SKYT 10-Q Quarterly Report June 29, 2025

CMI ACQUISITION, LLC

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skyt-20250629

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

______________________


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 29, 2025


¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 001-40345

______________________

SkyWater Technology, Inc.

(Exact name of registrant as specified in its charter)

______________________


Delaware			37-1839853
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2401 East 86 th Street , Bloomington , Minnesota 55425

(Address of registrant’s principal executive offices and zip code)

Registrant’s telephone number, including area code: ( 952 ) 851-5200

______________________

Securities registered under Section 12(b) of the Exchange Act:

Title of Each Class

Trading
Symbol

Name of Each Exchange
on Which Registered

Common stock, par value $0.01 per share

SKYT

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 17(a)(2)(B) of the Securities Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

On August 6, 2025, the number of shares of common stock, $0.01 par value, outstanding was 48,175,815 .

Table of Contents

SkyWater Technology, Inc.

TABLE OF CONTENTS


		Page No.

Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION		4

Item 1.	Financial Statements	4

	Condensed Consolidated Balance Sheets	4

	Condensed Consolidated Statements of Operations	5

	Condensed Consolidated Statements of Shareholders’ Equity	6

	Condensed Consolidated Statements of Cash Flows	8

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44

Item 4.	Controls and Procedures	45

PART II. OTHER INFORMATION		46

Item 1.	Legal Proceedings	46

Item 1A.	Risk Factors	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48

Item 3.	Defaults Upon Senior Securities	48

Item 4.	Mine Safety Disclosures	48

Item 5.	Other Information	48

Item 6.	Exhibits	49

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that SkyWater Technology, Inc. (“SkyWater,” the “Company,” “we,” “us,” or “our”) believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, without limitation, our expectations regarding our business, results of operations, financial condition and prospects, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “target,” “seek,” “potential,” “believe,” “will,” “could,” “should,” “would,” and “project” or the negative thereof or variations thereon or similar words or expressions that convey the uncertainty of future events or outcomes are generally intended to identify forward-looking statements.

Our forward-looking statements are subject to a number of risks, uncertainties, and assumptions. Key factors that may affect our results include, among others, the following:

• our goals and strategies;

• our future business development, financial condition, and results of operations;

• our ability to continue operating our fabrication facilities at full capacity;

• our ability to appropriately respond to changing technologies on a timely and cost-effective basis;

• our customer relationships and our ability to retain and expand our customer relationships;

• our ability to accurately predict our future revenues for the purpose of appropriately budgeting and adjusting our expenses;

• our expectations regarding dependence on our largest customers;

• our ability to diversify our customer base and develop relationships in new markets;

• our ability to integrate the operations of the Fab 25 facility with our operations and risks associated with operating the Fab 25 facility;

• the performance and reliability of our third-party suppliers and manufacturers;

• our ability to procure tools, materials, and chemicals;

• our ability to control costs, including our operating and capital expenses;

• the size and growth potential of the markets for our solutions, and our ability to serve and expand our presence in those markets;

• the level of demand in our customers’ end markets;

• our ability to attract, train, and retain key qualified personnel;

• adverse litigation judgments, settlements, or other litigation-related costs;

• changes in trade policies, including the imposition of or increase in tariffs;

• our ability to raise additional capital or financing;

• our ability to accurately forecast demand;

• changes in local, regional, national, and international economic or political conditions, including those resulting from increases in inflation and interest rates, a recession, or intensified international hostilities;

• the level and timing of U.S. government program funding;

• our ability to maintain compliance with certain U.S. government contracting requirements;

• regulatory developments in the United States and foreign countries;

• our ability to protect our intellectual property rights; and

• other factors disclosed in the section entitled “Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2024 and this Quarterly Report on Form 10-Q.

Moreover, our business, results of operations, financial condition, and prospects may be affected by new risks that could emerge from time to time. In light of these risks, uncertainties and assumptions, the forward-looking events and outcomes discussed in this Quarterly Report on Form 10-Q may not occur and our actual results could differ materially and adversely from those expressed or implied in the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should not rely on forward-looking statements as predictions of future events or outcomes. Although we believe that the expectations reflected in the forward-looking statements are reasonable, the results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements may not be achieved or occur.

The forward-looking statements in this Quarterly Report on Form 10-Q represent our views only as of the date hereof. We anticipate that subsequent events and developments will cause our views to change. However, we undertake no obligation to update publicly any forward-looking statements to conform such statements to changes in expectations or to actual results, or for any other reason, except as required by law. You should therefore not rely on these forward-looking statements as representing our views as of any date subsequent to the date hereof.

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`PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SKYWATER TECHNOLOGY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)


	June 29, 2025		December 29, 2024

	(in thousands, except per share data)
Assets
Current assets
Cash and cash equivalents	$	49,373	$	18,844
Accounts receivable (net of allowance for credit losses of $ 125 and $ 398 , respectively)	32,016		54,332
Contract assets (net of allowance for credit losses of $ 19 and $ 42 , respectively)	19,250		20,890
Inventory	13,385		14,535
Prepaid expenses and other current assets	41,914		23,476

Total current assets	155,938		132,077
Property and equipment, net	161,582		165,431
Intangible assets, net	8,441		7,779
Other assets	8,732		8,488
Total assets	$	334,693	$	313,775
Liabilities and shareholders’ equity
Current liabilities
Current portion of long-term debt	$	6,752	$	5,073
Accounts payable	15,353		29,590
Accrued expenses	40,627		36,829
Short-term financing, net of unamortized debt issuance costs	23,614		27,669
Contract liabilities	61,250		55,166
Total current liabilities	147,596		154,327
Long-term liabilities
Long-term debt, less current portion and net of unamortized debt issuance costs	35,316		34,704

Long-term contract liabilities	90,887		51,901
Deferred income tax liability, net	604		632
Other long-term liabilities	8,324		8,721
Total long-term liabilities	135,131		95,958
Total liabilities	282,727		250,285
Commitments and contingencies (Note 9)
Shareholders’ equity
Preferred stock, $ 0.01 par value per share ( 80,000 shares authorized; zero shares issued and outstanding as of June 29, 2025 and December 29, 2024)	—		—
Common stock, $ 0.01 par value per share ( 200,000 shares authorized; 48,176 and 47,704 shares issued and outstanding as of June 29, 2025 and December 29, 2024, respectively)	485		478
Additional paid-in capital	194,070		189,132
Accumulated deficit	( 149,319 )		( 131,996 )
Total shareholders’ equity, SkyWater Technology, Inc.	45,236		57,614
Noncontrolling interests	6,730		5,876
Total shareholders’ equity	51,966		63,490
Total liabilities and shareholders’ equity	$	334,693	$	313,775

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SKYWATER TECHNOLOGY, INC.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three-Month Period Ended				Six-Month Period Ended
	June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024

	(in thousands, except per share data)
Revenue	$	59,063	$	93,329	$	120,359	$	172,965
Cost of revenue	48,164		76,215		95,203		142,871
Gross profit	10,899		17,114		25,156		30,094
Research and development expense	3,368		3,382		6,617		7,394
Selling, general, and administrative expense	14,009		12,332		29,038		23,502

Operating (loss) income	( 6,478 )		1,400		( 10,499 )		( 802 )


Interest expense	1,637		2,482		3,450		4,871

Loss before income taxes	( 8,115 )		( 1,082 )		( 13,949 )		( 5,673 )
Income tax expense (benefit)	742		( 127 )		1,126		( 86 )
Net loss	( 8,857 )		( 955 )		( 15,075 )		( 5,587 )
Less: net income attributable to noncontrolling interests	1,121		942		2,248		2,039
Net loss attributable to SkyWater Technology, Inc.	$	( 9,978 )	$	( 1,897 )	$	( 17,323 )	$	( 7,626 )
Net loss per share attributable to common shareholders, basic and diluted	$	( 0.21 )	$	( 0.04 )	$	( 0.36 )	$	( 0.16 )
Weighted average shares used in computing net loss per common share, basic and diluted	48,091		47,395		47,943		47,247

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SKYWATER TECHNOLOGY, INC.

Condensed Consolidated Statements of Shareholders’ Equity

For the Three-Month Periods Ended June 29, 2025 and June 30, 2024

(dollars and shares in thousands)

(Unaudited)


	Preferred Stock	Common Stock		Additional Paid-in Capital			Accumulated Deficit	Total Shareholders’ Equity, SkyWater Technology, Inc.			Noncontrolling Interests		Total Shareholders’ Equity
			Shares			Amount				Shares					Amount
Balance at March 31, 2024			—	$	—		47,338	$	473		$	181,802	$	( 130,932 )		$	51,343	$	8,058	$	59,401
Issuance of common stock pursuant to equity compensation plans			—	—			130	1			( 1 )		—			—		—		—
Equity-based compensation			—	—			—	—			2,016		—			2,016		—		2,016
Contribution from noncontrolling interest			—	—			—	—			—		—			—		323		323
Distribution to noncontrolling interest			—	—			—	—			—		—			—		( 3,965 )		( 3,965 )
Net (loss) income			—	—			—	—			—		( 1,897 )			( 1,897 )		942		( 955 )
Balance at June 30, 2024			—	$	—		47,468	$	474		$	183,817	$	( 132,829 )		$	51,462	$	5,358	$	56,820

Balance at March 30, 2025			—	$	—		48,034	$	484		$	192,264	$	( 139,341 )		$	53,407	$	6,029	$	59,436




Issuance of common stock pursuant to equity compensation plans			—	—			123	1			( 535 )		—			( 534 )		—		( 534 )
Equity-based compensation			—	—			—	—			2,341		—			2,341		—		2,341

Contribution from noncontrolling interest			—	—			—	—			—		—			—		—		—
Distribution to noncontrolling interest			—	—			—	—			—		—			—		( 420 )		( 420 )
Net (loss) income			—	—			—	—			—		( 9,978 )			( 9,978 )		1,121		( 8,857 )
Balance at June 29, 2025			—	$	—		48,157	$	485		$	194,070	$	( 149,319 )		$	45,236	$	6,730	$	51,966

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SKYWATER TECHNOLOGY, INC.

Condensed Consolidated Statements of Shareholders’ Equity

For the Six-Month Periods Ended June 29, 2025 and June 30, 2024

(dollars and shares in thousands)

(Unaudited)


	Preferred Stock	Common Stock		Additional Paid-in Capital			Accumulated Deficit	Total Shareholders’ Equity, SkyWater Technology, Inc.			Noncontrolling Interests		Total Shareholders’ Equity
			Shares			Amount				Shares					Amount
Balance at December 31, 2023			—	$	—		47,028	$	470		$	178,473	$	( 125,203 )		$	53,740	$	6,961	$	60,701
Issuance of common stock pursuant to equity compensation plans			—	—			440	4			1,256		—			1,260		—		1,260
Equity-based compensation			—	—			—	—			4,088		—			4,088		—		4,088
Contribution from noncontrolling interest			—	—			—	—			—		—			—		323		323
Distribution to noncontrolling interest			—	—			—	—			—		—			—		( 3,965 )		( 3,965 )
Net (loss) income			—	—			—	—			—		( 7,626 )			( 7,626 )		2,039		( 5,587 )
Balance at June 30, 2024			—	$	—		47,468	$	474		$	183,817	$	( 132,829 )		$	51,462	$	5,358	$	56,820

Balance at December 29, 2024			—	$	—		47,704	$	478		$	189,132	$	( 131,996 )		$	57,614	$	5,876	$	63,490




Issuance of common stock pursuant to equity compensation plans			—	—			453	7			718		—			725		—		725
Equity-based compensation			—	—			—	—			4,220		—			4,220		—		4,220

Contribution from noncontrolling interest			—	—			—	—			—		—			—		626		626
Distribution to noncontrolling interest			—	—			—	—			—		—			—		( 2,020 )		( 2,020 )
Net (loss) income			—	—			—	—			—		( 17,323 )			( 17,323 )		2,248		( 15,075 )
Balance at June 29, 2025			—	$	—		48,157	$	485		$	194,070	$	( 149,319 )		$	45,236	$	6,730	$	51,966

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SKYWATER TECHNOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six-Month Period Ended
	June 29, 2025		June 30, 2024

	(in thousands)
Cash flows from operating activities
Net loss	$	( 15,075 )	$	( 5,587 )
Adjustments to reconcile net loss to net cash flows provided by operating activities
Depreciation and amortization	9,044		9,129



Gain on sale of property and equipment	—		( 78 )
Accretion of investment tax credits	( 385 )		—
Amortization of debt issuance costs included in interest expense	484		880
Equity-based compensation expense	4,220		4,088



Deferred income taxes	( 28 )		( 115 )



Allowance for credit losses	289		203


Changes in operating assets and liabilities
Accounts receivable and contract assets	23,648		24,775
Inventory	1,151		727
Prepaid expenses, other current assets, and other assets	( 18,665 )		( 560 )
Accounts payable and accrued expenses	4,548		( 18,529 )
Contract liabilities, current and long-term	45,069		( 9,427 )
Income tax receivable and payable	—		( 83 )
Net cash provided by operating activities	54,300		5,423
Cash flows from investing activities
Purchase of software and licenses	( 1,366 )		( 1,155 )
Proceeds from sale of property and equipment	—		23
Purchases of property and equipment	( 17,407 )		( 2,086 )
Net cash used in investing activities	( 18,773 )		( 3,218 )
Cash flows from financing activities


Proceeds from draws on the revolving line of credit	189,466		168,500
Repayment of draws on the revolving line of credit	( 195,544 )		( 163,900 )


Proceeds from tool financings	—		920
Repayment of tool financing advanced payments	—		( 920 )
Proceeds from sale leaseback transaction	4,599		—
Principal payments on long-term debt	( 2,479 )		( 2,047 )




Cash paid for principal on finance leases	( 371 )		( 396 )

Proceeds from the issuance of common stock pursuant to equity compensation plans	725		1,260

Cash paid on licensed technology obligations	—		( 2,000 )


Contributions from noncontrolling interest	626		323
Distributions to noncontrolling interest	( 2,020 )		( 3,965 )
Net cash used in financing activities	( 4,998 )		( 2,225 )
Net change in cash and cash equivalents	30,529		( 20 )
Cash and cash equivalents, beginning of period	18,844		18,382
Cash and cash equivalents, end of period	$	49,373	$	18,362

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SKYWATER TECHNOLOGY, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six-Month Period Ended
	June 29, 2025		June 30, 2024

	(in thousands)
Supplemental disclosure of cash flow information:
Cash paid during the period for
Interest	$	2,428	$	3,416
Income taxes	30		112
Noncash investing and financing activity
Capital expenditures incurred, not yet paid	$	2,812	$	4,042


Investment tax credit not received	445		—
Intangible assets acquired, not yet paid	216		706

The accompanying notes are an integral part of these condensed consolidated financial statements.

