What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-14 · 158 added, 223 removed, 607 unchanged (39% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except shares and par value) June 30, 2023 December 31, 2022

(In thousands, except shares and par value) September 30, 2023 December 31, 2022

CURRENT ASSETS:

Cash and cash equivalents $ 176,698 $ 110,337

Accounts receivable, net (less allowance of $ 14 and $ 0 )

Accounts receivable, net 17,573 9,127

Inventories 15,904 19,061

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Operating lease liabilities, current 1,346 1,305

Other liabilities 10,158 486

Deferred revenue 13,759 486

Total current liabilities 45,385 20,351

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STOCKHOLDERS’ EQUITY:

Common stock, $ 0.0001 par value, 750,000,000 shares authorized as of both June 30, 2023 and December 31, 2022, and 173,649,862 and 153,628,838 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.0001 par value, 750,000,000 shares authorized as of both September 30, 2023 and December 31, 2022, and 178,584,150 and 153,628,838 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 670,947 535,875

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands, except per share amounts) 2023 2022 2023 2022

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended June 30, Six Months Ended June 30,

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

(In thousands) 2023 2022 2023 2022

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Stockholder's Equity (Deficit)

SIX MONTHS ENDED JUNE 30, 2023 Common stock Additional

NINE MONTHS ENDED SEPTEMBER 30, 2023 Common stock Additional

capital Accumulated

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BALANCE AT JUNE 30, 2023 173,650 $ 19 $ 658,530 $ ( 275,128 ) $ ( 7 ) $ — $ 383,414

Issuance of common stock under employee stock option and stock award plans 4,934 — 2,178 — — — 2,178

Stock-based compensation expense related to employee and non-employee stock awards — — 10,239 — — — 10,239

Net income — — — 7,519 — — 7,519

BALANCE AT SEPTEMBER 30, 2023 178,584 $ 19 $ 670,947 $ ( 267,609 ) $ ( 7 ) $ — $ 403,350

Stockholder's Equity (Deficit)

SIX MONTHS ENDED JUNE 30, 2022 Common stock Additional

NINE MONTHS ENDED SEPTEMBER 30, 2022 Common stock Additional

capital Accumulated

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

Issuance of common stock under employee stock option and stock award plans 1,489 — 1,316 — — — 1,316

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

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

Stock-based compensation expense related to employee and non-employee stock awards — — 14,722 — — — 14,722

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

Foreign currency translation adjustment — — — — 54 — 54

Net loss — — — ( 32,590 ) — ( 238 ) ( 32,828 )

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.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2023 2022

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Other assets ( 1,649 ) 498

Accounts payable, accrued compensation and other expenses 11,832 1,883

Accounts payable, accrued compensation and deferred revenue 20,761 2,778

Operating lease liability ( 1,452 ) ( 466 )

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Investment purchases ( 1,000 ) —

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

Investment in Joint Venture — ( 5,204 )

Investment in preferred stock — ( 1,500 )

Purchases of property and equipment ( 3,410 ) ( 3,485 )

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Payment of May 2023 public offering costs ( 482 ) —

Principal payments on long-term debt — ( 1,600 )

Payment of debt issuance costs — ( 2,400 )

Net cash provided by (used in) financing activities 88,213 ( 1,476 )

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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 176,698 $ 124,792

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

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

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

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ORGANIZATION AND BASIS OF PRESENTATION

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

II, a Delaware corporation (“Live Oak”).

Pursuant to the BCA, among other transactions consummated on October 19, 2021 (collectively, the “Business Combination”), Live Oak acquired all of the capital stock of Navitas Ireland (other than the Navitas Ireland Restricted Shares, as defined below) 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 (“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 and its consolidated subsidiaries after the Business Combination, as the context suggests.

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.

Navitas Semiconductor Corporation (“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 applications including fast chargers for mobile phones and laptops, consumer electronics, data centers, solar products, electric vehicles and infrastructure, 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.

Navitas maintains its 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.

Reorganization

Navitas Semiconductor USA, Inc.

(f/k/a Navitas Semiconductor, Inc., “Navitas U.S.”) was incorporated in the State of Delaware on October 25, 2013.

