| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Summary of Significant Accounting Policies Segment Reporting We operate in one segment. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation and assessing performance. Our Chief Executive Officer (“CEO”) has been identified as our CODM, who reviews operating results to make decisions and assesses performance for the Company as a whole. Total available cash and cash equivalents, total revenues and net loss are used by our CEO to evaluate key operating decisions, such as company strategy, and determine and allocate resources on a consolidated basis. Since we operate in one segment, all significant segment expenses and financial information required by “Segment Reporting” can be found in the consolidated financial statements and the accompanying notes of the consolidated financial statements. See Note 18 “Segment and Geographic Information” for more information. Cash, Cash Equivalents and Restricted Cash We consider all highly liquid investments with original maturities from the date of purchase of 90 days or less to be cash equivalents. As of December 29, 2024 and December 31, 2023, restricted cash is primarily comprised of $1.8 million and $2.0 million, respectively, of deposits to secure the advanced payment made by our customer. The restricted cash is classified within prepaid expenses and other current assets, and other assets, non-current of the Consolidated Balance Sheets. Investments Our investments consist of highly liquid fixed-income securities. We determine the appropriate classification of its investments at the time of purchase and reevaluates such designation at each consolidated balance sheet date. We classified and accounted for our investments as available-for-sale securities as we may sell these securities at any time for use in its current operations or for other purposes, including prior to maturity. Investments with original maturities greater than 90 days and remaining maturities of less than one year are normally classified within current assets on the Consolidated Balance Sheets. In addition, investments with maturities beyond one year at the time of purchase that are highly liquid in nature and represent the investment of cash that is available for current operations are classified as current assets. Unrealized gains and losses on these investments are reported as a separate component of Accumulated other comprehensive loss until the security is sold, the security has matured, or the security has realized. Realized gains and losses on these investments are calculated based on the specific identification method and would be reclassified from Accumulated other comprehensive loss to Other income (expense), net in the Consolidated Statements of Operations. We designated all investments as available-for-sale and, therefore, the investments are subject to periodic impairment under the available-for-sale debt security impairment model. Available-for-sale debt securities in an unrealized loss position are written down to fair value through a charge to Other income (expense), net in the Consolidated Statements of Operations if we intend to sell the security or it is more likely than not we will be required to sell the security before recovery of its amortized cost basis. We evaluate the remaining securities to determine what amount of the excess, if any, is caused by expected credit losses. A decline in fair value attributable to expected credit losses is recorded to Other income (expense), net, while any portion of the loss related to non-credit factors is recorded in accumulated other comprehensive loss. For securities sold prior to maturity, the cost of the securities sold is based on the specific identification method. Realized gains and losses on the sale of investments are recorded in Other income (expense), net in the Consolidated Statements of Operations. Trade Accounts Receivable, Notes Receivable and Allowance for Credit Losses Our accounts receivable and notes receivable are recorded at invoiced amounts less allowance for any credit losses. According to the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13 that we adopted in the fiscal year 2022, we recognize credit losses based on a forward-looking current expected credit losses (“CECL”) model. We make estimates of expected credit losses based upon the assessment of various factors, including the age of receivable balances, credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers. The allowance for credit losses are recognized in the Consolidated Statement of Operations. The uncollectible receivables are written off in the period in which a determination is made that all commercially reasonable means of recovering them have been exhausted. We recognized an immaterial amount of allowance for expected credit loss as of December 29, 2024 and there was no write-off of accounts receivable for the periods presented. As of December 29, 2024 and December 31, 2023, our accounts receivable, net were $4.6 million and $0.9 million, respectively. As of December 29, 2024, we have an immaterial amount of notes receivable and $1.5 million of our notes receivable as of December 31, 2023. Credit Losses We are exposed to credit losses primarily through the available-for-sale investments. We invest excess cash in marketable securities with high credit ratings that are classified in Level 1 and Level 2 of the fair value hierarchy. Our investment portfolio at any point in time contains investments in United States (“U.S.”) treasury and U.S. government agency securities, taxable and tax-exempt municipal notes, corporate notes and bonds, commercial paper, non-U.S. government agency securities and money market funds, and are classified as available-for-sale. We assess whether our available-for sale investments are impaired at each reporting period. As December 29, 2024, we did not have any investments. As