What changed in this filing

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Item 1A. Risk Factors

2026-02-06 compared with 2025-11-07 · 50 added, 42 removed, 456 unchanged (17% of the section changed)

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• Impact of outstanding debt obligations.

• Influence of certain former Convertible Noteholders and Renesas.

• Influence of certain former holders of the Convertible Notes and Renesas.

• Reduced tax attributes due to cancellation of indebtedness.

• Impaired stakeholder confidence following Chapter 11 emergence.

• Impaired stakeholder confidence following emergence from the Chapter 11 Cases.

– Risks related to our markets and product demand

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• The impact of pandemic outbreaks on our operations and supply chain.

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• Changes in governmental policies and incentives.

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Following our emergence from the Chapter 11 Cases, our capital structure was significantly altered.

As a result of the Chapter 11 Cases, our historical financial performance is likely not indicative of our future financial performance.

As a result of the Chapter 11 Cases, our historical financial performance will not be indicative of our future financial performance.

In addition, the amounts reported in subsequent consolidated financial statements may materially change relative to our historical consolidated financial statements.

We are expected to adopt fresh start accounting, and accordingly, our assets and liabilities will be recorded at fair value as of the emergence date, which differs materially from the recorded values of assets and liabilities on our historical consolidated balance sheets.

Our financial results after the application of fresh start accounting may be different from historical trends.

We adopted fresh start accounting, and accordingly, our assets and liabilities will be recorded at fair value as of the emergence date, which differs materially from the recorded values of assets and liabilities on our historical consolidated balance sheets.

Our financial results after the adoption of fresh start accounting may be different from historical trends.

Furthermore, we may not realize any or all of the intended benefits of the Chapter 11 Cases, the benefits may not be on the terms or in the manner we expect, and the costs incurred may exceed the intended benefits.

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We have outstanding debt which could materially restrict our business and adversely affect our financial condition, liquidity and results of operations.

As of September 30, 2025, our indebtedness consisted of $535 million aggregate principal amount of our New 2L Renesas Convertible Notes and our New 2L Non-Renesas Convertible Notes, $296.4 million aggregate principal amount of our New 2L Non-Convertible Notes and $1,259.2 million aggregate principal amount of our New Senior Secured Notes.

The level of our outstanding debt may adversely affect our operating results and financial condition by, among other things:

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There can be no assurance that we will be able to manage any of these risks successfully.

The New Senior Secured Notes Indenture includes a liquidity maintenance financial covenant requiring us to have an aggregate amount of unrestricted cash and cash equivalents maintained in accounts over which the collateral agent for the New Senior Secured Notes has been granted a perfected first lien security interest of at least $350 million as of the last day of any calendar month.

In addition, the New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture, in each case, contain certain restrictions that limit our ability to, among other things:

The indenture governing the New Senior Secured Notes (the "New Senior Secured Notes Indenture") includes a liquidity maintenance financial covenant requiring us to have an aggregate amount of unrestricted cash and cash equivalents maintained in accounts over which the collateral agent for the New Senior Secured Notes has been granted a perfected first lien security interest of at least $350 million as of the last day of any calendar month.

In addition, the New Senior Secured Notes Indenture, the indenture governing the New 2L Non-Convertible Notes (the "New 2L Non-Convertible Notes Indenture"), the indenture governing the New 2L Renesas Convertible Notes (the "New 2L Renesas Convertible Notes Indenture") and the indenture governing the New 2L Non-Renesas Convertible Notes (the "New 2L Non-Renesas Convertible Notes Indenture"), in each case, contain certain restrictions that limit our ability to, among other things:

incur additional indebtedness, dispose of assets, pay dividends on or redeem or repurchase shares of our New Common Stock or other securities, create liens on assets, make investments and acquisitions or engage in mergers or consolidations, and engage in certain transactions with non-subsidiary guarantors and affiliates.

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certain casualty events (subject to certain limitations), (ii) in the case of the New Senior Secured Notes, with 100% of the proceeds of certain Department of Energy sponsored financings and in specified amounts upon the receipt of certain extraordinary proceeds and (iii) in the case of the New Senior Secured Notes, the New 2L Non-Convertible Notes, the New 2L Renesas Convertible Notes and the New 2L Non-Renesas Convertible Notes, in full upon a change of control.

