What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-15 compared with 2022-11-14 · 64 added, 141 removed, 117 unchanged (64% of the section changed)

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

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

We design, develop and market 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 our products may be used in a wide variety of electronics products including mobile phones, consumer electronics, data centers, solar inverters and electric vehicles.

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In support of our technology leadership, we have formed relationships with numerous Tier 1 manufacturers and suppliers over the past eight years, gaining significant traction in mobile and consumer charging applications.

Navitas GaN is now in mass production with 9 of the top 10 mobile OEMs across smartphone and laptops, and is in development with 10 out of 10.

Navitas GaN is now in mass production with 9 of the top 10 world-wide mobile OEMs across smartphone and laptops in development with 10 out of 10.

In addition, our supply chain partners have committed manufacturing capacity in excess of what we consider to be necessary to support our continued growth and expansion.

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

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

In the three months ended March 31, 2023 and 2022 , we spent approximately 130% and 198%, respectively, of our revenue on research and development.

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

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

Buyout of Elevation Semiconductor

On January 19, 2023, the Company announced an agreement to acquire the remaining minority interest in its silicon control IC joint venture as well as rights to certain intellectual property from Halo Microelectronics for a total purchase price of $22.4 million in Navitas stock.

As Navitas was already the majority shareholder, financial results from the joint venture have already been reflected in Navitas’ historical financial statements.

The transaction was completed on February 13, 2023.

In connection with the purchase of intellectual property, the Company recognized an intangible asset at its estimated fair value of $4.4 million related to acquired intellectual property

Acquisition of GeneSiC

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(“GeneSiC”) for $146.3 million of equity, $97.1 million of cash consideration, and potential future earn-out payments of up to an aggregate of $25.0 million in cash.

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

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 $244.0 million.

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

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

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

Acquisition of VDDTech

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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 included in the Company’s Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2022.

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

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

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

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

Business Combination and Reverse Recapitalization

On May 6, 2021, Navitas Semiconductor Limited (“Navitas Ireland”), a private company limited by shares organized under the Laws of Ireland and domesticated in the State of Delaware as Navitas Semiconductor Ireland, LLC, (“Navitas Delaware”, and together with Navitas Ireland, “Legacy Navitas”) a Delaware limited liability company, entered into a business combination agreement and plan of reorganization (the “Business Combination Agreement” or “BCA”) with Live Oak Acquisition Corp.

II (“Live Oak”).

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

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

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

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

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

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

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

The most significant change in our reported financial position and results of operations was net cash proceeds of $298 from the merger transaction, which included $173 in gross proceeds from the PIPE financing that was consummated in conjunction with the Business Combination.

The increase in cash was offset by transaction costs incurred in connection with the Business Combination of approximately $25.

Navitas expects to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.

VDDTech’s net assets and operating results since the acquisition date are included in the Company’s Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of Operations for the three months ended March 31, 2023.

Results of Operations

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We provide a non-conformity warranty which is not sold separately and does not represent a separate performance obligation.

The vast majority of our product revenue originates from sales shipped to customer locations in Asia.

Cost of Goods Sold

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

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

Our product revenue is well diversified across the United States, Europe, and Asia.

Cost of Revenues

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

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

Research and Development Expense

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Selling, general and administrative costs are expensed as incurred.

Interest Income

Interest income primarily consists of interest earned from our cash on hand..

Interest Expense

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

Interest expense primarily consists of interest under our term loan facility, held during the fiscal year 2022.

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

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

Results of Operations Three Months September 30, 2022 and 2021

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

Results of Operations

The table and discussion below present our results for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended

September 30, Change

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

Cost of goods sold 9,852 3,032 6,820 225 %

Gross profit 391 2,599 (2,208) (85) %

Operating expenses:

Research and development 13,343 5,804 7,539 130 %

Selling, general and administrative 24,477 3,550 20,927 589 %

Total operating expenses 37,820 9,354 28,466 304 %

Loss from operations (37,429) (6,755) (30,674) 454 %

Other income (expense), net:

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

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

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

Total other income (expense), net (5,534) (75) (5,459) 7279 %

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

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

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

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

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

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

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

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

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

Cost of Goods Sold

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

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

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

Research and Development Expense

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

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

Selling, General and Administrative Expense

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

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

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

O ther Income (Expense), net

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

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

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

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

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

Income Tax (Benefit) Provision

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

As a result of the GeneSiC Semiconductor Inc.

