What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 108 added, 81 removed, 150 unchanged (56% of the section changed)

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By unlocking this speed and efficiency, we believe we are leading a revolution in high-frequency, high-efficiency and high-density power electronics to electrify our world for a cleaner tomorrow.

We maintain operations around the world, including the United States, Ireland, Germany, Italy, Belgium, China, Taiwan and the Philippines, with principal executive offices in El Segundo, California.

We maintain operations around the world, including the United States, Ireland, Germany, Italy, Belgium, China, Taiwan, Thailand and the Philippines, with principal executive offices in Torrance, California.

We design, develop and market gallium nitride (“GaN”) power integrated circuits (“ICs”) used in power conversion and charging.

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We evaluate various complementary technologies and look to improve our PDK, in order to keep introducing newer generations of GaN technology.

In 2021 and the six months ended June 30, 2022 , we spent approximately 117% and 150%, respectively of our revenue on research and development.

In 2021 and the nine months ended September 30, 2022 , we spent approximately 103% and 163%, respectively of our revenue on research and development.

Navitas’ research and development activities are located primarily in the US and China.

As of June 30, 2022, we had approximate ly 116 full-time personnel in our research & development team, with approximately 55% with advanced degrees (PhD and MS).

As of September 30, 2022, we had approximate ly 138 f ull-time personnel in our research & development team, with approximat ely 55% wit h advanced degrees (PhD and MS).

Acquisition of GeneSiC

On August 15, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) to acquire 100% of the outstanding shares of GeneSiC Semiconductor Inc.

(“GeneSiC”) for $146.3 million of equity, $99.3 million of cash consideration, and potential future earn-out payments of up to an aggregate of $25.0 million in cash.

GeneSiC is a silicon carbide (“SiC”) pioneer with deep expertise in SiC power device design and process, based in Dulles, Virgnia.

The future earn-out payments were fair valued at $0.6 million, for a total merger consideration of $246.2 million.

GeneSiC’s net assets and operating results since the merger date are included in the Company’s Condensed Consolidated Balance Sheet and Condensed Consolidated Statements of Operations as of and for the three and nine months ended September 30, 2022, respectively.

We recorded a preliminary allocation of the purchase price to tangible and intangible assets acquired and liabilities assumed based on their fair values as of the acquisition date.

The excess of the purchase price over the fair value of assets of $157.4 million was recorded as goodwill.

Acquisition of VDDTech

On June 10, 2022, the Company’s wholly owned subsidiary, Navitas Semiconductor Limited, acquired all of the stock of VDDTECH srl, a private Belgian company (“VDDTech”) for approximately $1,859 in cash and stock.

On June 10, 2022, the Company’s wholly owned subsidiary, Navitas Semiconductor Limited, acquired all of the stock of VDDTECH srl, a private Belgian company (“VDDTech”), for approximately $1.9 million in cash and stock.

Based in Mont-saint-Guibert, Belgium, VDDTech creates advanced digital-isolators for next-generation power conversion.

VDDTech’s net assets and operating results since the acquisition date are included in the Company’s Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2022.

VDDTech’s net assets and operating results since the acquisition date are included in the Company’s Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2022.

We recorded a preliminary allocation of the purchase price to tangible and intangible assets acquired and liabilities assumed based on their fair values as of the acquisition date.

The excess of the purchase price over the fair value of assets of $1,177 was recorded as goodwill.

The excess of the purchase price over the fair value of assets of $1.2 million was recorded as goodwill.

Subsequent to June 30, 2022 a preliminary valuation of the intangible assets acquired was calculated at $1.2 million .

During the three months ended September 30, 2022 , the Company reclassed the goodwill to an intangible asset.

Business Combination and Reverse Recapitalization

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II (“Live Oak”).