of December 31, 2023, we did not recognize an allowance for expected credit losses related to available-for-sale investments. Inventory Inventory is stated at the lower of cost or net realizable value (“NRV”) on a first-in and first-out (“FIFO”) basis. Inventory costs include direct materials, direct labor, and manufacturing overhead. Determining net realizable value of finished goods and work in process inventories involves projecting average selling prices. When the estimated net realizable values are below the manufacturing costs, a charge to cost of revenue is recorded. The cost basis of our inventory is reduced for any products that are considered excess or obsolete based upon assumptions about future demand and market conditions. See Note 6 “Inventory” for more information. Property and Equipment, net Property and equipment, net are stated at the original cost, net of accumulated depreciation. Construction in process is related to the construction or development of property and equipment that have not yet been placed in service for their intended use. Property and equipment are depreciated or amortized using the straight-line method over the estimated useful lives of the following assets below. Estimated Useful Life (in Years) Machinery and equipment 2 - 10 Office equipment and software 3 - 5 Furniture and fixtures 3 - 5 Building 33 Leasehold improvements Shorter of the economic life or the remaining lease term When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the Consolidated Statement of Operations in the period of disposition. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed in the Consolidated Statement of Operations in the period incurred. See Note 5 “Property and Equipment” for more information. Capitalized Software Costs for Internal Use We capitalize direct costs associated with developing or obtaining internal use software, including enterprise-wide business software, that are incurred during the application development stage. These capitalized costs are recorded as capitalized software within property and equipment. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Once the software is ready for its intended use, amounts capitalized are amortized over an estimated useful life of up to five years, generally on a straight-line basis. Capitalized software costs for internal use are included in office equipment category of the property and equipment on the Consolidated Balance Sheets. Impairment of Long-Lived Assets We evaluate the carrying value of long-lived assets when indicators of impairment exist. The carrying value of a long-lived asset is considered impaired when the estimated separately identifiable, undiscounted cash flows from such an asset are less than the carrying value of the asset. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the estimated cash flows discounted at a rate commensurate with the risk involved. See Note 5 “Property and Equipment” for more information. Intangible Assets We amortize acquisition-related intangible assets that are subject to amortization over their estimated useful lives. We perform periodic reviews of significant long-lived assets to determine whether facts and circumstances indicate that the carrying amount may not be recoverable. These reviews can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and the forecasts for specific products. Periodically, we also evaluate the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization. Based on our 2024 impairment analysis, there was no impairment to the intangible assets for the periods presented. Leases We measure our lease obligations in accordance with Accounting Standards Codification (“ASC”) 842, Leases , which requires us to recognize a right-of-use (“ROU”) asset and lease liability for leases with terms of more than 12 months. We determine lease classification at the inception of an arrangement and recognize ROU assets and lease liabilities based on the present value of the future minimum lease payments over the lease term at the commencement date. Currently, we only have operating leases. ROU assets also include any initial direct costs incurred and any lease payments made on or before the lease commencement date, less lease incentives received. We use an incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as our leases generally do not provide an implicit rate. Lease terms may include options to extend or terminate the lease when we are reasonably certain that the option will be exercised. We combine the lease and non-lease components in determining the operating lease ROU assets and liabilities. Lease expense is recognized on a straight-line basis over the lease term. The lease agreements may contain variable costs such as contingent rent escalations, common area maintenance, insurance, real estate taxes or other costs. Such variable lease costs are expensed as incurred on the Consolidated Statement of Operations. See Note 7 “Leases” for more information. Goodwill We review goodwill for impairment at least annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Based on our 2024 impairment analysis, there was no goodwill impairment for the periods presented. See Note 3 “Business Combinations” for more information. Debt We accounted for our borrowings as liabilities measured at net proceeds less debt discount and debt issuance cost and were accreted to its face value over its expected term using the effective interest method. We considered whether there were any embedded features in its debt instruments that required bifurcation and separate accounting as derivative financial instruments pursuant to ASC 815, Derivatives and Hedging (“ASC 815”). See Note 9 “Borrowings” for more information. Common Stock Warrants In connection with the 2021 business combination with Rodgers Silicon Valley Acquisition Corp., we issued outstanding warrants of 17.5 million to purchase common stock