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

Note 1 Nature of Business

SkyWater Technology, Inc., together with its consolidated subsidiaries (collectively, “SkyWater,” the “Company,” “it,” or “its”), is a U.S.-based, independent, pure-play technology foundry that offers advanced semiconductor development and manufacturing services from its fabrication facility, or fab, in Minnesota and advanced packaging services from its Florida facility. SkyWater’s technology-as-a-service model leverages a foundation of proprietary technology to co-develop process technology intellectual property with its customers that enables disruptive concepts through its Advanced Technology Services (“ATS”) for diverse microelectronics (integrated circuits (“ICs”)) and related micro and nanotechnology applications. In addition to these differentiated technology development services, SkyWater supports customers with volume production of ICs for high-growth markets through its Wafer Services.

SkyWater is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

On February 25, 2025, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Spansion LLC, an affiliate of Infineon Technologies AG, pursuant to which the Company was to acquire all of the issued and outstanding membership interests of a limited liability company that received, pursuant to a pre-closing restructuring, substantially all of the property, plant and equipment and employees and certain other assets and liabilities related to Infineon Technologies AG’s 200 mm fab in Austin, Texas (the “Transaction”). Subsequent to the end of the Company’s second quarter, on June 30, 2025, the Company completed the Transaction. The Company financed the purchase price for the Transaction through debt financing. See Note 14 - Subsequent Events for further information.

Note 2 Basis of Presentation and Principles of Consolidation

The unaudited interim condensed consolidated financial statements as of June 29, 2025, and for the three- and six-month periods ended June 29, 2025 and June 30, 2024, are presented in thousands of U.S. dollars (except share and per share information), are unaudited, and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all financial information and disclosures required by U.S. GAAP for annual consolidated financial statements. These interim condensed consolidated financial statements should be read in conjunction with SkyWater’s annual consolidated financial statements and the related notes thereto as of December 29, 2024 and for the fiscal year then ended. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, including normal and recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position as of June 29, 2025 and its consolidated results of operations, shareholders’ equity, and cash flows for the three- and six-month periods ended June 29, 2025 and June 30, 2024.

The consolidated results of operations for the three- and six-month periods ended June 29, 2025 are not necessarily indicative of the results of operations to be expected for the fiscal year ending December 28, 2025, or for any other interim period, or for any other future fiscal year.

Principles of Consolidation

The interim condensed consolidated financial statements include the Company’s assets, liabilities, revenues, and expenses, as well as the assets, liabilities, revenues, and expenses of subsidiaries in which it has a controlling financial interest, SkyWater Technology Foundry, Inc. (“SkyWater Technology Foundry”), SkyWater Federal, LLC (“SkyWater Federal”), SkyWater Florida, Inc. (“SkyWater Florida”), and Oxbow Realty Partners, LLC (“Oxbow Realty”), a variable interest entity (“VIE”) for which SkyWater is the primary beneficiary and an affiliate of the Company’s principal shareholder. All intercompany accounts and transactions have been eliminated in consolidation.

Liquidity and Cash Requirements

The accompanying interim condensed consolidated financial statements have been prepared on the basis of the realization of assets and the satisfaction of liabilities and commitments in the normal course of business and do not include any adjustments to the recoverability and classifications of recorded assets and liabilities as a result of uncertainties.

For the three- and six-month periods ended June 29, 2025, the Company incurred net losses attributable to SkyWater Technology, Inc. of $ 9,978 and $ 17,323 , respectively. For the three- and six-month periods ended June 30, 2024, the Company

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

incurred net losses attributable to SkyWater Technology, Inc. of $ 1,897 and $ 7,626 , respectively. As of June 29, 2025 and December 29, 2024, the Company had cash and cash equivalents of $ 49,373 and $ 18,844 , respectively.

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

SkyWater’s ability to execute its operating strategy is dependent on its ability to maintain liquidity and continue to access capital through the Revolver (as defined in Note 6 – Debt ), and other sources of financing. The current business plans indicate that the Company maintains sufficient liquidity to continue its operations and maintain compliance with financial covenants for the next twelve months from the date the consolidated financial statements are issued. As of June 29, 2025, the Revolver had a maturity date of December 31, 2028 and provided for a maximum revolving facility amount of $ 130,000 . Subsequent to the end of the Company’s second quarter, on June 30, 2025, in connection with the closing of the Transaction, SkyWater and the parties thereto entered into the Amended Loan Agreement (as defined below). See Note 14 - Subsequent Events for further information. Based upon SkyWater’s operational forecasts, cash and cash equivalents on hand and available borrowings on the Revolver (as amended from time to time), as needed, management believes SkyWater will have sufficient liquidity to fund its operations for the next twelve months from the date these condensed consolidated financial statements are issued.

Use of Estimates

The preparation of the interim condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the interim condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods then ended. Management evaluates these estimates and judgments on an ongoing basis and bases its estimates on experience, current and expected future conditions, third-party evaluations, and various other assumptions that management believes are reasonable under the circumstances. Actual results could differ from those estimates.

Net Loss Per Share

Basic net loss per common share is calculated by dividing the net loss attributable to SkyWater Technology, Inc. by the weighted-average number of shares outstanding during the reporting periods, without consideration for potentially dilutive securities. Diluted net loss per common share is computed by dividing the net loss attributable to SkyWater Technology, Inc. by the weighted-average number of shares and potentially dilutive securities outstanding during the reporting periods determined using the treasury-stock method. Because the Company reported a net loss attributable to SkyWater Technology, Inc. for the three- and six-month periods ended June 29, 2025 and June 30, 2024, the number of shares used to calculate diluted net loss per common share is the same as the number of shares used to calculate basic net loss per common share because the potentially dilutive shares would have been anti-dilutive if included in the calculation. For the three- and six- month periods ended June 29, 2025, there were restricted stock units and stock options totaling 1,843,813 and 1,410,985 , respectively, excluded from the computation of diluted weighted-average shares outstanding because their inclusion would have been anti-dilutive. For the three- and six-month periods ended June 30, 2024, there were restricted stock units and stock options totaling 1,577,809 and 1,246,440 , respectively, excluded from the computation of diluted weighted-average shares outstanding because their inclusion would have been anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per common share for the three- and six-month periods ended June 29, 2025 and June 30, 2024:


	Three-Month Period Ended			Six -Month Period Ended
		June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024

		(in thousands, except per share data)				(in thousands, except per share data)
Numerator: net loss attributable to SkyWater Technology, Inc.		$	( 9,978 )	$	( 1,897 )	$	( 17,323 )	$	( 7,626 )


Denominator: weighted-average common shares outstanding, basic and diluted		48,091		47,395		47,943		47,247
Net loss per common share, basic and diluted		$	( 0.21 )	$	( 0.04 )	$	( 0.36 )	$	( 0.16 )

Reportable Segment Information

Reportable segments are identified as components of an enterprise about which separate financial information is available for evaluation by the chief operating decision maker (“CODM”) in making decisions regarding resource allocation

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

and assessing performance. SkyWater operates and manages its business as one reportable segment. See Note 13 - Reportable Segment and Geographic Information for segment and geography-specific disclosures.

Note 3 Summary of Significant Accounting Policies

Recently Issued Accounting Standards Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Income Taxes (“ASU 2023-09”). The amendments in this update improve existing income tax disclosures, notably with respect to the income tax rate reconciliation and income taxes paid disclosures, and are effective for annual periods beginning after December 15, 2025. As an emerging growth company, SkyWater will adopt the amendments in ASU 2023-09 for its fiscal year ending January 3, 2027. The Company is evaluating the impacts of the amendments on its consolidated financial statements and the accompanying notes to the financial statements.

In November of 2024, the FASB issued ASU No. 2024-03, Income Statement — Reporting Comprehensive Income—Expense Disaggregation Disclosures (“ASU 2024-03”). The amendments in this update require disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. The amendments in ASU 2024-03 are effective for annual periods beginning after December 15, 2026. SkyWater will adopt the amendments in this update for its fiscal year ending January 2, 2028. The Company is evaluating the impacts of the amendments on its consolidated financial statements and the accompanying notes to the financial statements.

Significant Accounting Policies

The annual consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2024 include discussion of the significant accounting policies and estimates used in the preparation of the interim condensed consolidated financial statements. The Company did not make any significant changes to its accounting policies and estimates during the three- and six-month periods ended June 29, 2025.

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

Note 4 Revenue

Disaggregated Revenue

The Company recognizes ATS development, tools, and Wafer Services revenues pursuant to its revenue recognition policies as described in Note 3 – Summary of Significant Accounting Policies to the annual consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2024. The following tables disclose revenue by product type and the timing of recognition of revenue for transfer of goods and services to customers:


	Three-Month Period Ended June 29, 2025
	Topic 606 Revenue
	Point-in-Time		Over Time		Lease Revenue Per Topic 842		Total Revenue

ATS development
Time-and-materials and cost-plus-fixed-fee contracts	$	—	$	36,566	$	—	$	36,566
Fixed price contracts	3,737		11,524		—		15,261
Other	—		—		778		778
Total ATS development	3,737		48,090		778		52,605
Wafer Services	296		5,115		—		5,411
Combined ATS development and Wafer Services	4,033		53,205		778		58,016
Tools	1,047		—		—		1,047
Total	$	5,080	$	53,205	$	778	$	59,063


	Three-Month Period Ended June 30, 2024
	Topic 606 Revenue
	Point-in-Time		Over Time		Lease Revenue Per Topic 842		Total Revenue

ATS development
Time-and-materials and cost-plus-fixed-fee contracts	$	—	$	40,363	$	—	$	40,363
Fixed price contracts	1,590		18,549		—		20,139
Other	—		—		1,167		1,167
Total ATS development	1,590		58,912		1,167		61,669
Wafer Services	357		5,423		—		5,780
Combined ATS development and Wafer Services	1,947		64,335		1,167		67,449
Tools	25,880		—		—		25,880
Total	$	27,827	$	64,335	$	1,167	$	93,329

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)


	Six-Month Period Ended June 29, 2025
	Topic 606 Revenue
	Point-in-Time		Over Time		Lease Revenue Per Topic 842		Total Revenue

ATS development
Time-and-materials and cost-plus-fixed-fee contracts	$	1,204	$	72,441	$	—	$	73,645
Fixed price contracts	8,569		20,981		—		29,550		`
Other	—		—		1,945		1,945
Total ATS development	9,773		93,422		1,945		105,140
Wafer Services	380		12,558		—		12,938
Combined ATS development and Wafer Services	10,153		105,980		1,945		118,078
Tools	2,281		—		—		2,281
Total	$	12,434	$	105,980	$	1,945	$	120,359


	Six-Month Period Ended June 30, 2024
	Topic 606 Revenue
	Point-in-Time		Over Time		Lease Revenue Per Topic 842		Total Revenue

ATS development
Time-and-materials and cost-plus-fixed-fee contracts	$	—	$	82,859	$	—	$	82,859
Fixed price contracts	1,590		36,070		—		37,660
Other	—		—		2,334		2,334
Total ATS development	1,590		118,929		2,334		122,853
Wafer Services	1,503		14,270		—		15,773
Combined ATS development and Wafer Services	3,093		133,199		2,334		138,626
Tools	34,339		—		—		34,339
Total	$	37,432	$	133,199	$	2,334	$	172,965

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

Deferred Contract Costs

The Company recognizes an asset for the incremental cost of obtaining a contract with a customer (i.e., deferred contract costs) when costs are considered recoverable and the duration of the contract is in excess of one year. Deferred contract costs are amortized as the related revenue is recognized. The Company recognized amortization of deferred contract costs totaling $ 0 for the three-month period ended June 29, 2025 and recognized amortization of deferred contract costs of $ 0 for the three-month period ended June 30, 2024. The Company recognized amortization of deferred contract costs totaling $ 0 and $ 172 for the six-month periods ended June 29, 2025 and June 30, 2024, respectively. There were no deferred contract costs capitalized as of June 29, 2025 and June 30, 2024 .