Pursuant to the BCA, through a series of transactions, Navitas Ireland merged with and into Live Oak effective October 19, 2021 (the “Closing Date”), with Navitas Ireland’s newly formed parent, Navitas Semiconductor Corporation (“Navitas Corp” or after the Business Combination, the “Company”, formerly named Live Oak Acquisition Corp.

II), surviving the transaction.

Pursuant to the BCA, Live Oak acquired all of the capital stock of Navitas Ireland by means of a tender offer, and a wholly owned subsidiary of Live Oak merged with and into Navitas Delaware, with Navitas Delaware surviving the merger.

As a result, Legacy Navitas became a wholly owned subsidiary of Live Oak effective October 19, 2021.

At the closing of the Business Combination, Live Oak changed its name to Navitas Semiconductor Corporation.

The Business Combination was accounted for as a reverse recapitalization in accordance with US GAAP.

Under the guidance in ASC 805, Live Oak was treated as the “acquired” company for financial reporting purposes.

We were deemed the accounting predecessor and the post-combination company is the successor SEC registrant, meaning that our financial statements for previous periods will be disclosed in our annual report Form 10-K filed with the SEC filed on June 30, 2022.

We were deemed the accounting predecessor and the post-combination company is the successor SEC registrant, meaning that our financial statements for previous periods were disclosed in our annual report Form 10-K filed with the SEC filed on March 31, 2022.

The Business Combination had a significant impact on our reported financial position and results as a consequence of the reverse recapitalization.

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Results of Operations

We design, develop and manufacture GaN ICs.

We design, develop and manufacture GaN ICs, SiC MOSFETs and Schottky MPS diodes that deliver best-in-class performance, ruggedness and quality.

Our revenue represents the sale of semiconductors through specialized distributors to original equipment manufacturers (“OEMs”), their suppliers and other end customers.

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Cost of Goods Sold

Cost of goods sold consists primarily of the cost of semiconductors purchased from subcontractors, including wafer fabrication, assembly, testing and packaging, manufacturing support costs, including labor and overhead (which includes depreciation and amortization) associated with such purchases, final test and wafer level yield fallout, consumables, system and shipping costs.

Cost of goods sold also includes compensation related to personnel associated with manufacturing.

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Interest expense primarily consists of interest under our term loan facility.

Legacy Navitas a dual domesticated corporation for Ireland and U.S.

Legacy Navitas is a dual domesticated corporation for Ireland and U.S.

federal income tax purposes.

Refer to Note 14, Provision for Income Taxes, in our accompanying condensed consolidated financial statements elsewhere in this quarterly report.

Results of Operations

The table and discussion below present our results for the three and six months ended June 30, 2022 and 2021:

Three Month Ended

June 30, Change

(dollars in thousands) 2022 2021

Results of Operations Three Months September 30, 2022 and 2021

The table and discussion below present our results for the three months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended

September 30, Change

Revenue $ 10,243 $ 5,631 $ 4,612 82 %

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Interest income (expense), net 638 (75) 713 (951) %

Gain (loss) from change in fair value of warrants — — — — %

Gain (loss) from change in fair value of earnout liabilities 54,854 — 54,854 — %

Loss from change in fair value of earnout liabilities (6,098) — (6,098) — %

Other income (expense) (74) — (74) — %

1 unchanged sentence

Income (loss) before income taxes (42,963) (6,830) (36,133) 529 %

Income tax expense 270 5 265 5300 %

Income tax (benefit) provision (10,135) 13 (10,148) (78062) %

Net income (loss) (32,828) (6,843) (25,985) 380 %

Six Months Ended

June 30, Change

(dollars in thousands) 2022 2021

Net income (loss) attributable to noncontrolling interests (238) — (238) — %

Net income (loss) attributable to controlling interests $ (32,590) $ (6,843) $ (25,747) 376 %

Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

Revenue for the three months ended September 30, 2022 was $10.2 million compared to $5.6 million for the three months ended September 30, 2021, an increase of $4.6 million , or 82%.