In 2020 Navitas U.S.

initiated a restructuring to streamline its worldwide legal entity structure and more efficiently align its business operations (the “Restructuring”).

The Restructuring introduced wholly owned subsidiaries in Hong Kong and China as well as the addition of Legacy Navitas, an entity registered in Ireland and the U.S., as the parent of Navitas U.S.

and the other Navitas subsidiaries.

In connection with the Restructuring, effective September 1, 2020, Legacy Navitas acquired certain intellectual property and other intangible assets from Navitas U.S.

and, after the Restructuring, contracts directly with customers.

The transfer of intellectual property and other intangible assets by Navitas U.S.

to Legacy Navitas in connection with the Restructuring was among entities within the same consolidated group and, as a result, did not result in any gain or loss to the Company.

Legacy Navitas is treated as a corporation for U.S.

federal income tax purposes and is a tax resident in both Ireland and the United States.

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

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

May 2023 Public Offering

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The Company intends to use the net proceeds for working capital and other general corporate purposes, including potential acquisitions or strategic manufacturing investments.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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See Note 18, Noncontrolling Interest, for more information.

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 six months ended June 30, 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 GAAP have been condensed or omitted pursuant to Securities and Exchange Commission (“SEC”) rules and regulations relating to interim financial statements.

Basis of Presentation

The unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The information contained in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are in the opinion of management, necessary for a fair presentation of such condensed consolidated financial statements.

Operating results for the three and nine months ended September 30, 2023, are not necessarily indicative of results to be expected for the full year ending December 31, 2023.

Certain footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America have been condensed or omitted pursuant to 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 for the fiscal year ended December 31, 2022, filed with the SEC on April 3, 2023.

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 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.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Actual results could differ from those estimates.

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Inventory consists of the following (in thousands):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Raw materials

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Furniture and fixtures $ 240 $ 215

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Total $ 8,392 $ 6,532

For the three and six months ended June 30, 2023, depreciation expense was $ 0.5 million and $ 1.0 million, respectively.

For the three and six months ended June 30, 2022, depreciation expense w as $ 0.2 million and $ 0.4 million, respectively, and was determined using the straight-line method over the following estimated useful lives:

For the three and nine months ended September 30, 2023, depreciation expense was $ 0.6 million and $ 1.6 million, respectively.

For the three and nine months ended September 30, 2022, depreciation e xpense w as $ 0.3 million and $ 0.6 million, respectively, and was determined using the straight-line method over the following estimated useful lives:

Furniture and fixtures

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This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

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 present ed.

Cash equivalents classified as Level 1 instruments were $ 159.3 million and not material as of June 30, 2023 and December 31, 2022, respectively.

Cash equivalents classified as Level 1 instruments were $ 159.5 million and not material as of September 30, 2023 and December 31, 2022, respectively.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the Company’s fair value hierarchy for financial liabilities as of June 30, 2023 (in thousands) :

The following table presents the Company’s fair value hierarchy for financial liabilities as of September 30, 2023 (in thousands) :

Level 1 Level 2 Level 3 Total

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Fair value adjustment 25,503

Balance at June 30, 2023 $ 73,040

The Company did not transfer any investments between Level 1 and Level 2 of the fair value hierarchy during the three and six months ended June 30, 2023.

Balance at September 30, 2023 $ 38,567

The Company did not transfer any investments between Level 1 and Level 2 of the fair value hierarchy during the three and nine months ended September 30, 2023.

GOODWILL AND INTANGIBLES

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Goodwill and indefinite-lived intangible assets are tested for impairment annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the assets are impaired.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Purchase price adjustment 1,688

Balance at June 30, 2023 $ 163,215

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Balance at September 30, 2023 $ 163,215

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

The following table presents the Company’s intangible asset balance by asset class as of June 30, 2023 (in thousands):

The following table presents the Company’s intangible asset balance by asset class as of September 30, 2023 (in thousands):

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

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Amortization expense ( 14,046 )

Balance at June 30, 2023 $ 100,847

The amortization expen se was $ 4.8 million and $ 9.3 million for the three and six months ended June 30, 2023, respectively.

