Enovix Corp

Previous wording

Following is a summary of the activities in the second quarter of 2024:

Current wording

Following is a summary of the activities in the third quarter of 2024:

Previous wording

In addition to the R&D headcount growth in Korea from our Routejade acquisition, we have grown our core R&D team significantly in the last year. Our lab in India is focused on evaluating next-generation battery materials for future technology nodes, and we anticipate our R&D team in Malaysia will double by end of fiscal 2024.

Current wording

In addition to the R&D headcount growth in Korea from our Routejade acquisition, we grew our core R&D team significantly in 2023. Our lab in India is focused on evaluating next-generation battery materials for future technology nodes and battery modeling. We anticipate that our R&D team in Malaysia will be double by the end of fiscal 2024.

Previous wording

We approach our commercialization strategy by identifying customer requirements and determining where our battery architecture will offer the greatest value. In 2023, we added a product management team to interface with customers, collect these requirements, and feed these learnings into our technology roadmap.

Current wording

We approach our commercialization strategy by identifying customer requirements and determining where our battery architecture will offer the greatest value. In 2023, we added a product management team to interface with customers, collect these requirements, and feed these learnings into our technology roadmap. In 2024, we added a product design team in Penang, Malaysia to support our high-volume manufacturing lines in meeting customer product requirements.

Previous wording

We believe focusing on these categories ahead of electric vehicles (“EVs”) is the right strategy for an advanced battery company because of the economic and time-to-market advantages. Entering the EV battery market requires billions of dollars of capital to build Gigafactories, offers lower prices per kWh than mobile electronics and demands long qualification cycles. We believe the best approach is to start in premium markets where we can leverage our differentiated technology and solidify our manufacturing process while driving toward profitability. At the same time, we are seeding our entry into the EV battery market by sampling batteries to EV OEMs and continuing work on our three-year grant with the U.S. Department of Energy to demonstrate batteries featuring our silicon anode paired with EV-class cathode materials. Our goal is to translate this work into partnerships (e.g., joint ventures or licensing) with EV OEMs or battery OEMs in order to commercialize our technology in this end market. We have entered into an agreement with a major automaker to validate the potential advantages of our battery in an EV.

Current wording

We believe focusing on these categories ahead of electric vehicles (“EVs”) is the right strategy for an advanced battery company because of the economic and time-to-market advantages. Entering the EV battery market requires billions of dollars of capital to build Gigafactories, offers lower prices per kWh than mobile electronics and demands long qualification cycles. We believe the best approach is to start in premium markets where we can leverage our differentiated technology and solidify our manufacturing process while driving toward profitability. At the same time, we are seeding our entry into the EV battery market by sampling batteries to EV OEMs and continuing work on our three-year grant with the U.S. Department of Energy to demonstrate batteries featuring our silicon anode paired with EV-class cathode materials. Our goal is to translate this work into partnerships (e.g., joint ventures or licensing) with EV OEMs or battery OEMs in order to commercialize our technology in this end market. We have entered into agreements with two major automakers to develop customized products for the EV battery market. In the fourth quarter of 2024, we expect to complete our first milestone pursuant to the agreement with one of the major automakers in the EV market, which is a major milestone in our efforts to enter and grow within the EV market. In 2025, we plan to focus on expanding these relationships, leveraging a capital-efficient, licensing-based business model that aligns with the long-term scalability of our technology.

Previous wording

Revenue for the quarter ended June 30, 2024 was $3.8 million, which primarily resulted from our product shipments, including $1.2 million to a South Korea military contractor. Revenue for the quarter ended July 2, 2023 was immaterial.

Current wording

Revenue for the quarter ended September 29, 2024 was $4.3 million, which primarily resulted from our product shipments, including $1.4 million to a South Korea military contractor. Revenue for the quarter ended October 1, 2023 was immaterial.