The restrictions imposed by the New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture could limit our ability to plan for or react to changing business conditions or could otherwise restrict our business activities and plans (including impairing our ability to obtain other financing).

Our ability to comply with the covenants and restrictions imposed by the New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture is subject to various risks and uncertainties beyond our control.

Failure to comply with any of the restrictions and covenants in the New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture or future financing arrangements could result in a default under those arrangements and under other arrangements containing cross-default provisions.

The New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture (collectively, the "Indentures") also require us to make an offer to repurchase (i) the New Senior Secured Notes, or if the New Senior Secured Notes are redeemed in full, the New 2L Non-Convertible Notes or the 2L Convertible Notes, with 100% of the net cash proceeds of certain non-ordinary course asset sales and casualty events, subject to the ability to reinvest the proceeds of certain casualty events (subject to certain limitations), (ii) in the case of the New Senior Secured Notes, with 100% of the proceeds of certain Department of Energy sponsored financings and in specified amounts upon the receipt of certain

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extraordinary proceeds and (iii) in the case of the New Senior Secured Notes, the New 2L Non-Convertible Notes, the New 2L Renesas Convertible Notes and the New 2L Non-Renesas Convertible Notes, in full upon a change of control.

The restrictions imposed by the Indentures could limit our ability to plan for or react to changing business conditions or could otherwise restrict our business activities and plans (including impairing our ability to obtain other financing).

Our ability to comply with the covenants and restrictions imposed by the Indentures is subject to various risks and uncertainties beyond our control.

Failure to comply with any of the restrictions and covenants in the Indentures or future financing arrangements could result in a default under those arrangements and under other arrangements containing cross-default provisions.

A default would permit holders of the New Senior Secured Notes, the New 2L Non-Convertible Notes, the New 2L Renesas Convertible Notes or the New 2L Non-Renesas Convertible Notes, as applicable, to accelerate the maturity of the debt under these arrangements and to foreclose upon any collateral securing the debt.

Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under our New Senior Secured Notes Indenture, the New 2L Non-Convertible Notes Indenture, the New 2L Renesas Convertible Notes Indenture and the New 2L Non-Renesas Convertible Notes Indenture.

Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under our Indentures.

Additionally, we are exposed to market value fluctuations and inherent interest rate risk related to our investment portfolio.

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Certain former Convertible Noteholders and Renesas may significantly influence matters submitted to stockholders.

Certain former holders of Convertible Notes acquired, and Renesas (subject to regulatory approvals) will acquire significant ownership interests in our common stock pursuant to the Plan.

Certain former holders of Convertible Notes and Renesas have acquired significant ownership interests in our common stock pursuant to the Plan.

These stockholders may control outcomes of actions requiring stockholder approval, including director elections, without other stockholders' approval.

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and either attract or deter potential acquirers.

We may issue additional shares of common stock in connection with the exercise of the warrant issued to Renesas or the conversion of the outstanding New 2L Renesas Convertible Notes or New 2L Non-Renesas Convertible Notes, which would result in significant dilution to stockholders.

We may issue additional shares of common stock in connection with outstanding securities that are exercisable or convertible into common stock.

Any future exercise of the outstanding warrant issued to Renesas to purchase an aggregate of 4,943,555 shares of the Company's common stock or the conversion of the New 2L Renesas Convertible Notes or New 2L Non-Renesas Convertible Notes may result in significant dilution to existing stockholders.

We are required to reduce tax attributes due to cancellation of indebtedness income.

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As a consequence of such an exclusion, a taxpayer generally must reduce certain of its tax attributes by the amount of COD income that it excluded from gross income.

federal income tax attributes subject to reduction generally include (i) NOLs and NOL carryforwards;

federal income tax attributes subject to reduction generally include (i) net operating losses ("NOLs") and NOL carryforwards;

(ii) general business credit carryovers;

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federal income tax purposes and our tax attributes will be subject to the foregoing attribute reduction rules.