Contract Assets

Contract assets represent SkyWater’s rights to payments for services it has transferred to its customers, but has not yet billed to its customers. Contract assets were $ 19,250 and $ 20,890 at June 29, 2025 and December 29, 2024, respectively, and are presented net of allowances for expected credit losses of $ 19 and $ 42 , respectively.

Contract Liabilities

The Company’s contract liabilities principally consist of deferred revenue which represents payments from customers for which performance obligations have not yet been satisfied and deferred lease revenue which represents prepayments on a leasing arrangement in which the Company serves as lessor. In some instances, cash may be received, or payment may be contractually due by a customer before the related revenue is recognized. The contract liabilities and other significant components of contract liabilities at June 29, 2025 and December 29, 2024 are as follows:


	June 29, 2025						December 29, 2024
	Contract Deferred Revenue (1)		Lease Deferred Revenue		Total Contract Liabilities		Contract Deferred Revenue (1)		Lease Deferred Revenue		Total Contract Liabilities

Current contract liabilities	$	60,472	$	778	$	61,250	$	53,222	$	1,944	$	55,166
Long-term contract liabilities	90,887		—		90,887		51,901		—		51,901
Total contract liabilities	$	151,359	$	778	$	152,137	$	105,123	$	1,944	$	107,067

__________________

(1) Contract deferred revenue includ es $ 42,638 and $ 48,200 at June 29, 2025 and December 29, 2024, respectively, related to material rights provided to a significant customer in exchange for funding additional manufacturing capacity. Of these amounts, $ 11,123 and $ 11,123 were cla ssified as current in the interim condensed consolidated balance sheets as of June 29, 2025 and December 29, 2024, respectively.

The change in contract liabilities during the three- and six-month periods ended June 29, 2025 and June 30, 2024 are as follows:


	Three-Month Period Ended				Six-Month Period Ended
	June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024

Balance at beginning of period	$	158,479	$	114,714	$	107,067	$	115,305
Revenue recognized included in the balance at the beginning of the period	( 9,581 )		( 21,960 )		( 19,076 )		( 34,647 )
Increase due to payments received, excluding amounts recognized as revenue	3,239		13,123		64,146		25,219
Balance at end of period	$	152,137	$	105,877	$	152,137	$	105,877

Remaining Performance Obligations

At June 29, 2025, the Company had $ 133,821 of remaining performance obligations that had not been fully satisfied on contracts with original expected durations of one year or more, which were primarily related to ATS development and tools

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

revenue contracts. The Company expects to recognize those revenues as it satisfies its performance obligations, which is not expected to exceed 4.0 years.

The Company does not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less. Further, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between when it transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

Note 5 Balance Sheet Information

Certain significant amounts included in the Company’s interim condensed consolidated balance sheets are summarized in the following tables:


	Three-Month Period Ended			Six-Month Period Ended
Allowance for credit losses - Accounts Receivable		June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024

Balance at beginning of period		$	597	$	96	$	398	$	180

Provision for credit losses		( 9 )		337		346		253

Accounts written-off		( 491 )		—		( 619 )		—
Less recoveries of accounts charged-off		28		—		—		—

Balance at end of period		$	125	$	433	$	125	$	433


Inventory	June 29, 2025		December 29, 2024

Raw materials	$	2,483	$	3,218
Work-in-process	1,244		981
Supplies and spare parts	9,658		10,222
Finished goods	—		114
Total inventory, current	13,385		14,535
Inventory, non current (1)	4,901		4,747
Total inventory	$	18,286	$	19,282

__________________

(1) Inventory, non-current consists of spare parts that will not be used within twelve months.

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)


Prepaid expenses and other current assets	June 29, 2025		December 29, 2024

Prepaid expenses	$	3,803	$	3,984

Tools purchased for customers (1)	34,423		16,923
Deferred contract costs	2,060		1,253
Investment tax credit receivable -current	1,628		1,316


Total prepaid assets and other current assets	$	41,914	$	23,476

__________________

(1) The Company acquires tools for its customers that consist of manufacturing equipment its customers will own but will be installed and qualified in a SkyWater facility. Prior to the customer obtaining ownership and control of the equipment, the Company records the costs associated with the acquisition, installation, and qualification of the equipment within prepaid expenses and other current assets. These deferred costs are recognized as cost of revenue when control of the equipment transfers to the customer and the related tools revenue is recognized.


Property and equipment, net	June 29, 2025		December 29, 2024

Land	$	5,396	$	5,396
Buildings and improvements	89,443		89,443
Machinery and equipment	203,870		202,667
Property and equipment placed in service, at cost (1)	298,709		297,506
Less: accumulated depreciation (1)	( 158,671 )		( 150,657 )
Property and equipment placed in service, net (1)	140,038		146,849
Property and equipment not yet in service	21,544		18,582
Total property and equipment, net	$	161,582	$	165,431

__________________

(1) Includes $ 10,469 and $ 10,805 of cost and $ 2,466 and $ 2,398 of accumulated depreciation associated with capital assets subject to financing leases at June 29, 2025 and December 29, 2024, respectively.

For the three-month periods ended June 29, 2025 and June 30, 2024, depreciation expense was $ 3,973 and $ 3,704 , respectively, and $ 8,002 and $ 8,394 for the six-month periods ended June 29, 2025 and June 30, 2024, respectively, substantially all of which was classified as cost of revenue.


Intangible Assets, net	June 29, 2025		December 29, 2024

Software and licensed technology	$	14,140	$	13,742
Less: accumulated amortization	( 8,607 )		( 7,950 )
Intangible assets placed in service, net	5,533		5,792
Intangible assets not yet in service	2,908		1,987
Total intangible assets, net	$	8,441	$	7,779

Intangible assets consist primarily of payments made under software and technology licensing arrangements with third parties, in addition to internally developed software costs. For the three-month periods ended June 29, 2025 and June 30, 2024, amortization of software and licenses was $ 328 and $ 360 , respectively, and $ 657 and $ 735 for the six-month periods ended June 29, 2025 and June 30, 2024, respectively.

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

Remaining estimated aggregate annual amortization expense for intangible assets placed in service is as follows for future fiscal years:


	Amortization Expense

Remainder of 2025	$	695
2026	1,089
2027	712
2028	712
2029	712
Thereafter	1,613
Total	$	5,533


Other Assets	June 29, 2025		December 29, 2024

Inventory, non-current (1)	$	4,901	$	4,747

Operating lease right-of-use assets	25		49
Investment tax credit receivable - non current	3,211		3,200
Other assets	595		492
Total other assets	$	8,732	$	8,488

__________________

(1) Inventory, non-current consists of spare parts that will not be used within twelve months .


Accrued Expenses	June 29, 2025		December 29, 2024

Accrued compensation	$	7,936	$	6,392

Accrued commissions	269		473

Accrued royalties	533		447
Current portion of operating lease liabilities	26		52
Current portion of finance lease liabilities	634		608
Accrued inventory	2,072		623
Accrued warranty (1)	2,139		3,752
Accrued vendor purchase commitments (2)	9,067		13,718
Accrued accounts payable	6,687		818
Accrued accounts payable - customer	1,560		2,175
Accrued utilities	1,074		1,934
Other accrued expenses	8,630		5,837
Total accrued expenses	$	40,627	$	36,829

__________________

(1) The Company accrued provisions for warranties of $ 2,139 and $ 3,752 as of June 29, 2025 and December 29, 2024, respectively. For the three-month periods ended June 29, 2025 and June 30, 2024, warranty expense was $ 582 and $ 2,350 , respectively, and $ 821 and $ 2,776 for the six-month periods ended June 29, 2025 and June 30, 2024 respectively. For the three-month periods ended June 29, 2025 and June 30, 2024, warranty credits was $ 1,130 and $ 726 , respectively, and $ 2,434 and $ 1,650 for the six-month periods ended June 29, 2025 and June 30, 2024, respectively.

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

(2) The Company accrues outstanding obligations on vendor purchase orders for goods or services provided to the Company for which invoices have not yet been received.


Other long-term liabilities	June 29, 2025		December 29, 2024

Finance lease obligations	$	8,255	$	8,652


Liability for uncertain tax positions	69		69
Total other long-term liabilities	$	8,324	$	8,721

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

Note 6 Debt

The components of debt outstanding at June 29, 2025 and December 29, 2024 are as follows:


	June 29, 2025		December 29, 2024

Short-term financing
Revolver	$	25,803	$	30,171
Unamortized debt issuance costs	( 2,189 )		( 2,502 )
Total short-term financing, net of unamortized debt issuance costs	$	23,614	$	27,669
Long-term debt
VIE Financing	$	34,106	$	34,671
Tool financing loans (1)	9,935		7,253
Unamortized debt issuance costs	( 1,973 )		( 2,147 )
Total long-term debt, including current maturities	42,068		39,777
Less: Current portion of long-term debt	( 6,752 )		( 5,073 )
Total long-term debt, excluding current portion	$	35,316	$	34,704

__________________

(1) Tool financing advance payments represent proceeds received from equipment lenders prior to the Company placing the tools into service. When the tools are placed into service, financing agreements are executed to repay the equipment lenders the financed acquisition cost of the tools, and any advance payments received from the equipment lenders are converted to tool financing loans and classified as long-term debt in the Company’s condensed consolidated balance sheets. Tool financings are often accounted for as failed sale and leasebacks.

Revolver

On December 28, 2022, the Company entered into a Loan and Security Agreement with Siena Lending Group LLC (“Siena”), which was amended on November 19, 2024 (as amended, the “Loan Agreement”). As of June 29, 2025, the Loan Agreement provided for a revolving line of credit with a borrowing limit of up to $ 130,000 with a scheduled maturity date of December 31, 2028 (the “Revolver”). The outstanding balance of the Revolver was $ 25,803 as of June 29, 2025 at an interest rate of 8.7 %. Borrowing under the Revolver is limited by a borrowing base of specified advance rates applicable to billed accounts receivable, contract assets, inventory and equipment, subject to various conditions and limits as provided in the Loan Agreement. The remaining availability under the Revolver was $ 104,196 as of June 29, 2025. As of June 29, 2025, the Company was in compliance with all applicable financial covenants of the Revolver. Subsequent to the end of the second quarter of 2025, on June 30, 2025, the Company entered into an Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”) with Siena as agent, and other lenders party thereto. See Note 14 - Subsequent Events for further information.

VIE Financing

On September 30, 2020, Oxbow Realty, the Company’s consolidated VIE entered into a loan agreement for $ 39,000 (the “VIE Financing”) to finance the acquisition of the building and land of the SkyWater Minnesota facility (see Note 10 – Related Party Transactions and Note 11 – Variable Interest Entity ). The VIE Financing is repayable in equal monthly installments of $ 194 over 10 years, with the remaining balance payable at the maturity date of October 6, 2030. The interest rate under the VIE Financing is fixed at 3.44 %. The VIE Financing is guaranteed by Oxbow Industries, LLC (“Oxbow Industries”), who is also the sole equity holder of Oxbow Realty. The VIE financing is not subject to financial debt default covenants.

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

loan agreement, reported by SkyWater historically. Pursuant to its protective rights, the lender retained in a restricted account amounts paid by SkyWater to Oxbow Realty that were in excess of the scheduled debt payments paid by Oxbow Realty to the lender. The triggering event was cured during the three-month period ended June 30, 2024 and the funds held in the restricted account were remitted back to Oxbow Realty. No triggering events as defined in the loan agreement existed as of June 29, 2025.

The VIE Financing is secured by a security interest in the land and building which was the subject of the sale-leaseback transaction (see Note 10 – Related Party Transactions ). The Company and Oxbow Realty, the Company’s VIE, incurred third-party transaction costs of $ 3,487 and $ 65 , respectively, which have been capitalized as debt issuance costs, presented as a reduction of the outstanding loan balance, and are being amortized as additional interest expense over the remaining maturity of the VIE Financing.

Maturities

Future principal payments of the Company’s long-term debt, excluding unamortized debt issuance costs, are as follows:


Remainder of 2025	$	3,370
2026	5,975
2027	2,808
2028	2,008
2029	1,307
Thereafter	28,573
Total	$	44,041

Note 7 Income Taxes

The Company’s effective tax rates for the three- and six-month periods ended June 29, 2025 and June 30, 2024 differ from its 21 % U.S. statutory corporate tax rate due to the impact of state income taxes, permanent tax differences, the tax impact of the vesting of restricted stock units, and changes in the Company’s deferred tax asset valuation allowance. The effective tax rate in any quarter can be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution. The effective income tax rates for the three -month periods ended June 29, 2025 and June 30, 2024 were ( 8.04 )% and 11.7 % , respectively, an d ( 7.0 )% and 1.5 % for the six- month periods ended June 29, 2025 and June 30, 2024, respectively. Regarding the One Big Beautiful Bill Act, t he Company will implement the tax law changes in the third quarter of 2025. Please see Note 14 - Subsequent Events for further information.

