Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, including our chief executive officer and chief financial officer, have conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2022 and based on this evaluation, have concluded that, as a result of the material weaknesses in internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of December 31, 2022.
Under Rule 13a-15(e), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its chief executive officer and chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Material Weaknesses in Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that:
• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
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Under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, we conducted an assessment of our internal control over financial reporting as of December 31, 2022. As a result of this evaluation, management identified the following material weaknesses in internal control, which continue to exist as of December 31, 2022:
Management concluded that we lack a sufficient number of trained professionals with technical accounting expertise to identify, evaluate, value and account for complex and non-routine transactions, including revenue and stock-based compensation. We also found we have insufficient accounting resources to maintain appropriate segregation of duties, including to ensure journal entries are reviewed by personnel independent of the preparer. As a result, we performed additional analysis we deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles.
While these material weaknesses did not result in material misstatements of the Company’s financial statements as of and for the year ended December 31, 2022, these material weaknesses create a reasonable possibility that a material misstatement of account balances or disclosures in our consolidated financial statements may not be prevented or detected in a timely manner. Accordingly, the Company concluded that the deficiencies represent material weaknesses in its internal control over financial reporting and that internal control over financial reporting was not effective as of December 31, 2022.
This annual report does not include an attestation report of our independent registered public accounting firm, Deloitte & Touche LLP, under the transitional rules of the Securities and Exchange Commission applicable to emerging growth companies.
Management’s Remediation Plan
The Company’s remediation efforts are ongoing, and it will continue its initiatives to implement and document policies and procedures and strengthen the Company’s internal control environment. Remediation of the identified material weaknesses and strengthening the Company’s internal control environment will require a substantial effort throughout 2023. The material weaknesses cannot be considered completely remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. In addition, it is possible that certain controls the Company plans to implement in 2023 will not have operated for a sufficient period of time in 2023 to test their operating effectiveness as part of the Company’s evaluation of internal control over financial reporting as of December 31, 2023 and may extend to the following year.
To remediate the material weaknesses described above, the Company is pursuing the following remediation steps:
• The Company has added a SEC reporting manager to the accounting team with technical accounting experience.
• The Company has outsourced complex technical accounting matters to an external third party to provide assistance to the Company when such accounting matters arise.
• The Company has identified a system generated report from its accounting system that identifies if edits were made to journal entries and posted without review. On at least a quarterly basis, management will review this report to ensure journal entries are valid.
Changes in Internal Control Over Financial Reporting
On August 15, 2022, we acquired GeneSiC and, as a result, we have completed integrating certain processes, systems and controls relating to GeneSiC into our existing system of internal control over financial reporting in accordance
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with our integration plans as of December 31, 2022. Except for certain processes, systems and controls relating to the integration of GeneSiC, during the year ended December 31, 2022, there were no significant changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
As described above under “Management's Remediation Plan”, we are taking actions to remediate the material weaknesses in our internal control over financial reporting. Except as described above, there were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
Announcement of 2023 Annual Stockholders’ Meeting Date and Related Information
Our 2023 annual meeting of stockholders is scheduled to be held on Thursday, June 8, 2023, at 9:30 a.m., at our principal executive offices located at 3520 Challenger Street, Torrance, California 90503. The record date for determining stockholders entitled to notice of the meeting, and to vote on proposals to come before the meeting, is April 17, 2023. This announcement does not constitute a notice of a meeting of stockholders for purposes of Delaware law or under our bylaws, nor is this announcement a solicitation of proxies for the meeting. We expect to begin mailing the Notice of Meeting and a Notice of Internet Availability of Proxy Materials to eligible stockholders on or about April 27, 2023, which will contain instructions on how to access the proxy statement and related materials for the meeting. Stockholders should be aware of the following applicable deadlines in connection with the meeting.
Proposals Governed by Rule 14a-8 Under the Exchange Act. Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since the 2023 annual meeting is being held more than 30 days before the first anniversary of the 2022 annual meeting, any proposal that a stockholder intends to be presented at the 2023 annual meeting via the company’s proxy statement and form of proxy must be received by our corporate secretary at our principal executive offices at the address below no later than a reasonable time before we begin to print and send proxy materials for the 2023 meeting. In connection with the 2023 annual meeting, we expect to file a proxy statement with the SEC and begin mailing a Notice of Internet Availability of Proxy Materials to eligible stockholders on or about April 27, 2023. Stockholder proposals received after the deadline will be considered untimely under Rule 14a-8.
Stockholder Nominations of Candidates for Director and Other Business . If a stockholder desires to bring before the 2023 annual meeting a director nomination or other matter that is not the subject of a proposal meeting the requirements of Rule 14a-8 for inclusion in the company’s 2023 proxy statement, the stockholder must follow procedures outlined in our bylaws in order to personally present the proposal at the meeting. One of the procedural requirements is providing timely notice in writing of the director nomination or other business the stockholder proposes to bring before the meeting. Since our 2023 annual meeting is being held more than 30 days before the first anniversary of the date of the 2022 annual meeting, to be timely the written notice must be received no later than the close of business on the 10th calendar day following the date of this announcement.
In addition, to comply with the “universal proxy rules” recently promulgated by the SEC, stockholders who intend to solicit proxies in support of director nominees other than the company’s nominees for election at the 2023 annual meeting must provide notice to the company at the address below, setting forth the information required by Rule 14a-19 under the Exchange Act, no later than the 10th calendar day following the date of this announcement.
We reserve the right to decline to include in our proxy materials any stockholder’s proposal that does not comply with the rules of the SEC. Our bylaws are included as Exhibit 3.2 to this annual report on Form 10-K. We will furnish paper copies
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of the applicable bylaw provisions that set forth the requirements for a stockholder’s written notice, upon written request to the corporate secretary at the address below, or by telephoning (844) 654-2642.
The address of the corporate secretary is:
Navitas Semiconductor Corporation
3520 Challenger Street
Torrance, CA 90503-1640
Att’n: Corporate Secretary
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
None.
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Part III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item is incorporated by reference to the proxy statement on Schedule 14A to be filed with the Securities and Exchange Commission in connection with our 2023 annual stockholders' meeting within 120 days of the fiscal year ended December 31, 2022 (our “Proxy Statement”).
Our board of directors has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including our President and Chief Executive Officer, Chief Financial Officer, and other executive and senior officers. The full text of this code of business conduct and ethics is posted on the investor relations page of our website, at
https://ir.navitassemi.com/corporate-governance/documents-charters. The reference to our website address in this filing does not include or incorporate by reference the information on that website into this filing. We intend to disclose future amendments to certain provisions of this code of business conduct and ethics, or waivers of these provisions, on our website or in public filings to the extent required by the applicable rules.
Item 11. Executive Compensation.
The information required by this item is incorporated by reference to our Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters.
The information required by this item is incorporated by reference to our Proxy Statement.
Item 13. Certain Relationships and Related Person Transactions.
The information required by this item is incorporated by reference to our Proxy Statement.
Item 14. Principal Accountant Fees and Services.
The information required by this item is incorporated by reference to our Proxy Statement.
Part IV
Item 15. Exhibits and Financial Statement Schedules.
(a) (1) Financial Statements . Financial statements included in this annual report are listed under Part II, Item 8.
(2) Financial Statement Schedules . Schedules not listed above have been omitted because they are not required, not applicable, or the required information is otherwise included.
(3) Exhibits. The exhibits listed below are filed or furnished, as applicable, as part of this annual report or are incorporated by reference as indicated.
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EXHIBIT INDEX
Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
2.1 Business Combination Agreement and Plan of Reorganization, dated as of May 6, 2021, among Live Oak Acquisition Corp. II, Live Oak Merger Sub Inc. and Navitas Semiconductor Limited, including as domesticated in the State of Delaware as Navitas Semiconductor Ireland, LLC (“Legacy Navitas”)
S-4 333-256880 2.1 6/8/2021
2.2 Agreement and Plan of Merger, dated as of August 15, 2022, by and among Navitas Semiconductor Corporation, Gemini Acquisition LLC, GeneSiC Semiconductor Inc., Ranbir Singh and The Ranbir Singh Irrevocable Trust dated February 4, 2022
10-Q 001-39755 2.1 11/14/2022
3.1 Second Amended and Restated Certificate of Incorporation of Navitas Semiconductor Corporation
8-K 001-39755 3.1 10/25/2021
3.2 Amended and Restated Bylaws of Navitas Semiconductor Corporation
8-K 001-39755 3.2 10/25/2021
4.1* Description of Registrant’s Securities
10.1† Navitas Semiconductor Corporation 2021 Equity Incentive Plan
8-K/A 001-39755 10.5 11/15/2021
10.2† Form of Restricted Stock Unit Agreement
8-K 001-39755 10.6 10/25/2021
10.3† Form of Stock Option Agreement
8-K 001-39755 10.7 10/25/2021
10.4† Amended and Restated Navitas Semiconductor Limited 2020 Equity Incentive Plan
S-4/A 333-256880 10.16 8/23/2021
10.5 Warrant Agreement, dated December 2, 2020, between Live Oak Acquisition Corp. II and Continental Stock Transfer & Trust Company, as warrant agent
8-K 001-39755 4.1 12/8/2020
10.6 Private Placement Warrants Purchase Agreement, dated December 2, 2020, between Live Oak Acquisition Corp. II and Live Oak Sponsor Partners II, LLC
8-K 001-39755 10.4 12/8/2020
10.7 Registration Rights Agreement, dated December 2, 2020, among Live Oak Acquisition Corp. II, Live Oak Sponsor Partners II, LLC and certain other security holders named therein
8-K 001-39755 10.3 12/8/2020
10.8 Administrative Support Agreement, dated December 2, 2020, between Live Oak Acquisition Corp. II and Live Oak Sponsor Partners II, LLC
8-K 001-39755 10.5 12/8/2020
10.9 Promissory Note, dated August 12, 2020, issued to Live Oak Sponsor Partners II, LLC
S-1 333-249854 10.2 11/4/2020
10.10† Form of Indemnification Agreement
8-K 001-39755 10.4 10/25/2021
10.11 Shareholder Tender and Support Agreement, dated as of May 6, 2021, among Live Oak Acquisition Corp. II, Legacy Navitas and c ertain e quity holders of L egacy Navitas
8-K 001-39755 10.1 5/7/2021
10.12 Lock-Up Agreement (Management) , dated as of May 6, 2021, among Live Oak Acquisition Corp. II, Legacy Navitas and certain equity holders of Legacy Navitas
8-K 001-39755 10.2 5/7/2021
10.13 Lock-Up Agreement (VPs) , dated as of May 6, 2021, among Live Oak Acquisition Corp. II, Legacy Navitas and certain equity holders of Legacy Navitas
8-K 001-39755 10.3 5/7/2021
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Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
10.14 Lock-Up Agreement (Non-Management) , dated as of May 6, 2021, among Live Oak Acquisition Corp. II, Legacy Navitas and certain equity holders of Legacy Navitas
8-K 001-39755 10.4 5/7/2021
10.15 Letter Agreement, dated December 2, 2020, among Live Oak Acquisition Corp. II, its officers and directors and Live Oak Sponsor Partners II, LLC
8-K 001-39755 10.1 12/8/2020
10.16 Investment Management Trust Agreement, dated December 2, 2020, between Live Oak Acquisition Corp. II and Continental Stock Transfer & Trust Company, as trustee
8-K 001-39755 10.2 12/8/2020
10.17 Sponsor Letter Agreement, dated May 6, 2021, between Live Oak Acquisition Corp. II and Live Oak Sponsor Partners II, LLC
8-K 001-39755 10.5 5/7/2021
10.18† Form of Indemnity Agreement
S-1/A 333-249854 10.8 11/18/2020
10.19 Amendment to Letter Agreement, dated May 6, 2021. among Live Oak Acquisition Corp. II, its officers and directors and Live Oak Sponsor Partners II, LLC
8-K 001-39755 10.5 5/7/2021
10.20† Employment Agreement of Gene Sheridan , dated as of May 6, 2021
S-4/A 333-256880 10.14 8/23/2021
10.21† Employment Agreement of Daniel Kinzer , dated as of May 6, 2021
S-4/A 333-256880 10.15 8/23/2021
10.22† Employment Agreement of Todd Glickman, dated as of May 6, 2021
8-K 001-39755 10.2 10/25/2021
10.23 Backstop Agreement, dated as of August 20, 2021, among Live Oak Acquisition Corp. II , Live Oak Sponsor Partners II, LLC and Encompass Capital Advisors LLC
S-4/A 333-256880 10.17 8/23/2021
10.24 Form of PIPE Subscription Agreement
8-K 001-39755 10.6 5/7/2021
10.25 Sponsor Letter Agreement, dated October 6, 2021, among Live Oak Sponsor Partners II, LLC, Live Oak Acquisition Corp. II and Navitas Semiconductor Limited
8-K 001-39755 10.3 10/7/2021
10.26 Forward Purchase Agreement, dated October 6, 2021, between ACM AART VII A LLC and Live Oak Acquisition Corp. II
8-K 001-39755 10.2 10/7/2021
10.27† Stock Repurchase Agreement, dated March 4, 2022, between Todd Glickman and Navitas Semiconductor Corporation
10-Q 001-39755 10.5 5/16/2022
10.28† Employment Offer Letter, dated May 17, 2022, between Ron Shelton and Navitas Semiconductor Corporation
10-Q 001-39755 10.1 8/15/2022
10.29† Registration Rights Agreement, dated August 15, 2022, among Navitas Semiconductor Corporation, Ranbir Singh and The Ranbir Singh Irrevocable Trust dated February 4, 2022
10-Q 001-39755 10.1 11/14/2022
10.30† Navitas Semiconductor 2022 Employee Stock Purchase Plan
10-Q 001-39755 10.2 11/14/2022
21.1* List of Subsidiaries
23.1* Consent of Deloitte & Touche LLP
24.1* Power of Attorney (included on signature page)
31.1* Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act
31.2* Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act
32.1** Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. § 1350
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Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date
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
_____________________________________________
† Management contract or compensatory arrangement.
* Filed herewith.
** Furnished herewith.
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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.
NAVITAS SEMICONDUCTOR CORPORATION
By: /s/ Gene Sheridan
Name: Gene Sheridan
Title: President and Chief Executive Officer
Date: April 3, 2023
Each person whose signature appears below constitutes and appoints Ron Shelton and Paul D. Delva as his true and lawful attorney-in-fact and agent, with full power of substitution and, for him and in his name, place and stead, in any and all capacities to sign any and all amendments to this annual report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Gene Sheridan
Gene Sheridan
President, Chief Executive Officer and Director
(principal executive officer)
April 3, 2023
/s/ Ron Shelton
Ron Shelton
Chief Financial Officer and Treasurer
(principal financial and accounting officer)
April 3, 2023
/s/ Daniel Kinzer
Daniel Kinzer
Chief Operating Officer, Chief Technology Officer and Director April 3, 2023
/s/ Richard J. Hendrix
Richard J. Hendrix
Director April 3, 2023
/s/ Brian Long
Brian Long
Director April 3, 2023
/s/ David Moxam
David Moxam
Director April 3, 2023
/s/ Dipender Saluja
Dipender Saluja
Director April 3, 2023
/s/ Gary K. Wunderlich, Jr.
Gary K. Wunderlich, Jr.
Director April 3, 2023
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