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

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

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

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

Results of Operations Nine Months September 30, 2022 and 2021

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

Nine Months Ended

September 30, Change

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

Cost of goods sold 18,655 8,962 9,693 108 %

Gross profit 6,939 7,436 (497) (7) %

March 31, Change

(dollars in thousands) 2023 2022

Net revenues (including $0 and $613 of related party revenues) $ 13,358 $ 6,740 $ 6,618 98 %

Cost of revenues (exclusive of amortization of intangible assets included below) 7,873 3,777 4,096 108 %

Operating expenses:

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Selling, general and administrative 19,058 24,544 (5,486) (22) %

Amortization of intangible assets 4,499 88 4,411 5013 %

Total operating expenses 40,951 37,957 2,994 8 %

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Interest income (expense), net 903 (24) 927 (3863) %

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

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

Gain (loss) from change in fair value of earnout liabilities (27,752) 63,406 (91,158) — %

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Income (loss) before income taxes (62,304) 79,795 (142,099) (178) %

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

Income tax provision 61 3 58 1933 %

Net income (loss) (62,365) 79,792 (142,157) (178) %

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

Net loss attributable to noncontrolling interests (518) — (518) — %

Net income (loss) attributable to controlling interests $ (61,847) $ 79,792 (141,639) (178) %

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

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

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

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

Cost of Goods Sold

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

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

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Reve nue for the three months ended March 31, 2023 was $13.4 million compared to $6.7 million for the three months ended March 31, 2022, an increase of $6.6 million, or 98%.

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

Total sales volumes increased 19%, from 7.5 million to 8.9 million units shipped, while the average selling price increased 78% to $1.46 per unit.

Cost of Revenues

Cost of revenues for the three months ended March 31, 2023 was $7.9 million compared to $3.8 million for the three months ended March 31, 2022, an increase of $4.1 million or 108%.

The increase was primarily driven by significant revenue growth, acquisition of GeneSiC, in addition to TSMC’s 20% wafer price increase which created a higher cost of revenues.

Research and Development Expense

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

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

Research and development expense for the three months ended March 31, 2023 of $17.4 million increased by $4.1 million, or 31%, when compared to the three months ended March 31, 2022, driven by increases of $3.0 million compensation costs related to growth in headcount as the Company develops products in Solar, Enterprise and EV and $1.3 million toward the expansion of new products, slightly offset by a decrease of $0.3 million in stock based compensation.

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

Selling, General and Administrative Expense

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

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

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

Selling, general and administrative expense for the three months ended March 31, 2023 of $19.1 million decreased by $5.5 million, or 22%, when compared to the three months ended March 31, 2022, driven by decreases of $7.8 million in stock based compensation and $0.5 million in professional fees, slightly offset by an increase of $1.9 million in headcount costs and $1.3 million higher transaction expense.

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

Amortization of Definite-Lived Intangible Assets

Amortization of definite-lived intangible assets for the three months ended March 31, 2023 of $4.5 million increased by $4.4 million, or 5,013%, when compared to the three months ended March 31, 2022.

The increase is primarily due to business acquisitions that occurred during the fiscal year ended December 31, 2022.

O ther Income (Expense), net

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

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

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

ii) Earnout liability:

Net interest income for the three months ended March 31, 2023 was $0.9 million compared to immaterial net interest expense for the three months ended March 31, 2022, primarily due to the higher interest rate received on money markets funds.

During the three months ended March 31, 2023 , we recognized $27.8 million loss from the change in fair value of our earn-out liabilities.