Previous wording

As of June 30, 2024 and December 31, 2023, we had $10.8 million and $10.5 million of deferred revenue on our Condensed Consolidated Balance Sheets, respectively.

Current wording

As of September 29, 2024 and December 31, 2023, we had $10.0 million and $10.5 million of deferred revenue on our Condensed Consolidated Balance Sheets, respectively.

Previous wording

Cost of revenue for the quarter ended June 30, 2024 was $4.4 million, compared to $14.2 million during the quarter ended July 2, 2023. The decrease in cost of revenue of $9.8 million, or 69%, was primarily attributable to the fact that our Fab1 became a “Center for Innovation” in 2024 and focused on new product development. There was no production generated from Fab1 during the second quarter of 2024 and, accordingly, no cost of revenue associated with Fab1 was recorded in the second quarter of 2024. This decrease was partially offset by $3.8 million of manufacturing costs associated with the revenue recognized in the second quarter of 2024.

Current wording

Cost of revenue for the quarter ended September 29, 2024 was $5.0 million, compared to $16.8 million during the quarter ended October 1, 2023. The decrease in cost of revenue of $11.9 million, or 70%, was primarily attributable to the fact that there was no production generated from Fab1 and Fab2 during the third quarter of 2024, as well as we ceased our manufacturing operations in Fab1 and shifted it to Fab2 in Malaysia. Accordingly, no cost of revenue associated with Fab1 and Fab2 was recorded in the third quarter of 2024. This decrease was partially offset by $4.8 million of manufacturing costs associated with the revenue recognized in thethird quarter of 2024.

Previous wording

$4.2 million of overhead costs being recorded as R&D expenses (previously recorded as cost of revenue) as a result of Fab1 transitioning to a R&D focus center in 2024. In addition, there was a $2.4 million increase in technology and facilities costs with new office locations, a $2.2 million increase in depreciation expense, a $2.2 million increase in material costs for testing, and a $1.6 million net increase in salaries, employee benefits and stock-based compensation expense due to an increase in headcount in Asia.

Current wording

Research and development (“R&D”) expenses for the quarter ended September 29, 2024 were $24.2 million, compared to $13.5 million during the quarter ended October 1, 2023. The increase of $10.7 million, or 79%, was primarily attributable to $7.6 million of overhead costs being recorded as R&D expenses (previously recorded as cost of revenue) as there was no production generated from both Fab1 and Fab2 in the third quarter of 2024. In addition, there was a $2.3 million net increase in salaries, employee benefits and stock-based compensation expense due to an increase in headcount in Asia, a $1.5 million increase in technology and facilities costs with new office locations, a $1.5 million increase in material costs for factory acceptance and site acceptance testings and increases in other miscellaneous expenses. These increases were partially offset by a one-time severance, benefits and stock-based compensation expense of $1.7 million in the third quarter of 2023 and a $1.2 million decrease in salaries, employee benefits and stock-based compensation expense in U.S. mainly due to the 2024 Restructuring Plan in the third quarter of 2024.

Previous wording

Selling, general and administrative expenses for the quarter ended June 30, 2024 were $20.9 million, compared to $16.7 million during the quarter ended July 2, 2023. The increase of $4.2 million, or 25%, was primarily attributable to a $4.1 million increase of stock-based compensation expense, a $1.0 million increase in salaries and benefits due to increased headcount in Asia, a $0.9 million increase of intangible amortization for the acquired intangible assets from the acquisition of Routejade and a $0.8 million increase of professional fees. These increases were partially offset by a $1.9 million of one-time severance, benefits and stock-based compensation expense in the second quarter of 2023 and decreases in other miscellaneous expenses.

Current wording

Selling, general and administrative expenses for the quarter ended September 29, 2024 were $20.7 million, compared to $17.2 million during the quarter ended October 1, 2023. The increase of $3.5 million, or 20%, was primarily attributable to a $4.8 million increase of stock-based compensation expense, a $0.9 million increase in salaries and benefits due to increased headcount in Asia, and a $0.8 million increase of intangible amortization for the acquired intangible assets from the acquisition of Routejade and increases in other miscellaneous expenses. These increases were partially offset by a one-time severance, benefits and stock-based compensation expense of $2.1 million in connection with the resignation of our former Chief Financial Officer (“CFO”) in the third quarter of 2023 and a $1.1 million of acquisition costs incurred for the acquisition of Routejade.

Previous wording

In May 2024, we initiated the 2024 Restructuring Plan to relocate our Fab1 manufacturing operations in Fremont, California to Malaysia. As a result, we recorded pre-tax restructuring charges of $38.1 million, which consisted of non-cash charges of $35.1 million of loss on disposals of Fab1 long-lived assets in Fremont and $1.1 million of stock-based compensation expense, and cash charges of $1.3 million of severance and termination benefits and $0.6 million of other charges. There was no restructuring cost for the same period last year.

Current wording

In May 2024, we initiated the 2024 Restructuring Plan to relocate our Fab1 manufacturing operations in Fremont, California to Malaysia. For the quarter ended September 29, 2024, we recorded additional pre-tax restructuring charges of $3.7 million, which primarily consisted of non-cash charges of $3.1 million of loss on disposals of Fab1 long-lived assets in Fremont and $0.2 million of other charges.

Previous wording

Income tax benefit for the quarter ended June 30, 2024 was $4.6 million, which was calculated based on the estimated annualized effective tax rate and was due to the income tax benefit in foreign jurisdictions. There was no income tax benefit for the same period last year.

Current wording

Income tax benefit for the quarter ended September 29, 2024 was $2.2 million, which was calculated based on the estimated annualized effective tax rate and was due to the income tax in foreign jurisdictions. There was no income tax expense for the same period last year.

Previous wording

Revenue for the fiscal year-to-date ended June 30, 2024 was $9.0 million, which primarily resulted from our product shipments, including $3.1 million to a South Korea military contractor. Revenue for the fiscal year-to-date ended July 2, 2023 was immaterial.

Current wording

Revenue for the fiscal year-to-date ended September 29, 2024 was $13.4 million, which primarily resulted from our product shipments, including $4.5 million to a South Korea military contractor. Revenue for the fiscal year-to-date ended October 1, 2023 was immaterial.

Previous wording

As of June 30, 2024 and December 31, 2023, we had $10.8 million and $10.5 million of deferred revenue on our Condensed Consolidated Balance Sheets.

Current wording

As of September 29, 2024 and December 31, 2023, we had $10.0 million and $10.5 million of deferred revenue on our Condensed Consolidated Balance Sheets.

Previous wording

Cost of revenue for the fiscal year-to-date ended June 30, 2024 was $11.5 million, compared to $26.5 million during the prior fiscal year-to-date ended July 2, 2023. The decrease in cost of revenue of $15.0 million, or 57%, was primarily attributable to the fact that our Fab1 became a “Center for Innovation” in 2024 and focused on new product development. There was no production generated from Fab1 during the fiscal year-to-date ended June 30, 2024 and, accordingly, no cost of revenue associated with Fab1 was recorded during the fiscal year-to-date ended June 30, 2024. This decrease was partially offset bya one-time inventory step-up amortization of $1.9 million in the current year related to the acquisition of Routejade and $9.6 million of manufacturing costs associated with the revenue recognized for the fiscal year-to-date ended June 30, 2024.

Current wording

Cost of revenue for the fiscal year-to-date ended September 29, 2024 was $16.5 million, compared to $43.3 million during the prior fiscal year-to-date ended October 1, 2023. The decrease in cost of revenue of $26.8 million, or 62%, was primarily attributable to the fact that there was no production generated from Fab1 and Fab2 during the fiscal year-to-date ended September 29, 2024. In the third quarter of 2024, we ceased our Fab1 manufacturing operations and shifted it to Fab2 in Malaysia. Accordingly, no cost of revenue associated with Fab1 and Fab2 was recorded during the fiscal year-to-date ended September 29, 2024. This decrease was partially offset bya one-time inventory step-up amortization of $1.9 million in the current year related to the acquisition of Routejade and $13.8 million of manufacturing costs associated with the revenue recognized for the fiscal year-to-date ended September 29, 2024.