The amortization expense was $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2022, respectively.

There were no impairment charges during the three months ended June 30, 2023 and 2022.

Balance at September 30, 2023 $ 96,176

The amortization expense was $ 4.8 million and $ 14.0 million for the thre e and nine months ended September 30, 2023, respectively.

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

There were no impairment charges during the three months ended September 30, 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 provided for term advances up to $ 8.0 million.

As of June 30, 2023, this loan had been paid in full.

As of September 30, 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 no longer outstanding by December 31, 2022, and amortization of debt discount and issuance costs was not significant any of the three or six months ended June 30, 2023 or 2022.

All warrants were no longer outstanding

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

by December 31, 2022, and amortization of debt discount and issuance costs was not significant any of the three or nine months ended September 30, 2023 or 2022.

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

These leases have terms which range from 0.1 to 5.2 years.

As of June 30, 2023 no operating lease agreements contain economic penalties for the Company to extend th e lease, and it is not reasonably certain the Company will exercise these extension options.

As of September 30, 2023 no operating lease agreements contain economic penalties for the Company to extend th e 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 June 30, 2023 all leases recorded on the Company’s consolidated balance sheets were operating leases.

As of September 30, 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.

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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 $ 1.0 million for the three and six months ended June 30, 2023, respectively.

Rent expense, including short term lease cost, was $ 0.4 million and $ 0.7 million for the three and six months ended June 30, 2022, respectively.

Rent expense, including short-term lease cost, was $ 0.5 million and $ 1.5 million for the three and nine months ended September 30, 2023, respectively.

Rent expense, including short term lease cost, was $ 0.7 million and $ 1.4 million for the three and nine months ended September 30, 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 costs as variable payments and does not include such costs as a lease component.

Total variable expense was not material for the three and six months ended June 30, 2023 and 2022.

There were no leases that had not yet commenced as of June 30, 2023, that will create significant additional rights and obligations for the Company.

Total variable expense was not material for the three and nine months ended September 30, 2023 and 2022.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid for operating lease liabilities $ 1,426 $ 425

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4.25 % - 5.50 %

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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Total lease liabilities $ 6,134

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SHARE BASED COMPENSATION:

Equity Incentive Plans

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 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 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.

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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) su ch amount, if any, as the board of directors may determine.

As of June 30, 2023 the Company has issued 9,750,000 non- statutory stock options under the 2021 Plan.

As of September 30, 2023 the Company has issued 9,750,000 non- statutory stock options under the 2021 Plan.

Stock-Based Compensation

At the Closing of the Business Combination on October 19, 2021, Legacy Navitas’ outstanding vested and unvested share-based compensation awards (as such terms are defined below) were converted into equity, RSUs or options in the Company at a ratio of 1.0944 to 1 share (the “Exchange Ratio”).

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 Company uses the straight-line method to amortize stock awards granted over the requisite

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the stock-based compensation expense recognized for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30, Six Months Ended June 30,

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, 2023 and 2022:

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

2023 2022 2023 2022

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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 stock option awards during the three or six months ended June 30, 2023 or 2022.

A summary of stock options outstanding, excluding LTIP Options as of June 30, 2023, and activity during the three months then ended, is presented below:

The Company did not grant any stock option awards during the three or nine months ended September 30, 2023 or 2022.

A summary of stock options outstanding, excluding LTIP Options as of September 30, 2023, and activity during the nine months then ended, is presented below:

Stock Options Shares

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

Granted — — —

Exercised ( 3,729 ) 0.47 —

Forfeited or expired ( 215 ) 1.06 —

Cancelled — — —

Outstanding at June 30, 2023 5,389 $ 0.57 5.81

Vested and Exercisable at June 30, 2023 5,389 $ 0.57 5.81

During both the three and six months ended June 30, 2023, the Company recogni zed $ 0.1 million and $ 0.2 million o f stock-based compensation expense for the vesting of outstanding stock optio ns, excluding $ 1.9 million and $ 4.3 million related to the LTIP Options described below.

During the three and six months ended June 30, 2022, the Company recognized $ 0.1 million and $ 0.2 million of stock-based compensation expense for the vesting of outstanding stock options, excluding $ 1.4 million related to LTIP options described below.