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

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

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

The increase in fair value of our earn-out liability of $27.8 million was primarily a result of the increase of the closing price of our Class A common stock listed on the Nasdaq, resulting in the increase in the estimated fair value of the earnout shares from $1.47 as of December 31, 2022 to $4.76 as of March 31, 2023.

Income Tax (Benefit) Provision

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

As a result of the GeneSiC Semiconductor Inc.

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

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

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

net deferred tax assets.

Income tax provision for the three months ended March 31, 2023 did not change materially when compared to the three months ended March 31, 2022.

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

Liquidity and Capital Resources

Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, working capital requirements related to inventory, accounts payable and accounts receivable, and selling, general and administrative expenditures.

In addition, we use cash to fund our debt service obligations, and purchases of capital and software assets.

Our primary use of cash is to fund our operating expenses, working capital requirements, and outlays for strategic investments and acquisitions.

In addition, we use cash to conduct research and development, incur capital expenditures, and fund our debt service obligations.

We expect to continue to incur net operating losses and negative cash flows from operations and we expect our research and development expenses, general and administrative expenses and capital expenditures will continue to increase.

We expect our expenses and capital requirements to increase in connection with our ongoing initiatives to expand our operations, product offerings and end customer base.

Prior to the Business Combination, we derived our liquidity and capital resources primarily from the issuance and sale of convertible preferred stock.

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

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

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

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

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

As of March 31, 2023, we had cash and cash equivalents of $100.8 million.

We currently expect to fund our cash requirements through the use of cash on hand.

We believe that our current levels of cash and cash equivalents are sufficient to finance our operations, working capital requirements and capital expenditures for the foreseeable future.

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

If additional funds are required to support our working capital requirements, acquisitions or other purposes, we may seek to raise funds through additional debt financing or from other sources.

If additional funds are required to support our working capital requirements, acquisitions or other purposes, we may seek to raise funds through additional equity or debt financing or from other sources.

If we raise additional funds through the issuance of equity, the percentage ownership of our equity holders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing equity holders.

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

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

September 30, 2022 September 30, 2021

The following table summarizes our consolidated cash flows for the three months ended March 31, 2023 and 2022 (in thousands):

March 31, 2023 March 31, 2022

Consolidated Statements of Cash Flow Data:

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$ (1,815) $ (2,992)

Net cash used in financing activities

Net cash provided by (used in) financing activities

$ 221 $ (862)

We derive liquidity primarily from debt and equity financing activities.

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

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

As of March 31, 2023, our balance of cash and cash equivalents was $100.8 million, which is a decrease of $9.5 million or 9% compared to December 31, 2022.

Operating Activities

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

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

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

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

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

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

Fo r the three months ended March 31, 2023, net cash used in operating activities was $7.9 million, which primarily reflects a net loss of $62.4 million.

This decrease to operating cash flows are partially offset by adjustments for non-cash share-based compensation of $17.2 million, non-cash losses of $27.8 million in earnout liabilities, amortization of intangible assets of $4.5 million, and an aggregate cash provided by operating assets and liabilities of $3.9 million.

Specifically, a $3.4 million increase in accounts payable-trade, accrued compensation, and other expenses primarily due to an increase in accrued compensation expense as a result of timing, a $1.7 million decrease in account receivable and $0.2 million decrease in inventory, partially offset by a increase in other assets of $1.6 million..

Investing Activities

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

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

Net cash used in investing activities for the three months ended March 31, 2023 of $1.8 million was primarily due to $1.0 million cash funding of a joint venture and $0.8 million for purchases of fixed assets.

Financing Activities

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

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

Net cash provided by financing activities for the three months ended March 31, 2023 of $0.2 million was due to proceeds from stock option exercises of $0.2 million.

Contractual Obligations, Commitments and Contingencies

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

In the ordinary course of business, we enter into contractual arrangements that may require future cash payments.

As of March 31, 2023, our non-cancellable contractual arrangements consisted entirely of lease obligations.

Refer to Note 8 - Leases for further information.

Off-Balance Sheet Commitments and Arrangements

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

As of March 31, 2023, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Critical Accounting Policies and Estimates

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

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

JOBS Act Accounting Election

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis