurred a $7 million PIPE fee and approximately $16.6 million in transaction costs.
- Legacy Enovix repaid a $15 million related-party bridge loan, including $156,696 of interest, on July 14.
- As of August 12, 2021, 145,245,628 common shares were issued and outstanding.
Outlook, risks and unusual items
RSVAC itself gave no operating guidance. The filing’s risk disclosures describe Legacy Enovix as an early-stage battery company expecting continued losses and significant spending, with significant production not expected until at least 2023. They identify manufacturing scale-up, energy-density targets, customer qualification, supplier availability and cost, competition, product safety and the need for additional manufacturing capacity and capital as major uncertainties. The filing says merger proceeds were expected to fund the operating plan for at least 12 months, while warning that estimates could prove inaccurate and additional financing may be needed.
The filing cites Legacy Enovix net losses of approximately $14.3 million for the three months ended June 30, 2021 and an accumulated deficit of approximately $237.7 million at that date; these are separate from RSVAC’s reported results. It also notes prior going-concern doubt for Legacy Enovix, with the company stating that merger proceeds were expected to address near-term funding needs.
Two lawsuits related to the merger alleged fiduciary-duty breaches and deficient disclosures; plaintiffs sought damages and injunctive relief, and one also sought rescission or rescissory damages. The company said it could not estimate a possible loss, considered the claims without merit and intended to defend them. Disclosure controls were deemed ineffective because of a continuing material weakness involving independent review of technical accounting matters; remediation actions were underway.
Important facts for investors to verify
- Distinguish RSVAC’s pre-merger SPAC financial statements and warrant-related fair-value losses from Legacy Enovix’s operating performance.
- Confirm merger proceeds net of transaction costs and how much cash was available to fund manufacturing scale-up and operations.
- Track production-line installation, qualification, yields, customer approvals and progress toward commercial-volume production.
- Assess whether customer design wins convert to purchase orders and whether suppliers can provide production volumes at acceptable cost.
- Monitor cash runway, future financing needs, the material weakness remediation and the outcome of the merger-related lawsuits.