The increase reflects a combination of the Company’s customer growth trajectory, evolving from aftermarket customers to higher volume customers, and the accretive acquisition of GeneSiC.

Total sales volumes increased 19%, from 6.0 million to 7.1 million units shipped, while the average selling price increased 53% to $1.43 per unit.

Cost of Goods Sold

Cost of goods sold for the three months ended September 30, 2022 was $9.9 million compared to $3.0 million for the three months ended September 30, 2021, an increase of $6.8 million or 225%.

The increase was primarily driven by significant revenue growth, acquisition of GeneSiC, which includes $0.5 million for step up in inventory valuation that was

expensed during the quarter, and inventory reserves of $2.8 million, in addition to TSMC’s 20% wafer price increase which created a higher cost of goods sold.

Research and Development Expense

Research and development expense for the three months ended September 30, 2022 of $13.3 million increased by $7.5 million, or 130%, when compared to the three months ended September 30, 2021, driven by increases in stock based compensation, resulting in $5.2 million higher compensation costs, along with an increase of $1.9 million compensation costs related to growth in headcount as the Company develops products in Solar, Enterprise and EV and through its acquisition of GeneSiC.

We expect research and development expense to continue to increase as we grow our headcount to support our expansion into new applications.

Selling, General and Administrative Expense

Selling, general and administrative expense for the three months ended September 30, 2022 of $24.5 million increased by $20.9 million, or 589%, when compared to the three months ended September 30, 2021, driven by increases in stock based compensation, resulting in $10.4 million higher compensation costs, along with an increase of $1.4 million increase in compensation costs related to growth in headcount.

In addition, the Company incurred $7.7 million of transaction expenses and amortization of intangibles related to the acquisition of GeneSiC and a $1.1 million increase in other costs of growing the business.

We expect selling, general and administrative costs to increase to support our growth and as a result of the increased costs for infrastructure required as a public company.

O ther Income (Expense), net

Net interest income for the three months ended September 30, 2022 was $638 compared to $75 net interest expense for the three months ended September 30, 2021, primarily due to the higher interest rate received on money markets funds.

During the three months ended September 30, 2022 , we recognized $6.1 million loss from the change in fair value of our earn-out liabilities.

Subsequent to the recognition of the earnout liability upon the consummation of the Business Combination on October 19, 2021, we remeasure the fair value of this liability at each reporting date.

The increase in fair value of our earn-out liability of $6.1 million was primarily a result of the increase of the closing price of our Class A common stock listed on the Nasdaq, resulting in the increased in the estimated fair value of the earnout shares from $1.89 as of June 30, 2022 to $2.61 as of September 30, 2022.

Other expense primarily reflects our minority interest in the net loss of a joint venture through August 18, 2022..

Income Tax (Benefit) Provision

Income tax benefit for the three months September 30, 2022 increased by $10,148 when compared to the three months September 30, 2021.

As a result of the GeneSiC Semiconductor Inc.

acquisition, (see Note 17, Business Combinations), the Company released $9.9 million of U.S.

valuation allowance during the three months ended September 30, 2022.

The release was attributable to a preliminary estimate of $23.2 million of net deferred tax liabilities recorded on GeneSiC’s opening balance sheets that offset other U.S.

net deferred tax assets.We expect our tax rate to remain close to zero in the near term due to full valuation allowances against deferred tax assets.

Results of Operations Nine Months September 30, 2022 and 2021

The table and discussion below present our results for the nine months ended September 30, 2022 and 2021 (in thousands):

Nine Months Ended

September 30, Change

Revenue $ 25,594 $ 16,398 $ 9,196 56 %

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Income (loss) before income taxes 70,939 (32,801) 103,740 (316) %

Income tax expense 273 24 249 1038 %

Income tax (benefit) provision (9,862) 37 (9,899) (26754) %

Net income (loss) 80,801 (32,838) 113,639 (346) %

Comparison of the Quarters ended June 30, 2022 and 2021

Revenue for the three months ended June 30, 2022 was $8.6 million compared to $5.5 million for the three months ended June 30, 2021, an increase of $3.2 million , or 58%.