Previous wording

Research and development expenses for the fiscal year-to-date ended June 30, 2024 were $77.9 million, compared to $40.3 million during the prior fiscal year-to-date ended July 2, 2023. The increase of $37.6 million, or 93%, was primarily attributable to $24.0 million increase in depreciation expense, which included a $18.3 million of accelerated deprecation in connection with the strategic realignment in October 2023, and $6.7 million of overhead costs being recorded as R&D expenses (previously recorded as cost of revenue) as a result of Fab1 transitioning to a R&D focus center in 2024. In addition, there were a $5.0 million increase in material costs, a $4.9 million increase in stock-based compensation, a $4.7 million increase in technology and facilities costs with new office locations, a $3.1 million increase in salaries and employee benefits due to an increase in headcount in Asia and a $0.8 million of intangible amortization for the acquired technology from the acquisition of Routejade. These increases were partially offset by a one-time severance, benefits and stock-based compensation expense of $9.1 million in connection with the departures of certain executives and senior management in the first quarter of 2023, a $0.8 million decrease in professional fees and decreases in other miscellaneous expenses.

Current wording

Research and development expenses for the fiscal year-to-date ended September 29, 2024 were $102.1 million, compared to $53.8 million during the prior fiscal year-to-date ended October 1, 2023. The increase of $48.3 million, or 90%, was primarily attributable to $24.7 million increase in depreciation expense, which included a $18.3 million of accelerated deprecation in connection with the strategic realignment in October 2023, and $14.4 million of overhead costs being recorded as R&D expenses (previously recorded as cost of revenue) as a result of Fab1 became a R&D focus center in 2024 and there were no production generated from Fab1 and Fab2. In addition, there were a $6.5 million increase in salaries and employee benefits due to an increase in headcount in Asia, a $5.3 million increase in material costs, a $5.1 million increase in technology and facilities costs with new office locations, a $1.2 million increase in utilities, a $1.2 million increase of intangible amortization for the acquired technology from the acquisition of Routejade and increases in professional fees and other costs. These increases were partially offset by a one-time severance, benefits and stock-based compensation expense of $10.6 million in connection with the departures of certain executives and senior management in 2023.

Previous wording

Selling, general and administrative expenses for the fiscal year-to-date period ended June 30, 2024 were $40.4 million, compared to $44.0 million during the prior fiscal year-to-date ended July 2, 2023. The decrease of $3.5 million, or 8%, was primarily attributable to a one-time severance, benefits and stock-based compensation expense of $15.7 million in connection with the departures of our former officers and certain executives during the corresponding period in 2023. This decrease was partially offset by a $6.7 million increase of stock-based compensation expense, a $1.9 million increase in salaries and benefits due to increased headcount in Asia, a $1.5 million increase of intangible amortization for the acquired intangible assets from the acquisition of Routejade, a $1.3 million increase of professional fees and a $0.7 million increase in depreciation expense.

Current wording

Selling, general and administrative expenses for both fiscal years-to-date periods ended September 29, 2024 and October 1, 2023 were $61.2 million. Although the level of selling, general and administrative expenses remained the same, we had the following increases for the fiscal year-to-date ended September 29, 2024: a $13.0 million increase in stock-based compensation expense, a $3.0 million increase in salaries, benefits and stock-based compensation due to increased headcount in Asia, a $2.3 million increase of intangible amortization for the acquired intangible assets from the acquisition of Routejade, and a $1.2 million increase in facilities costs and increases in technology costs and professional fees, which were partially offset by one-time expenses in the corresponding period in 2023, including a one-time severance, benefits and stock-based compensation expense of $17.9 million in connection with the departures of our former officers and certain executives and $1.1 million of acquisition costs incurred for the acquisition of Routejade.

Previous wording

In May 2024, we initiated the 2024 Restructuring Plan to relocate our Fab1 manufacturing operations in Fremont, California to Malaysia. As a result, we recorded pre-tax restructuring charges of $38.1 million, which consisted of non-cash charges of $35.1 million of loss on disposals of Fab1 long-lived assets located in Fremont and $1.1 million of stock-based compensation expense, and cash charges of $1.3 million of severance and termination benefits and $0.6 million of other charges. There was no restructuring cost for the same period last year.

Current wording

In May 2024, we initiated the 2024 Restructuring Plan to relocate our Fab1 manufacturing operations in Fremont, California to Malaysia. As a result, we recorded pre-tax restructuring charges of $41.8 million, which consisted of non-cash charges of $38.2 million of loss on disposals of Fab1 long-lived assets located in Fremont and $1.2 million of stock-based compensation expense, and cash charges of $1.6 million of severance and termination benefits and $0.8 million of other charges.

Previous wording

Interest expense for the fiscal year-to-date ended June 30, 2024 was $3.4 million, compared to $1.3 million for the fiscal year-to-date ended July 2, 2023. The increase of $2.1 million, or 164%, was primarily attributable to the fact that the Convertible Senior Notes were issued in April 2023. Accordingly, we recognized six months of interest expense in the current year as compared to approximately 2.5 months of interest expense recognized for the fiscal year-to-date ended July 2, 2023.

Current wording

Interest expense for the fiscal year-to-date ended September 29, 2024 was $5.1 million, compared to $2.8 million for the fiscal year-to-date ended October 1, 2023. The increase of $2.2 million, or 79%, was primarily attributable to the fact that the Convertible Senior Notes were issued in April 2023. Accordingly, we recognized nine months of interest expense in the current year as compared to approximately 5.5 months of interest expense recognized for the fiscal year-to-date ended October 1, 2023.

Previous wording

Income tax benefit for the fiscal year-to-date ended June 30, 2024 was $4.7 million, which was calculated based on the estimated annualized effective tax rate and was due to the income tax benefit in foreign jurisdictions. There was no income tax benefit for the same period last year.

Current wording

Income tax benefit for the fiscal year-to-date ended September 29, 2024 was $2.5 million, which was calculated based on the estimated annualized effective tax rate and was due to the income tax benefit in foreign jurisdictions. There was no income tax benefit for the same period last year.

Previous wording

We have incurred operating losses and negative cash flows from operations since inception through June 30, 2024 and expect to incur operating losses for the foreseeable future. As of June 30, 2024, we had cash, cash equivalents, restricted cash, and short-term investments of $251.8 million, working capital of $202.0 million and an accumulated deficit of $761.1 million. For the fiscal year-to-date ended June 30, 2024, we received net proceeds of $40.0 million from the issuance of our common stock under our ATM facility.

Current wording

We have incurred operating losses and negative cash flows from operations since inception through September 29, 2024 and expect to incur operating losses for the foreseeable future. As of September 29, 2024, we had cash, cash equivalents, restricted cash, and short-term investments of $202.9 million, working capital of $164.5 million and an accumulated deficit of $783.6 million. For the fiscal year-to-date ended September 29, 2024, we received net proceeds of $40.0 million from the issuance of our common stock under our ATM facility.

Previous wording

As of June 30, 2024, we had cash, cash equivalents, restricted cash, and short-term investments of $251.8 million. We use cash to fund operations, meet working capital requirements and fund our capital expenditures. For the remainder of fiscal year 2024, we expect that our spending in cost of revenues and operating expenses will continue to increase as we ramp up our operations.

Current wording

As of September 29, 2024, we had cash, cash equivalents, restricted cash, and short-term investments of $202.9 million. We use cash to fund operations, meet working capital requirements and fund our capital expenditures. For the remainder of fiscal year 2024, we expect that our spending in cost of revenues and operating expenses will continue to increase as we ramp up our operations.

Previous wording

For the fiscal year-to-date ended June 30, 2024, we used $40.3 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.

Current wording

For the fiscal year-to-date ended September 29, 2024, we used $59.8 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.

Previous wording

Net cash used in operating activities was $62.0 million for the fiscal year-to-date ended June 30, 2024. Net cash used in operating activities consists of net loss of $162.4 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 $12.5 million, stock-based compensation expense of $31.8 million, depreciation and amortization expense, net of accretion of $30.9 million and impairment and disposals of Fab1 long-lived assets of $35.1 million.

Current wording

Net cash used in operating activities was $92.7 million for the fiscal year-to-date ended September 29, 2024. Net cash used in operating activities consists of net loss of $185.1 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 $17.4 million, stock-based compensation expense of $48.6 million, depreciation and amortization expense, net of accretion of $37.4 million and impairment and disposals of Fab1 long-lived assets of $38.2 million.

Previous wording

Net cash used in operating activities was $49.2 million for the fiscal year-to-date ended July 2, 2023. Net cash used in operating activities consists of net loss of $137.9 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 $27.2 million, stock-based compensation expense of $44.2 million, depreciation and amortization expense of $7.1 million and impairment of equipment of $4.4 million.

Current wording

Net cash used in operating activities was $77.4 million for the fiscal year-to-date ended October 1, 2023. Net cash used in operating activities consists of net loss of $154.1 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 $4.1 million, stock-based compensation expense of $57.8 million, depreciation and amortization expense, net of accretion of $10.0 million and impairment of equipment of $4.4 million.

Previous wording

Our cash flows used in investing activities to date have been primarily comprised of purchases of property and equipment, as well as purchases of short-term investments. We expect the costs to acquire property and equipment to increase as we continue to build-out our facility in Malaysia (“Fab2”) and develop our battery manufacturing production lines in Malaysia. Net cash provided by investment activities was $19.5 million for the fiscal year-to-date ended June 30, 2024, which primarily consisted of maturities of $91.6 million of short-term investments, partially offset by $40.3 million of equipment purchases and $31.8 million of short-term investments. Net cash used by investing activities for the fiscal year-to-date ended July 2, 2023 was $81.5 million, which primarily consisted of $15.7 million of equipment purchases and $65.7 million of short-term investments.

Current wording

Our cash flows used in investing activities to date have been primarily comprised of purchases of property and equipment, as well as purchases of short-term investments. We expect the costs to acquire property and equipment to increase as we continue to build-out and develop our battery manufacturing production lines in Fab2. Net cash provided by investment activities was $15.0 million for the fiscal year-to-date ended September 29, 2024, which primarily consisted of maturities of $106.6 million of short-term investments, partially offset by $59.8 million of equipment purchases and $31.8 million of short-term investment purchases.

Previous wording

Net cash provided by financing activities was $45.1 million for the fiscal year-to-date ended June 30, 2024, which primarily consisted of $4.6 million of gross proceeds from the loans, $42.8 million of proceeds from issuance of our common stock through an ATM offering and proceeds from the exercise of stock options to purchase our common stock, and $1.1 million of proceeds from our employee stock purchase plan (“ESPP”) to purchase our Common Stock, partially offset by $3.3 million of payroll tax payments for shares withheld upon vesting of restricted stock units.

Current wording

Net cash provided by financing activities was $44.2 million for the fiscal year-to-date ended September 29, 2024, which primarily consisted of $4.6 million of gross proceeds from the loans, $40.0 million of proceeds from issuance of our common stock through an ATM offering, $4.3 million of proceeds from the exercise of stock options to purchase our common stock and $1.1 million of proceeds from our employee stock purchase plan (“ESPP”) to purchase our common stock, partially offset by $5.6 million of payroll tax payments for shares withheld upon vesting of restricted stock units.