Note 8 Equity-Based Compensation

Equity-based compensation expense was recorded in the interim condensed consolidated statements of operations as follows:


	Three - Month Period Ended			Six-Month Period Ended
		June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024

Cost of revenue		$	626	$	504	$	1,193	$	959
Research and development expense		113		90		196		197
Selling, general and administrative expense		1,543		1,422		2,831		2,932
Total equity-based compensation expense		$	2,282	$	2,016	$	4,220	$	4,088

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

Note 9 Commitments and Contingencies

Litigation and Other Asserted Claims

From time to time, the Company is involved in legal proceedings and subject to other asserted claims arising in the ordinary course of its business. Although the results of litigation and asserted claims cannot be predicted with certainty, the Company currently believes that the resolution of these ordinary-course matters will not have a material adverse effect on its business, operating results, financial condition or cash flows. Even if any particular litigation is resolved in a manner that is favorable to the Company’s interests, such litigation can have a negative impact on the Company because of defense and settlement costs, diversion of management resources from its business, and other factors. There were no material litigation-related or other asserted claim contingencies recognized at either June 29, 2025 or December 29, 2024.

Capital Expenditures

The Company has various contracts outstanding with third parties which primarily relate to semiconductor tool purchases and installation. The Company has $ 5,470 and $ 24,979 of contractual commitments outstanding as of June 29, 2025 and December 29, 2024, respectively, that it expects to be paid in the next twelve months using cash on hand and operating cash flows.

Center for NeoVation

On January 25, 2021 the Company entered into a technology and economic development agreement (the “TED Agreement”), and a lease agreement (the “CfN Lease”) with the government of Osceola County, Florida (“Osceola”) and ICAMR, Inc., a Florida non-profit corporation doing business as BRIDG (“BRIDG”), to lease and operate the Center for NeoVation (the “CfN”), a semiconductor research and development and manufacturing facility in Kissimmee, Florida. Under the CfN Lease, the Company agrees to bring the plant to full production capacity within five years , and then to operate the plant at full capacity for an additional 15 years At the end of the lease, SkyWater will take ownership of the facility. The Company is responsible for taxes, utilities, insurance, maintenance, operation of the assets, and making capital investments in the facility to bring the facility to its full production capacity. Investments and costs required to bring the facility to its full capacity will be substantial. The Company may terminate the TED Agreement and CfN Lease with 18 months’ notice. In the event the Company terminates the agreements, it is required to continue to operate the CfN until the earlier of either a replacement operator is found, or the 18 -month notice period expires, and it may be required to make a payment of up to $ 15,000 to Osceola upon termination.

As part of entering into the TED Agreement, the Company agreed to operate the advanced wastewater treatment facility (“AWT Facility”), a separate building located on the same leased premise as the CfN and subject to the CfN Lease. The AWT Facility was financed in substantial part by funds provided by the Tohopekaliga Water Authority (“TWA”) to house the acid waste neutralization, pH adjustment, and reverse osmosis water treatment systems. In connection with entering into the CfN Lease, the Company agreed that development of the CfN requires the payment of water, wastewater, and reuse water capacity charges imposed by TWA monthly over the remaining period of six years . The Company also agreed that TWA shall be entitled to recover the capital contribution of TWA for construction of the AWT Facility through a capital reimbursement surcharge monthly over the remaining period of six years . As of June 29, 2025, the Company expects future payments on these commitments of approximately $ 3,600 which the Company expects will be paid in full by the first quarter of 2028.

Build Back Better Grant

In the third quarter of 2022, the U.S. Department of Commerce Economic Development Administration granted funds to Osceola and BRIDG for continued development of Central Florida’s Semiconductor Cluster for Broad-Based Prosperity through the Build Back Better Regional Challenge, a portion of which is committed to the expansion of the CfN and purchase, installation, and qualification of equipment in the CfN. In February 2023, SkyWater committed to a 20 % matching share contribution of the project costs to Osceola totaling approximately $ 9,100 . SkyWater’s commitment to fund this matching contribution is limited to $ 1,000 in any single calendar quarter. As of June 29, 2025, SkyWater is currently obligated to pay $ 1,000 in the subsequent quarter based upon development activity that has occurred through the second quarter of 2025 .

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

Note 10 Related Party Transactions

In August 2022, SkyWater entered into a support letter with Oxbow Industries to provide funding in an amount up to $ 12,500 , if necessary, to enable the Company to meet its obligations as they become due. In March 2024, the agreement was amended to extend the term through March 18, 2026. No amounts were provided to the Company under this agreement.

In August 2023, SkyWater entered into a consulting agreement with Oxbow Industries pursuant to which an employee of Oxbow Industries provides certain consulting services to the Company, including services where the Oxbow employee negotiated and brokered the acquisition of the semiconductor fab in Austin, Texas. For the three-month periods ended June 29, 2025 and June 30, 2024, e xpense associated with this agreement totaled $ 212 and $ 126 , respectively. For the six-month periods ended June 29, 2025 and June 30, 2024, e xpense associated with this agreement totaled $ 416 and $ 267 , respectively.

Sale-Leaseback Transaction

On September 29, 2020, SkyWater entered into an agreement to sell the land and building of its Bloomington, Minnesota facility to Oxbow Realty. In the fourth quarter of 2020, SkyWater entered into an agreement to lease the land and building from Oxbow Realty for initial payments of $ 394 per month over 20 years. The monthly payments are subject to a 2 % increase each year during the term of the lease. Since September 29, 2024, the monthly rental payment to Oxbow Realty has been $ 426 . The Company is also required to make certain customary payments constituting “additional rent,” which relate to monthly leasing and replacement reserves, insurance, and tax payments in accordance with the terms of the lease agreement. Future minimum lease commitments to Oxbow Realty as of June 29, 2025 were as follows (such amounts are eliminated from the consolidated financial statements due to the consolidation of Oxbow Realty, see Note 11 – Variable Interest Entity).


Remainder of 2025	$	2,591
2026	5,252
2027	5,357
2028	5,464
2029	5,573
Thereafter	66,835
Total lease payments	91,072
Less: imputed interest	( 63,016 )
Total	$	28,056

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

Note 11 Variable Interest Entity

Oxbow Realty was established for the purpose of holding real estate and facilitating real estate transactions on behalf of Oxbow Industries. This included facilitating the purchase of the land and building of SkyWater’s Minnesota facility with proceeds from a bank loan (see Note 6 – Debt ) and managing the leaseback of the land and building to SkyWater (see Note 10 – Related Party Transactions ). Management determined that Oxbow Realty meets the definition of a VIE under Accounting Standards Codification Topic 810, “Consolidations” (“Topic 810”), because it lacks sufficient equity to finance its activities. Furthermore, the Company is the primary beneficiary of Oxbow Realty as it has the power over those activities that most significantly affect Oxbow Realty’s economic performance, mainly activities focused on the operation and maintenance of the Minnesota facility. As the primary beneficiary, the Company consolidates the assets, liabilities, and results of operations of Oxbow Realty pursuant to Topic 810, eliminating any transactions between the Company and Oxbow Realty, and recording a noncontrolling interest for the economic interest in Oxbow Realty attributable to parties other than the Company’s common stock shareholders. In addition, the assets of Oxbow Realty can only be used to settle its liabilities, and the creditors of Oxbow Realty do not have recourse to the general credit of SkyWater.

The following table shows the carrying amounts of assets and liabilities of Oxbow Realty that are consolidated by the Company as of June 29, 2025 and December 29, 2024. The assets and liabilities are presented prior to the elimination of intercompany balances.


	June 29, 2025		December 29, 2024

Cash and cash equivalents	$	340	$	383
Accounts receivable	1,368		1,242

Finance receivable	41,360		41,153
Other assets	82		107
Total assets	$	43,150	$	42,885

Accounts payable	$	1,373	$	1,217
Accrued expenses	—		80
Contract liabilities	975		1,078
Debt	34,072		34,634
Total liabilities	$	36,420	$	37,009

The following table shows the revenue and expenses of Oxbow Realty for the three- and six-month periods ended June 29, 2025 and June 30, 2024. These results of Oxbow Realty are presented prior to the elimination of intercompany transactions.


	Three-Month Period Ended				Six-Month Period Ended
	June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024

Revenue	$	1,438	$	1,423	$	2,872	$	2,842
General and administrative expenses	13		23		16		39
Interest expense	304		458		608		764
Total expenses	317		481		624		803
Net income	$	1,121	$	942	$	2,248	$	2,039

Note 12 Leases

SkyWater as the Lessor

In March 2020, SkyWater executed a contract with a customer that includes an operating lease for the right to use a specified portion of the Company’s Minnesota facility to produce wafers using the customer’s equipment. The contractual amount that relates to revenue from an operating lease was $ 21,000 , and is being recognized over the estimated lease term of

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

4.5 years. The total amount was prepaid by the customer and recorded as deferred revenue. See Note 4 – Revenue for additional information on revenue recognition and deferred revenue of the operating lease.

SkyWater Furnace Sale-Leaseback Transaction

In June 2025, the Company entered into an agreement to sell and leaseback a furnace over a 36 month period. Monthly lease payments total $ 142 under the agreement. The Company received $ 4,599 of cash as part of the sale agreement and accounted for the transaction as a failed sale leaseback. As a result, the Company is deemed the owner of the asset and a financial obligation has been recorded. Monthly lease payments will reduce the financial obligation balance, with a portion of the payments being applied to interest expense over the course of the lease.

Note 13 Reportable Segment and Geographic Information

The following represents the results of the Company’s single segment as presented and reviewed by our CODM:


	Three-Month Period Ended				Six-Month Period Ended
	June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024

	(in thousands, except per share data)
Revenue	$	59,063	$	93,329	$	120,359	$	172,965
Cost of revenue


Labor	20,892		20,166		42,160		40,918
Direct expenses	22,362		27,314		43,009		60,106
Cost of tool revenue	881		24,869		1,911		33,129
Depreciation and amortization	4,029		3,866		8,123		8,718
Total cost of revenue	48,164		76,215		95,203		142,871
Gross profit	10,899		17,114		25,156		30,094
Research and development expense	3,368		3,382		6,617		7,394
Selling, general, administrative expense
Labor	6,510		6,364		13,623		12,521
Direct expenses	7,353		5,895		15,130		10,835
Depreciation and amortization	146		73		286		146
Total selling, general, and administrative expense	14,009		12,332		29,038		23,502
Operating (loss) income	( 6,478 )		1,400		( 10,499 )		( 802 )
Other expense:
Interest expense	1,637		2,482		3,450		4,871
Total other expense	1,637		2,482		3,450		4,871
Loss before income taxes	( 8,115 )		( 1,082 )		( 13,949 )		( 5,673 )
Income tax expense (benefit)	742		( 127 )		1,126		( 86 )
Net loss	$	( 8,857 )	$	( 955 )	$	( 15,075 )	$	( 5,587 )

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

The following table discloses revenue for the for the three- and six-month periods ended June 29, 2025 and June 30, 2024 by country as determined based on customer address:


	Three-Month Period Ended			Six-Month Period Ended
		June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024

United States		$	53,780	$	90,598	$	111,026	$	166,822
Canada		3,030		1,647		560		637
Hong Kong		293		32		5,342		3,880
United Kingdom		560		352		767		79
All others		1,400		700		2,663		1,547
Total		$	59,063	$	93,329	$	120,359	$	172,965

One customer accounted for 43 % and 41 % of revenue for the three- and six-month periods ended June 29, 2025. Three customers accounted for 10% or more of revenue, and in aggregate accounted for 72 % and 66 % of revenue for the three- and six-month periods ended June 30, 2024, respectively. One customer accounted for 34 % of accounts receivable as of June 29, 2025 and there were no other customers that exceeded 10% of total accounts receivable. The loss of a major customer could adversely affect the Company’s operating results and financial condition.

Note 14 Subsequent Events

Acquisition of Spansion Fab 25, LLC

On June 30, 2025, the Company completed the acquisition of all of the issued and outstanding membership interests of Spansion Fab 25, LLC, a newly formed limited liability company that received, pursuant to a pre-closing restructuring, substantially all of the property, plant and equipment and employees and certain other assets and liabilities related to Infineon Technologies AG’s 200 mm fab in Austin, Texas (the “Transaction”), pursuant to the amended Membership Interest Purchase Agreement, with Spansion LLC (the “Seller”), an affiliate of Infineon Technologies AG. In connection with the Transaction, the Company entered into a corresponding multi-year wafer supply agreement with an affiliate of the Seller. The Transaction is expected to enhance SkyWater’s capabilities in foundational semiconductor manufacturing and strengthen its strategic position within North America’s semiconductor ecosystem.

The purchase price for the Transaction was approximately $ 93 million, all of which was paid in cash at the closing of the Transaction, comprised of a base purchase price of $ 73 million plus a payment for working capital of approximately $ 20 million, which is subject to adjustment.

The Company will account for the Transaction as a purchase of a business under the acquisition method of accounting. The Company is currently evaluating the preliminary purchase price allocation, including the fair values of assets acquired and liabilities assumed. As such, financial effects of the acquisition cannot be reasonably estimated at this time and certain disclosures have been excluded. The Company expects to complete the preliminary purchase price allocations relating to this acquisition in the third quarter of fiscal year 2025.