The significant increase primarily reflected the Company’s customer growth trajectory, evolving from aftermarket customers to the higher volume customers and total sales volumes increasing 26%, from 5.8 million to 7.3 million units shipped, while the average selling price increased 11% to $1.06 per unit.

Cost of Goods Sold

Cost of goods sold for the three months ended June 30, 2022 was $5.0 million compared to $3.0 million for the three months ended June 30, 2021, an increase of $2.1 million or 69%.

The increase was primarily driven by significant revenue growth, in addition to TSMC's 20% wafer price increase which created a higher cost of goods sold.

Research and Development Expense

Research and development expense for the three months ended June 30, 2022 of $9.6 million increased by $3.3 million, or 53%, when compared to the three months ended June 30, 2021, driven by increases in stock based compensation, resulting in $1.7 million higher compensation costs, along with an increase of $1.7 million compensation costs related to growth in headcount as the Company develops products in Solar, Enterprise and EV.

We expect research and development expense to continue to increase as we grow our headcount to support our expansion into new applications.

Selling, General and Administrative Expense

Selling, general and administrative expense for the three months ended June 30, 2022 of $14.0 million decreased by $(0.8) million, or (5)%, when compared to the three months ended June 30, 2021.

The decrease is primarily due to a

($3.3) million decrease in stock-based compensation issued for one-time executive stock awarded in the three months ended June 30, 2021, offset by a $2.5 million increase in compensation costs related to growth in headcount and an increase in other costs of growing the business.

We expect selling, general and administrative costs to increase to support our growth and as a result of the increased costs for infrastructure required as a public company.

Other Income (Expense), net

Net interest income for the three months ended June 30, 2022 was $52 thousand compared to $(63) thousand net interest expense for the three months ended June 30, 2021, primarily due to the higher interest rate received on money markets funds.

During the three months ended June 30, 2022, we recognized $54.9 million gain from the change in fair value of our earn out liabilities and $(0.8) million loss from an equity method investment as follows:

i) Earnout liability:

Subsequent to the recognition of the earnout liability upon the consummation of the Business Combination on October 19, 2021, we remeasure the fair value of this liability at each reporting date.

The decrease in fair value of our earn-out liability of $54.9 million was primarily a result of the decrease of the closing price of our Class A common stock listed on the Nasdaq, resulting in the decline in the estimated fair value of the earnout shares from $8.47 as of March 31, 2022 to $1.89 as of June 30, 2022.

ii) Other expense primarily reflects our minority interest in the net loss of a joint venture.

Income Tax Expense

Income tax expenses for th e three months June 30, 2022 increased by $265 thousand when compared to the three months June 30, 2021.

We expect our tax rate to remain close to zero in the near term due to full valuation allowances against deferred tax assets.

Comparison of the Six Months ended June 30, 2022 and 2021

Revenue for the six months ended June 30, 2022 was $15.4 million compared to $10.8 million for the six months ended June 30, 2021, an increase of $4.6 million , or 43%.

The significant increase primarily reflected the Company’s customer growth trajectory, evolving from aftermarket customers to higher volume customers and total sales volumes increasing 29%, from 11.5 million to 14.8 million units shipped, while the average selling price remained approximately flat at $0.94 per unit.

Net income (loss) attributable to noncontrolling interests (238) — (238) — %

Net income (loss) attributable to controlling interests $ 81,039 $ (32,838) $ 113,877 (347) %

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

Revenue for the nine months ended September 30, 2022 was $25.6 million compared to $16.4 million for the nine months ended September 30, 2021, an increase of $9.2 million , or 56%.

The significant increase primarily reflected the Company’s customer growth trajectory, evolving from aftermarket customers to higher volume customers and the accretive acquisition of GeneSiC.

