What changed in this filing

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Item 1. Financial Statements

2023-05-15 compared with 2022-11-14 · 345 added, 426 removed, 448 unchanged (63% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value amounts)

September 30, 2022 December 31, 2021

(In thousands, except shares and par value) March 31, 2023 December 31, 2022

CURRENT ASSETS:

Cash and cash equivalents $ 100,823 $ 110,337

Accounts receivable, net 10,859 8,263

Inventory 17,044 11,978

Accounts receivable, net (less allowance of $ 300 and $ 0 )

Inventories 18,873 19,061

Prepaid expenses and other current assets 2,880 3,623

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Accrued compensation expenses 7,711 3,907

Current operating lease liabilities 1,208 —

Current portion of long-term debt 3,200 3,200

Operating lease liabilities, current 1,477 1,305

Other liabilities 674 486

Total current liabilities 23,472 20,351

LONG-TERM DEBT 1,323 3,716

OPERATING LEASE LIABILITIES NONCURRENT 5,248 5,263

WARRANT LIABILITY — 81,388

EARNOUT LIABILITY 40,816 13,064

DEFERRED TAX LIABILITIES 1,829 1,824

OTHER LIABILITIES — 60

Total liabilities 71,365 40,502

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STOCKHOLDERS’ EQUITY:

Common stock, $ 0.0001 par value, 740,000,000 shares authorized as of September 30, 2022 and December 31, 2021, and 152,015,458 and 117,750,608 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Common stock, $ 0.0001 par value, 750,000,000 shares authorized as of both March 31, 2023 and December 31, 2022, and 160,943,107 and 153,628,838 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 561,193 535,875

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

Three Months Ended

September 30, Nine Months Ended

September 30,

(In thousands, except per share amounts) 2023 2022

NET REVENUES (including $ 0 and $ 613 of related party revenues)

$ 13,358 $ 6,740

NET REVENUES $ 10,243 $ 5,631 $ 25,594 $ 16,398

COST OF REVENUES 9,852 3,032 18,655 8,962

GROSS PROFIT 391 2,599 6,939 7,436

COST OF REVENUES (exclusive of amortization of intangible assets included below) 7,873 3,777

OPERATING EXPENSES:

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Selling, general and administrative 19,058 24,544

Amortization of intangible assets 4,499 88

Total operating expenses 40,951 37,957

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Gain (loss) from change in fair value of earnout liabilities ( 27,752 ) 63,406

Other expense ( 74 ) — ( 1,215 ) —

Other income (expense) 11 ( 356 )

Total other income (expense), net ( 26,838 ) 114,789

INCOME (LOSS) BEFORE INCOME TAXES ( 62,304 ) 79,795

INCOME TAX (BENEFIT) PROVISION ( 10,135 ) 13 ( 9,862 ) 37

INCOME TAX PROVISION 61 3

NET INCOME (LOSS) ( 62,365 ) 79,792

NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS ( 238 ) — ( 238 ) —

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS ( 518 ) —

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTERESTS $ ( 61,847 ) $ 79,792

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended March 31,

(In thousands) 2023 2022

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

NET INCOME (LOSS) $ ( 62,365 ) $ 79,792

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COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST ( 518 ) —

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST $ ( 32,536 ) $ ( 6,841 ) $ 81,033 $ ( 32,839 )

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST $ ( 61,847 ) $ 79,732

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands)

Redeemable Convertible Preferred Stock Stockholder's equity (deficit)

preferred stock Series B

preferred stock Series B-1

preferred stock Series B-2

preferred stock Common stock Additional

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Stockholder's equity

THREE MONTHS ENDED MARCH 31, 2023 Common stock Additional

capital Accumulated

deficit Notes receivable - shareholder's Accumulated

deficit Accumulated

comprehensive

income (loss) Noncontrolling interest Total

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

BALANCE AT JANUARY 1, 2022 — $ — — $ — — $ — — $ — 117,751 $ 15 $ 294,190 $ ( 228,667 ) $ — $ ( 2 ) $ — $ 65,536

Issuance of common stock under employee stock option and stock award plans — — — — — — — — 2,459 — 1,305 — — — — 1,305

Repurchase of common stock — — — — — — — — ( 67 ) — ( 550 ) — — — — ( 550 )

Exercise of warrants — — — — — — — — 3,318 — 29,641 — — — — 29,641

Stock-based compensation expense related to employee and non-employee stock awards — — — — — — — — — — 24,072 — — — — 24,072

Foreign currency translation adjustment — — — — — — — — — — — — — ( 60 ) — ( 60 )

Net income — — — — — — — — — — — 79,792 — — — 79,792

BALANCE AT MARCH 31, 2022 — $ — — $ — — $ — — — 123,461 $ 15 $ 348,658 $ ( 148,875 ) $ — $ ( 62 ) $ — $ 199,736

Issuance of common stock under employee stock option and stock award plans — — — — — — — — 1,862 1 2,514 — — — — 2,515

Shares issued for business acquisition — — — — — — — — 150 — 1,068 — — — — 1,068

Stock-based compensation expense related to employee and non-employee stock awards — — — — — — — — — — 9,723 — — — — 9,723

Net income — — — — — — — — — — — 33,837 — — — 33,837

BALANCE AT JUNE 30, 2022 — $ — — $ — — $ — — $ — 125,473 $ 16 $ 361,963 $ ( 115,038 ) $ — $ ( 62 ) $ — $ 246,879

Shares Amount

BALANCE AT DECEMBER 31, 2022 153,629 $ 18 $ 535,875 $ ( 154,754 ) $ ( 7 ) 3,628 $ 384,760

Issuance of common stock under employee stock option and stock award plans 3,082 — 2,925 — — — $ 2,925

Shares issued for business acquisition — — — — — — — — 24,883 2 146,310 — — — — 146,312

Shares issued for transaction fees — — — — — — — — 170 — 1,000 — — — — 1,000

Shares issued in connection with buyout agreement (see Note 18) 4,232 — 7,509 — — ( 3,110 ) $ 4,399

Stock-based compensation expense related to employee and non-employee stock awards — — 14,884 — — — $ 14,884

Change in noncontrolling interest — — — — — — — — — — — — — — 4,655 4,655

Foreign currency translation adjustment — — — — — — — — — — — — — 54 — 54

Net loss — — — ( 61,847 ) — ( 518 ) ( 62,365 )

BALANCE AT SEPTEMBER 30, 2022 — $ — — $ — — $ — — $ — 152,015 $ 18 $ 525,311 $ ( 147,628 ) — $ ( 8 ) $ 4,417 $ 382,110

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands)

Redeemable Convertible Preferred Stock Stockholder's equity (deficit)

preferred stock Series B

preferred stock Series B-1

preferred stock Series B-2

preferred stock Common stock Additional

BALANCE AT MARCH 31, 2023 160,943 $ 18 $ 561,193 $ ( 216,601 ) $ ( 7 ) $ — $ 344,603

Stockholder's equity

THREE MONTHS ENDED MARCH 31, 2022 Common stock Additional

capital Accumulated

deficit Notes receivable - shareholder's Accumulated

deficit Accumulated

comprehensive

income (loss) Total

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

BALANCE AT JANUARY 1, 2021 16,620 $ 14,970 14,213 $ 27,371 5,416 $ 14,786 18,199 $ 52,379 16,774 $ 2 $ 3,557 $ ( 75,982 ) $ — $ ( 1 ) $ ( 72,424 )

income (loss) Noncontrolling interest Total

Shares Amount

BALANCE AT DECEMBER 31, 2021 117,751 $ 15 $ 294,190 $ ( 228,667 ) $ ( 2 ) — $ 65,536

Issuance of common stock under employee stock option and stock award plans 2,459 — 1,305 — — — $ 1,305

Repurchase of common stock ( 67 ) — ( 550 ) — — — $ ( 550 )

Exercise of warrants 3,318 — 29,641 — — — $ 29,641

Stock-based compensation expense related to employee and non-employee stock awards — — 24,072 — — — $ 24,072

Foreign currency translation adjustment — — — — ( 60 ) — $ ( 60 )

Net loss — — — — — — — — — — — ( 7,345 ) — — ( 7,345 )

Net income — — — 79,792 — — 79,792

BALANCE AT MARCH 31, 2022 123,461 $ 15 $ 348,658 $ ( 148,875 ) $ ( 62 ) $ — $ 199,736

Issuance of common stock under employee stock option and stock award plans — — — — — — — 12,729 — — 12,729

Rescission of common stock — — — — — — — — ( 4,729 ) — ( 1,231 ) — 1,183 — ( 48 )

Foreign currency translation adjustment — — — — — — — — — — — — — ( 3 ) ( 3 )

Net loss — — — — — — — — — — — ( 18,650 ) — — ( 18,650 )

BALANCE AT JUNE 30, 2021 16,620 $ 14,970 14,213 $ 27,371 5,416 $ 14,786 18,199 $ 52,379 17,888 $ 3 18,295 $ ( 101,977 ) $ — $ ( 4 ) $ ( 83,683 )

Issuance of common stock under employee stock option and stock award plans — — — — — — — — 446 — 71 — — — 71

Stock-based compensation expense related to employee and non-employee stock awards — — — — — — — — — — 201 — — — 201

Foreign currency translation adjustment — — — — — — — — — — — — — 2 2

Net loss — — — — — — — — — — — ( 6,843 ) — — ( 6,843 )

BALANCE AT SEPTEMBER 30, 2021 16,620 $ 14,970 14,213 $ 27,371 5,416 $ 14,786 18,199 $ 52,379 18,334 $ 3 $ 18,567 $ ( 108,820 ) $ — $ ( 2 ) $ ( 90,252 )

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

Three Months Ended March 31,

(In thousands) 2023 2022

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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Depreciation 506 125

Amortization of intangibles 2,408 253

Amortization of deferred rent — ( 35 )

Amortization of intangible assets 4,536 88

Non-cash lease expense 512 243

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Gain from change in fair value of warrants — ( 51,763 )

Gain from change in fair value of earnout liability ( 112,162 ) —

(Gain) loss from change in fair value of earnout liability 27,752 ( 63,406 )

Deferred income taxes 5 —

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Other assets ( 1,612 ) 1,391

Accounts payable, accrued compensation and other liabilities 2,778 2,639

Accounts payable, accrued compensation and other expenses 3,376 817

Operating lease liability ( 511 ) ( 241 )

Deferred revenue — 59

Net cash used in operating activities ( 7,920 ) ( 10,601 )

( 35,537 ) ( 24,792 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Business acquisitions, net of cash acquired ( 96,355 ) —

Asset acquisition — ( 680 )

Investment purchases ( 1,000 ) —

Investment in Joint Venture — ( 2,704 )

Investment in preferred stock ( 1,500 ) —

Purchases of property and equipment ( 815 ) ( 294 )

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CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of deferred offering costs — ( 2,503 )

Redemption of warrants — ( 38 )

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Proceeds from issuance of common stock in connection stock option exercises 221 526

Proceeds from issuance of long-term debt — 2,000

Principal payments on long-term debt — ( 800 )

Net cash used in financing activities

( 1,476 ) ( 476 )

Effect of exchange rate changes on cash

Net cash provided by (used in) financing activities 221 ( 862 )

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 9,514 ) ( 14,455 )

( 143,460 ) ( 27,794 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 110,337 268,252

268,252 38,869

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 100,823 $ 253,797

$ 124,792 $ 11,075

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Deferred offering costs in other current assets and accounts payable and accrued expenses $ — $ 977

Net assets acquired through change in control of joint venture $ 6,444 $ —

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

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Cash paid for interest $ — $ 67

Shares issued for business acquisition $ 147,380 $ —

Shares issued in connection with buyout agreement (see Note 18) $ 22,400 $ —

Capital expenditures in accounts payable $ 228 $ —

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

ORGANIZATION AND BASIS OF PRESENTATION

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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.

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

References to the “Company” in these financial statements refer to Legacy Navitas and its predecessors before the consummation of the Business Combination, or to Navitas Semiconductor Corporation after the Business Combination, as the context suggests.

The Company was founded in 2013 and has since been developing ultra-efficient gallium nitride (GaN) semiconductors.

The Company designs, develops and markets next-generation power semiconductors including gallium nitride (“GaN”) power integrated circuits (“ICs”), silicon carbide (“SiC”) and associated high-speed silicon system controllers, and digital isolators used in power conversion and charging.

Power supplies incorporating the Company’s products may be used in a wide variety of electronics products including fast chargers for mobile phones and laptops, consumer electronics, data centers, solar inverters and electric vehicles, among numerous other applications.

The Company’s products provide superior efficiency, performance, size, cost and sustainability relative to existing silicon technology.

The Company presently operates as a product design house that contracts the manufacturing of its chips and packaging to partner suppliers.

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See Note 14, Provision for Income Taxes, for more information.

Business combination

Pursuant to the terms of the BCA, the Business Combination was consummated (the “Closing”) on October 19, 2021 (the “Closing Date”) by means of (i) a tender offer to acquire the entire issued share capital of Navitas Ireland (other than Navitas Ireland Restricted Shares (as defined below)) in exchange for the Tender Offer Consideration (as defined below) (the “Tender Offer”) and (ii) the merger of a wholly owned subsidiary of Live Oak (“Merger Sub”) with and into Navitas Delaware (the “Merger”), with Navitas Delaware surviving the Merger.

See the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2022 for further information.

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

Under this method of accounting, although Live Oak issued shares for outstanding equity interests of Legacy Navitas in the Business Combination, Live Oak was treated as the “acquired” company for financial reporting purposes.

Accordingly, the Business Combination was treated as the equivalent of Legacy Navitas issuing stock for the net assets of Live Oak, accompanied by a recapitalization.

The net assets of Live Oak were stated at historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Business Combination are those of Navitas.

For all periods presented, unless stated otherwise, references to Legacy Navitas common shares and options for common shares outstanding before the Closing and related per share amounts have been retroactively restated to give effect to the reverse recapitalization, specifically, the Exchange Ratio of 1.0944 shares to 1 at Closing.

References to share

In June 2022, the Company acquired VDDTECH srl, a Belgian private company, for approximately $ 1.9 million in cash and stock , and in August 2022 the Company acquired GeneSiC for approximately $ 246.2 million in cash and stock.

S ee Note 17, Business Combinations, for more information.

In January 2023, the Company announced an agreement to acquire the remaining minority interest in its silicon control IC joint venture from Halo Microelectronics International Corporation for a purchase price of $ 22.4 million in Navitas stock.

The transaction was completed in February 2023.

See Note 18, Noncontrolling Interest, for more information

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

quantities for Legacy Navitas convertible preferred stock related to balances or activity before the Closing reflect the historical quantities and are not adjusted for the Exchange Ratio.

In June 2022, the Company acquired VDDTech for $ 1.9 million in cash and stock , and in August 2022 the Company acquired GeneSiC for $ 246.2 million in cash and stock.

S ee Note 17, Business Combinations, for more information.

Basis of presentation

Basis of Consolidation

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The results of operations for the three and nine months ended September 30, 2022 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2022.

The results of operations for the three months ended March 31, 2023 shown in this report are not necessarily indicative of results to be expected for the full year ending December 31, 2023.

In the opinion of the Company’s management, the information contained herein reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the Company’s results of operations, financial position, cash flows and stockholders’ equity (deficit).

Certain footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted pursuant to Securities and Exchange Commissions (SEC) rules and regulations relating to interim financial statements.

The accompanying condensed consolidated financial statements should be read in conjunction with consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K filed with the SEC on March 31, 2022.

Except as further described below, there have been no significant changes in the Company’s accounting policies from those disclosed in its annual report on Form 10-K filed with the SEC on March 31, 2022.

The consolidated financial statements include the accounts of a Former Joint Venture, an entity in which the Company has a controlling interest (see Note 18, Noncontrolling Interest).

Certain footnote disclosures normally included in annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to Securities and Exchange Commission (“SEC”) rules and regulations relating to interim financial statements.

Except as further described below, there have been no significant changes in the Company’s accounting policies from those disclosed in its Form 10-K filed with the SEC on April 3, 2023.

The Company reports noncontrolling interests of the consolidated entities as a component of equity separate from the Company’s equity.

All material inter-company transactions between and among the Company and its consolidated subsidiaries have been eliminated in the consolidation.

The Company’s net income (loss) excludes income (loss) attributable to the noncontrolling interests.

Basis of consolidation

All material intercompany transactions between and among the Company and its consolidated subsidiaries have been eliminated in consolidation.

The Company’s net income (loss) excluded income (loss) attributable to the noncontrolling interests.

The consolidated financial statements include the accounts of Elevation Semiconductor Inc.

(the “Joint Venture”), an entity in which the Company had a controlling interest since August 19, 2022 (see Note 18, Noncontrolling Interest).

During the first quarter of fiscal year 2023 the Company acquired the remaining noncontrolling interest in the Joint Venture.

The transaction was completed on February 13, 2023.

As Navitas already had a controlling interest, financial results from the Joint Venture have already been reflected in Navitas’ historical financial statements.

The condensed consolidated financial statements include the accounts of the Company, its wholly owned or majority-owned subsidiaries and entities in which the Company is deemed to have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model.

All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Actual results could differ from those estimates.

On an ongoing basis, management evaluates the assumptions used in making estimates, including those related to (i) the collectability of accounts receivable;

(ii) write-down for excess and obsolete inventory;

(iii) warranty obligations;

(iv) the value assigned to and estimated useful lives of long-lived assets;

(v) the realization of tax assets and estimates of tax liabilities and tax reserves;

(vi) recoverability of intangible assets;

(vii) the computation of share-based compensation;

(viii) accrued compensation and other expenses;

and (ix) the recognition of revenue.

These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

The Company engages third-party valuation specialists to assist with estimates related to the valuation of intangible assets, stock options, restricted common stock awards,earnout shares and warrants.

Such estimates often require the selection of appropriate valuation methodologies and models, and significant judgment in evaluating ranges of assumptions and financial inputs.

Actual results could differ from those estimates.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS

Business Combinations

We account for business combinations using the acquisition method of accounting, in accordance with ASC 805, Business Combinations .

The acquisition method requires identifiable assets acquired and liabilities assumed be recognized and measured at fair value on the acquisition date, which is the date that the acquirer obtains control of the acquired business.

We account for business combinations using the acquisition method of accounting, in accordance with Accounting Standards Codification (“ASC”) 805 , “ Business Combinations” .

The acquisition method requires identifiable assets acquired and liabilities assumed to be recognized and measured at fair value on the acquisition date, which is the date that the acquirer obtains control of the acquired business.

The amount by which the fair value of consideration transferred exceeds the net fair value of assets acquired and liabilities assumed is recorded as goodwill.

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We record contingent consideration resulting from a business combination at its fair value on the acquisition date.

Each quarter thereafter, we revalue these obligations and record increases or decreases in their fair value within our Statement of Operations and Comprehensive Income (Loss) until such time as the specified milestone achievement period is complete.

Each quarter thereafter, we revalue these obligations and record increases or decreases in their fair value within our Condensed Consolidated Statements of Operations until such time as the specified milestone achievement period is complete.

Increases or decreases in fair value of the contingent consideration liabilities can result from updates to assumptions such as the expected timing or probability of achieving the specified milestones.

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Actual results may differ from estimates.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842) (“ASU 2016-02”), and also issued subsequent amendments under ASU 2019-10 and ASU 2020-05 (collectively ASC 842).

On January 1, 2022, the Company adopted ASC 842 and the related amendments.

ASC 842 requires lessees to (i) recognize a right of use asset and a lease liability that is measured at the present value of the remaining lease payments, on the consolidated balance sheets, (ii) recognize a single lease cost, calculated over the lease term on a straight-line basis and (iii) classify lease related cash payments within operating and financing activities.

The Company recognized approximately $ 1.6 million of operating lease right-of-use assets and $ 1.7 million operating lease liabilities on the consolidated balance sheets upon adoption on January 1, 2022.

Recently Adopted Accounting Standards

Credit Losses

In June 2016, the FASB amended guidance related to impairment of financial instruments as part of ASU 2016-13, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss.

In June 2016, the Financial Accounting Standards Board (“FASB”) amended guidance related to impairment of financial instruments as part of ASU 2016-13, Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which replaced the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss.

This ASU requires entities to measure the impairment of certain financial instruments, including accounts receivable, based on expected losses rather than incurred losses.

For non-public business entities, this ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, and will be effective for the Company beginning in 2023.

The Company is currently evaluating the impact of the new standard on the Company’s condensed consolidated financial statements and related disclosures.

For companies that qualify under the emerging growth company exemptions, this ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted, and is effective for the Company beginning in 2023.

The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

We pool financial assets based on their risk characteristics, which include class of customer, geographic location of the customer, contractual life of the financial asset, and age of the open receivable balance.

The allowance for credit losses pool is estimated based on historical credit loss rates adjusted for management’s reasonable and supportable expectations of future economic conditions, which consider macroeconomic, industry and market trends that could impact future credit loss rates.

Additions to the allowance are charged to general and administrative expenses in the consolidated statements of operations.

Accounts receivable are written off against the allowance when the probability of collection of an account balance is deemed remote.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

Inventory consists of the following (in thousands):

March 31, 2023 December 31, 2022

Raw materials

$ 3,551 $ 4,314

Work-in-process

Finished goods

$ 18,873 $ 19,061

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following (in thousands):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Furniture and fixtures $ 202 $ 215

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Leasehold improvements 2,045 2,054

$ 8,275 $ 3,958

Construction in Progress 71 —

Accumulated depreciation ( 3,542 ) ( 2,988 )

( 2,554 ) ( 1,656 )

$ 5,721 $ 2,302

For the three and nine months ended September 30, 2022, depreciation expense was $ 280 and $ 632 , respectively.

For the three and nine months ended September 30, 2021, depreciation expense was $ 112 and $ 278 .

The depreciation method was determined using the straight-line method over the following estimated useful lives:

Total $ 6,840 $ 6,532

For the three months ended March 31, 2023 and 2022, depreciation expense w as $ 0.5 million and $ 0.1 million, respectively, and was determined using the straight-line method over the following estimated useful lives:

Furniture and fixtures

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Leasehold improvements

Inventory consists of the following (in thousands):

September 30, 2022 December 31, 2021

Raw materials

Work-in-process

Finished goods

$ 17,044 $ 11,978

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

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The short-term nature of the Company’s cash and cash equivalents, accounts receivable, debt and current liabilities causes each of their carrying values to approximate fair value for all periods presented.

Cash equivalents classified as Level 1 instruments were $ 12.6 million and $ 159.6 million as of September 30, 2022 and December 31, 2021, respectively.

Cash equivalents classified as Level 1 instruments were no t material as of March 31, 2023 and December 31, 2022.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

The following table presents the Company’s fair value hierarchy for financial liabilities as of September 30, 2022 (in thousands) :

The following table presents the Company’s fair value hierarchy for financial liabilities as of March 31, 2023 (in thousands) :

Level 1 Level 2 Level 3 Total

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Level 1 Level 2 Level 3 Total

Public warrants $ 52,361 $ — $ — $ 52,361

Private warrants — 29,027 — 29,027

Earnout liability $ — $ — $ 13,064 $ 13,064

Total $ — $ — $ 13,064 $ 13,064

The liability for the Private Warrants is a level 2 valuation because there is no active market.

The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):

Fair Value Measurements Using Significant Unobservable Inputs

Balance at December 31, 2022 $ 13,064

Fair value adjustment 27,752

Balance at March 31, 2023 $ 40,816

The Company did not transfer any investments between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2023.

GOODWILL AND INTANGIBLES

Goodwill and Intangible Assets

Goodwill represents the excess of the consideration transferred over the estimated fair value of assets acquired and liabilities assumed in a business combination.

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The following table presents the changes in the Company’s goodwill balance (in thousands):

VDDTech GeneSiC Former Joint Venture Total

Balance at June 30, 2022 $ 1,177 $ — $ — $ 1,177

Additions to goodwill — 157,429 2,867 160,296

Impairment of goodwill — — — —

Purchase accounting adjustment ( 1,177 ) — — ( 1,177 )

Balance at September 30, 2022 $ — $ 157,429 $ 2,867 $ 160,296

Refer to Note 17, Business Combinations, for further details.

Balance at December 31, 2022 $ 161,527

Purchase price adjustment ( 85 )

Balance at March 31, 2023 $ 161,442

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

The following table presents the Company’s intangible asset balance (in thousands):

Refer to Note 17, Business Combinations, for further details.

The following table presents the Company’s intangible asset balance by asset class as of March 31, 2023 (in thousands):

Intangible Asset Cost Accumulated Amortization Net Book Value Amortization Method Useful Life

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Total $ 117,603 $ ( 12,034 ) $ 105,569

The amortization expense was $ 2.2 million and $ 2.4 million for the three months and nine months ended September 30, 2022, respectively.

There were no impairment charges as of September 30, 2022.

The following table presents the changes in the Company’s intangible asset balance (in thousands):

Intangible Assets, net

Balance at December 31, 2022 $ 105,620

Additions to intangible assets 4,485

Amortization expense ( 4,536 )

Balance at March 31, 2023 $ 105,569

The amortization expen se was $ 4.5 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, respectively.

There were no impairment charges during the three months ended March 31, 2023 and 2022.

DEBT OBLIGATIONS

On April 29, 2020, the Company entered into a loan and security agreement with a new bank (the “Term Loan”), which provides for term advances up to $ 8.0 million .

The loan is divided into three term advances, First Term Advance, Second Term Advance and Third Term Advance.

The First Term Advance has a maximum available amount of $ 6.0 million .

The Second Term Advance has a maximum available amount of $ 1.0 million and is subject to the Company receiving aggregate net proceeds from Series B-2 Preferred Stock of $ 29.8 million by no later than September 30, 2020.

The Third Term Advance has a maximum available amount of $ 1.0 million and is subject to the Company receiving aggregate net proceeds from Series B-2 Preferred Stock of $ 39.9 million by no later than September 30, 2020.

The Term Loan bears interest at a rate equal to the greater of (i) US Prime Rate plus 0.75 % or (ii) 5.5 % and is collateralized by all assets of the Company.

As of September 30, 2022, the interest rate wa s 6.3 %.

T he loan is payable in monthly installments beginning September 1, 2021 with a final maturity date of January 1, 2024.

Concurrent with the execution of the Term Loan, the Company paid off the outstanding principal balance and accrued interest on its then-existing long-term debt (which bore interest at 5 % at December 31, 2019) with a different bank, fully satisfying its obligations.

On August 1, 2021, the Company drew down $ 2.0 million , the maximum available amount under the Second Term Advance and Third Term Advance.

In connection with execution of the Term Loan, the Company issued warrants to the bank (see Note 10, Warrant Liability).

The fair value of the warrants at the date of issuance was $ 16 and was recorded as debt discount, subject to amortization using the effective interest rate method over the term of the loan.

Amortization of debt discount and issuance costs for the three and nine months ended September 30, 2022 was $ 3 and $ 7 , respectively.

Amortization of debt discount and issuance costs for the three and nine months ended September 30, 2021 was $ 3 and $ 9 , respectively.

Amortization of debt discount and issuance costs includes the write-off of unamortized costs as of the date that the prior term loan was extinguished in 2020.

On April 29, 2020, the Company entered into a loan and security agreement with a new bank (the “Term Loan”), which provided for term advances up to $ 8.0 million.

As of March 31, 2023, this loan had been paid in full.

In connection with execution of the Term Loan, the Company issued warrants to the bank (see Note 10.

Warrant Liability).

The fair value of the warrants at the date of issuance was not material and was recorded as debt discount, subject to amortization using the effective interest rate method over the term of the loan.

All warrants were redeemed by December 31, 2022, and amortization of debt discount and issuance costs was not significant either of the three months ended March 31, 2023 or 2022.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

The following is a summary of the carrying value of long-term debt as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

$ 4,533 $ 6,933

Current portion

( 3,200 ) ( 3,200 )

Debt discount and issuance costs

( 10 ) ( 17 )

Note payable, net of current portion

$ 1,323 $ 3,716

As of September 30, 2022, future scheduled principal payments of debt obligations were as follows (in thousands):

2022 (remaining) $ 800

Total $ 4,533

The Company has entered into operating leases primarily for commercial buildings.

The Compa ny has entered into operating leases primarily for commercial buildings.

These leases have terms which range from 0.5 to 5.7 years.

There are no economic penalties for the Company to extend the lease, and it is not reasonably certain the Company will exercise the extension options.

The operating leases do not contain material residual value guarantees or material restrictive covenants.

Rent expense, including short-term lease cost, was $ 657 and $ 1.4 million for the three and nine months ended September 30, 2022, respectively.

Rent expense, including short-term lease cost, was $ 372 and $ 923 for the three and nine months ended September 30, 2021, respectively.

As of March 31, 2023 no operating lease agreements contain economic penalties for the Company to extend the lease, and it is not reasonably certain the Company will exercise these extension options.

Additionally, these operating lease agreements do not contain material residual value guarantees or material restrictive covenants.

As of March 31, 2023 all leases recorded on the Company’s consolidated balance sheets were operating leases.

Upon adoption of ASC 842 on January 1, 2022, the Company recorded operating lease assets of $ 1.6 million and lease liabilities of $ 1.7 million in the Company’s consolidated balance sheets.

The adoption of this standard did not have a material impact on retained earnings, the co nsolidated statements of operations, or cash flows.

The Company obtained $ 0.6 million in additional right-of-use assets in exchange for lease obligations during the three months ended March 31, 2023.

The Company has made the accounting policy election to use certain ongoing practical expedients made available by ASC 842 to:

(i) not separate lease components from nonlea se components for real estate;

and (ii) exclude leases with an initial term of 12 months or less (“short-term” leases) from the consolidated balance sheets and will recognize related lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

For leases that do not have a readily determinable implicit rate, the Company uses its estimated secured incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments.

Rent expense, including short-term lease cost, was $ 0.5 million and $ 0.4 million for the three months ended March 31, 2023 and 2022, respectively.

In addition to rent payments, the Company’s leases include real estate taxes, common area maintenance, utilities, and management fees, which are not fixed.

The Company accounts for these cost as variable payment and does not include such costs as a lease component.

Total variable expense was $ 50 and $ 129 f or the three and nine months ended September 30, 2022, respectively.

The Company accounts for these costs as variable payments and does not include such costs as a lease component.

Total variable expense was not material for the three months ended March 31, 2023 and 2022.

There were no leases that had not yet commenced as of March 31, 2023, that will create significant additional rights and obligations for the Company.

Information related to the Company right-of-use assets and related operating lease liabilities were as follows (in thousands):

Nine Months Ended September 30, 2022

Three Months Ended March 31,

Cash paid for operating lease liabilities $ 454 $ 261

Operating lease cost $ 512 $ 263

Right-of-use assets obtained in exchange for lease obligations $ 5,805

Weighted-average remaining lease term 2.26

Non-cash right-of-use assets obtained in exchange for new operating lease obligations $ 590 $ 1,391

Weighted-average remaining lease term 4.96 years 2.06 years

Weight-average discount rate 4.25 % - 7.75 %

Right-of-use assets and lease liabilities consisted of the following (in thousands):

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

Maturities of lease liabilities (in thousands) due in 12-month period ending September 30,

March 31, 2023 December 31, 2022

Operating lease right-of-use assets $ 6,537 $ 6,381

Operating lease liabilities - current 1,477 1,305

Operating lease liabilities - noncurrent 5,248 5,263

Total lease liabilities $ 6,725 $ 6,568

Maturities of lease liabilities are as follows (in thousands):

Remainder of fiscal year 2023 $ 1,422

Fiscal year 2024 1,532

Fiscal year 2025 1,239

Fiscal year 2026 1,183

Fiscal year 2027 1,218

Thereafter 1,125

1 unchanged sentence

Total lease liabilities $ 6,725

Supplemental information for comparative periods

As of December 31, 2021 prior to the adoption of ASC 842, minimum payments under operating leases having initial or remaining non-cancelable lease terms in excess of one year were as follows (in thousands):

Operating Leases

Total minimum payments $ 1,721

SHARE BASED COMPENSATION:

Equity Incentive Plans

The 2020 Equity Incentive Plan, initially adopted by the Company’s board of directors on August 5, 2020 as an amendment and restatement of the 2013 Equity Incentive Plan (“2013 Plan”), was amended and restated at the Closing of the Business Combination as the Amended and Restated Navitas Semiconductor Limited 2020 Equity Incentive Plan (the “2020 Plan”).

The Navitas Semiconductor Limited 2020 Equity Incentive Plan, initially adopted by the Company’s board of directors on August 5, 2020 as an amendment and restatement of the 2013 Equity Incentive Plan (“2013 Plan”), was amended and restated at the Closing of the Business Combination as the Amended and Restated Navitas Semiconductor Limited 2020 Equity Incentive Plan (the “2020 Plan”).

The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit (“RSU”) awards, stock appreciation rights, and other stock awards to employees, directors and consultants.

3 unchanged sentences

Under the terms of the 2020 Plan, the Company is authorized to issue 18,899,285 shares of common stock pursuant to awards under the 2020 Plan.

As of October 19, 2021, the Company has issued an aggregate of 11,276,706 stock options and non-statutory options to its employees and consultants and 4,525,344 shares of restricted stock to employees, directors and consultants under the 2020 Plan.

As of October 19, 2021, the Company had issued an aggregate of 11,276,706 stock options and non-statutory options to its employees and consultants and 4,525,344 RSUs to employees, directors and consultants under the 2020 Plan.

No awards have or will be issued under the 2020 Plan after October 19, 2021.

Shares of Common Stock subject to awards under the 2020 Plan that are forfeited, expire or lapse after October 19, 2021 will become authorized for issuance pursuant to awards under the 2021 Plan (as defined below).

The Navitas Semiconductor Corporation 2021 Equity Incentive Plan (the “2021 Plan”) was adopted by the Company’s board of directors on August 17, 2021 and adopted and approved by the Company’s stockholders at the Special Meeting on October 12, 2021.

Under the terms of the 2021 Plan, the Company is authorized to issue, pursuant to awards granted under the 2021 Plan, (a) up to 16,334,527 shares of Common Stock;

plus (b) up to 15,802,050 shares of Common

plus (b) up to 15,802,050 shares of Common Stock subject to awards under the 2020 Plan that are forfeited, expire or lapse after October 19, 2021;

plus (c) an annual increase, effective as of the first day of each fiscal year up to and including January 1, 2031, equal to the lesser of (i) 4 % of the

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

Stock subject to awards under the 2020 Plan that are forfeited, expire or lapse after October 19, 2021;

plus (c) an annual increase, effective as of the first day of each fiscal year up to and including January 1, 2031, equal to the lesser of (i) 4 % of the number of shares of Common Stock outstanding as of the conclusion of the Company’s immediately preceding fiscal year, or (ii) such amount, if any, as the board of directors may determine.

number of shares of Common Stock outstanding as of the conclusion of the Company’s immediately preceding fiscal year, or (ii) such amount, if any, as the board of directors may determine.

As of March 31, 2023 the Company has issued 9,750,000 non-statutory stock options under the 2021 Plan.

Stock-Based Compensation

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Share and per share information below has been converted from historical disclosures based on the Exchange Ratio.

The Company recognizes the fair value of stock-based compensation in its financial statements over the requisite service period of the individual grants, which generally equals a four-year vesting period, except for long-term incentive performance stock options (“LTIP Options”) discussed below.

The Company uses estimates of volatility, expected term, risk-free interest rate and dividend yield in determining the fair value of these awards and the amount of compensation expense to recognize.

The Company uses the straight-line method to amortize stock awards granted over the requisite service period of the award, which may be explicit or derived, unless market or performance conditions result in a graded attribution.

The following table summarizes the stock-based compensation expense recognized for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Cost of revenues $ — $ — $ — $ 163

The following table summarizes the stock-based compensation expense recognized for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

Research and development $ 7,177 $ 7,494

2 unchanged sentences

Stock Options

Generally, stock options granted under the Plans have ten year terms and vest 1/4th on the anniversary of the vesting commencement date and 1/48th monthly thereafter.

Generally, stock options granted under the Plans have terms of ten years and vest in 1/4th increments on the anniversary of the vesting commencement date and in 1/48th increments monthly thereafter.

Stock options with performance vesting conditions begin to vest upon achievement of the performance condition.

1 unchanged sentence

The fair value of incentive stock options and non-statutory stock options issued was estimated using the Black-Scholes model.

The Company did not grant any awards during the nine months ended September 30, 2022.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

A summary of stock options outstanding, excluding LTIP options as of September 30, 2022, and activity during the nine months then ended, is presented below:

(In thousands) Exercise Price Per Share Weighted-

The Company did not grant any stock option awards during either the three months ended March 31, 2023 or 2022.

A summary of stock options outstanding, excluding LTIP Options as of March 31, 2023, and activity during the three months then ended, is presented below:

Stock Options Shares

(In thousands) Weighted-

Price Weighted-

(In years) Per Share Average Intrinsic Value

Outstanding at December 31, 2022 6,775 $ 0.59 6.20

$ 0.51 6.80 $ 3.34

Granted — — —

2 unchanged sentences

Cancelled — — —

Outstanding at September 30, 2022 7,074 $ .08 - $ 1.06

$ 0.60 6.60 $ 4.25

Vested and Exercisable at September 30, 2022 5,301 $ .08 - $ 1.06

$ 0.46 6.11 $ 4.39

During the three and nine months ended September 30, 2022, the Company recognized $ 117 and $ 363 respectively, of stock-based compensation expense for the vesting of outstanding stock options, excluding $ 1.4 million related to the LTIP Options described below.

During the three and nine months ended September 30, 2021, the Company recognized $ 145 and $ 492 , respectively, of stock-based compensation expense for the vesting of outstanding stock options.

At September 30, 2022, unrecognized compensation cost related to unvested awards totaled $ 736 .

Outstanding at March 31, 2023 6,127 $ 0.61 6.20

Vested and Exercisable at March 31, 2023 5,015 $ 0.51 5.90

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During both the three months ended March 31, 2023 and 2022, the Company recognized $ 0.1 million of stock-based compensation expense for the vesting of outstanding stock options, excluding $ 2.5 million and $ 1.4 million related to the LTIP Options d escribed below.

At March 31, 2023, unrecognized compensation cost related to unvested awards totaled $ 0.5 million.

The weighted-average period over which this remaining compensation cost will be recognized is 1.2 years .

Long-term Incentive Plan Stock Options

The Company awarded a total of 6,500,000 performance stock options (“LTIP Options”) to certain members of senior management on December 29, 2021 pursuant to the 2021 Plan.

The Company awarded a total of 6,500,000 LTIP Options to certain members of senior management on December 29, 2021 pursuant to the 2021 Plan.

These non-statutory options are intended to be the only equity awards for the recipients over the duration of the performance period.

The options vest in increments subject to achieving certain performance conditions, including ten share price hurdles ranging from $ 15 to $ 60 per share, coupled with revenue and EBITDA targets, measured over a seven-year performance period and expire on the tenth anniversary of the grant date.

The options have an exercise price of $ 15.51 per share and the average fair value on the grant date was $ 8.13 .

The options have an exercise price of $ 15.51 per share and the average fair value on the grant date was $ 8.13 based on the Black-Scholes model and a Monte Carlo simulation incorporating 500,000 scenarios.

The weighted average contractual period remaining is 8.8 years.

T he Black-Scholes model and a Monte Carlo simulation incorporated 100,000 scenarios.

The Company utilized the services of a professional valuation firm to finalize these assumptions during the fiscal year ended December 31, 2022.

The valuation model utilized the following assumptions:

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Weighted-average grant date fair value of options $ 8.13

The Company recognized $ 1.4 million and $ 4.2 million of stock-based compensation expense for the three month and nine months ended September 30, 2022, respectively.

The unrecognized compensation expense related to the LTIP Options is $ 48.6 million as of September 30, 2022, a compensation expense will be recognized over 3.7 years.

The Company awarded a total of 3,250,000 performance stock options (“LTIP Options”) to a member of senior management on August 15, 2022 pursuant to the 2021 Plan.

The options vest in increments subject to achieving certain performance conditions, including ten share price hurdles ranging from $ 15 to $ 60 per share, coupled with revenue and EBITDA targets, measured over a seven year performance period and expire on the tenth anniversary of the grant date.

In connection with LTIP Options granted in 2021, the Company recognized $ 2.2 million and $ 1.4 million of stock-based compensation expense for the three months ended March 31, 2023 and 2022, respectively.

The unrecognized compensation expense related to these LTIP Options is $ 51.6 million as of M arch 31, 2023, and compensation expense will be recogn ized over 3.2 years.

The Company awarded a total of 3,250,000 LTIP Options to a member of senior management on August 15, 2022 pursuant to the 2021 Plan.

The options vest in increments subject to achieving certain market and performance conditions, including ten share price hurdles ranging from $ 15 to $ 60 per share, coupled with revenue and EBITDA targets, measured over a seven year performance period and expire on the tenth anniversary of the grant date.

The options have an exercise price of $ 10.00 per share and the average fair value on the grant date was $ 2.51 .

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

weighted average contractual period remaini ng is 9.9 years.

The weighted average contractual period remaining is 9.4 years.

T he Black-Scholes model and a Monte Carlo simulation incorporated 100,000 scenarios.

5 unchanged sentences

Weighted-average grant date fair value of options $ 2.51

The Company recognized $ 119 and $ 119 of stock-based compensation expense for the three and nine months ended September 30, 2022, respectively.

The unrecognized compensation expense related to the LTIP Options is $ 8.0 million as of September 30, 2022, and compensation expense will be recognized over 4.3 years.

In connection with LTIP Options granted in 2022, the Company recognized $ 0.3 million of stock-based compensation expense for the three months ended March 31, 2023.

The unrecognized compensation expense related to the LTIP Options is $ 8.7 million as of March 31, 2023, and compensation expense will be recognized over 3.8 years.

Restricted Stock Units

On August 25, 2021, Legacy Navitas granted an aggregate of 4,135,000 Legacy Navitas RSUs under the 2020 Plan to certain members of senior management pursuant to restricted stock unit agreements (collectively, the “RSU Agreements”).

At the Closing of the Business Combination, these Legacy Navitas RSUs were assumed by the Company and converted at the Exchange Ratio into RSUs to acquire an aggregate of 4,525,344 shares of common stock.

Each RSU represents the right to receive one share of common stock of the Company, subject to the vesting and other terms and conditions set forth in the RSU Agreements and the 2020 Plan.

3,830,400 of these RSU awards are subject to vesting in three equal installments over a three-year period, subject to the occurrence of an IPO (which includes the Business Combination) and certain valuation targets, and subject to accelerated vesting based on the satisfaction of certain stock price targets.

547,200 of these RSUs were subject to vesting on the six-month anniversary of the grant date, subject to the occurrence of an IPO (which included the Business Combination) and certain valuation targets.

57,456 of these RSUs were subject to vesting upon the occurrence of an IPO (which included the Business Combination), while the remaining 90,288 RSUs are subject to vesting as specified by an RSU Agreement over a period of approximately three years .

As of October 19, 2021, the IPO performance condition had been met as a result of the completion of the Business Combination.

A summary of RSUs outstanding as of September 30, 2022 , and activity during the nine months then ended, is presented below:

On August 25, 2021, the Company granted an aggregate of 4,135,000 Legacy Navitas RSUs under the 2020 Plan to certain members of senior management pursuant to restricted stock unit agreements (collectively, the “RSU Agreements”).

Each RSU represents the right to receive one share of common stock of the Company, subject to the vesting and other

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

terms and conditions set forth in the RSU Agreements and the Plan.

3,500,000 of these RSU awards vest in three equal installments over a three-year period subject to the occurrence of an IPO (which includes the Business Combination) and certain valuation targets, subject to an accelerated vesting schedule based on the satisfaction of certain stock price targets.

Up to 500,000 of these RSUs were eligible to vest on the six-month anniversary of the grant date, subject to the occurrence of an IPO (which included the Business Combination) and certain valuation targets.

52,500 RSUs vested upon the occurrence of the Business Combination, while the remaining 82,500 RSUs vest as specified by an RSU Agreement over a period of approximately three years .

As of October 19, 2021, the IPO performance condition had been met due to the Business Combination.

Additionally, the Company regularly grants RSUs to employees as a component of their compensation.

A summary of RSUs outstanding as of March 31, 2023 , and activity during the three months then ended, is presented below:

(In thousands) Weighted-Average Grant Date Fair Value Per Share

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Forfeited ( 67 ) 6.62

Outstanding at September 30, 2022 11,255 $ 5.54

During the three and nine months ended September 30, 2022 , the Company recognized $ 8.7 million and $ 32.4 million of stock-based compensation expense for the vesting of RSUs, respectively.

During the three and nine months ended September 30, 2021 , the Company recogniz ed $ 501 and $ 14.3 million of stock-based compensation expense for the vesting of RSUs, respectively.

As of September 30, 2022, unrecognized compensation cost related to unvested RSU awards totale d $ 58.4 million.

Outstanding at March 31, 2023 15,224 $ 6.30

During the three months ended March 31, 2023 and 2022 , the Company recognized $ 7.1 million and $ 16.2 million of stock-based compensation expense for the vesting of RSUs, respectively.

As of March 31, 2023, unrecognized compensation cost related to unvested RSU awards totaled $ 90.2 million.

The weighted-average period over which this remaining compensation cost is expected be recognized is 2.8 years.

The Company accrued $ 3.8 million an d $ 2.0 million as of September 30, 2022 and December 31, 2021, respectively, related to a stock-based bonus plan that the Company plans to settle by issuing a variable number of fully-vested restricted stock units to employees.

The $ 3.8 million accrued as of September 30, 2022 is for the eligible employee’s included the Company’s 2022 annual bonus plan and is expected to be settled during the first quarter of 2023.

The $ 2.0 million accrued as of December 31, 2021 was for the Company’s 2021 annual bonus plan and no balance is

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

accrued as of September 30, 2022.

Based on the closing share price of the Company’s Class A Common Stock of $ 4.85 on September 30, 2022, approximately 783,505 shares would have been issued, however, the actual number of shares will be based on the share price at the date of settlement .

The Company implemented a yearly a stock-based bonus plan in 2021 which settles by issuing a variable number of fully-vested restricted stock units to employees in the first quarter of the following fiscal year.

The $ 2.3 million accrued as of March 31, 2023 reflects eligible employees included the Company’s 2023 annual bonus plan and amounts expected to be settled during the first quarter of 2024.

The $ 2.8 million accrued as of December 31, 2022 was for the Company’s 2022 annual bonus plan and a balance of $ 0.1 million is accrued as of March 31, 2023.

Other Share Awards

In connection with the acquisition of the remaining minority interest of a silicon control IC joint venture, as described in Note 18, the Company issued 841,729 fully vested shares to certain former employees of the joint venture with a grant date fair value totaling $ 4.5 million.

Such amount has been recognized as stock-based compensation expense during the three months ended March 31, 2023.

Unvested Earnout Shares

A portion of the earnout shares may be issued to individuals with unvested equity awards.

While the payout of these shares requires achievement of the volume weighted average price of the Company's common stock, the individuals are required to complete the remaining service period associated with these unvested equity awards to be eligible to receive the earnout shares.

A portion of the earnout shares related to the Business Combination (discussed in Note 11 below) may be issued to individuals with unvested equity awards.

While the payout of these shares requires achievement of share price targets based on the volume weighted average price of the Company’s common stock, the individuals are required to complete the remaining service period associated with these unvested equity awards to be eligible to receive the earnout shares.

As a result, these unvested earn-out shares are equity-classified awards and have an aggregated grant date fair value of $ 19.1 million or $ 11.52 per share.

During the three and nine months ended September 30, 2022, the Company recog nized $ 4.3 million and $ 11.5 million of s tock-based compensation expense for the vesting of earnout shares, respectively.

At September 30, 2022, unrecognized compensation cost related to unvested earnout shares total ed $ 1.8 million.

The weighted-average period over which this remaining compensation cost is expected be recognize d is 0.5 years.

Ref er to Note 11, Earnout Liability.

During the three months ended March 31, 2023 and 2022 the Company recog nized $ 0.3 million and $ 6.3 million, respectively, of s tock-based compensation expense for the vesting of earnout shares.

At March 31, 2023, there was no remaining compensation cost related to unvested earnout shares.

Refer to Note 11, Earnout Liability.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

WARRANT LIABILITY

In connection with the closing of the Business Combination, holders of Live Oak Class A ordinary shares automatically received Class A Common Stock of the Company, and holders of Live Oak warrants automatically received 13,100,000 warrants of the Company with substantially identical terms (“the Warrants”).

At the Closing, 8,433,333 Live Oak public warrants automatically converted into 8,433,333 warrants to purchase one share of the Company’s Class A Common Stock at $ 11.50 per share (the “Public Warrants”), and 4,666,667 Private Placement Warrants held by the Sponsor and certain permitted transferees, each exercisable for one Class A ordinary share of Live Oak at $ 11.50 per share, automatically converted into warrants to purchase one share of the Company’s Class A Common Stock at $ 11.50 per share with substantially identical terms as the Public Warrants.

In connection with the closing of the Business Combination, holders of Live Oak Class A ordinary shares automatically received Class A Common Stock of the Company, and holders of Live Oak warrants automatically received a total of 13,100,000 warrants of the Company with substantially identical terms (“the Warrants”).

Accordingly, 8,433,333 Live Oak public warrants automatically converted into 8,433,333 warrants to purchase one share of the Company’s Class A Common Stock at $ 11.50 per share (the “Public Warrants”), and 4,666,667 private placement warrants held by the sponsor of the Business Combination and certain permitted transferees (“Private Placement Warrants”), each exercisable for one Class A ordinary share of Live Oak at $ 11.50 per share, automatically converted into warrants to purchase one share of the Company’s Class A Common Stock at $ 11.50 per share with substantially identical terms as the Public Warrants.

On February 4, 2022, the Company gave notice that it would redeem all of the Warrants, as further described below.

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The Company also had the right to redeem not less than all of the outstanding Public Warrants on 30 days’ notice, at a redemption price of $ 0.10 per Warrant, if the reported closing price of the Common Stock was at least $ 10.00 per share for any 20 of 30 trading days ending three business days before the notice of redemption, subject to certain other conditions.

If the Company elected to exercise the latter right to redeem the Public Warrants for $ 0.10 per Warrant, and the reported closing price of the Common Stock was less than $ 18.00 per share for any 20 of 30 trading days ending three business days before the notice of redemption, the Company was required to concurrently redeem the Private Placement Warrants on the same terms.

In addition, in such event, hold ers of Warrants subject to redemption would have the right to exercise their Warrants on a “cashless” basis, whereby they would receive a fractional number of shares of Common Stock per Warrant exercised before the redemption date, based on the volume weighted average price of the Common Stock for the 10 trading days following notice of redemption (the “Redemption Fair Market Value”) and the time period between the redemption date and the original expiration of the Warrants in the absence of redemption.

If the Company elected to exercise the latter right to redeem the Public Warrants for $ 0.10 per Warrant, and the reported closing price of the Common Stock was less than $ 18.00 per share for any 20 of 30 trading days ending three business days before the notice of redemption, the Company was required by the terms of the Public Warrants to concurrently redeem the Private Placement Warrants on the same terms.

On February 4, 2022, the Company issued a notice of redemption that it would redeem, at 5:00 p.m.

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The Warrants were exercisable by their holders until immediately before 5:00 p.m.

New York City time on the Redemption Date, either (i) on a cash basis, at an exercise price of $ 11.50 per share of Common Stock, or (ii) on a

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

“cashless” basis in which the exercising holder would receive 0.261 shares of Common Stock per Warrant exercised.

New York City time on the Redemption Date, either (i) on a cash basis, at an exercise price of $ 11.50 per share of Common Stock, or (ii) on a “cashless” basis in which the exercising holder would receive 0.261 shares of Common Stock per Warrant exercised.

Between December 7, 2021 (the date the Warrants became exercisable) and the Redemption Date, an aggregate of 12,722,773 Warrants were exercised (including 17,785 on a cash basis and 12,704,988 on a “cashless” basis);

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A total of 377,187 Warrants remained outstanding and unexercised at the Redemption Date and were redeemed for an aggregate Redemption Price of $ 38 .

Prior to the redemption date, the warrants had an aggregate fair value of $ 81.4 million which resulted in a gain of $ 0 and $ 51.8 million due to the decrease in the fair value of the warrant liability in the three and nine months ended September 30, 2022.

There were no outstanding warrants as of September 30, 2022.

Prior to the Redemption Date, the warrants had an aggregate fair value of $ 81.4 million which resulted in a gain of $ 51.8 million due to the decrease in the fair value of the warrant liability in the three months ended March 31, 2022.

There were no outstanding warrants as of March 31, 2023.

EARNOUT LIABILITY

Certain of the Company’s stockholders are entitled to receive up to 10,000,000 “earnout shares” of the Company’s Class A Common Stock if the earnout milestones are met.

The Earnout Milestones represents three independent criteria, which each entitles the eligible stockholders to 3,333,333 earn-out shares per milestone met.

Each Earnout Milestone is considered met if at any time 150 days following the Business Combination and prior to October 19, 2026, the volume weighted average price of the Company’s Class A common stock is greater than or equal to $ 12.50 , $ 17.00 or $ 20.00 for any twenty trading days within any thirty trading day period, respectively.

The earnout milestones represent three independent criteria, each of which entitles the eligible stockholders to 3,333,333 aggregate earn-out shares if the milestone is met.

Each earnout milestone is considered met if at any time 150 days following the Business Combination and prior to October 19, 2026, the

volume weighted average price of the Company’s Class A Common Stock is greater than or equal to $ 12.50 , $ 17.00 or $ 20.00 , respectively, for any twenty trading days within any thirty trading day period, respectively.

Further, the earnout milestones are also considered to be met if the Company undergoes a Sale.

A Sale is defined as the occurrence of any of the following:

(i) engage in a “going private” transaction pursuant to Rule 13e-3 under the Exchange Act or otherwise cease to be subject to reporting obligations under Sections 13 or 15(d) of the Exchange Act;

(ii) Class A common stock cease to be listed on a national security exchange, other than for the failure to satisfy minimum listing requirements under applicable stock exchange rules;

or (iii) change of ownership (including a merger or consolidation) or approval of a plan for complete liquidation or dissolution.

(i) engaging in a “going private” transaction pursuant to Rule 13e-3 under the Exchange Act or otherwise ceasing to be subject to reporting obligations under Sections 13 or 15(d) of the Exchange Act;

(ii) the Class A Common Stock ceases to be listed on a national security exchange, other than for the failure to satisfy minimum listing requirements under applicable stock exchange rules;

or (iii) a change of ownership (including a merger or consolidation) or approval of a plan for complete liquidation or dissolution.

These earnout shares have been categorized into two components:

(i) the “Vested Shares” - those associated with stockholders with vested equity at the closing of the Business Combination that will be earned upon achievement of the Earnout Milestones and (ii) the “Unvested Shares” - those associated with stockholders with unvested equity at the closing of the Business Combination that will be earned over the remaining service period with the Company on their unvested equity shares and upon achievement of the Earnout Milestones.

(i) the “Vested Shares” – those associated with vested equity held by stockholders at the closing of the Business Combination that will be earned upon achievement of the earnout milestones and (ii) the “Unvested Shares” – those associated with unvested equity held by stockholders at the closing of the Business Combination that will be earned over the remaining service period with the Company on their Unvested Shares and upon achievement of the earnout milestones.

The Vested Shares are classified as liabilities in the consolidated balance sheet and the Unvested Shares are equity-classified share-based compensation to be recognized over time (see Note 9, Share-based Compensation).

The earnout liability was initially measured at fair value at the closing of the Business Combination and subsequently remeasured at the end of each reporting period.

The change in fair value of the earn-out liability is recorded as part of Other income (expense), net in the consolidated statement of operations.

The change in fair value of the earn-out liability is recorded as part of Other income (expense), net in the consolidated statements of operations.

The estimated fair value of the earnout liability was determined using a Monte Carlo analysis of 20,000 simulations of the future path of the Company’s stock price over the earnout period.

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The valuation model utilized the following assumptions:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Risk-free interest rate

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63.00 % 65.00 %

At the closing of the Business Combination on October 19, 2021, the earnout liability had an initial fair value of $ 96,069 , which was recorded as a long-term liability and a reduction to additional paid in capital in the consolidated balance sheet.

As of September 30, 2022 and December 31, 2021, the earnout liability had a fair va lue of $ 22.6 million a nd $ 134.2 million , respectively which resulted in a loss in the fair value of the earnout liability of $ 6.1 million for the three months ended September 30, 2022 due to the increase in the fair value of the earnout liability during the third quarter of 2022 and a gain due to the decrease in the fair value of the earnout liability of $ 112.2 million for the nine months ended September 30, 2022.

At the closing of the Business Combination on October 19, 2021, the earnout liability had an initial fair value of $ 96.1 million, which was recorded as a long-term liability and a reduction to additional paid in capital in the consolidated balance sheets.

As of March 31, 2023 and December 31, 2022, the earnout liability had a fair value of $ 40.4 million and $ 12.5 million, respectively which resulted in a loss in the fair value of the earnout liability of $ 27.9 million for the three months ended March 31, 2023 due to the increase in the fair value of the earnout liability.

GeneSiC Earnout Liability

In connection with the merger agreement of GeneSiC Semiconductor as discussed in Note 17, the Company will pay additional contingent consideration of up to $ 25.0 million , in the form of cash earnout payments to the Sellers and certain employees of GeneSiC, conditioned on the achievement of substantial revenue and gross profit margin targets for the

GeneSiC business over the four fiscal quarters beginning on October 1, 2022 and ending on September 30, 2023.

The estimated fair value of the earnout liability was determined using a Monte Carlo analysis of 20,000 simulations assuming that GeneSiC’s revenue and gross profit margins follow a geometric Browian motion over the earnout period.

In connection with the acquisition of GeneSiC as discussed in Note 17, the Company will pay additional contingent consideration of up to $ 25.0 million, in the form of cash earnout payments to the Sellers and certain employees of GeneSiC, conditioned on the achievement of substantial revenue and gross profit margin targets for the GeneSiC business over the four fiscal quarters beginning on October 1, 2022 and ending on September 30, 2023.

The valuation model utilized an assumption on the risk-free interest rate of 3.1 % and equity volatility rate of 99.9 %.

As of September 30, 2022, the GeneSiC Earnout liability was $ 0.6 million and is recorded in Earnout Liability on the Company’s Condensed Consolidated Balance Sheets.

As of March 31, 2023, the GeneSiC earnout probability is considered remote, and a liability of $ 0.4 million is recorded in earnout liability in the Company’s Condensed Consolidated Balance Sheets.

SIGNIFICANT CUSTOMERS AND CREDIT CONCENTRATIONS

Customer Concentration

Majority of the Company’s revenues are attributable to sales of the Company’s products to distributors of electronic components.

A majority of the Company’s revenues are attributable to sales of the Company’s products to distributors of electronic components.

These distributors sell the Company’s products to a range of end users, including OEMs and merchant power supply manufacturers

The following customers represented 10% or more of the Company’s net revenues for the respective three and nine months ended September 30, 2022 and 2021, respectively:

Three Months Ended September 30, Nine Months Ended September 30,

The following customers represented 10% or more of the Company’s net revenues for the three months ended March 31, 2023 and 2022:

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31,

Customer 2023 2022

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Distributor D * 39

Distributor E * 13

*Total customer net revenues was less than 10% of total net revenues.

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The Company considers the domicile of its end customers, rather than the distributors it sells to directly, to be the basis for attributing revenues from external customers to individual countries.

Revenues for the three and nine months ended September 30, 2022 and 2021, were attributable to end customers in the following countries:

Three Months Ended September 30, Nine Months Ended September 30,

Revenues for the three months ended March 31, 2023 and 2022 were attributable to end customers in the following countries or regions:

Three Months Ended March 31,

Country 2023 2022

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Rest of Asia 4 9

Other 2 — 2 1 —

100 % 100 % 100 % 100 %

All others — —

*Impractical to disclose the revenue percentages by individual countries within Europe and therefore Europe is presented in total.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

Concentration of Credit Risk

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The following customers represented 10% or more of the Company’s accounts receivable.

Customer September 30, 2022 December 31, 2021

Customer March 31, 2023 December 31, 2022

Distributor A 32 % 19 %

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Distributor C 11 *

*Total customer accounts receivable was less than 10% of net account receivables.

*Total customer accounts receivable was less than 10% of total net accounts receivable.

Concentration of Supplier Risk

The Company currently relies on a single foundry to produce wafers for GaN ICs and a separate single foundry to produce SiC MOSFETs.

Loss of the relationship with either of these suppliers could have a substantial negative effect on the Company.

The Company currently relies on a single foundry to produce wafers for GaN ICs and a separate single foundry to produce wafers for SiC MOSFETs.

Loss of the relationship with either of these suppliers could have a substantial negative

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

effect on the Company.

Additionally, the Company relies on a limited number of third-party subcontractors and suppliers for testing, packaging and certain other tasks.

Disruption or termination of supply sources or subcontractors, including due to the COVID-19 pandemic or natural disasters such as an earthquake or other causes, could delay shipments and could have a material adverse effect on the Company.

Disruption or termination of supply sources or subcontractors, including due to pandemics or natural disasters such as an earthquake or other causes, could delay shipments and could have a material adverse effect on the Company.

Although there are generally alternate sources for these materials and services, qualification of the alternate sources could cause delays sufficient to have a material adverse effect on the Company.

A significant amount of the Company’s third-party subcontractors and suppliers, including third-party foundry that supply wafers for GaN ICs, are located in Taiwan.

A significant amount of the Company’s assembly and test operations are conducted by third-party contractors in Taiwan, Thailand and the Philippines.

A significant amount of the Company’s third-party subcontractors and suppliers, including the third-party foundry that supplies wafers for GaN ICs, are located in Taiwan.

A significant amount of the Company’s assembly and test operations are conducted by third-party contractors in Taiwan and the Philippines.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

NET INCOME (LOSS) PER SHARE:

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Performance-based restricted stock units and restricted stock awards are included in the number of shares used to calculate diluted earnings per share after evaluating the applicable performance criteria as of period end and under the assumption the end of the reporting period was the end of the contingency period, and the effect is dilutive.

Restricted stock awards are eligible to receive all dividends declared on the Company’s common shares during the vesting period;

Restricted stock awards (but not restricted stock unit awards) are eligible to receive all dividends declared on the Company’s common shares during the vesting period;

however, such dividends are not paid until the restrictions lapse.

The Company has no plans to declare dividends.

A summary of the net income (loss) per share calculation is as follows (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

A summary of the net income (loss) per share calculation is as follows (in thousands, except per share amounts):

Three Months Ended March 31,

Numerator - basic and diluted:

2022 2021 2022 2021

Net income (loss) attributable to controlling interests $ ( 61,847 ) $ 79,792

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Shares excluded from diluted weighted-average shares:

Redeemable convertible preferred stock shares — 54,449 — 54,449

Warrants to purchase redeemable convertible preferred stock — 176 — 176

Warrants to purchase common shares — 1,107 — 1,107

Earnout shares (potentially issuable common shares) 10,000 10,000

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Shares excluded from diluted weighted average shares 20,126 21,479

(1) The Company’s potentially dilutive securities, which include unexercised stock options, unvested shares, preferred shares, earnout shares, and warrants for common and preferred shares, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share for the three months ended September 30, 2022 and three and nine months ended September 30, 2021.

F or the nine months ended September 30, 2022, potentially dilutive securities have been excluded as these securities contain performance metric(s) which have not be satisfied as of September 30, 2022.

(2) Balances as of September 30, 2022 r etroactively restated to give effect to the October 19, 2021 reverse recapitalization.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PROVISION FOR INCOME TAXES:

The Company determined the income tax provision for interim periods using an estimate of the Company’s annual effective tax rate, adjusted for discrete items arising during the quarter.

The Company’s effective tax rate for the three months ended September 30, 2022 and 2021 was ( 98.9 )% and 0.2 %, respectively.

The Company’s effective tax rate for the nine months ended September 30, 2022 and 2021 was ( 38.5 )% and 0.2 %, respectively.

The effective tax rates for 2022 differ from the prior year primarily as a result of the valuation allowance release described below.

In each quarter, the Company updates its estimated annual effective tax rate, and if the estimated annual effective tax rate changes, a cumulative adjustment is recorded in that quarter.

The Company’s quarterly income tax provision and quarterly estimate of the annual effective tax rate are subject to volatility due to several factors, including our ability to accurately predict the proportion of our income (loss) before provision for income taxes in multiple jurisdictions, the tax effects of our stock-based compensation, and the effects of its foreign entities.

At December 31, 2021, the Company had approximately $ 100.1 million of federal net operating loss (“NOL”) carryforwards and approximately $ 82,583 of State NOL carryforwards expiring in varying amounts through 2037, with the exception of Federal NOLs arising from the years ended after December 31, 2017 that may be carried forward indefinitely.

Realization of the NOL carryforwards is dependent on the Company generating sufficient taxable income prior to expiration of the NOL carryforwards and is also potentially subject to usage limitations due to changes in the Company’s ownership.

As of December 31, 2021 and through the second quarter of 2022, the Company had a full valuation allowance on its net deferred tax assets.

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 certain U.S.

net deferred tax assets of Navitas.

As of September 30, 2022, the Company continues to maintain a valuation allowance on the remaining deferreds as the Company believes that it is not more likely than not that the deferred tax assets will be fully realized.

The Company had no unrecognized tax benefits for the three and nine months ended September 30, 2022 and 2021.

The Company’s effective tax rate for the three months ended March 31, 2023 and 2022 was ( 0.03 )% and 0.0 %, respectively.

The effective tax rate was impacted by nondeductible executive compensation and other expenses, stock compensation, state taxes, and the change in valuation allowance in the U.S.

and certain foreign jurisdictions.

The effective tax rate for 2023 differs from the prior year primarily as a result of tax expense in certain foreign jurisdictions not impacted by valuation allowance.

The effective tax rate as of March 31, 2022 is reflective of a full valuation allowance in all jurisdictions.

The Company’s quarterly income tax provision and quarterly estimate of the annual effective tax rate are subject to volatility due to several factors, including our ability to accurately predict the proportion of our income (loss) before provision for income taxes in multiple jurisdictions, the tax effects of stock-based compensation, and the effects of its foreign entities.

The Company had no unrecognized tax benefits for the three months ended March 31, 2023 and 2022.

The Company recognizes interest and penalties related to unrecognized tax benefits in operating expenses.

No such interest and penalties were recognized during the three and nine months ended September 30, 2022 and 2021.

No such interest and penalties were recognized during the three months ended March 31, 2023 and 2022.

COMMITMENTS and CONTINGENCIES

Purchase Obligations

At September 30, 2022, the Company had no non-cancelable purchase obligations that were due beyond one year.

At March 31, 2023, the Company had no non-cancelable contractual arrangements that were due beyond one year besides lease obligations.

Employment agreements

The Company has entered into agreements with certain employees to provide severance payments to the employees for termination for reasons other than cause, death or disability.

Aggregate payments that would be required to be made in the event of termination under the agreements are approximat ely $ 2.1 million.

At September 30, 2022, no terminations have occurred or are expected to occur pursuant to these arrangements and, accordingly, no termination benefits have been accrued.

Indemnifications

The Company sells products to its distributors under contracts, collectively referred to as Distributor Sales Agreements (DSA).

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

that may be awarded against the distributor in the event the Company’s products are found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party (Customer Indemnification).

The Company has entered into agreements with certain employees to provide severance payments to the employees for termination for reasons other than cause, death or dis ability.

Aggregate payments that would be required to be made in the event of termination under the agreements are approximately $ 2.1 million.

A t March 31, 2023, no terminations have occurred or are expected to occur pursuant to these arrangements and, accordingly, no termination benefits have been accrued.

Indemnification

The Company sells products to its distributors under contracts, collectively referred to as Distributor Sales Agreements (“DSAs”).

Each DSA contains the relevant terms of the contractual arrangement with the distributor, and generally includes certain provisions for indemnifying the distributor against losses, expenses, and liabilities from damages that may be awarded against the distributor in the event the Company’s products are found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party (Customer Indemnification).

The DSA generally limits the scope of and remedies for the Customer Indemnification obligations in a variety of industry-standard respects, including, but not limited to, limitations based on time and geography, and a right to replace an infringing product.

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In addition, the Company requires its employees to sign a proprietary information and inventions agreement, which assigns the rights to its employees’ development work to the Company.

To date, the Company has not had to reimburse any of its distributors or end customers for any losses related to these indemnifications and no material claims were outstanding as of September 30, 2022.

To date, the Company has not had to reimburse any of its distributors or end customers for any losses related to these indemnifications and no material claims were outstanding as of March 31, 2023.

For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases, the Company cannot determine the maximum amount of potential future payments, if any, related to such indemnifications.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Legal proceedings and contingencies

From time to time in the ordinary course of business, the Company may become involved in lawsuits, or end customers and distributors may make claims against the Company.

From time to time in the ordinary course of business, the Company may become involved in lawsuits, or end customers, distributors, suppliers or other third parties may make claims against the Company.

The Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

2 unchanged sentences

Notes Receivable

The Company has outstanding interest-bearing notes receivable from an employee.

The notes have various maturity dates through May 1, 2023 and bear interest at rates ranging from 1 % to 2.76 %.

As of September 30, 2022, Note 1 was forgiven for a loss of $ 109 and Note 2 was paid off in the amount of $ 88 .

The Company recognized $ 0 and $ 0.9 of interest income from the notes for the three and nine months ended September 30, 2022, respectively.

The Company recognized $ 0 and $ 2 of interest income from the notes for the three and nine months ended September 30, 2021.

September 30, 2022 December 31, 2021

Notes receivable

The Company had outstanding interest-bearing notes receivable from an employee.

The notes had various maturity dates through May 1, 2023 and bore interest at rates ranging from 1 % to 2.76 %.

As of December 31, 2022, Note 1 was forgiven for a loss of $ 0.1 million and Note 2 was paid off in the amount of $ 0.1 million.

The Company did not recognize significant interest income from the notes for the three months ended March 31, 2023 or 2022.

Joint Venture

In 2021, Navitas entered into a partnership with a manufacturer of power management ICs to develop products and technology relating to AC/DC converters.

Structured as a joint venture, Navitas’ initial contribution was the commitment to sell its GaN integrated circuit die at prices representing cost plus insignificant handling fees, in exchange for a minority interest, with the right to acquire the balance of the joint venture based on the future results of the venture (among other rights and obli gat ions).

The Company accounted for the investment in the joint venture as an equity-method investment.

Total related party revenues recognized by the Company as a result of arrangements with its joint venture were $ 21 and $ 678 for the three and nine months ended September 30, 2022 , respectively, and are included in Net Revenues in the Condensed Consolidated Statements of Operations.

In 2021, Navitas entered into a silicon control IC joint venture with Halo Microelectronics Co., Ltd.

(“Halo”), a manufacturer of power management ICs, to develop products and technology relating to AC/DC converters.

Navitas’ initial contribution to the joint venture was the commitment to sell its GaN integrated circuit die at prices representing cost plus insignificant handling fees, in exchange for a minority interest, with the right to acquire the balance of the joint venture based on the future results of the venture (among other rights and obli gat ions).

On January 19, 2023, the Company announced an agreement to acquire the remaining minority interest in the joint venture as well as rights to certain intellectual property from Halo and its U.S.

affiliate for a total purchase price of $ 22.4 million in Navitas stock.

Total related party revenues recognized by the Company as a result of arrangements with its joint venture were $ 0.0 million and $ 0.6 million for the three months ended March 31, 2023 and 2022 , respectively, and are included in Net Revenues in the Condensed Consolidated Statements of Operations.

See Note 18, Noncontrolling Interest, for more information.

Related Party License Revenue

During the second quarter of 2022, Navitas entered into a Patent License Agreement with an entity under common control with the Company’s partner in the joint venture described above.

In consideration of the license rights granted, the Company recorded license fee revenue of $ 0 and $ 850 during the three and nine months ended September 30, 2022, respectively.

Such amounts are included in Net Revenues in the Condensed Consolidated Statement of Operations.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

Related Party Investment

During the third quarter of 2022, Navitas ma de a $ 1.5 million inv estment in preferred interests of an entity under common control with the Company’s partner in the joint venture described above.

Such investment is included in Other Assets in the condensed consolidated balance sheet as of September 30, 2022 and will be accounted for as an equity investment under ASC 321 Investments - Equity Securities .

The Company also entered into a Patent License Agreement with this entity as described above under related party license revenue.

During the first quarter of 2023 the Company made an additional investment of $ 1.0 million in the entity.

Such investment is included in Other Assets in the Condensed Consolidated Balance Sheets as of March 31, 2023 and is accounted for as an equity investment under ASC 321 Investments - Equity Securities .

In accordance with ASC 321, the Company elected to use the measurement alternative to measure such investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any.

Related Party Advance

During the third quarter of 2022, Navitas made a $ 1.0 million to its p artner in the joint venture described above in order to facilitate orders of raw materials.

Such amounts are included in Prepaid Expenses and Other Current Assets as of September 30, 2022.

During the third quarter of 2022, Navitas made a $ 1.0 million advance to its p artner in the joint venture described above in order to facilitate orders of raw materials.

The outstanding amount as of March 31, 2023 was not material.

Related Party Leases

The Company leases certain property from an entity that it is owned by an executive of the Company, which expires in September 2023.

During the three months ended March 31 2023, the Company paid an immaterial amount in rental payments in relation to this lease.

These payments were made at standard market rates in the ordinary course of business.

The total rent obligation as of March 31, 2023 was $ 0.1 million through September 30, 2023.

The Company leases certain property from the family member of a senior executive of the Company, which expires in March 2024.

During the three months ended March 31 2023, the Company paid an immaterial amount in rental payments in relation to this lease.

These payments were made at standard market rates in the ordinary course of business.

The total rent obligation as of March 31, 2023 was $ 43 thousand through March 31, 2024.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS COMBINATIONS

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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 inc luded in the Company’s Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2022, and were not material.

VDDTech’s net assets and operating results since the acquisition date are inc luded in the Company’s Condensed Consolidated Statements of Operations and were not material for the three months ended March 31, 2022.

Among shares issued in the transaction, the Company issued approximately 113,000 restricted shares that are subject to time based vesting and issued approximately 151,000 restricted shares that are subject to time and performance based vesting over the next four and three years , respectively.

These restricted shares are subject to certain individuals maintaining employment with the Company and, therefore, are accounted for under ASC 718.

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

The Company recorded an allocation of the purchase price to tangible 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 tangible assets and liabilities of $ 1.2 million was recorded as goodwill as of June 30, 2022.

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.

Upon a final determination of the purchase price and the final valuation of the intangible assets acquired, primarily including in-process R&D, the Company will allocate the purchase price to tangible and intangible assets acquired and liabilities assumed, and adjust the excess purchase price allocated to goodwill as needed.

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

During the third quarter of fiscal year 2022, the Company reclassified the goodwill to an intangible asset.

The fair value of the in-process R&D was estimated using the multi-period excess earnings method, an income approach (Level 3), which converts projected revenues and costs into cash flows.

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Acquisition of GeneSiC Semiconductor Inc.

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.

for approximately $ 146.3 million of equity, $ 99.3 million of cash consideration, and potential future cash earn-out payments of up to an aggregate of $ 25.0 million.

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

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

The acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”).

The Company has determined preliminary fair values of the assets acquired and liabilities assumed.

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

Total merger consideration was approximately $ 244.0 million and consisted of approximately $ 146.3 million of common stock, $ 97.1 million of cash consideration, and potential future cash earn-out payments of up to an aggregate of $ 25.0 million which were fair valued at $ 0.6 million.

The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations.

The Company has determined fair values of the assets acquired and liabilities assumed.

These values are subject to change as the Company performs additional reviews of the assumptions used.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the fair values of certain tangible assets and liabilities acquired, certain legal matters, amounts for income taxes including deferred tax accounts, amounts for uncertain tax positions, and net operating loss carryforwards inclusive of associated limitations and valuation allowances, the determination of identifiable intangible assets and the final allocation of purchase price to goodwill.

Additionally, finalized fair values associated with deferred tax accounts could have a material effect on the Company's estimated reversal of its consolidated U.S.

valuation allowances recognized during the three month period ended December 31, 2022.

See Note 14, Provision for Income Taxes, for further information.

The Company expects to continue to obtain information to assist it in determining the fair values of the net assets acquired at the acquisition date during the measurement period.

The following tables summarize the preliminary purchase consideration and the preliminary purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed (in thousands):

The following tables summarize the purchase consideration and the purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed (in thousands):

Merger Consideration Fair Value

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Total $ 244,030

Preliminary estimate of purchase price allocation

Estimate of purchase price allocation

Cash and cash equivalents $ 951

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Goodwill is not expected to be deductible for income tax purposes.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

The preliminary fair values of the identifiable intangible assets acquired at the date of Acquisition are as follows (in thousands):

The fair values of the identifiable intangible assets acquired at the date of Acquisition are as follows (in thousands):

Intangible Asset Fair Value Amortization Method Useful Life

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The valuations of intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows.

The Company recognized approximately $ 5.4 million of transaction costs in the three and nine months ended September 30, 2022.

These costs are recorded in “Selling, general and administrative expense” in the consolidated statements of operations.

The Company recognized approximately $ 5.9 million of transaction costs in the fiscal year ended December 31, 2022.

These costs were recorded in “Selling, general and administrative expense” in the consolidated statements of operations.

The financial results of GeneSiC have been included in the Company's consolidated financial statements since the date of the acquisition.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of developed technology was estimated using the multi-period excess earnings method, an income approach (Level 3), which converts projected revenues and costs into cash flows.

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The fair value of customer relationships was estimated using the distributor method, an income level approach (Level 3), which estimates the value of an asset based upon costs avoided through ownership of the asset.

Estimated costs on projected revenues, excluding acquired contract backlog, were made using historical data pertaining to sales to new and existing customers.

Estimated costs on projected revenues were made using historical data pertaining to sales to new and existing customers.

The cash flow impact of projected cost savings, primarily avoidance of legal costs pertaining to new customers and lower commission rates applicable to existing customers than new customers, were discounted at a rate of 16 % to determine the fair value.

The fair value of the trade name and trademarks was estimated using the relief from royalty method, an income approach (Level 3), because of the licensing appeal of these assets, the Company estimated the benefit of the ownership as the relief form the royalty expense that would be incurred in the absence of ownership A royalty rate was applied to the projected revenues associated with the intangible asset to determine the amount of savings, which was at a rate of 16 % to determine the fair value.

The fair value of the patents was estimated using the relief from royalty method, an income approach (Level 3), because of the licensing appeal of these assets, the Company estimated the benefit of the ownership as the relief form the royalty expense that would be incurred in the absence of ownership.

The fair value of the trade name and trademarks was estimated using the relief from royalty method, an income approach (Level 3), because of the licensing appeal of these assets, the Company estimated the benefit of the ownership as the relief from the royalty expense that would be incurred in the absence of ownership A royalty rate was applied to the projected revenues associated with the intangible asset to determine the amount of savings, which was at a rate of 1 % to determine the fair value.

The fair value of the patents was estimated using the relief from royalty method, an income approach (Level 3), because of the licensing appeal of these assets, the Company estimated the benefit of the ownership as the relief from the royalty expense that would be incurred in the absence of ownership.

A royalty rate was applied to the projected revenues associated with the intangible asset to determine the amount of savings, which was at a rate of 5 % to determine the fair value.

The value of the non-competition agreement was estimated using the lost income method (Level 3), because the non-competition agreement prohibits the covenantor from competing with the Company, the fair value of the non-competition agreement can be determined by estimating cash flows that would be lost if the covenantors were to compete, we estimated a discount rate of 16 % to determine the fair value.

The value of the non-competition agreement was estimated using the lost income method (Level 3).

Because the non-competition agreement prohibits the covenantor from competing with the Company, the fair value of the non-competition agreement can be determined by estimating cash flows that would be lost if the covenantors were to compete.

Based on this method we estimated a discount rate of 16 % to determine the fair value.

Discount rates for each respective intangible asset were determined by accounting for the risk associated with each asset, including required technology development and customer acquisition required to support respective projections, the uncertainty of market success and the risk inherent with projected financial results.

The estimated useful lives were determined by evaluating the expected economic and useful lives of the assets and of similar intangible assets from previous business combinations and adjusting accordingly after taking into account circumstances that may be unique to GeneSiC.

The estimated useful lives were determined by evaluating the expected economic and useful lives of the assets and of similar intangible assets from comparable business combinations and adjusting accordingly after taking into account circumstances that may be unique to GeneSiC.

Net tangible assets and intangibles assets assumed as well as goodwill recognized are presented as continuing operations in the consolidated balance sheets.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands, except per share amounts and where noted)

The following unaudited pro forma financial information presented in the table below is provided for illustrative purposes only and is based on the historical financial statements of the Company and presents the Company’s results as if the business combination had occurred as of January 1, 2022 (in thousands):

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2022

Revenue $ 11,476

Net loss $ ( 162,744 )

Basic net loss per share $ ( 2.54 )

Diluted net loss per share $ ( 2.54 )

Net income $ 79,741

Basic net income per share $ 0.55

Diluted net income per share $ 0.51

The unaudited pro forma financial information may not be indicative of the results of operations that the Company would have attained had the business combination occurred as of January 1, 2022, nor is the pro forma financial information indicative of the results of operations that may occur in the fut ure.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NONCONTROLLING INTEREST

In July 2021, the Company formed a joint venture for the purpose of conducting research and development on technology in the area of AC/DC converters for chargers and adapters.

On August 19, 2022, the Company obtained control of the joint venture, no consideration was paid pursuant to the Change of Control Agreement.

Refer to Note 16 above.

On August 19, 2022, the Company obtained control of the joint venture, and no consideration was paid pursuant to the Change of Control Agreement.

The Company consolidated the fair value of the net assets of the joint venture as of August 19, 2022, and the Company reports noncontrolling interests of the joint venture as a component of equity separate from the Company’s equity.

The fair value of the net assets is based on preliminary estimates.

The fair value of the noncontrolling interest and net assets is based on estimates.

The Company’s net income (loss) excludes income (loss) attributable to the noncontrollling interests.

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In connection with the consolidation, the Company reacquired a patent license, which was fair valued at $ 1.0 million based on comparable transactions during the year, and will be amortized over a five year term.

The carrying value of the non-controlling interest as of September 30, 2022 (in thousands):

Entity Carrying Value of Non-Controlling Interest as of August 19, 2022 Net loss Attributable to the Non-Controlling Interest Carrying Value of Non-Controlling Interest as of September 30, 2022

Former Joint Venture $ 4,655 $ ( 238 ) $ 4,417

Goodwill of $ 3.1 million was recorded in connection with this transaction

On January 19, 2023, the Company announced an agreement to acquire the remaining minority interest in the joint venture as well as rights to certain intellectual property from Halo and its U.S.

affiliate for a total purchase price of $ 22.4 million in Navitas stock.

The transaction was completed on February 13, 2023.

In connection with the purchase of intellectual property, the Company recognized developed technology as an intangible asset at its estimated fair value o f $ 4.4 million .

As a result of this transaction, the Company recorded a net increase to additional paid in capital of $7.5 million representing the difference between the fair value of share consideration related to the acquisition of the remaining noncontrolling interest and the carrying value of the noncontrolling interest at the date of the transaction.

The fair value of the developed technology was estimated using the relief from royalty method, an income approach (Level 3), because of the licensing appeal of these assets The Company estimated the benefit of the ownership as the relief form the royalty expense that would be incurred in the absence of ownership.

A royalty rate was applied to the projected revenues associated with the intangible asset to determine the amount of savings, which was at a rate of 10 % to determine the fair value.

SUBSEQUENT EVENTS

The Company evaluated material subsequent events from the consolidated balance sheet date of September 30, 2022, through November 14, 2022, the date the condensed consolidated financial statements were issued.

There were no material subsequent events as of November 14, 2022.

The Company evaluated material subsequent events from the consolidated balance sheet date of March 31, 2023, through May 15, 2023, the date the condensed consolidated financial statements were issued.

There were no material subsequent events as of May 15, 2023.

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 1. Financial Statements