At June 30, 2023, unrecognized compensation cost related to unvested awards totaled $ 0.4 million.

Outstanding at September 30, 2023 2,831 $ 0.74 6.03

Vested and Exercisable at September 30, 2023 2,269 $ 0.66 5.77

During both the three and nine months ended September 30, 2023, the Company recogni zed $ 0.1 million and $ 0.4 million o f stock-based compensation expense for the vesting of outstanding stock optio ns, excluding $ 1.8 million and $ 6.1 million related to the LTIP Options described below.

During the three and nine months ended September 30, 2022, the Company recognized $ 0.1 million and $ 0.4 million of stock-based compensation expense for the vesting of outstanding stock options, excluding $ 1.4 million related to LTIP options described below.

At September 30, 2023, unrecognized compensation cost related to unvested awards totaled $ 0.2 million.

The weighted-average period over which this remaining compensation cost will be recognized is 0.7 years.

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Weighted-average grant date fair value of options $ 8.13

In connection with LTIP Options granted in 2021, the Company recognized $ 1.6 million and $ 3.7 million of stock-based compensation expense for the three and six months ended June 30, 2023, respectively.

The Company recognized $ 1.4 million and $ 2.8 million related to these LTIP Options during the three and six months ended June 30, 2022, respectively.

The unrecognized compensation expense related to these LTIP Options is $ 50.1 million as of June 30, 2023, and compensation expense will be recognized over 2.9 years.

In connection with LTIP Options granted in 2021, the Company recognized $ 1.6 million and $ 5.3 million of stock-based compensation expense for the three and nine months ended September 30, 2023, respectively.

The Company recognized $ 1.4 million and $ 4.2 million related to these LTIP Options during the three and nine months ended September 30, 2022, respectively.

The unrecognized compensation expense related to these LTIP Options is $ 48.5 million as of September 30, 2023, and compensation expense will be recognized over 2.7 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.

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Weighted-average grant date fair value of options $ 2.51

In connection with LTIP Options granted in 2022, the Company recognized 0.3 million and $ 0.6 million of stock-based compensation expense for the three and six months ended June 30, 2023, respectively.

The unrecognized compensation expense related to the LTIP Options is $ 8.5 million as of June 30, 2023, and compensation expense will be recognized over 3.5 years.

In connection with LTIP Options granted in 2022, the Company recognized $ 0.3 million and $ 0.8 million of stock-based compensation expense for the three and nine months ended September 30, 2023, respectively.

The Company recognized $ 0.1 million related to these LTIP Options during the three and nine months ended September 30, 2022.

The unrecognized compensation expense related to the LTIP Options is $ 8.2 million as of September 30, 2023, and compensation expense will be recognized over 3.3 years.

Restricted Stock Units

On August 25, 2021, the Company granted an aggregate of 4,525,344 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 terms and conditions set forth in the RSU Agreements and the Plan.

3,830,400 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.

57,456 RSUs vested upon the occurrence of the Business Combination, while the remaining 90,288 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 June 30, 2023 , and activity during the six months then ended, is presented below:

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company regularly grants RSUs to employees as a component of their compensation.

A summary of RSUs outstanding as of September 30, 2023 , and activity during the nine months then ended, is presented below:

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

3 unchanged sentences

Forfeited ( 44 ) 7.16

Outstanding at June 30, 2023 14,944 $ 6.29

During the three and six months ended June 30, 2023 , the Company recognized $ 8.1 million and $ 15.4 million of stock-based compensation expense for the vesting of RSUs, respectively.

During the three and six months ended June 30, 2022, the Company recognized $ 7.4 million and $ 23.3 million of stock-based compensation expense for the vesting of RSUs, respectively.

As of June 30, 2023, unrecognized compensation cost related to unvested RSU awards totaled $ 83.2 million.

Outstanding at September 30, 2023 13,120 $ 6.73

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the three and nine months ended September 30, 2023, the Company recognized $ 8.1 million and $ 23.5 million of stock-based compensation expense for the vesting of RSUs, respectively.

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.