Total sales volumes increasing 26%, from 17.5 million to 22.0 million units shipped, while the average selling price increased 24.2% to $1.16 per unit.

Cost of Goods Sold

Cost of goods sold for the six months ended June 30, 2022 was $8.8 million compared to $5.9 million for the six months ended June 30, 2021, an increase of $2.9 million or 48%.

The increase was primarily driven by significant revenue growth, in addition to TSMC's 20% wafer price increase which created a higher cost of goods sold.

Cost of goods sold for the nine months ended September 30, 2022 was $18.7 million compared to $9.0 million for the nine months ended September 30, 2021, an increase of $9.7 million or 108%.

The increase was primarily driven by significant revenue growth, acquisition of GeneSiC, which includes $0.5 million for step up in inventory valuation that was expensed during the quarter, and inventory reserves of $2.8 million, in addition to TSMC’s 20% wafer price increase which created a higher cost of goods sold.

Research and Development Expense

Research and development expense for the six months ended June 30, 2022 of $23.0 million increased by $12.5 million, or 119%, when compared to the six months ended June 30, 2021, primarily driven by increases in stock based compensation, resulting in $8.9 million higher compensation costs, along with an increase of $3.6 million in non-compensation costs related to new applications and reliability expenses devoted to next generation product development and compensation costs related to growth in headcount as the Company develops products in Solar, Enterprise and EV.

Research and development expense for the nine months ended September 30, 2022 of $36.4 million increased by $20.0 million, or 123%, when compared to the nine months ended September 30, 2021, primarily driven by increases in

stock based compensation, resulting in $14.0 million higher compensation costs, along with an increase of $1.1 million in non-compensation costs related to new applications and reliability expenses devoted to next generation product development and $4.9 million in compensation costs related to growth in headcount as the Company develops products in Solar, Enterprise and EV.

We expect research and development expense to continue to increase as we grow our headcount to support our expansion into new applications.

Selling, General and Administrative Expense

Selling, general and administrative expense for the six months ended June 30, 2022 of $38.5 million increased by $18.4 million, or 91%, when compared to the six months ended June 30, 2021.

The increase is primarily due to a $13 million increase in stock-based compensation, and a $5.3 million increase in compensation costs related to growth in headcount and other costs of growing the business.

Selling, general and administrative expense for the nine months ended September 30, 2022 of $63.0 million increased by $39.3 million, or 166%, when compared to the nine months ended September 30, 2021.

The increase is primarily due to a $23.5 million increase in stock-based compensation, and a $3.5 million increase in compensation costs related to growth in headcount.

In addition, the Company incurred $7.7 million of transaction expenses and amortization related to the acquisition of GeneSiC and a $3.4 million increase in other costs of growing the business..

We expect selling, general and administrative costs to increase to support our growth and as a result of the increased costs for infrastructure required as a public company.

Other Income (Expense), net

Net interest income for the six months ended June 30, 2022 was $28 thousand compared to $(124) thousand net interest expense for the six months ended June 30, 2021, increased by 123%, primarily due to the higher interest rate received on cash equivalents.

During the six months ended June 30, 2022 , we recognized $51.8 million gain from the change in fair value of our warrant liabilities, $118.3 million decrease in fair value of our earn out liabilities and $(1.1) million loss from an equity method investment, as follows:

O ther Income (Expense), net

Net interest income for the nine months ended September 30, 2022 was $666 thousand compared to $(199) thousand net interest expense for the nine months ended September 30, 2021, increased by 435%, primarily due to the higher interest rate received on cash equivalents.

During the nine months ended September 30, 2022 , we recognized $51.8 million gain from the change in fair value of our warrant liabilities, $112.2 million decrease in fair value of our earn out liabilities and $(1.2) million loss from an equity method investment, as follows:

The change in fair value of our warrant liability is due to the Company issuing a notice of redemption on February 4, 2022 and the Company revaluing the liability just before the exercise and redemptions which resulted in a valuation change of $51.8 million.