at a price of $11.50 per share. These warrants consisted of 11,500,000 warrants held by the third-party investors (the “Public Warrants”) and 6,000,000 warrants issued to a private placement to the sponsor and members of Rodgers Capital LLC (the “Private Placement Warrants”). The warrants expire five years from the completion of the business combination and were exercisable starting December 5, 2021. There are no outstanding Public Warrants since fiscal year 2022. The Private Placement Warrants are transferable, assignable or salable in certain limited exceptions. The Private Placement Warrants are exercisable for cash or on a cashless basis, at the holder’s option, and are non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will cease to be Private Placement Warrants, and become Public Warrants and be redeemable by us and exercisable by such holders on the same basis as the other Public Warrants. We account for the warrants in accordance with ASC 815, Derivative and Hedging . The Private Placement Warrants contain exercise and settlement features that may change with a change in the holder, which precludes the Private Placement Warrants from being indexed to our own stock, and therefore the Private Placement Warrants are precluded from being classified within equity and are accounted for as derivative liabilities on the Consolidated Balance Sheet at fair value, with subsequent changes in fair value recognized in the Consolidated Statement of Operations at each reporting date. As of December 29, 2024, there were 5,500,000 outstanding shares of the Private Placement Warrants and no Public Warrants outstanding. See Note 12 “Warrants” for more information. Fair Value of Financial Instruments Our assets and liabilities, which require fair value measurement on a recurring basis, consist of Private Placement Warrants recorded at fair value. Fair value principles require disclosures regarding the manner in which fair value is determined for assets and liabilities and establishes a three-tiered fair value hierarchy into which these assets and liabilities must be grouped, based upon significant levels of inputs as follows: • Level 1 — Observable inputs, such as quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date; • Level 2 — Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. See Note 4 “Fair Value Measurement” for more information. Non-Controlling Interests Non-controlling interests represent the portion of equity not attributable to us and are reported as a separate component of equity, net of tax and transaction costs, on the Consolidated Balance Sheets. Net loss and comprehensive loss for majority-owned subsidiary are attributed to us and to non-controlling interest holders on the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Loss based on respective ownership percentage. Variable Interest Entity We determine at the inception of each arrangement whether an entity in which we hold an investment or in which we have other variable interests is considered a VIE. We consolidate a VIE’s balance sheet and results of operations into the consolidated financials when we are the primary beneficiary that meets both of the following criteria: (1) we have the power to direct activities that most significantly affect the VIE’s economic performance and (2) we have the obligation to absorb losses or the right to receive benefits of the VIE that in either case could potentially be significant to the VIE. We continually reassess whether we are the primary beneficiary of a VIE for the consolidation analysis. If we are not the primary beneficiary in a VIE, we account for the investment or other variable interest in accordance with applicable GAAP. Please refer to Note 16 “Variable Interest Entity” for more details. We will reconsider whether an entity is still a VIE if certain reconsideration events occur as defined in the ASC 810, Consolidation, issued by the FASB. Foreign Currency Transactions The functional currency of our international subsidiaries is the U.S. dollar (“USD”), except for the acquired Routejade, which is in Korean Won. Monetary assets and liabilities of our international subsidiaries that are denominated in foreign currency are remeasured into USD at period-end exchange rates. Non-monetary assets and liabilities that are denominated in the foreign currency are remeasured into USD at the historical rates. Foreign transaction gains and losses resulting from the conversion of the transaction currency to functional currency and remeasurement of foreign currency accounts are reflected in Other income (expense), net of the Consolidated Statements of Operations. For the fiscal years 2024 and 2023, we recorded an immaterial amount of net foreign transaction losses in Other income (expense), net in the Consolidated Statements of Operations. Routejade utilizes Korean Won as its functional currency. The assets and liabilities of this subsidiary is translated at period-end exchange rates, while revenue and expenses are translated at the average rates in effect for the period. The related translation gains and losses are included in other comprehensive income or loss within the Consolidated Statements of Operations and the Consolidated Statement of Comprehensive Income (Loss). Concentrations of Credit Risk and Major Customers Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash and cash equivalent balances in checking, savings, and money market accounts at financial institutions. Amounts held in these accounts may exceed federally insured limits. As of December 29, 2024 and December 31, 2023, we did not experience any losses on such deposits. For the fiscal year 2024, we have three customers, who had revenues greater than 10% of the total revenues. Customer D, Customer E and Customer G had accounted for approximately 50%, 20%, and 10% of our total revenues, respectively. For the fiscal year 2023, Customer D, which