In connection with the Transaction, the Company entered into a multi-year supply agreement with certain of Infineon’s Technologies AG’s subsidiaries which includes minimum wafer loading commitments under a take-or-pay clause for the first three years . In addition, as part of the Transaction, the Company agreed to lease a portion of the acquired office space back to Infineon Technologies AG for $ 1.2 million annually through June 2029, after which the rent will be adjusted based on fair market value escalators

Amended and Restated Loan and Security Agreement

In connection with the completion of the Transaction, on June 30, 2025, the Company entered into an Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”), with Siena Lending Group LLC as agent and the other lenders and parties thereto. The Amended Loan Agreement amends, restates and replaces the prior Loan Agreement.

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SKYWATER TECHNOLOGY, INC.

Notes to Condensed Consolidated Financial Statements

(unaudited in thousands, except share and per share data)

The Amended Loan Agreement provides for a revolving line of credit of up to $ 350 million with a scheduled maturity date of June 30, 2030. Proceeds of borrowings under the Amended Loan Agreement were initially used to refinance all indebtedness owing to the lenders under the prior Loan Agreement, to fund the purchase price for the Transaction and to pay the fees, costs, and expenses incurred in connection with the Transaction, the Amended Loan Agreement, and the transactions contemplated thereby, and thereafter, may be used for working capital purposes, for equipment, and for such other purposes as specifically permitted pursuant to the terms of the Amended Loan Agreement. The Company’s obligations under the Amended Loan Agreement are secured by substantially all of their assets and guaranteed by the Company as further described in the Amended Loan Agreement.

One, Big, Beautiful Bill Act

The One Big Beautiful Bill Act (the “Act”) was signed into law on July 4, 2025. The Act contains significant tax law changes with various effective dates affecting business taxpayers. Among the tax law changes, the Act increases the Section 48D credit for semiconductor manufacturing facilities from 25% to 35% for property placed in service after 2025. Additionally, the Act contains provisions that are expected to impact the Company related to the timing of certain tax deductions including depreciation expense, R&D expenditures, and interest expense. The Company will record the effect of the tax law changes in the third quarter of 2025. The Company does not anticipate any material impact to its overall tax expense recorded as a result of the Act .

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the interim condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and the Company’s audited annual consolidated financial statements and related notes, included in its Annual Report on Form 10-K for the fiscal year ended December 29, 2024. In addition to historical financial information, the following discussion contains forward-looking statements that reflect the Company’s current expectations, estimates and assumptions concerning events and financial trends that may affect the Company’s future operating results or financial position. Actual results and the timing of events may differ materially from those discussed or implied in the Company’s forward-looking statements due to a number of factors, including those described in the sections entitled “Risk Factors” and “Forward-Looking Statements” herein and elsewhere in its Annual Report on Form 10-K.

SkyWater refers to the three-month periods ended June 29, 2025 and June 30, 2024 as the second quarter of 2025 and second quarter of 2024, respectively. Each of these three-month periods includes 13 weeks. The six-month periods ended June 29, 2025 and June 30, 2024 are referred to as the first six months of 2025 and the first six months of 2024, respectively. Each of these six-month periods includes 26 weeks. All percentage amounts and ratios presented in this management’s discussion and analysis were calculated using the underlying data in thousands. Unless otherwise indicated, all changes identified for the current period results represent comparisons to results for the prior corresponding period.

For purposes of this section, the terms “we,” “us,” “our,” and “SkyWater” refer to SkyWater Technology, Inc. and its subsidiaries collectively.

Overview

We are a U.S.-based, independent, pure-play technology foundry that offers advanced semiconductor development and manufacturing services from our fabrication facility, or fab, in Minnesota and advanced packaging services from our Florida facility. Our Technology-as-a-Service model leverages a foundation of proprietary technology, engineering know-how capabilities, and microelectronics manufacturing capacity to co-develop process technology intellectual property (“IP”) with our customers that enables disruptive concepts through our Advanced Technology Services (“ATS”) for diverse microelectronics (integrated circuits (“ICs”)) and related micro- and nanotechnology applications. In addition to differentiated technology development services, we support customers with volume production of ICs for high-growth markets through our Wafer Services.

The combination of semiconductor development and manufacturing services we provide our customers is not available to them from a conventional fab. In addition, we believe our status as a publicly-traded, U.S.-based, U.S. headquartered pure-play technology foundry with Defense Microelectronics Activity Category 1A Trusted Accreditation from the U.S. Department of Defense positions us well to provide distinct, competitive advantages to our customers. These advantages include the benefits of enhanced IP security and secure access to a U.S. domestic supply chain.

We primarily focus on serving diversified, high-growth end users in numerous vertical markets, including (1) advanced compute, (2) aerospace and defense, (3) automotive, (4) bio-health, and (5) industrial. By housing both development and manufacturing in a single operation, we rapidly and efficiently transition newly-developed processes to high-yielding volume production, eliminating the time it would otherwise take to transfer production to a third-party fab. Through our ATS model, we specialize in co-creating advanced solutions with our customers that directly serve our end markets, such as infrared imaging, superconducting ICs for quantum computing and sensing, Rad-hard complementary metal oxide semiconductor (“CMOS”), integrated photonics, microelectromechanical systems (“MEMS”), technologies for biomedical and imaging applications, and advanced packaging. Our Wafer Services include the manufacture of silicon-based analog and mixed-signal ICs for our end markets. Our focus on the differentiated analog and CMOS markets supports long product life-cycles and requirements that value performance over cost-efficiencies, and leverages our portfolio IP.

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Factors and Trends Affecting our Business and Results of Operations

The following trends and uncertainties either affected our financial performance during the first six months of 2025 and 2024 or are reasonably likely to impact our results in the future.

• Macroeconomic and competitive conditions, including cyclicality and consolidation, as well as government funding in semiconductor technology and manufacturing, create unique challenges and opportunities for the semiconductor industry and SkyWater.

• Changes in trade policies, including the imposition of or increase in tariffs and changes to existing trade agreements, could negatively impact our business, financial condition and results of operations.

• In August 2022, the U.S. enacted the Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (the “CHIPS Act”) pursuant to which the United States has committed to a renewed focus on providing incentives and funding for onshore companies to develop and advance the latest semiconductor technologies, supporting onshore manufacturing capabilities, and on strengthening key onshore supply chains. The CHIPS Act authorizes the U.S. Department of Commerce to enable execution of awards under the CHIPS Act and provides $52.7 billion for American semiconductor research, development, manufacturing, and workforce development, including $39.0 billion in financial assistance to build, expand, or modernize domestic facilities and equipment for semiconductor fabrication, assembly, testing, advanced packaging, or research and development. In December 2023, we submitted an application to the CHIPS Program Office of the U.S. Department of Commerce for funding through the CHIPS and Science Act for modernization and equipment upgrades to enhance production at our Minnesota facility. In December 2024, we signed a preliminary memorandum of terms that provides for up to $16 million pursuant to the CHIPS and Science Act, which is in addition to $19 million in incentives from the State of Minnesota. The federal funding is expected to be received in 2026, and the state incentives are expected to be received starting in the fourth quarter of 2025.

• We project customer-funded capital investment to be a significant driver of the success of our business model, as we expect customers to invest in our capabilities and enable us to develop technology platforms that will drive our future growth.

• Our overall level of indebtedness from our revolving credit agreement, which we refer to as the Revolver (as defined below and in Note 6 – Debt ), financing arising from the sale and leaseback of the land and building of our Minnesota facility, which we refer to as the VIE Financing, financing arrangements with lenders to finance the purchase of manufacturing tools and other equipment, which we refer to as the Tool Financing Loans, and the corresponding interest rates charged to us by our lenders, are key components of maintaining capital funding that allow us to continue to grow our business.

Acquisition of Spansion Fab 25, LLC

On June 30, 2025, the Company completed the acquisition of all of the issued and outstanding membership interests of Spansion Fab 25, LLC, a newly formed limited liability company that received, pursuant to a pre-closing restructuring, substantially all of the property, plant and equipment and employees and certain other assets and liabilities related to Infineon Technologies AG’s 200 mm fab (“Fab 25”) in Austin, Texas (the “Transaction”), pursuant to the amended Membership Interest Purchase Agreement, with Spansion LLC (the “Seller”), an affiliate of Infineon Technologies AG. In connection with the Transaction, the Company entered into a corresponding multi-year wafer supply agreement with an affiliate of the Seller. The Transaction is expected to enhance SkyWater’s capabilities in foundational semiconductor manufacturing and strengthen its strategic position within North America’s semiconductor ecosystem.

The purchase price for the Transaction was approximately $93 million, all of which was paid in cash at the closing of the Transaction, comprised of a base purchase price of $73 million plus a payment for working capital of approximately $20 million, which is subject to adjustment. The Company financed the purchase price for the Transaction through borrowings under the Amended Loan Agreement.

Financial Performance Metrics

Our senior management team regularly reviews certain key financial performance metrics within our business, including:

• Revenue and gross profit;

• Net loss; and

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• Earnings before interest, taxes, depreciation and amortization, as adjusted (“adjusted EBITDA”), which is a financial measure not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), that excludes certain items that may not be indicative of our core operating results, as well as items that can vary widely across different industries or among companies within the same industry. For information regarding our non-GAAP financial measure, see the section entitled “—Non-GAAP Financial Measure” below.

Results of Operations

Second Quarter of 2025 Compared to the Second Quarter of 2024

The following table summarizes certain financial information relating to our operating results for the second quarter of 2025 and 2024.


	Second Quarter Ended				Percentage Change
	June 29, 2025		June 30, 2024

	(in thousands)
Consolidated statement of operations data:
Revenue	$	59,063	$	93,329	(37)	%
Cost of revenue	48,164		76,215		(37)	%
Gross profit	10,899		17,114		(36)	%
Research and development expense	3,368		3,382		—	%
Selling, general, and administrative expense	14,009		12,332		14	%
Operating (loss) income	(6,478)		1,400		(563)	%



Interest expense	1,637		2,482		(34)	%

Loss before income taxes	(8,115)		(1,082)		650	%
Income tax expense (benefit)	742		(127)		(684)	%
Net loss	(8,857)		(955)		827	%
Less: net income attributable to noncontrolling interests	1,121		942		19	%
Net loss attributable to SkyWater Technology, Inc.	$	(9,978)	$	(1,897)	426	%

Revenue

Revenue was $59.1 million for the second quarter of 2025 compared to $93.3 million for the second quarter of 2024, a decrease of $34.3 million, or 37%. This includes a $24.7 million year-over-year decrease in revenue recognized from customer-funded tool technologies. The decline in tool revenue was a primary driver in margin stability, despite significant revenue decline. The following table shows revenue by service type for the second quarter of 2025 and 2024:


	Second Quarter Ended
	June 29, 2025		June 30, 2024

	(in thousands)
ATS development	$	52,605	$	61,669
Tools	1,047		25,880
Wafer Services	5,411		5,780
Total	$	59,063	$	93,329

Advanced Technology Services (ATS) revenue decreased by $9.1 million in the second quarter of 2025 compared to the second quarter of 2024. This decline was primarily driven by a $9.3 million decrease in aerospace and defense industry revenue. The decline in our revenue from customers in the aerospace and defense industry is largely driven by recent changes in U.S. government policy and defense spending. Shifts in budget priorities and delayed contract awards have impacted program funding and slowed our pipeline. We expect to fulfill these contracts in the second half of the year. Of the aerospace and defense decline, $0.7 million of the aerospace and defense decrease is attributable to transitioning a program from ATS development to Wafer Services, or WS, upon successful completion of critical development steps. Additional declines included a $0.8 million decrease in medical industry revenue, partially offset by growth in other areas, including a $0.9 million increase in consumer market revenue.

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Wafer Services (WS) revenue decreased by $0.4 million in the second quarter of 2025, primarily due to a $1.5 million decline in demand from a key automotive customer facing inventory oversupply challenges. This decrease was partially offset by a $0.7 million increase in revenue from an aerospace and defense customer transition from ATS development to WS and a $0.3 million increase from a consumer customer.

Cost of revenue

Cost of revenue decreased $28.1 million, or 37%, in the second quarter of 2025 when compared to the second quarter of 2024. The decrease was primarily driven by a $24.0 million decrease from completion of procurement of several tools on behalf of our customers to advance our capabilities for their ATS development programs, in addition to $2.1 million incurred during the second quarter of 2024 for anticipated additional costs to complete certain development milestones for a significant aerospace and defense program. In addition, in the first quarter of 2024, we recorded an $8.0 million charge to recognize estimated future losses on a significant customer program, driven by anticipated cost increases to complete the project. By the end of the second quarter of 2024, $1.6 million of this loss was released, leaving a $6.4 million reserve. In the third quarter of 2024, we successfully amended the customer contract, reducing our estimated costs to complete and eliminating the need for the remaining reserve. As a result, second quarter expense was $1.6 million in 2024 compared to $0 in 2025.

Selling, general and administrative expense

Selling, general and administrative expense increased to $14.0 million in the second quarter of 2025, from $12.3 million for the second quarter of 2024. The increase of $1.7 million was primarily attributable to $2.2 million in expenses related to the acquisition of Fab 25. These expenses primarily consisted of consulting fees associated with the acquisition.

Interest expense

Interest expenses decreased by $0.8 million, or 34%, in the second quarter of 2025 when compared to second quarter of 2024. This was the result of decreased equipment leases and amortization costs.

First Six Months of 2025 Compared to the First Six Months of 2024

The following table summarizes certain financial information relating to the Company’s operating results for the first six months of 2025 and 2024 .


	First Six Months Ended				Percentage Change
	June 29, 2025		June 30, 2024

	(in thousands)
Consolidated statements of operations data:
Revenue	$	120,359	$	172,965	(30)	%
Cost of revenue	95,203		142,871		(33)	%
Gross profit	25,156		30,094		(16)	%
Research and development expense	6,617		7,394		(11)	%
Selling, general, and administrative expense	29,038		23,502		24	%

Operating loss	(10,499)		(802)		1209	%
Interest expense	3,450		4,871		(29)	%

Loss before income taxes	(13,949)		(5,673)		146	%
Income tax expense (benefit)	1,126		(86)		(1409)	%
Net loss	(15,075)		(5,587)		170	%
Less: net income attributable to noncontrolling interests	2,248		2,039		10	%
Net loss attributable to SkyWater Technology, Inc.	$	(17,323)	$	(7,626)	127	%

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Revenue

Revenue was $120.4 million for the first six months of 2025 compared to $173.0 million for the first six months of 2024, a decrease of $52.6 million, or 30.4%. The decrease in revenue was primarily driven by a decrease in Tool and ATS revenue. The following table shows revenue by service type for the first six months of 2025 and 2024:


	First Six Months Ended
		June 29, 2025		June 30, 2024

		(in thousands)
ATS development		$	105,140	$	122,853
Tools		2,281		34,339
Wafer Services		12,938		15,773
Total		$	120,359	$	172,965

ATS revenue decreased by $17.7 million in the first six months of 2025 compared to the first six months of 2024. This decline was primarily driven by a $18.1 million decrease in aerospace and defense industry revenue as a result of recent changes in U.S. government policy and defense spending. Shifts in budget priorities and delayed contract awards have impacted program funding and slowed our pipeline. We expect to fulfill these contracts in the second half of the year. Additional declines included a $1.5 million decrease in medical revenue and a $0.3 million decrease in industrial revenue. Offsetting these losses, revenue from consumer customers increased by $1.3 million and revenue from a cloud computing customer increased by $0.9 million.

Tools revenue decreased $31.9 million from the first half of 2024 to the first half of 2025 driven by completion of several investment efforts by our customers to acquire tools that advance our capabilities for their ATS development programs.

WS revenue declined by $2.8 million compared to the prior period. The decrease was primarily driven by a $5.7 million decline in demand from a key automotive customer facing inventory oversupply challenges. Additionally, a $1.1 million decrease resulted from reduced medical volume. This decreases were partially offset by a $3.1 million increase in revenue from an aerospace and defense customer transition from ATS to WS and a $0.7 million increase from a consumer customer.

Cost of revenue

For the first six months of 2025, cost of revenue decreased $47.7 million to $95.2 million from $142.9 million for the first six months of 2024. The year-to-date decrease was primarily driven by a $31.2 million decrease from completion of procurement of several tools on behalf of our customers to advance our capabilities for their ATS development programs. In addition, in the first quarter of 2024, we recorded an $8.0 million charge to recognize estimated future losses on a significant customer program, driven by anticipated cost increases to complete the project. By the end of the second quarter of 2024, $1.6 million of this loss was released, leaving a $6.4 million reserve. In the third quarter of 2024, we successfully amended the customer contract, reducing our estimated costs to complete and eliminating the need for the remaining reserve. As a result, year-to-date expense was $6.4 million in 2024 compared to $0 in 2025.

Research and development expense

For the first six months of 2025, research and development expense decreased $0.8 million to $6.6 million from $7.4 million for the first six months of 2024 . The decline was primarily driven by decreased R&D activities related to the RH90 and SL90 platforms, as the Company shifted focus away from foundational development toward more scalable solutions.

Selling, general and administrative expense

For the first six months of 2025, selling, general and administrative expense increased to $29.0 million from $23.5 million for the first six months of 2024. The increase of $5.5 million was primarily attributable to $2.2 million in acquisition-related expenses, notably consulting fees, related to the Transaction.

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Interest expense

For the first six months of 2025, interest expense decreased to $3.5 million from $4.9 million for the first six months of 2024. The decrease of $1.4 million was the result of lower interest rates on our outstanding lending facility.

Net Loss Attributable to Skywater Technology, Inc.

Net loss attributable to Skywater Technology, Inc. increased to $10.0 million for the second quarter of 2025 from $1.9 million for the second quarter of 2024, and increased to $17.3 million for the first six months of 2025 from $7.6 million for the first six months of 2024. The increase was the result of the net impacts of the changes described above related to the components of our results of operations.

Adjusted EBITDA

Adjusted EBITDA decreased $5.9 million, or 72%, to $2.3 million for the second quarter of 2025 from $8.1 million in the second quarter of 2024. Adjusted EBITDA decreased $6.7 million, or 51% to $6.4 million for the first six months of 2025 from $13.1 million in the first six months of 2024. The decrease in adjusted EBITDA was a result of headwinds experienced in our ATS business as a result of U.S. government policy impacts on defense spending and related funding. For a discussion of adjusted EBITDA as well as reconciliation to the most directly comparable U.S. GAAP measure, see the section below entitled “Non-GAAP Financial Measure.”

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Liquidity and Capital Resources

General

For the three-months ended June 29, 2025, and fiscal year ended December 29, 2024, the Company incurred net losses attributable to SkyWater Technology, Inc. of $10.0 million and $6.8 million, respectively. As of June 29, 2025 and December 29, 2024, the Company held cash and cash equivalents of $49.4 million and $18.8 million, respectively.

SkyWater’s ability to execute its operating strategy is dependent on its ability to maintain liquidity and continue to access capital through the Revolver (as defined in Note 6 – Debt ), and other sources of financing. The current business plans indicate that the Company maintains sufficient liquidity to continue its operations and maintain compliance with financial covenants for the next twelve months from the date the consolidated financial statements are issued. As of June 29, 2025 , the Revolver had a maturity date of December 31, 2028 and provided for a maximum revolving facility amount of $130 million . However, on June 30, 2025 , in connection with the closing of the Transaction, SkyWater and the lender parties thereto amended and restated the Loan Agreement to extend the maturity date to June 30, 2030 and increase the maximum revolving facility amount to $350 million, as described in the section below entitled “Indebtedness – Revolving Credit Agreement”.

Based upon SkyWater’s operational forecasts, cash and cash equivalents on hand, available and expected additional borrowings on the Revolver, as needed, management believes SkyWater will have sufficient liquidity to fund its operations for the next twelve months from the date these interim condensed consolidated financial statements are issued.

We had $49.4 million in cash and cash equivalents, not including cash held by a VIE that we consolidate, and availability under our Revolver of $104.2 million at June 29, 2025. Following the Transaction, we had availability under our Revolver of $213.0 million. We are subject to certain liquidity and EBITDA covenants under our Loan Agreement, as outlined in the section below entitled “Indebtedness.”

Open Market Sale Agreement

On September 2, 2022, SkyWater entered into an Open Market Sale Agreement with Jefferies LLC with respect to an at the market offering program (the “ATM Program”). Pursuant to the agreement, the Company may, from time to time, offer and sell up to $100.0 million in shares of the Company’s common stock. During the six-month period ended June 29, 2025 and June 30, 2024, the Company did not sell shares under the ATM Program. From the date of the ATM Program through June 29, 2025, the Company has cumulatively sold 2,516,586 shares at an average sale price of $9.96 per share, resulting in gross proceeds of approximately $25.1 million before deducting sales commissions and fees of approximately $1,212. The Company used the net proceeds to pay down the Revolver and fund its operations.

As of June 29, 2025, the Company was authorized to sell an additional $74.9 million in shares under the ATM Program.

Capital Expenditures

For the first six months of 2025 and 2024, we spent approximately $18.8 million and $5.2 million, respectively, on capital expenditures, including purchases of property, equipment and software. The majority of these capital expenditures relate to improvements at our Minnesota facility and the development of our advanced packaging capabilities at our Center for NeoVation in Florida. We anticipate our cash on hand and the availability under the Revolver will provide the funds needed to meet our customer demand and anticipated capital expenditures for the next 12 months.

We have approximately $5.5 million of contractual commitments relating to various anticipated capital expenditures outstanding at June 29, 2025 that we expect to pay during the remainder of 2025 through cash on hand and operating cash flows.

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Working Capital

Historically, we have depended on cash on hand, funds available under our Revolver and, in the future, we may need to depend on additional debt and equity financings to fund our growth strategy, working capital needs, and capital expenditures. We believe that these sources of funds will be adequate to provide cash, as required, to support our strategy, ongoing operations, capital expenditures, lease obligations, and working capital for at least the next twelve months. However, we cannot be certain that we will be able to obtain future debt or equity financings on commercially reasonable terms sufficient to meet our cash requirements.

At June 29, 2025, the outstanding balance of our Revolver was $25.8 million, and our remaining availability under the Revolver was $104.2 million. Following the Transaction, the outstanding balance of our Revolver was $137.1 million, and our remaining availability under the Revolver was $213.0 million.

The following table sets forth general information derived from our interim condensed consolidated statement of cash flows for the first six months of 2025 and 2024:


	First Six Months Ended
	June 29, 2025		June 30, 2024

	(in thousands)
Net cash provided by operating activities	$	54,300	$	5,423
Net cash used in investing activities	$	(18,773)	$	(3,218)
Net cash used in financing activities	$	(4,998)	$	(2,225)

Cash and Cash Equivalents

At June 29, 2025 and December 29, 2024, we had $49.4 million and $18.8 million of cash and cash equivalents, respectively. A discussion of the change in cash and cash equivalents can be found below.

Operating Activities

Cash flow from operations is driven by changes in the working capital needs associated with the various goods and services we provide, and expenses related to the infrastructure in place to support revenue generation. Working capital is primarily affected by changes in accounts receivable, contract assets, accounts payable, accrued expenses, and contract liabilities, all of which are partially correlated to and impacted by changes in the timing and volume of activities performed in our facilities. Net cash provided by operating activities was $54.3 million during the first six months of 2025, an increase of $48.9 million from $5.4 million of cash provided by operating activities during the first six months of 2024. The increase in cash provided by operating activities during the first half of 2025 was driven primarily by an increase in contract liabilities of $45.1 million, driven by a $52.0 million cash receipt from a customer, which we will use to install a tool over the next two quarters. Other increases to operating cash flows were driven by a $23.6 million decrease in accounts receivable and contract assets due to improved cash collection efforts as a result of a higher quality customer mix and timing of invoicing for unbilled work and contract assets. Cash flow provided by operations also improved as a result of an increase in accrued expenses by $5.5 million, primarily driven by a $10.1 million accrual related to tool purchases in Florida, as well as a $1.7 million increase in short-term financing and a $2.3 million increase in open purchase orders in our Florida facility, offset by a $8.5 million decline in accruals in Minnesota due to payment activity and a decline in payables related to customer-funded tooling. Cash flow from operations also benefited from a decrease in inventory balance of $1.5 million, aligned with the reduction in wafer service revenue. These positive impacts were partially offset by a $19.6 million increase in prepayments for customer-owned assets of $20.6 million for tool purchases in the Florida facility related to the achievement of engineer milestones, as well as a decreases in accounts payable of $0.9 million due to the timing of the payment amounts owed to vendors.

Investing Activities

Our investments in capital expenditures are intended to enable revenue growth in new and expanding markets, help us meet product demand, and increase our manufacturing efficiencies and capacity. Net cash used in investing activities was $18.8 million during the first six months of 2025 compared to $3.2 million during the first six months of 2024 as we continue to invest in our development and manufacturing capabilities. The increase in cash used in investing activities during the first six months of 2025 reflects the increased capital spending on property and equipment compared to the same period in 2024.

Financing Activities

Net cash used in financing activities was $5.0 million during the first six months of 2025 from net cash used in financing activities of $2.2 million during the first six months of 2024. The increase in net cash used by financing activities

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during the first six months of 2025 was primarily driven by the decrease in net draws on our Revolver of $10.7 million, offset by $4.6 mil lion cash proceeds from a sale leaseback transaction occurring in the first six months of 2025, in addition to decreases in distributions to the Company’s VIE members by $2.0 million.

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Indebtedness

Sale Leaseback Transactions

In 2020, we entered into an agreement to sell the land and building of our Minnesota facility to Oxbow Realty, an affiliate of our principal stockholder, for $39.0 million, less applicable transaction costs of $1.5 million and transaction services fees paid to Oxbow Realty of $2.0 million, and paid a guarantee fee to our principal stockholder of $2.0 million. We subsequently entered into an agreement to leaseback the land and building from Oxbow Realty for initial payments of $0.4 million per month over 20 years. The monthly payments are subject to a 2% increase each year during the term of the lease. We are also required to make certain customary payments constituting “additional rent,” including certain monthly reserve, insurance, and tax payments, in accordance with the terms of the lease. Due to our continuing involvement in the property, we are accounting for the transactions as a failed sale leaseback. Under failed sale leaseback accounting, we are deemed the owner of the land and building with the proceeds received recorded as a financial obligation.

In June 2025, the Company entered into an agreement to sell and leaseback a furnace over a 36 month period. Monthly lease payments total $0.1 million under the agreement. The Company received $4.6 million of cash as part of the sale agreement and accounted for the transaction as a failed sale leaseback. As a result, the Company is deemed the owner of the asset and a financial obligation has been recorded. Monthly lease payments will reduce the financial obligation balance, with a portion of the payments being applied to interest expense over the course of the lease.

Revolving Credit Agreement

On December 28, 2022, we entered into a Loan and Security Agreement with Siena Lending Group LLC (“Siena”), which was amended on November 19, 2024 to extend the maturity date to December 31, 2028 and increase the total borrowing capacity to $130 million (the “Revolver”). Subsequent to quarter-end on June 30, 2025, we entered into a restated loan agreement to further amend the credit facility and increase the borrowing base in connection with the Transaction. The restated agreement significantly increased our borrowing capacity from $130 million to $350 million, increased the borrowing base from $93 million to $231 million, and extended the maturity date to June 30, 2030. The restated agreement enhanced availability under the borrowing base, increased the allowable unfunded capital expenditures from $15 million to $44 million for 2025, and increased our minimum liquidity requirement from $15 million to $30 million. We expect these changes to improve our liquidity profile and support continued investment in strategic capital growth initiatives.

The Company has incurred $4.2 million of debt issuance costs in connection with the Loan Agreement, which is being amortized as additional interest expense over the term of the Revolver. At June 29, 2025, we had borrowings of $25.8 million under the Revolver.

Borrowing under the Amended Loan Agreement is limited by a borrowing base of specified advance rates applicable to billed accounts receivable, contract assets, inventory and equipment, subject to various conditions, limits and any availability block as provided in the Loan Agreement. The Loan Agreement also provides for borrowing base sublimits applicable to each of contract assets and equipment. Under certain circumstances, Siena may from time to time establish and revise reserves against the borrowing base and/or the maximum revolving facility amount.

Borrowings under the Amended Loan Agreement bear interest at a rate that depends upon the type of borrowing, whether a term secured overnight financing rate (“SOFR”) loan or base rate loan, plus the applicable margin. The term SOFR loan rate is a forward-looking term rate based on SOFR for a tenor of one month on the applicable day, subject to a minimum of 2.5% per annum. The base rate is the greatest of the prime rate, the Federal funds rate plus 0.5% and 7.0% per annum. The applicable margin is an applicable percentage based on the fix charged coverage ratio that ranges from 4.00% to 5.00% per annum for term SOFR loans and ranges from 3.00% to 4.00% per annum for base rate loans.

The Amended Loan Agreement contains customary representations and warranties and financial and other covenants and conditions. Subject to certain cure rights, the Loan Agreement requires $10.0 million in minimum EBITDA (as defined in the Loan Agreement) calculated as of the last day of each calendar month commencing April 30, 2023 for the preceding twelve calendar months, prohibits unfunded capital expenditures in excess of $44.3 million calculated as of the last day of each calendar month commencing April 30, 2023 for the preceding twelve calendar months, and requires a minimum fixed charge coverage ratio, measured on a trailing twelve month basis, of not less than 1.00 to 1.00 if our liquidity is less than $30.0 million. In addition, the Loan Agreement places certain restrictions on our ability to incur additional indebtedness (other than permitted indebtedness), to create liens or other encumbrances (other than liens relating to permitted indebtedness), to sell or otherwise dispose of assets, to merge or consolidate with other entities, and to make certain restricted payments, including payments of dividends to our stockholders. As of June 29, 2025, we were in compliance with applicable covenants of the Loan Agreement and expect to continue to be in compliance with applicable financial covenants over the next twelve months.

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Due to a lockbox clause in the Loan Agreement, the outstanding loan balance is required to be serviced with working capital, and the debt is classified as short-term on the interim condensed consolidated balance sheets in accordance with U.S. GAAP.

VIE Financing

On September 30, 2020, Oxbow Realty, the Company’s consolidated VIE, entered into a loan agreement for $39.0 million (the “VIE Financing”) to finance the acquisition of the building and land of the SkyWater Minnesota facility. The VIE Financing is repayable in equal monthly installments of $0.2 million over 10 years, with the balance payable at the maturity date of October 6, 2030. The interest rate under the VIE Financing is fixed at 3.44%. The VIE Financing is guaranteed by Oxbow Industries, who is also the sole equity holder of Oxbow Realty. The VIE Financing is not subject to financial covenants.

The terms of the VIE Financing include provisions that grant the lender several protective rights when certain triggering events defined in the loan agreement occur, including events tied to SkyWater’s occupancy of the SkyWater Minnesota facility and SkyWater’s financial performance. The triggering events are not financial covenants and the occurrence of these triggering events do not represent events of default, nor do they result in the VIE Financing becoming callable, rather the protective rights become enforceable by the lender. Based on the level of SkyWater’s earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs relative to gross rents paid from SkyWater to Oxbow Realty, as defined in the loan agreement, a triggering event existed and the lender’s protective rights were enforceable during the first half of fiscal year 2024. Pursuant to its protective rights, the lender had retained in a restricted account amounts paid by SkyWater to Oxbow Realty pursuant to the Company’s related party lease agreement that were in excess of the scheduled debt payments paid by Oxbow Realty to the lender. The triggering event was cured during the three-month period ended June 30, 2024 and the funds held in the restricted account were remitted back to Oxbow Realty. No triggering events as defined in the loan agreement existed as of June 29, 2025.

The VIE Financing is secured by a security interest in the land and building which was the subject of the sale-leaseback transaction described above. The Company’s VIE incurred third-party transaction costs of $0.1 million, which are recognized as debt issuance costs and are amortizing as additional interest expense over the life of the VIE Financing. The Company incurred additional third-party transaction costs of $3.5 million, which are recognized as debt issuance costs and are being amortized as additional interest expense over the life of the VIE Financing.

Tool Financing Loans

We, from time to time, enter into financing arrangements with lenders to finance the purchase of manufacturing tools and other equipment. In the first six months of fiscal year 2025, we did not enter into any new arrangements to sell manufacturing tools and other equipment to financing lenders. In fiscal year 2024, these arrangements totaled $9.9 million. These agreements include bargain purchase options at the end of the lease terms, which we intend to exercise. These transactions represent failed sale leasebacks with the associated equipment recorded in property and equipment, net and the proceeds received, net of scheduled repayments of the financings, recorded as debt on the consolidated balance sheets.

Material Cash Requirements

Our material cash requirements from known contractual and other obligations primarily relate to the following, for which information on both a short-term and long-term basis is provided in the indicated notes to the consolidated financial statements:

• Debt—Refer to Note 6.

• Capital expenditure commitments—Refer to Note 9.

• Capital lease commitments—Refer to Note 12 .

• Sale leaseback obligation—Refer to Note 10 and Note 12 .

• Income Taxes—Refer to Note 7.

• Other commitments and contingencies—Refer to Note 9.

Recent Accounting Developments

Refer to Note 3 of the interim condensed consolidated financial statements for information on new accounting pronouncements.

Emerging Growth Company and Smaller Reporting Company Status

We qualify as an “emerging growth company” pursuant to the provisions of the JOBS Act. For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are

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applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation, and shareholder advisory votes on golden parachute compensation.

The JOBS Act also permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use the extended transition period for complying with new or revised accounting standards and therefore, we will not be subject to the same new or revised accounting standards as other public companies that comply with such new or revised accounting standards on a non-delayed basis.

We are also a “smaller reporting company.” If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Critical Accounting Policies and Estimates

In connection with preparing our interim condensed consolidated financial statements in accordance with U.S. GAAP, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue and expense, and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes are relevant at the time we prepared our interim condensed consolidated financial statements. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our interim condensed consolidated financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ materially from our assumptions and estimates.

On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, valuation of long-lived assets, valuation of inventory, equity-based compensation, and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates under different assumptions or conditions.

There have been no changes to our critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended December 29, 2024, except for the critical accounting policy set forth below.

Business Combinations

We account for business combinations using the acquisition method in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations, recognizing identifiable tangible and intangible assets acquired, liabilities assumed, and any non-controlling interests at their fair values as of the acquisition date. The total purchase consideration transferred, including cash paid, equity issued, contingent payments and other forms of consideration is also measured at fair value as of the acquisition date. When the total consideration transferred exceeds the fair value of net assets acquired, the excess is recorded as goodwill.

The estimation of fair values in a business combination involves significant judgment. We use a variety of valuation techniques many of which are complex, including discounted cash flow techniques, market comparisons, and cost approaches. These valuations depend on valuation inputs, including many assumptions such as discount rates, projected earnings, useful lives, and other economic factors that management must estimate.

If complete information is not available at the time of acquisition, provisional estimates are used and may be adjusted during a measurement period of up to one year, based on information that existed as of the acquisition date. If new information becomes available during the measurement period, provisional amounts are adjusted retrospectively. However, once the measurement period ends, any subsequent changes to fair value estimates are recognized in current-period earnings.

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Non-GAAP Financial Measure

Our interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP. To supplement our interim condensed consolidated financial statements presented in accordance with U.S. GAAP, an additional non-GAAP financial measure is provided and reconciled in the table below.

We provide supplemental non-GAAP financial information that our management regularly evaluates to provide additional insight to investors as supplemental information to our U.S. GAAP results. Our management uses adjusted EBITDA to make informed operating decisions, complete strategic planning, prepare annual budgets, and evaluate the Company’s and our management’s performance. We believe that adjusted EBITDA is a useful performance measure to our investors because it provides a baseline for analyzing trends in our business and excludes certain items that may not be indicative of our core operating results. The use of non-GAAP financial information should not be considered as an alternative to, or more meaningful than, the comparable U.S. GAAP measure. In addition, because this non-GAAP financial measure is not determined in accordance with U.S. GAAP, other companies, including our peers, may calculate their non-GAAP financial measures differently than we do. As a result, the non-GAAP financial measure presented in this Quarterly Report on Form 10-Q may not be directly comparable to similarly titled measures presented by other companies.

Adjusted EBITDA

Adjusted EBITDA is not a financial measure determined in accordance with U.S. GAAP. We define adjusted EBITDA as net (loss) income before interest expense, income tax (benefit) expense, depreciation and amortization, and certain other items that we do not view as indicative of our ongoing performance, including net income attributable to noncontrolling interests, equity-based compensation expense and transaction costs.

We believe adjusted EBITDA is a useful performance measure to our investors because it allows for an effective evaluation of our operating performance when compared to other companies, including our peers, without regard to financing methods or capital structures. We exclude the items listed above from net income or loss in arriving at adjusted EBITDA because these amounts can vary substantially within our industry depending on the accounting methods and policies used, book values of assets, capital structures, and the methods by which assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net (loss) income determined in accordance with U.S. GAAP. Certain items excluded from adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are reflected in adjusted EBITDA. Our presentation of adjusted EBITDA should not be construed as an indication that our results will be unaffected by the items excluded from adjusted EBITDA. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items. Accordingly, the exclusion of these items and other similar items in our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual, unless otherwise expressly indicated.

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The following table presents a reconciliation of net loss attributable to SkyWater Technology, Inc. to adjusted EBITDA, our most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.


	Second Quarter Ended				First Six Months Ended
	June 29, 2025		June 30, 2024		June 29, 2025		June 30, 2024

	(in thousands)
Net loss attributable to SkyWater Technology, Inc.	$	(9,978)	$	(1,897)	$	(17,323)	$	(7,626)
Interest expense	1,637		2,482		3,450		4,871
Income tax expense (benefit)	742		(127)		1,126		(86)
Depreciation and amortization, net	4,301		4,064		8,659		9,129
EBITDA	(3,298)		4,522		(4,088)		6,288
Equity-based compensation expense (1)	2,282		2,016		4,220		4,088
Management transition expense (2)	—		664		—		664




Transaction costs (3)	2,171		—		3,981		—
Net income attributable to noncontrolling interests (4)	1,121		942		2,248		2,039




Adjusted EBITDA	$	2,276	$	8,144	$	6,361	$	13,079

__________________

(1) Represents non-cash equity-based compensation expense.

(2) Represents the cost of severance, separation, and other termination benefits related to the reorganization of the manufacturing, sales, marketing, and operations leadership team.

(3) Represents costs associated with the Company's acquisition of Fab 25, including fees for consultants, professional services fees and other costs to effectuate the closing of the Transaction.

(4) Represents net income attributable to noncontrolling interests arising from our variable interest entity (VIE), which was formed for the purpose of purchasing the land and building of our primary operating facility in Bloomington, Minnesota. Since interest expense is added back to net income (loss) attributable to SkyWater Technology, Inc. in our adjusted EBITDA financial measure, we also add back the net income attributable to noncontrolling interests as its net income is derived from interest the VIE charges SkyWater.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices. Currently, our market risks relate to potential changes in the fair value of our debt due to fluctuations in applicable market interest rates. In the future, our market risk exposure generally will be limited to those risks that arise in the normal course of business, as we do not engage in speculative, non-operating transactions, nor do we utilize financial instruments or derivative instruments for trading purposes.

Credit Risk

Financial instruments that potentially subject us to credit risk are cash and cash equivalents, accounts receivable, and contract assets. Cash balances are maintained in financial institutions, which at times exceed federally insured limits. We monitor the financial condition of the financial institutions in which our accounts are maintained and have not experienced any losses in such accounts. We perform ongoing credit evaluations as to the financial condition of our customers with respect to trade receivables and contract assets. Generally, no collateral is required as a condition of sale. Our consideration of the need for an allowance for credit losses is based upon current market conditions and other factors.

Interest Rate Risk

At June 29, 2025, the outstanding balance of our Revolver was $25.8 million, which bears interest at a variable rate. At June 29, 2025, the rate in effect was 8.7% . Based on the outstanding balance of our Revolver at June 29, 2025, a 100 basis point increase in the interest rate would increase interest expense by $0.3 million annually.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial and accounting officer) as appropriate, to allow for timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, our principal executive officer and principal financial officer, respectively, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of June 29, 2025. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 29, 2025 due to the material weakness in our internal control over financial reporting described below.

In light of this fact, our management has performed additional analyses, reconciliations, and other post-closing procedures and, notwithstanding the material weakness in internal control over financial reporting, has concluded that our condensed consolidated balance sheets as of June 29, 2025 and December 29, 2024, the related condensed consolidated statements of operations, shareholders’ equity, and cash flows for the three- and six-month periods ended June 29, 2025 and June 30, 2024, present fairly, in all material respects, our financial position, results of our operations and our cash flows for the periods presented in this Quarterly Report on Form 10-Q, in conformity with GAAP.

Previously Reported Material Weakness

As disclosed in Item 9A. “Controls and Procedures” in our Annual Report on Form 10-K for the year ended December 29, 2024, we identified a material weakness in our internal control over financial reporting. As of June 29, 2025, we have a material weakness in our revenue accounting process. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Remediation Plans

Remediation of the material weakness in the revenue accounting process will require the Company to design and implement system improvements to either remove the privileged access to the manufacturing application and its databases or develop and implement controls from which changes processed via the privileged access are monitored and evaluated.

As we continue to evaluate and work to remediate the control deficiencies that gave rise to the material weakness in the revenue accounting process, we may determine that additional measures or time are required to address the issues fully, or that we need to modify or otherwise adjust the remediation actions described above. We will also continue to assess the effectiveness of our remediation efforts in connection with our evaluation of our internal control over financial reporting. The material weakness in the revenue accounting process cannot be considered remediated until our remediation plans have been completed and the effectiveness of the remedial actions have been validated.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three- month period ended June 29, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.

Item 1A. Risk Factors

This Quarterly Report on Form 10-Q should be read in conjunction with the risk factors included in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 29, 2024. There have been no material changes to the risk factors disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 29, 2024, except for the risk factors set forth below.

We may not realize the anticipat ed benefits of the Transaction and any benefit may take longer to realize than we expect.

On June 30, 2025, we completed our acquisition of substantially all of the property, plant and equipment and employees and certain other assets and liabilitie s related to Infineon Technologies AG’s 200 mm fab (“Fab 25”) in Austin, Texas (the “Transaction”). The success of the Transaction will depend, in part, on our ability to realize the anticipated benefits of the integration of Fab 25’s operations with our existing operations, and there are uncertainties inherent in such an integration. We will be required to devote significant management attention and resources to integrating Fab 25’s operations. Delays or unexpected difficulties in the integration process could adversely affect our business, financial results and financial condition. Even if we are able to integrate Fab 25’s operations successfully, this integration may not result in the realization of the full benefits of revenue synergies, cost savings and operational efficiencies that we expect or the achievement of these benefits within a reasonable period of time or at all.

Increased leverage may harm our financial condition and results of operations.

As of June 29, 2025 and pro forma for indebtedness incurred in connection with the completion of the Transaction, we had $179.1 million of total debt on a consolidated basis. We funded the purchase price for the Transaction of approximately $93 million with borrow ings under our Loan Agreement (as defined below), which materially increased our indebtedness. This increase and any future increases in our level of indebtedness will have several important effects on our future operations, including, without limitation:

• we have additional cash requirements to support the payment of interest on our outstanding indebtedness;

• increases in our outstanding indebtedness and leverage may increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressure;

• our ability to obtain additional financing for working capital, capital expenditures, general corporate and other purposes may be reduced;

• our flexibility in planning for, or reacting to, changes in our business and our industry may be reduced; and

• our flexibility to make acquisitions and develop technology may be limited.

Our ability to make payments of principal and interest on our indebtedness depends upon our future performance, which will be subject to general economic conditions and financial, business and other factors affecting our consolidated operations, many of which are beyond our control. If we are unable to generate sufficient cash flow from operations in the future to service our debt and meet our other cash requirements, we may be required, among other things:

• to seek additional financing in the debt or equity markets;

• to refinance or restructure all or a portion of our indebtedness;

• to sell selected assets or businesses; or

• to reduce or delay planned capital or operating expenditures.

Such measures might not be sufficient to enable us to service our debt and meet our other cash requirements. In addition, any such financing, refinancing or sale of assets might not be available at all or on economically favorable terms.

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We may need to raise additional capital or financing to continue to execute and expand our business.

We may need to raise additional capital to expand or if positive cash flow is not achieved and m aintained. As of June 29, 2025, our available cash balance, not including cash held by a variable interest entity that we consolidate, was $49.0 million. We may be required to pursue sources of additional capital through various means, including joint venture projects, strategic partnerships and alliances, licensing or sale and leasing arrangements, and debt or equity financings, including sales of our common stock under our at the market offering program. If we raise additional equity or securities convertible or exchangeable for our equity, our stockholders may experience significant dilution of their ownership interests and the per share value of our common stock could decline. Newly-issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible securities that could have additional dilutive effects. The incurrence of additional indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through joint venture projects, strategic partnerships and alliances, licensing or sale and leasing arrangements, we may have to relinquish valuable rights to our technologies or other assets, or grant licenses on terms unfavorable to us. Further, we may incur substantial costs in pursuing future capital or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses, and other costs. We also may be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which could adversely impact our financial condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings.

In addition, our ability to execute our operating strategy is dependent on our ability to maintain liquidity and access capital through our Amended and Restated Loan and Security Agreement (as amended, the “Loan Agreement”), which provides for a revolving line of credit of up to $350 million with scheduled maturity date of June 30, 2030, and other sources of financing. Borrowing under the Loan Agreement is limited by a borrowing base of specified advance rates applicable to billed accounts receivable, unbilled accounts receivable, inventory, and equipment, subject to various conditions and limits as provided in the Loan Agreement. The Loan Agreement also provides for borrowing base sublimits applicable to each of unbilled accounts receivable and equipment. We have also obtained a support letter from Oxbow Industries, an affiliate of our principal stockholder, to provide funding in an amount up to $12.5 million, if necessary, to enable us to meet our obligations as they become due. Pursuant to the support letter, such funding would be in the form of a loan or equity investment. However, if such funding is required and Oxbow Industries does not provide additional funding to us, our liquidity, business, results of operations and financial condition could be materially and adversely impacted. The support letter expires March 18, 2026.

We believe our expected results of operations, cash and cash equivalents on hand, available borrowings from our Loan Agreement and the support letter from Oxbow Industries, as needed, will provide sufficient liquidity to fund our operations for the next twelve months from the date of issuance of the consolidated financial statements in this Quarterly Report on Form 10-Q; however, we may need to seek additional financing and cannot provide any assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. If the amount of capital we are able to raise from financing activities, together with our revenues from operations, is not sufficient to satisfy our capital needs, we may have to reduce our operations accordingly, which could materially and adversely impact our business, results of operations and financial condition.

Our indebtedness could adversely affect our cash flows and limit our flexibility to raise additional capital.

We have a significant amount of indebtedness and may need to incur additional debt to support our growth. As of June 29, 2025 and pro forma for indebtedness incurred in connection with the completion of the Transaction, our indebtedness totaled $ 179.1 million, consisting of $137.1 million under our Loan Agreement currently with an interest rate of 8.7%, subject to adjustment in accordance with the terms of the Loan Agreement, $7.9 million of tool financing, which is inclusive of a $4.6 million obligation from a sale leaseback transaction entered into in the second quarter of 2025 (see Note 12 - Leases ), and a $34.1 million financing from the sale of the land and building representing our corporate headquarters in Minnesota (the “Fina ncing”). Recent significant increases in interest rates have increased our borrowing costs and continued increases in interest rates will further increase the cost of servicing our outstanding indebtedness, refinancing our outstanding indebtedness, and increase the cost of any new indebtedness.

Under the terms of the Financing, we entered into an agreement to lease the land and building for our corporate headquarters from Oxbow Realty Partners, LLC (“Oxbow Realty”), an affiliate of our principal stockholder, for initial payments of $0.4 million per month over 20 years terminating on September 29, 2040 . The monthly payments are subject to a

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2% increase each year during the term of the lease. We are also required to make certain customary payments constituting additional rent, including certain monthly reserve, insurance, and tax payments, in accordance with the terms of the lease.

Our substantial amount of debt could have important consequences, and could:

• require us to dedicate a substantial portion of our cash and cash equivalents to make interest, rent, and principal payments, reducing the availability of our cash and cash equivalents and cash flow from operations to fund future capital expenditures, working capital, execution of our strategy and other general corporate requirements;

• increase our cost of borrowing and limit our ability to access additional debt to fund future growth;

• increase our vulnerability to general adverse economic and industry conditions and adverse changes in governmental regulations;

• limit our flexibility in planning for, or reacting to, changes in our business and industry, which may place us at a disadvantage compared with our competitors; and

• limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity, which would also limit our ability to further expand our business.

The occurrence of any of the foregoing factors could have a material adverse effect on our business, results of operations and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

(c) During the three -month period ended June 29, 2025, no director or Section 16 officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, except that, on June 13, 2025 , Loren A. Unterseher , together with entities under his control, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and provides for the sale of up to 480,370 shares of the Company’s common stock pursuant to the terms of the trading arrangement. The term of Mr. Unterseher’s Rule 10b5-1 trading arrangement expires upon the earlier of the date all such shares have been sold pursuant to the trading arrangement and September 10, 2026 . Mr. Unterseher is a member of the Company’s Board of Directors .

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Item 6. Exhibits

The following is a list of all exhibits filed or furnished as part of this report:


Exhibit Number						Description

2.1						Membership Interest Purchase Agreement, dated as of February 25, 2025, between SkyWater Technology, Inc. and Spansion LLC (incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 2025).

2.2						Amendment No. 1 to Membership Interest Purchase Agreement, dated as of June 30, 2025, between SkyWater Technology, Inc. and Spansion LLC (incorporated by reference to the Company’s Current Report on Form 8 K filed with the SEC on July 3, 2025).










10.1						Amended and Restated Loan and Security Agreement among SkyWater Technology, Inc., the subsidiary borrowers named therein, Siena Lending Group LLC, as agent, and the lenders named therein (incorporated by reference to the Company’s Current Report on Form 8 K filed with the SEC on July 3, 2025).

31.1						Certification of the Chief Executive Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of the Chief Financial Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*						Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2*						Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350

101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						XBRL Taxonomy Extension Definition Linkbase Document

101.LAB						XBRL Taxonomy Extension Label Linkbase Document

101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

__________________

* The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	SkyWater Technology, Inc.

Date: August 7, 2025	By:	/s/ Thomas Sonderman
	Thomas Sonderman Chief Executive Officer (Principal Executive Officer)

	By:	/s/ Steve Manko
	Steve Manko Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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Item 1. Financial Statements Note 1 Nature Of Business Note 2 Basis Of Presentation and Principles Of Consolidation Note 3 Summary Of Significant Accounting Policies Note 4 Revenue Note 5 Balance Sheet Information Note 6 Debt Note 7 Income Taxes Note 8 Equity-based Compensation Note 9 Commitments and Contingencies Note 10 Related Party Transactions Note 11 Variable Interest Entity Note 12 Leases Note 13 Reportable Segment and Geographic Information Note 14 Subsequent Events Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II. Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

Exhibits

2.1 Membership Interest Purchase Agreement, dated as of February 25, 2025, between SkyWater Technology, Inc. and Spansion LLC (incorporated by reference to Exhibit 2.1 to the Companys Quarterly Report on Form 10-Q for the quarter ended March 30, 2025). 2.2 Amendment No. 1 to Membership Interest Purchase Agreement, dated as of June 30, 2025, between SkyWater Technology, Inc. and Spansion LLC (incorporated by reference to the Companys Current Report on Form 8 K filed with the SEC on July 3, 2025). 10.1 Amended and Restated Loan and Security Agreement among SkyWater Technology, Inc., the subsidiary borrowers named therein, Siena Lending Group LLC, as agent, and the lenders named therein (incorporated by reference to the Companys Current Report on Form 8 K filed with the SEC on July 3, 2025). 31.1 Certification of the Chief Executive Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of the Chief Financial Officer pursuant to Exchange Act Rules Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section1350 32.2* Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section1350

SKYT 10-Q Quarter ended June 29, 2025

Exhibits