As of September 30, 2023, unrecognized compensation cost related to unvested RSU awards totaled $ 77.4 million.

The weighted-average period over which this remaining compensation cost is expected be recognized is 2.7 years.

The Company implemented a yearly 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 $ 4.1 million accrued as of June 30, 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 June 30, 2023.

The $ 5.7 million accrued as of September 30, 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 September 30, 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 six months ended June 30, 2023.

Such amount has been recognized as stock-based compensation expense during the nine months ended September 30, 2023.

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

1 unchanged sentence

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

The Company recognized $ 0.1 million and $ 0.6 million of stock-based compensation expense related to the vesting of these shares during the three and six months ended June 30, 2023, respectively.

The Company recognized $ 0.1 million and $ 0.7 million of stock-based compensation expense related to the vesting of these shares during the three and nine months ended September 30, 2023, respectively.

Unvested Earnout Shares

2 unchanged sentences

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 six months ended June 30, 2023 the Company recognized $ 0.3 million of stock-based compensation expense for the vesting of earnout shares.

During the three and nine months ended September 30, 2023 the Company recognized $ 0.0 million and $ 0.3 million, respectively, of stock-based compensation expense for the vesting of earnout shares.

As of the beginning of the second quarter of fiscal year 2023, these earnout shares had fully vested.

During the six months ended June 30, 2022, the Company recognized $ 0.8 million of stock-based compensation expense for the vesting of earnout shares.

At June 30, 2023, there was no remaining compensation cost related to unvested earnout shares.

At September 30, 2023, there was no remaining compensation cost related to unvested earnout shares.

During the three and nine months ended September 30, 2022, the Company recognized $ 4.3 million and $ 11.5 million, respectively, of stock-based compensation expense for the vesting of 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 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.

The Warrants were exercisable only during the period commencing December 7, 2021 ( 12 months after the consummation of Live Oak’s initial public offering) and ending on the earlier of October 19, 2026 ( five years after the Closing of the Business Combination) or, in the event of redemption, the corresponding redemption date.

The Company had the right to redeem not less than all of the outstanding Public Warrants on 30 days’ notice, at a redemption price of $ 0.01 per Warrant, if the reported closing price of the Common Stock was at least $ 18.00 per share for any 20 of 30 trading days ending three business days before the notice of redemption, subject to certain other conditions.

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 by the terms of the Public Warrants 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 date of the Warrants in the absence of redemption.

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

2 unchanged sentences

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

New York City time

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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);

1 unchanged sentence

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 $ 51.8 million due to the decrease in the fair value of the warrant liability in the six months ended June 30, 2022.

There were no outstanding warrants as of June 30, 2023.

There were no outstanding warrants as of September 30, 2023.

See footnote 10, Warrant Liability to the Company’s consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on April 3, 2023 for further details.

EARNOUT LIABILITY

Certain of the Company’s stockholders are entitled to receive up to 10,000,000 aggregate “earnout shares” of the Company’s Class A Common Stock if earnout milestones set forth in the Business Combination Agreement are met.

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

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) 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 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.

See footnote 11, Earnout Liability to the Company’s consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on April 3, 2023 for further details.

The earnout liability is remeasured at the end of each reporting period.

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

2 unchanged sentences

The valuation model utilized the following assumptions:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Risk-free interest rate

2 unchanged sentences

70.00 % 65.00 %

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 June 30, 2023 and December 31, 2022, the earnout liability had a fair value of $ 73.0 million and $ 12.5 million, respectively which resulted in a loss in the fair value of the earnout liability of $ 32.6 million and $ 60.0 million for the three and six months ended June 30, 2023, respectively, due to the increase in the fair value of the earnout liability.

As of September 30, 2023 and December 31, 2022, the earnout liability had a fair value of $ 38.6 million and $ 12.5 million, respectively which resulted in a gain in the fair value of the earnout liability of $ 34.5 million and a loss in the fair value of the earnout liability of $ 25.5 million for the three and nine months ended September 30, 2023, respectively, due to the fluctuations in the fair value of the earnout liability.

GeneSiC Earnout Liability

2 unchanged sentences

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

As of June 30, 2023, the GeneSiC earnout probability is considered remote, and no liability was recorded in earnout liability in the Company’s Condensed Consolidated Balance Sheets.

As of September 30, 2023, the GeneSiC earnout was not achieved, and no liability was recorded in earnout liability in the Company’s Condensed Consolidated Balance Sheets.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT CUSTOMERS AND CREDIT CONCENTRATIONS

2 unchanged sentences

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following customers represented 10% or more of the Company’s net revenues for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30, Six Months Ended June 30,

The following customers represented 10% or more of the Company’s net revenues for the three and nine months ended September 30, 2023 and 2022:

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

Customer 2023 2022 2023 2022

4 unchanged sentences

Distributor E * 15 * *

Distributor F * 21 * 29

Distributor G * 16 * *

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

1 unchanged sentence

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 six months ended June 30, 2023 and 2022 were attributable to end customers in the following countries or regions:

Three Months Ended June 30, Six Months Ended June 30,

Revenues for the three and nine months ended September 30, 2023 and 2022 were attributable to end customers in the following countries or regions:

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

Country 2023 2022 2023 2022

3 unchanged sentences

Rest of Asia 12 3 8 7

All others — 2 — 1

Total 100 % 100 % 100 % 100 %

6 unchanged sentences

The Company does not have any off-balance-sheet credit exposure related to its customers.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Customer June 30, 2023 December 31, 2022

Customer September 30, 2023 December 31, 2022

Distributor A 58 % *

1 unchanged sentence

Distributor C * 19 %

Distributor D * 19 %

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

17 unchanged sentences

The Company has no plans to declare dividends.

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

Three Months Ended June 30, Six Months Ended June 30,

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

2023 2022 2023 2022

Numerator - basic and diluted:

Net income (loss) attributable to controlling interests $ ( 58,527 ) $ 33,837 $ ( 120,375 ) $ 113,629

Weighted-average common shares - basic common stock 175,103 138,455 165,719 127,390

Weighted-average common shares - diluted common stock 165,606 132,132 161,086 130,882

Net income (loss) per share - basic common stock $ ( 0.35 ) $ 0.27 $ ( 0.75 ) $ 0.93

Net income (loss) per share - diluted common stock $ ( 0.35 ) $ 0.26 $ ( 0.75 ) $ 0.87

Weighted-average common shares - basic common stock 165,606 124,030 161,086 121,827

Stock options and other dilutive awards 10,523 — — 12,744

5 unchanged sentences

Shares excluded from diluted weighted average shares 20,013 30,745 20,013 19,975

(1) The Company’s potentially dilutive securities, which include unexercised stock options, unvested shares, and earnout 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 and six months ended June 30, 2023.

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 and six months ended June 30, 2023 was 0.2 % and 0.0 %, respectively.

The Company’s effective tax rate for the three and six months ended June 30, 2022 was 0.8 % and 0.2 %, 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 June 30, 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 and six months ended June 30, 2023 and 2022.

The Company’s effective tax rate for the three and nine months ended September 30, 2023 was 0.3 % and 0.0 %, respectively.

The Company’s effective tax rate for the three and nine months ended September 30, 2022 was 23.6 % and ( 13.9 )%, respectively.

The effective tax rate for 2023 differs from the prior year primarily as a result of tax expense in foreign jurisdictions that are in a full valuation allowance as the effective tax rate as of September 30, 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 our stock-based compensation, and the effects of its foreign entities.

The Company had no unrecognized tax benefits for the nine months ended September 30, 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 six months ended June 30, 2023 and 2022.

No such interest and penalties were recognized during the nine months ended September 30, 2023 and 2022.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS and CONTINGENCIES

Purchase Obligations

At June 30, 2023, the Com pany had no non-cancelable contractual arrangements that were due beyond one year besides lease obligations.

At September 30, 2023, the Com pany had no non-cancelable contractual arrangements that were due beyond one year besides lease obligations.

Employment agreements

1 unchanged sentence

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

At June 30, 2023, no terminations have occurred or are expected to occur pursuant to these arrangements and, accordingly, no termination benefits have been accrued.