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Subsequent to the recognition of the earnout liability upon the consummation of the Business Combination on October 19, 2021, we remeasure the fair value of this liability at each reporting date.

The decrease in fair value of our earn-out liability of $118.3 million was primarily a result of the decrease of the closing price of our Class A common stock listed on the Nasdaq, resulting in the decline in the estimated fair value of the earnout shares from $16.09 as of December 31, 2021 to $1.89 as of June 30, 2022.

iii) Other expense primarily reflects our minority interest in the net loss of a joint venture.

Income Tax Expense

Income tax expense s for the six months ended June 30, 2022 increased by $249 thousand when compared to the six months ended June 30, 2021.

The decrease in fair value of our earn-out liability of $111.6 million was primarily a result of the increase of the closing price of our Class A common stock listed on the Nasdaq, resulting in the decline in the estimated fair value of the earnout shares from $16.09 as of December 31, 2021 to $2.61 as of September 30, 2022 .

iii) Other expense primarily reflects our minority interest in the net loss of a joint venture through August 18, 2022..

Income Tax Benefit (Provision)

Income tax benefit for the nine months ended September 30, 2022 increased by $9,899 when compared to the nine months ended September 30, 2021.

As a result of the GeneSiC Semiconductor Inc.

acquisition, (see Note 17, Business Combinations), the Company released $9.9 million of U.S.

valuation allowance during the three months ended September 30, 2022.

The release was attributable to a preliminary estimate of $23.2 million of net deferred tax liabilities recorded on GeneSiC’s opening balance sheets that offset other U.S.

net deferred tax assets.

We expect our tax rate to remain close to zero in the near term due to full valuation allowances against deferred tax assets.

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The term loan principal balance is payable in monthly installments beginning in September 2021.

As June 30, 2022, we had cash and cash equivalents of $240.5 million.

As September 30, 2022, we had cash and cash equivalents of $124.8 million.

We currently use cash to fund operations, meet working capital requirements, for capital expenditures and strategic investments.

Post-Business Combination, the Company has additional access to capital resources through public market transactions and the historical focus on near-term working capital and liquidity has shifted to more strategic and forward-looking capital optimization plans.

that the influx of capital from the Business Combination is sufficient to finance our operations, working capital requirements and capital expenditures for the foreseeable future.

We believe that the influx of capital from the Business Combination is sufficient to finance our operations, working capital requirements and capital expenditures for the foreseeable future.

We expect our operating and capital expenditures to increase as we increase headcount, expand our operations and grow our end customer base.

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We can provide no assurance that additional financing will be available at all or, if available, that we would be able to obtain additional financing on terms favorable to us.

The following table summarizes our consolidated cash flows for the six months ended June 30, 2022 and 2021:

June 30, 2022 June 30, 2021

(dollars in thousands)

The following table summarizes our consolidated cash flows for the nine months ended September 30, 2022 and 2021 (in thousands):

September 30, 2022 September 30, 2021

Consolidated Statements of Cash Flow Data:

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$ (106,447) $ (2,525)

Net cash provided (used in) by financing activities

Net cash used in financing activities

$ (1,476) $ (476)

We derive liquidity primarily from debt and equity financing activities.

As of June 30, 2022, our balance of cash and cash equivalents was $240.5 million, which is an decrease of $27.7 million or 10% compared to December 31, 2021.

Our total outstanding debt principal balance as of June 30, 2022 was $5.3 million, which is a decrease of $1.6 million from the $6.9 million of total debt outstanding at December 31, 2021.

As of September 30, 2022, our balance of cash and cash equivalents was $124.8 million, which is a decrease of $143.5 million or 53% compared to December 31, 2021.

Our total outstanding debt principal balance as of September 30, 2022 was $4.5 million, which is a decrease of $2.4 million from the $6.9 million of total debt outstanding at December 31, 2021.