While the ultimate effect of the attribute reduction is uncertain because, among other things, it will depend on the amount of COD income we realize, loss of these tax attributes may have an adverse effect on our future cash flow.

While the ultimate effect of the attribute reduction is uncertain because, among other things, it will depend the full year results of fiscal 2026, loss of these tax attributes may have an adverse effect on our future cash flow.

Impaired stakeholder confidence and weakened relationships following Chapter 11 emergence may adversely affect our business.

Our emergence from Chapter 11 bankruptcy proceedings on September 29, 2025 may continue to adversely affect our business, operations, and stakeholder relationships.

Our emergence from the Chapter 11 Cases on the Effective Date may continue to adversely affect our business, operations, and stakeholder relationships.

Customer and vendor confidence may remain impaired, potentially causing:

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and ongoing reputational harm in our markets.

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Additionally, investors and capital markets may require demonstrated operational and financial recovery before fully restoring confidence, potentially limiting our access to capital on favorable terms or affecting the trading price of our common stock until sustained performance improvements are evidenced.

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incorrectly forecasting end market demand for their products;

altering their purchasing practices as a result of our emergence from Chapter 11 and the implementation of the Plan;

altering their purchasing practices as a result of our emergence from the Chapter 11 Cases and the implementation of the Plan;

or experiencing a reduction in their market share in the markets for which they purchase our products.

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Our research and development efforts address increasingly complex problems, and not all projects will succeed.

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semiconductor industry is characterized by rapid technological change, and our ability to compete effectively depends on our continued innovation in silicon carbide technology and our capacity to anticipate and respond to evolving customer requirements across automotive, industrial, energy, and emerging AI and data center applications.

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The United States Government has

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imposed, and in the future may impose, restrictions on shipments to some of our current customers.

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A significant product recall could result in adverse publicity, damage to our reputation, and loss of customer confidence in our products—particularly critical as we work to

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rebuild stakeholder trust following our Chapter 11 emergence.

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rebuild stakeholder trust following our emergence from the Chapter 11 Cases.

High defect rates and failure to meet evolving industry quality standards may damage customer relationships, impact customer acquisition and retention, and create significant reputational risk that could impair our competitive position.

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Initially, we expect this underutilization cost will be substantial as we ramp facilities.

Additionally, large upfront investments in facilities to increase capacity do not guarantee we'll need the capacity, and we may experience lower than expected demand once facilities are in production, resulting in further margin pressures.

Additionally, large upfront investments in facilities to increase capacity do not guarantee we'll need the capacity, and we have experienced and may continue to experience lower than expected demand, resulting in further margin pressures.

Our efforts to improve quoted delivery lead-time performance may result in corresponding reductions in order backlog.

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Our failure to comply with applicable laws could result in regulatory penalties, fines, legal liabilities,

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forfeiture of tax benefits, suspension of production, alteration of our processes, and curtailment of operations or sales.

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There is substantial competition for qualified and capable personnel, particularly experienced engineers and technical personnel, which may make it difficult to recruit and retain qualified employees.

If we are unable to staff sufficient and adequate personnel at our facilities, including as a result of attrition beyond the intended 2025 Restructuring Plan or adverse impacts on our ability to recruit and hire qualified personnel in the future as a result of the Chapter 11 Cases, we may experience lower revenue or increased manufacturing costs, adversely affecting our business, financial condition, and results of operations.

If we are unable to staff sufficient and adequate personnel at our facilities, including as a result of attrition beyond the intended restructuring plans or adverse impacts on our ability to recruit and hire qualified personnel in the future as a result of the Chapter 11 Cases, we may experience lower revenue or increased manufacturing costs, adversely affecting our business, financial condition, and results of operations.

To help attract, motivate, and retain key employees, we use benefits such as stock-based compensation awards.

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Our existing patents are subject to expiration and re-examination, and we cannot be sure additional patents will be issued on new applications

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around covered technology or that existing or future patents won't be successfully contested by third parties.