At September 30, 2023, no terminations have occurred or are expected to occur pursuant to these arrangements and, accordingly, no termination benefits have been accrued.

Indemnification

5 unchanged sentences

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 June 30, 2023.

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, 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

7 unchanged sentences

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 and six months ended June 30, 2023 or 2022.

No interest income was recognized for the three and nine months ended September 30, 2023, and interest income recognized for the three and nine months ended September 30, 2022 was not material.

Joint Venture

1 unchanged sentence

(“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).

Navitas’ initial contribution to the joint venture was the commitment to sell its GaN integrated circuit die at prices representing cost plus

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 f or both the three and six months ended June 30, 2023 , and $ 0.0 million and $ 0.7 million for the three and six months ended June 30, 2022, respectively, and are included in Net Revenues in the Condensed Consolidated Statements of Operations.

Total related party revenues recognized by the Company as a result of arrangements with its joint venture were $ 0.0 million f or both the three and nine months ended September 30, 2023 , and $ 0.0 million and $ 0.7 million for the three and nine months ended September 30, 2022, respectively, and are included in Net Revenues in the Condensed Consolidated Statements of Operations.

See Note 18, Noncontrolling Interest, for more information.

2 unchanged sentences

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 June 30, 2023 and is accounted fo r as an equity investment under ASC 321 Investments - Equity Securities .

Such investment is included in Other Assets in the Condensed Consolidated Balance Sheets as of September 30, 2023 and is accounted fo r 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.

1 unchanged sentence

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

The outstanding amount as of June 30, 2023 was not material.

The outstanding amount as of September 30, 2023 was $ 0.3 million.

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 and six months ended June 30, 2023, the Company paid an immaterial amount in rental payments in relation to this lease.

During the three and nine months ended September 30, 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 June 30, 2023 was $ 27 thousand 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 and six months ended June 30, 2023, the Co mpany paid an immaterial amount in rental payments in relation to this lease.

During the three and nine months ended September 30, 2023, the Co mpany 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 June 30, 2023 was $ 32 thousand through M arch 31, 2024.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The total rent obligation as of September 30, 2023 was $ 21 thousand through M arch 31, 2024.

BUSINESS COMBINATIONS

9 unchanged sentences

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

5 unchanged sentences

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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) at acquisition date:

19 unchanged sentences

Estimated fair value of net assets acquired $ 244,030

Goodwill represents the excess of the merger price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed, the final amount of the goodwill recorded could differ materially from the amount presented.

Goodwill represents the excess of the merger price over the amounts assigned to the fair value of the assets acquired and the liabilities assumed.

Goodwill is primarily attributable to assembled workforce, market and expansion capabilities, expected synergies from integration and streamlining operational activities and other factors.

3 unchanged sentences

The Company determined that a $ 1.7 million return liability should have been recorded as of the close of the acquisition on August 15, 2022.

The Company recorded the return liability as a purchase price adjustment as of June 30, 2023, resulting in an increase to goodwill and accounts payable and other accrued expenses of $ 1.7 million.

The Company’s cumulative purchase price allocation adjustment through June 30, 2023 was $ 1.6 million, primarily due to sales returns discussed above, inventory reserve, working capital adjustment and employee bonuses.

The Company recorded the return liability as a purchase

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

price adjustment as of June 30, 2023, resulting in an increase to goodwill and accounts payable and other accrued expenses of $ 1.7 million.

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

22 unchanged sentences

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 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

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

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

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

Revenue $ 11,070 $ 36,266

Net income $ 36,615 $ 116,356

Net income (loss) $ ( 38,479 ) $ 77,877

Basic net income per share $ ( 0.24 ) $ 0.55

21 unchanged sentences

SUBSEQUENT EVENTS

The Company evaluated material subsequent events from the consolidated balance sheet date of June 30, 2023, through August 14, 2023, the date the condensed consolidated financial statements were issued.

There were no material subsequent events as of August 14, 2023.

The Company evaluated material subsequent events from the consolidated balance sheet date of September 30, 2023, through November 9, 2023, the date the condensed consolidated financial statements were issued.

There were no material subsequent events as of November 9, 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