had revenues greater than 10% of the total revenues, had accounted for approximately 75% of our total revenues. For the fiscal year 2022, Customer A and Customer C accounted for approximately 81% and 14%, respectively, of our total revenue. As of December 29, 2024, we had three customers, which had accounts receivable greater than 10% of our total accounts receivables. Customer D, E, and G accounted for 54%, 11% and 16%, respectively, of the total accounts receivable. As of December 31, 2023, we had Customer C, E, and F accounted for 13%, 45% and 11%, respectively, of the total accounts receivable. Revenue Recognition In June 2022, we began to generate revenue from the planned principal business activities. We recognize revenue within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”) . The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The following five steps are applied to achieve that core principle: 1. Identify the contract with the customer; 2. Identify the performance obligations in the contract; 3. Determine the transaction price; 4. Allocate the transaction price to the performance obligations in the contract; and 5. Recognize revenue when the company satisfies a performance obligation. Our revenue consists of product revenue, resulting from the sale of lithium-ion batteries and battery pack products (“Product Revenue”), and service revenue, resulting from payments received from our customers based on executed engineering revenue contracts for the development of lithium-ion battery technology (“Service Revenue”). Product Revenue Product Revenue mainly relates to sales of lithium-ion batteries or battery packs. We recognize Product Revenue at a point in time when the performance obligation has been satisfied upon transfer of control of goods, which is upon product shipment, delivery or customer acceptance, depending on the specific contract terms. For certain customized products with customer acceptance criteria specified in the contract, the performance obligation is satisfied upon our customer’s formal acceptance. For the fiscal years 2024 and 2023, we had $23.1 million and $7.6 million of Product Revenue, respectively. We had an immaterial amount of Product Revenue for the fiscal year 2022. Service Revenue Service Revenue contracts generally include the design and development efforts to conform our existing battery technology with the customer’s required specifications. The term of the Service Revenue contracts generally last from one Deferred Revenue Deferred revenue represents situations where the cash is collected, but the related revenue has not yet been recognized. Revenue is subsequently recognized when the revenue recognition criteria are met. The following table summarizes the significant changes in deferred revenue during the fiscal years 2024 and 2023 (in thousands). 2024 2023 Beginning Balance $ 10,482 $ 3,774 Routejade acquisition — 10,568 Revenue recognized (10,145) (3,968) Increased due to customer advanced payments 7,087 108 Deferred revenues, end of period $ 7,424 $ 10,482 As of December 29, 2024, we currently expect to recognize approximately 49% of deferred revenue as revenue within the next twelve months and the remaining amount is expected to be recognized as revenues in 2026. Costs to Fulfill a Customer Contract The revenue recognition standard requires capitalization of certain costs to fulfill a customer contract, such as certain employee compensation for design and development services that specifically relate to customer contracts. Costs are recognized as an asset if they relate directly to a customer contract, generate or enhance resources of the entity that will be used in satisfying future performance obligations, and are expected to be recovered. If these three criteria are not met, the costs are expensed in the period incurred. Deferred costs are recognized as cost of revenue in the period when the related revenue is recognized. As of December 29, 2024 and December 31, 2023, total deferred contract costs were $0.8 million for each period. Product Warranties We provide product warranties, which cover certain repair or replacement under the revenue contracts and they generally range from one continuously monitor our product returns for warranty failures and maintains a reserve for the related warranty expenses based on various factors, including historical product failure rates, results of accelerated lab testing, field monitoring, vendor reliability estimates, and data on industry averages for similar products. Due to the potential for variability in these underlying factors, the difference between the estimated costs and the actual costs could be material to our consolidated financial statements. If actual product failure rates or the frequency or severity of reported claims differ from the estimates, we may be required to revise our estimated warranty liability. As of December 29, 2024 and December 31, 2023, our warranty liability on the Consolidated Balance Sheet was immaterial. Sales and Transaction Taxes Sales and other taxes collected from customers and remitted to governmental authorities on revenue-producing transactions are reported on a net basis and are therefore excluded from revenues in the Consolidated Statement of Operations. Cost of Revenues Cost of revenues includes materials, labor, depreciation expense, and other direct costs related to product production and Service Revenue contracts. Labor consists of personnel-related expenses such as salaries, benefits, and stock-based compensation. Other direct costs include costs incurred on certain Service Revenue contracts that was in excess of the amount expected to be recovered and other overhead costs in connection with the product production. Research and Development Costs Research and development costs consist of engineering services, depreciation, development expenses, materials, labor and stock-based compensation and allocated facilities costs, related primarily to our (i) technology development, (ii) design, construction, and testing of preproduction prototypes and models, and (iii) certain costs related to the design, construction, and operation of the pilot plant that is not of a scale economically feasible to us for commercial production. Research and development costs are expensed as incurred. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of personnel-related expenses, marketing expenses, allocated facilities expenses, depreciation expenses, travel, and professional services expenses, including legal, human resources, information technology, audit, accounting and tax-related services. Personnel related costs consist of salaries, benefits and stock-based compensation. Facilities costs consist of rent and maintenance of facilities. Government Grant In September 2020, we entered into a financial assistance agreement totaling $6.5 million with the Office of Energy Efficiency and Renewable Energy (“EERE”), an office within the U.S. Department of Energy. Under the agreement, we will perform research and development under a joint project with the EERE, and the EERE will reimburse us for approximately 49.8% of allowable project costs. The remaining approximately 50.2% in costs would be incurred by us. We account for the reimbursable amount, which are probable of being received in the same period in which the costs were incurred as an offset to the related expense (Research and development) or capitalized asset (Property and equipment, net). As of December 29, 2024 and December 31, 2023, we had an immaterial reimbursement receivable from the assistance agreement, which is included in prepaid expenses and other current assets Income Taxes We account for income taxes in accordance with ASC 740, Income Taxes, issued by FASB. Under the asset and liability method specified by ASC 740, deferred tax assets and liabilities are recognized for the future consequences of differences between the carrying amounts of existing assets and liabilities and their respective tax bases (temporary differences). Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets are established when it is more likely than not that some or all of the deferred tax assets will not be realized. In addition, ASC 740 provides comprehensive guidance on the recognition and measurement of tax positions in previously filed tax returns or positions expected to be taken in future tax returns. The benefit from an uncertain tax position must meet a more-likely-than-not recognition threshold and is measured at the largest amount of benefit greater than 50% determined by cumulative probability of being realized upon ultimate settlement with the taxing authority. Our policy is to recognize interest and penalties expense, if any, related to uncertain tax positions as a component of income tax expense. Stock-Based Compensation We issue stock-based compensation to employees and non-employees in the form of stock options or restricted stock units (“RSUs”) or performance restricted stock units (“PRSUs”). Since the fiscal year 2022, we have not issued stock options. Restricted Stock Units Starting in the fiscal year 2021, we began to grant RSUs to our employees and non-employees and these RSUs generally have a service vesting condition over four Performance Restricted Stock Units Starting in the fiscal year 2022, we began to grant PRSUs to certain employees with vesting conditions based on performance and service conditions over two years. We use our common stock price, which is the closing stock price on the grant date to value our PRSUs. We use the graded vesting method to calculate the stock-based compensation expense. At each reporting period, we would recognize and adjust the stock-based compensation expense based on the probability assessment in meeting our PRSUs' performance conditions. Forfeitures are recorded when they occur. Employee Stock Purchase Plan We began to offer the employee stock purchase plan (“ESPP”) to our employees in the fiscal year 2021. We use the Black-Scholes valuation method to value the fair value of ESPP shares and use the graded vesting method to calculate the stock-based compensation expense. Stock options Generally, the stock options have a maximum contractual term up to 10 years. The fair value of stock options is based on the date of the grant using the Black-Scholes valuation method. The awards are accounted for by recognizing the fair value of the related award over the period during which services are provided in exchange for the award (referred to as the requisite service period, which typically equals the vesting period of the award). The vesting period is generally four Compensation — Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, the measurement of equity-classified non-employee awards is fixed at the grant date. Stock-based compensation expense is recognized using the straight-line attribution method. Forfeitures are recorded when they occur. For the fiscal years 2024 and 2023, we did not grant any stock options and, for the fiscal year 2022, we granted less than 60,000 shares. The following assumptions were used in the Black-Scholes valuation model for the fair value of stock options per share. • Expected Term — The expected term of the options represents the average period the share options are expected to remain outstanding. As we did not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior, the expected term of options granted is derived from the average midpoint between the weighted average vesting and the contractual term, also known as the simplified method. We used the simplified calculation of the expected life, which takes into consideration the grant’s contractual life and vesting period and assumes that all options will be exercised between the vesting date and the contractual term of the option. • Risk- |