Previous wording

Net cash used in financing activities was $150.9 million for the fiscal year-to-date ended July 2, 2023, which was primarily consisted of $172.5 million of gross proceeds from the Convertible Senior Notes, $1.0 million of proceeds from the exercise of stock options to purchase our common stock, and $1.2 million of proceeds from our ESPP to purchase our Common Stock, partially offset by $17.3 million of capped call transaction costs, $5.2 million of debt issuance costs, and $1.2 million of payroll tax payments for shares withheld upon vesting of restricted stock units.

Current wording

Net cash used in financing activities was $157.4 million for the fiscal year-to-date ended October 1, 2023, which was primarily consisted of $172.5 million of gross proceeds from the Convertible Senior Notes, $9.2 million of proceeds from the exercise of stock options to purchase our common stock, and $1.2 million of proceeds from our ESPP to purchase our common stock, partially offset by $17.3 million of capped call transaction costs, $5.3 million of debt issuance costs, and $3.0 million of payroll tax payments for shares withheld upon vesting of restricted stock units.

Previous wording

In connection with our manufacturing agreement with YBS International Berhad (“YBS”), we have a cash deposit agreement with OCBC Bank (Malaysia) Berhad (“OCBC”) to collateralize $70.0 million of foreign currency term loan (the “Term Loan”) in financing for manufacturing operation. The Term Loan is expected to be repaid within five years. As of June 30, 2024, there is no outstanding balance of the Term Loan and no deposit was made to OCBC for the collateralization. As of June 30, 2024, we had $70.0 million on deposit in an interest-bearing account with OCBC for interest earning purposes. For more information on the variable interest entity, please see Note 13 “Variable Interest Entity” of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q.

Current wording

In connection with our manufacturing agreement with YBS International Berhad (“YBS”), we have a cash deposit agreement with OCBC Bank (Malaysia) Berhad (“OCBC”) to collateralize $70.0 million of foreign currency term loan (the “Term Loan”) in financing for its manufacturing operations. The Term Loan is expected to be repaid within five years. As of September 29, 2024, we had no outstanding balance of the Term Loan and we had not made any deposits to OCBC for collateralization. As of September 29, 2024, we had $70.0 million on deposit in an interest-bearing account with OCBC. For more information on the variable interest entity, please see Note 13 “Variable Interest Entity” of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q.

Previous wording

We lease our headquarters in Fremont, California and Malaysia, and offices in Asia Pacific region. For the lease payment schedule, please see Note 7 “Leases” of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q.

Current wording

We lease our headquarters in Fremont, California and Malaysia, and offices in the Asia Pacific region. For the lease payment schedule, please see Note 7 “Leases” of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q.

Previous wording

We expect to enter into other commitments to support our product development, the build-out of our manufacturing facilities, and our business development, which are generally cancellable upon notice. Additionally, from time to time, we enter into agreements in the normal course of business with various vendors, which are generally cancellable upon notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of service providers, up to the date of cancellation. As of June 30, 2024, our commitments included approximately $34.1 million of our open purchase orders, including equipment purchase orders, and contractual obligations that occurred in the ordinary course of business. For contractual obligations, please See Note 9 “Commitments and Contingencies” of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.

Current wording

We expect to enter into other commitments to support our product development, the build-out of our manufacturing facilities, and our business development, which are generally cancellable upon notice. Additionally, from time to time, we enter into agreements in the normal course of business with various vendors, which are generally cancellable upon notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of service providers, up to the date of cancellation. As of September 29, 2024, our commitments included approximately $24.6 million of our open purchase orders, including equipment purchase orders, and contractual obligations that occurred in the ordinary course of business. For contractual obligations, please See Note 9 “Commitments and Contingencies” of the notes to our condensed consolidated financial statements in Part I of this Quarterly Report on Form 10-Q for further information.