Operating Activities

For the six months ended June 30, 2022, net cash used in operating activities was $18.4 million, which primarily reflects a net income of $113.6 million, adjusted for non-cash share-based compensation of $36.4 million, non-cash gains of $170.0 million in earnout and warrant liabilities and an aggregate cash used in operating activities of $1.0 million.

For the nine months ended September 30, 2022, net cash used in operating activities was $35.5 million, which primarily reflects a net income of $80.8 million, adjus ted for non-cash share-based compensation of $52.1 million, non-cash gains of $163.9 million in earnout and warrant liabilities and an aggregate cash provided by operating assets and liabilities of $2.6 million.

Specifically, $0.5 million increase in account receivable and $2.7 million increase in inventory are primarily due to increased sales.

$1.9 million increase in account payable is primarily due to accrued bonus and increased wages, offsetting by $0.6 million increase in operating lease liability.

For the six months ended June 30, 2021, net cash used in operating activities was $13.8 million, which reflects a net loss of $26.0 million, adjusted for non-cash share-based compensation of $14.6 million and includes an aggregate cash used in operating activities of $2.7.

$2.8 million increase in account payable is primarily due to accrued bonus and increased wages, offsetting by $0.5 million decrease in operating lease liability.

For the nine months ended September 30, 2021, net cash used in operating activities was $24.8 million, which primarily reflects a net loss of $32.8 million, adjus ted for non-cash share-based compensation of $14.8 million and an aggregate cash used in operating assets and liabilities of $7.3 million.

Specifically, $1.4 million increase in account receivable and $8.3 million increase in inventory are primarily due to increased sales.

$2.6 million increase in account payable is primarily due to accrued bonus and increased wages.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2022 of $8.1 million was primarily due to $5.2 million cash funding of a joint venture, $2.3 million for purchases of fixed assets, coupled with $0.6 million business acquisition.

Net cash used in investing activities of $1.5 million for the six months ended June 30, 2021, was primarily related to the purchase of an asset acquisition and property and equipment.

Net cash used in investing activities for the nine months ended September 30, 2022 of $106.4 million was primarily due to $5.2 million cash funding of a joint venture, $3.5 million for purchases of fixed assets, coupled with $99.9 million business acquisitions.

Net cash used in investing activities of $2.5 million for the nine months ended September 30, 2021 , was primarily related to the purchase of an asset acquisition and property and equipment.

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2022 of $1.3 million was primarily due to debt payments of $1.6 million and repurchase of our common stock of $0.6 million, partially offset by proceeds from stock option exercises of $0.9 million.

Net cash provided by financing activities for the six months ended June 30, 2021 of $222 thousand was primarily the result proceeds from stock option exercises.

Net cash used in financing activities for the nine months ended September 30, 2022 of $0.5 million was primarily due to debt payments of $2.4 million and repurchase of our common stock of $0.6 million, partially offset by proceeds from stock option exercises of $1.5 million.

Net cash used in financing activities for the nine months ended September 30, 2021 of $476 was primarily due to payments of deferred offering costs offset by proceeds from issuance of long term debt.

Contractual Obligations, Commitments and Contingencies

Except for a new operating lease entered into during the quarter, there have been no significant changes to our contractual obligations as described in our annual report on Form 10-K for the year ended December 31, 2021.

Except for a new operating lease entered into during the quarter (see Note 8, Leases, included on this Form 10-Q), there have been no significant changes to our contractual obligations as described in our annual report on Form 10-K for the year ended December 31, 2021.

Off-Balance Sheet Commitments and Arrangements

As of June 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

As of September 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Critical Accounting Policies and Estimates

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Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain.

There have been no material changes to our critical accounting policies and estimates from the information in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, included in our 2021 annual report on Form 10-K, except for adoption of ASC 805 Business Combinations as discussed in Note 2, Significant Accounting Policies and Recent Accounting Pronouncements included on this Form10-Q.

JOBS Act Accounting Election

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis