Enovix (ENVX) risk factors, 2025 10-K

Risks Related to Our Manufacturing and Scale-Up

1. 01We will need to improve our energy density, cycle life, fast charging, capacity roll off and gassing metrics in order to stay ahead of competition over time, which is difficult, and we may not be able to do
2. 02We rely on a new and complex manufacturing process for our operations, and achieving volume production involves a significant degree of risk and uncertainty in terms of operational performance such as yield and costs
3. 03Even if we are able to successfully complete development of and modify, as necessary, this new and complex manufacturing process, we may not be able to produce our lithium-ion batteries in commercial volumes in a cost-effective manner
4. 04We rely on a manufacturing agreement with a Malaysia-based company for some of the facilities, procurement, and personnel needs of our operations. Changes to our relationship with such third-party contract manufacturer, expected or unexpected, may result in delays or disruptions that could harm our business
5. 05Our operations in international markets, including our manufacturing operations, expose us to operational, financial and regulatory risks, as well as risks relating to geopolitical tensions and conflicts, including changes to trade policies and regulations
6. 06We expect that our international activities will continue to grow for the foreseeable future as we continue to pursue opportunities in existing and new international markets, which will require significant dedication of management attention and financial resources
7. 07We may be unable to adequately control the costs associated with our operations and the components necessary to build our lithium-ion battery cells

Risks Related to Our Customers

1. 08Lengthy sales cycles, unpredictable safety risks and certain provisions of defense and other customer contracts may negatively impact our ability to maintain and grow our customer base, which could adversely affect our business and future prospects
2. 09objections. If unanticipated product safety problems arise, it may raise warranty costs and adversely affect revenue and profit
3. 10If our batteries fail to perform as expected, our ability to develop, market and sell our batteries could be harmed
4. 11We have a concentration of customer accounts in the defense sector and dependence on these customer accounts may create a risk to our financial stability
5. 12Our future growth and success depend on our ability to qualify new customers and the customer qualification cycles can take years to complete
6. 13Our future growth and success depend on our ability to sell effectively to, and manage relationships with, large enterprise and defense customers
7. 14We may not be able to accurately estimate the future supply and demand for our batteries, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience delays
8. 15Increases in sales of our lithium-ion battery cells may expose us to the risks associated with manufacturing batteries for unique customer specifications and increase our dependency upon specific customers, including due to the costs to develop and qualify our system solutions

Risks Related to Our Business

1. 16We have a history of financial losses and expect to incur significant expenses and continuing losses for the foreseeable future
2. 17If we are unable to develop our business and effectively commercialize our products as anticipated, we may not be able to generate revenue or achieve profitability
3. 18We face significant barriers in our attempts to produce our products, our products are still under development, and we may not be able to successfully develop our products at commercial scale. If we cannot successfully overcome those barriers, our business will be negatively impacted and could fail
4. 19The Gen2 manufacturing equipment requires qualified labor to inspect the parts to ensure proper assembly. We have already experienced equipment malfunctions, and the lack of qualified labor to inspect our batteries may further slow our production and impact our manufacturing costs and production schedule
5. 20We have acquired and may continue to acquire other businesses, which could require significant management attention, disrupt our business, and dilute stockholder value
6. 21Fluctuations in foreign currency exchange rates or interest rates have had, and could continue to have, an adverse impact on our financial condition and results of operations
7. 22Operational problems with our manufacturing equipment subject us to safety risks which, if not adequately addressed, could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects
8. 23Lithium-ion battery modules in the marketplace have been observed to catch fire or vent smoke and flame, and such events have raised concerns over the use of such batteries
9. 24The battery market continues to evolve and is highly competitive, and we may not be successful in competing in this industry or establishing and maintaining confidence in our long-term business prospects among current and future partners and customers
10. 25We could face state-sponsored competition from overseas and may not be able to compete in the market on the basis of price
11. 26Our failure to keep up with rapid technological changes and evolving industry standards may cause our batteries to become less marketable or obsolete, resulting in a decrease in demand for our batteries and harm our ability to grow revenue and expand margins
12. 27If we are unable to attract and retain key employees and qualified personnel on a global basis, our business and prospects could be harmed
13. 28We have incurred and will continue to incur significant increased expenses and administrative burdens as a public company, which could negatively impact our business, financial condition and results of operations
14. 29We 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
15. 30which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our securities
16. 31We have previously been, currently are, and may in the future be involved in class-action lawsuits and other litigation matters that are expensive and time-consuming. If resolved adversely, lawsuits and other litigation matters could seriously harm our business

Risks Related to Our Capital Needs and Capital Strategy

1. 32We may not have adequate funds to finance our operating needs and our growth, and may need to raise additional capital, which we may not be able to do
2. 33Raising additional funds may cause dilution to existing stockholders and/or may restrict our operations or require us to relinquish proprietary rights

Risks Related to Our Convertible Senior Notes

1. 34Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt
2. 35The conditional conversion feature of the Convertible Senior Notes, if triggered, may adversely affect our financial condition and operating results
3. 36Certain provisions in the indenture governing the Convertible Senior Notes may delay or prevent an otherwise beneficial takeover attempt of us
4. 37Conversion of the Convertible Senior Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock
5. 38The accounting method for the Convertible Senior Notes could adversely affect our reported financial condition and results
6. 39The capped call transactions may affect the value of the Convertible Senior Notes and our common stock
7. 40The Option Counterparties are financial institutions, and we will be subject to the risk that any or all of them might default under the Capped Call Transactions. Our exposure to the credit risk of the Option Counterparties will not be secured by any collateral

Risks Related to Our Intellectual Property

1. 41We rely heavily on our intellectual property portfolio. If we are unable to protect our intellectual property rights, our business and competitive position would be harmed
2. 42We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs
3. 43Our patent applications may not result in issued patents or our patent rights may be contested, circumvented, invalidated or limited in scope, any of which could have a material adverse effect on our ability to prevent others from interfering with our commercialization of our products

Risks Related to Our Regulatory Compliance

1. 44We may encounter regulatory approval difficulties which could delay our ability to launch our lithium-ion battery cells, and compliance with regulatory laws may limit their usefulness
2. 45We are subject to substantial regulation, and unfavorable changes to, or our failure to comply with, these regulations could substantially harm our business and operating results
3. 46We are subject to a variety of laws and regulations related to the safety and transportation of our batteries. Our failure to comply with these laws and regulations may have a material adverse effect on our business and results of operations
4. 47We are subject to requirements relating to environmental and safety regulations and environmental remediation matters which could adversely affect our business, results of operations and reputation
5. 48We may continue to incur compliance costs under foreign trade zone laws and regulations, with no corresponding benefits

Risks Related to Ownership of Our Securities

1. 49The trading price of our common stock may be volatile, and the value of our common stock may decline
2. 50If securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding our securities adversely, the price and trading volume of our securities could decline
3. 51The future sales of shares by existing stockholders may adversely affect the market price of our common stock
4. 52Private Placement Warrants are exercisable for our common stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders
5. 53To the extent Private Placement Warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to our existing common stockholders, and increase the number of our shares eligible for resale in the public market
6. 54An active trading market for our securities may not continue, which would adversely affect the liquidity and price of our securities
7. 55There can be no assurance that we will be able to comply with the continued listing standards of the Nasdaq Global Select Market
8. 56We have been, and may in the future be, involved in legal proceedings and commercial or contractual disputes, which could have an adverse impact on our profitability and consolidated financial position
9. 57Global conflicts could adversely impact our business, costs, supply chain, sales, financial condition or results of operations
10. 58We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims
11. 59Additionally, sensitive information of the Company or our customers could be leaked, disclosed, or revealed as a result of or in connection with the use by our employees, personnel, or vendors of generative artificial intelligence (“AI”) technologies
12. 60Our facilities or operations could be damaged or adversely affected as a result of natural disasters and other catastrophic events
13. 61Any financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially and adversely affect our business, financial condition and results of operations
14. 62Our ability to utilize our net operating losses and certain other tax attributes to offset future taxable income and taxes may be subject to certain limitations
15. 63Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition or results of operations
16. 64Significant increases in import and excise duties or other taxes on, as well as any tariffs, particularly on our products to China, could materially increase our costs of our products and have an adverse effect on our business, liquidity, financial condition, and/or results of operations
17. 65Our insurance coverage may not be adequate to protect us from all business risks