NOTE 5 — REVERSE RECAPITALIZATION

On July 14, 2021, Legacy Enovix, RSVAC, and Merger Sub, consummated the closing of the transactions contemplated by the Merger Agreement, following the approval at the Special Meeting held on July 12, 2021. Immediately prior to the Merger all shares of Legacy Enovix outstanding convertible preferred stock were converted into an equivalent number of shares of Legacy Enovix Common Stock.

At the Merger, eligible Legacy Enovix equity holders received or have the right to receive shares of common stock at a deemed value of $10.00 per share after giving effect to the exchange ratio of 0.1846 as defined in the Merger Agreement (“Exchange Ratio”). Accordingly, immediately following the consummation of the Merger, Legacy Enovix Common Stock was exchanged into 103,995,643 shares of Common Stock, and 5,547,327 shares were reserved for the issuance of common stock upon the potential future exercise of Legacy Enovix's stock options that were exchanged into Enovix's stock options.

In connection with the execution of the Merger Agreement, RSVAC entered into separate subscription agreements (each a “Subscription Agreement”) with a number of investors (each a “New PIPE Investor”), pursuant to which the New PIPE Investors agreed to purchase, and RSVAC agreed to sell to the New PIPE Investors, an aggregate of 12,500,000 shares of common stock (“PIPE Shares”), for a purchase price of $14.00 per share and an aggregate purchase price of $175,000,000, in a private placement pursuant to the subscription agreements (“PIPE Financing”). The PIPE Financing closed simultaneously with the consummation of the Merger.

The Merger is accounted for as a reverse recapitalization under GAAP. This determination is primarily based on Legacy Enovix stockholders comprising a relative majority of the voting power of New Enovix and having the ability to nominate the members of the Board, Legacy Enovix’s operations prior to the acquisition comprising the only ongoing operations of New Enovix, and Legacy Enovix’s senior management comprising a majority of the senior management of New Enovix. Under this method of accounting, RSVAC is treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of New Enovix represent a continuation of the financial statements of Legacy Enovix with the Merger being treated as the equivalent of New Enovix issuing stock for the net assets of RSVAC, accompanied by a recapitalization. The net assets of RSVAC are stated at historical costs, with no goodwill or other intangible assets recorded. Operations prior to the Merger are presented as those of New Enovix. All periods prior to the Merger have been retrospectively adjusted using the Exchange Ratio for the equivalent number of shares outstanding immediately after the Merger to effect the reverse recapitalization. Additionally, upon the consummation of the Merger, the Company gave effect to the issuance of 41,249,985 shares of common stock for the previously issued RSVAC common stock and PIPE Shares that were outstanding at the Closing Date.

In connection with the Merger in July 2021, New Enovix raised approximately $405,200,000 of gross proceeds including the contribution of $230,012,116 of cash held in RSVAC’s trust account from its initial public offering, $175,000,000 of gross proceed in connection with the PIPE financing and operating cash held in the checking account. New Enovix incurred $7,000,000 of PIPE financing fee, which was 4.0% of the gross proceeds from PIPE financing, and approximately $16,600,000 of transaction costs, which primarily consisted of banking, legal, and other professional fees. Majority of the transaction costs was recorded as a reduction to additional paid-in capital of proceeds.