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and/or adversely impacted by unforeseen defects, technical challenges, cybersecurity threats, or material performance issues, any of which may not be easily detectable, our performance and reputation, as well as our customers' reputations, could suffer or we could incur liability resulting from violation of laws or contracts to which we are a party or civil claims.

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We use AI licensed from third parties, and our ability to continue using such third-party AI at the scale we need may be dependent on access to specific third-party software and infrastructure.

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We are often involved in litigation, primarily patent litigation, and we and certain former executive officers and directors were named as defendants in multiple securities class action lawsuits regarding past public disclosures, each as discussed further in Note 5,

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"Commitments and Contingencies," in our unaudited consolidated financial statements in Part I, Item 1 of this Quarterly Report.

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Our future effective tax rates and ability to obtain tax credits may significantly affect our financial condition due to numerous factors, including:

changes in or recapture of available tax credits, including eligibility for federal funding benefits;

limitations on utilizing federal and state net operating loss ("NOL") carryforwards following ownership changes under Section 382 of the Internal Revenue Code (the "Code");

changes in or recapture of available tax credits, including the AMIC;

limitations on utilizing federal and state NOL carryforwards following ownership changes under Section 382 of the Code;

changes in tax laws or their interpretation;

changes in valuation of deferred tax assets and liabilities;

changes in valuation or scheduling of the reversal of deferred tax assets and liabilities;

jurisdictional profit allocation;

implementation of international tax rules, including the OECD's 15% minimum global tax;

implementation of international tax rules, including the Organization for Economic Co-operation and Development's 15% minimum global tax;

resolution of tax audits;

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We cannot assure that anticipated reincorporation benefits will be achieved, and if benefits do not meet investor or analyst expectations, our stock price may decline.

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Our certificate of incorporation and bylaws provide that:

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Historically, our common stock has experienced substantial price volatility, particularly as a result of significant fluctuations in our revenue, earnings and margins over the past few years, and variations between our actual financial results and the published expectations of analysts.

For example, the closing price per share of our common stock on the New York Stock Exchange ranged from a low of $0.40 to a high of $16.21 during the twelve months ended September 28, 2025.

For example, the closing price per share of our common stock on the New York Stock Exchange ranged from a low of $17.15 to a high of $35.42 during the three months ended December 28, 2025 since emergence from bankruptcy.

If our future operating results or margins are below the expectations of stock market analysts or our investors, our stock price will likely decline.

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For example, on September 29, 2025, we emerged from the Chapter 11 Cases.

In connection with our emergence from Chapter 11 and pursuant to the Plan, the number of shares of common stock outstanding decreased significantly as part of the reorganization, which has impacted, and may in the future impact our stock price, and may result in additional stock price volatility.

In connection with our emergence from the Chapter 11 Cases and pursuant to the Plan, the number of shares of common stock outstanding decreased significantly as part of the reorganization, which has impacted, and may in the future impact our stock price, and may result in additional stock price volatility.

Speculation and opinions in the press or investment community about our strategic position, financial condition, results of operations or significant transactions have caused, and may continue to cause changes in our stock price.

In the past, we have been subject to shareholder activism and may be subject to such activism in the future, which could result in substantial costs and divert management's and our board's attention and resources from our business.

In the past, we have been subject to stockholder activism and may be subject to such activism in the future, which could result in substantial costs and divert management's and our board's attention and resources from our business.

In addition, competition or trends in some of the markets we address such as electric vehicles or the industrial and energy markets, the ramp up of our business, and the effect of tariffs on our business, may have a dramatic effect on our stock price.

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Future environmental regulations could restrict supply or increase the cost of certain of those materials.

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The impact of pandemic outbreaks on our operations and supply chain could disrupt our business.

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Reliance on local utilities and infrastructure at our manufacturing facilities creates operational vulnerabilities.

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Our manufacturing operations depend on reliable access to local utilities and infrastructure, including electricity, water, natural gas, and telecommunications services.

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Additionally, disruptions in, or inadequate infrastructure of, countries where we operate, including transportation networks, could affect our ability to receive raw materials and ship finished products, adversely affecting our business, financial condition, and results of operations.

Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Defaults Upon Senior Securities

Not applicable.

Mine Safety Disclosures

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors