What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-06 compared with 2023-04-03 · 341 added, 338 removed, 769 unchanged (47% of the section changed)

Financial Statements and Supplementary Data.

Report of Independent Registered Public Accounting Firm (PCAOB ID 34 )

Report of Independent Registered Public Accounting Firms (Moss Adams, LLP, PCAOB ID 659 and Deloitte & Touche LLP, PCAOB ID 34 )

Consolidated Balance Sheets

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To the shareholders and the Board of Directors of Navitas Semiconductor Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Navitas Semiconductor Corporation (the “Company”) as of December 31, 2023, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity (deficit) and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023, and the consolidated results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting included in Item 9A.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidate financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Inventory

As described in Notes 2 and 3 to the consolidated financial statements, the Company’s inventory balance was $23.2 million as of December 31, 2023.

The Company values inventory at lower of cost (first-in, first-out) or market.

The Company periodically reviews inventory for potential obsolescence based upon an aging analysis of the inventory on hand, specifically known inventory-related risks, and assumptions about future demand and market conditions.

Inventory items determined to be impaired are reduced to their net realizable values.

The potential obsolescence is subjective and primarily dependent on the estimates of future demand and market conditions for a particular product.

Changes in assumptions of product demand could have a significant impact on the amount of write-down recorded.

The valuation of inventory requires management to make significant assumptions and subjective judgments about the future salability of the inventory and the value of obsolete and unmarketable inventory.

These assumptions include the assessment of market conditions and trends, sales forecasts, historic usage, expected demand, anticipated sales price, the stage in the product life cycle of its customers’ products, new product development schedules, the effect new products might have on the sale of existing products, product obsolescence, customer design activity, customer concentrations, and product merchantability.

We identified the valuation of inventory, in particular the estimate for potential obsolescence to reduce inventory to net realizable value, as a critical audit matter, because of the significant assumptions and subjective judgments used by management, which involved significant audit effort and the use of especially challenging and subjective auditor judgment when performing audit procedures and evaluating the results of those procedures.

The primary procedures we performed to address this critical audit matter included:

• Evaluating management’s process used in developing the estimate by:

• Evaluating the methodology used.

• Evaluating the reasonableness of the significant assumptions used, including but not limited to -

◦ Performing inquiries with non-financial personnel regarding slow-moving, obsolete or discontinued inventory items;

◦ Examining purchase orders or other audit evidence of future demand.

• Testing the completeness, accuracy, and relevance of the underlying data used.

• Testing the mathematical accuracy of management’s calculations.

• Evaluating audit evidence from transactions occurring after year-end.

/s/ Moss Adams LLP

Los Angeles, CA

March, 6, 2024

We have served as the Company’s auditor since 2023.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Navitas Semiconductor Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Navitas Semiconductor Corporation and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), redeemable convertible preferred stock and stockholders' equity (deficit), and cash flows, for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Navitas Semiconductor Corporation and subsidiaries (the "Company") as of December 31, 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit), and cash flows, for the year then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

1 unchanged sentence

April 3, 2023

We have served as the Company's auditor since 2021 .

We began serving as the Company’s auditor in 2021.

In 2023, we became the predecessor auditor.

NAVITAS SEMICONDUCTOR CORPORATION

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GOODWILL 163,215 161,527

NOTES RECEIVABLE — 206

OTHER ASSETS 5,328 3,054

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Operating lease liabilities, current 1,892 1,305

Current portion of long-term debt — 3,200

Other liabilities 486 29

Deferred revenue 10,953 486

Total current liabilities 50,384 20,351

LONG-TERM DEBT — 3,716

OPERATING LEASE LIABILITIES NONCURRENT 6,653 5,263

WARRANT LIABILITY — 81,388

EARNOUT LIABILITY 46,852 13,064

DEFERRED TAX LIABILITIES 1,040 1,824

OTHER LIABILITIES — 60

Total liabilities 104,929 40,502

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STOCKHOLDERS’ EQUITY:

Common stock, $ 0.0001 par value, 750,000,000 and 740,000,000 shares authorized as of December 31, 2022 and 2021, respectively, 153,628,838 and 117,750,608 shares issued and outstanding at December 31, 2022 and 2021, respectively

Common stock, $ 0.0001 par value, 750,000,000 shares authorized as of December 31, 2023 and 2022, 179,196,418 and 153,628,838 shares issued and outstanding at December 31, 2023 and 2022, respectively

Additional paid-in capital 680,790 535,875

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CONSOLIDATED STATEMENTS OF OPERATIONS

ded December 31,

Year Ended December 31,

(In thousands, except per share amounts) 2023 2022

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OTHER INCOME (EXPENSE), net:

Interest income (expense), net 1,387 ( 257 )

Gain (loss) from change in fair value of warrants 51,763 ( 45,625 )

Interest income 5,368 1,387

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

Gain (loss) from change in fair value of earnout liabilities ( 33,788 ) 121,709

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INCOME (LOSS) BEFORE INCOME TAXES ( 146,468 ) 50,075

INCOME TAX (BENEFIT) PROVISION ( 22,812 ) 47

INCOME TAX BENEFIT ( 517 ) ( 22,812 )

NET INCOME (LOSS) $ ( 145,951 ) $ 72,887

NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS $ ( 1,026 ) $ —

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTERESTS $ 73,913 $ ( 152,685 )

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST $ ( 518 ) $ ( 1,026 )

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST $ ( 145,433 ) $ 73,913

NET INCOME (LOSS) PER COMMON SHARE:

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

ded December 31,

Year Ended December 31,

(In thousands) 2023 2022

Net loss $ 72,887 $ ( 152,685 )

Net (loss) income $ ( 145,951 ) $ 72,887

Other comprehensive income (loss), net of tax:

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COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTEREST ( 145,951 ) 72,882

COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST ( 1,026 ) —

COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST ( 518 ) ( 1,026 )

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST $ ( 145,433 ) $ 73,908

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NAVITAS SEMICONDUCTOR CORPORATION

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

Redeemable Convertible Preferred Stock Stockholder's equity (deficit)

(in thousands) Series A

preferred stock Series B

preferred stock Series B-1

preferred stock Series B-2

preferred stock Common stock Additional

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

Stockholder's equity (deficit)

(In thousands) Common stock Additional

capital Accumulated

deficit Notes receivable - shareholder's Accumulated

deficit Accumulated

comprehensive

income (loss) Non-controlling Interest Total

Shares Amount Shares Amount Shares Amount Shares Amount Shares 1 Amount

Balance at December 31, 2021 117,751 $ 15 $ 294,190 $ ( 228,667 ) $ ( 2 ) $ — $ 65,536

Issuance of common stock under employee stock option and stock award plans 7,423 1 3,780 — — — 3,781

Reverse recapitalization on October 19, 2021 ( 16,620 ) ( 14,970 ) ( 14,213 ) ( 27,371 ) ( 5,416 ) ( 14,786 ) ( 18,199 ) ( 52,379 ) 99,375 12 250,761 — — — — 250,773

Stock-based compensation expense related to employee and non-employee stock awards — — 60,436 — — — 60,436

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

Foreign currency translation adjustment — — — — — — — — — — — — — ( 1 ) — ( 1 )

Net (loss) income — — — — — — — — — — — ( 152,685 ) — — — ( 152,685 )

Balance at December 31, 2021 — $ — — $ — — $ — — — 117,751 $ 15 $ 294,190 $ ( 228,667 ) $ — $ ( 2 ) $ — $ 65,536

Issuance of common stock under employee stock option and stock award plans — — — — — — — — 7,423 1 3,780 — — — — 3,781

Stock-based compensation expense related to employee and non-employee stock awards — — — — — — — — — — 60,436 — — — — 60,436

Repurchase of common stock ( 66 ) — ( 550 ) — — — ( 550 )

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Balance at December 31, 2022 153,629 $ 18 $ 535,875 $ ( 154,754 ) $ ( 7 ) $ 3,628 $ 384,760

Issuance of common stock under employee stock option and stock award plans 9,835 — 5,904 5,904

Stock-based compensation expense related to employee and non-employee stock awards 45,043 45,043

Shares issued in public offering 11,500 3 86,459 86,462

Shares issued in connection with buyout agreement 4,232 7,509 ( 3,110 ) 4,399

Net loss ( 145,433 ) ( 518 ) ( 145,951 )

Balance at December 31, 2023 179,196 $ 21 $ 680,790 $ ( 300,187 ) $ ( 7 ) $ — $ 380,617

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

1 Retroactively restated to give effect to the October 19, 2021 reverse recapitalization.

NAVITAS SEMICONDUCTOR CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

ded December 31,

Year Ended December 31,

(In thousands) 2023 2022

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Amortization of intangibles 18,820 6,859

Amortization of deferred rent — ( 48 )

Non-cash lease expense 2,036 1,207

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Amortization of debt discount and issuance costs — 17

(Gain) loss from change in fair value of warrants ( 51,763 ) 45,625

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

(Gain) loss from change in fair value of earnout liability 33,788 ( 121,709 )

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CASH FLOWS FROM INVESTING ACTIVITIES:

Investment purchase ( 1,000 ) —

Business acquisitions, net of cash acquired — ( 96,357 )

Asset acquisition — ( 680 )

Investment in joint venture — ( 5,204 )

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CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from reverse recapitalization — 298,066

Payment of stock issuance costs — ( 24,967 )

Redemption of warrants — ( 38 )

Repurchase of common stock — ( 550 )

Proceeds from issuance of common stock in connection stock option exercises 1,711 517

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

Proceeds from issuance of common stock in connection with stock option exercises 1,923 1,711

Proceeds from issuance of common stock in May 2023 public offering 86,941 —

Payment of May 2023 public offering costs ( 482 ) —

Principal payments on long-term debt — ( 6,933 )

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Net assets acquired through change in control of joint venture $ — $ 3,813

Payable for investment contribution $ — $ 704

Recognition of earn-out consideration $ — $ 96,069

Recognition of warrant liabilities $ — $ 35,763

Conversion of preferred stock $ — $ 109,506

Shares issued for business acquisition $ — $ 147,380

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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.

Business combination

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

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

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

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

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

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

Operations prior to the Business Combination are those of Navitas.

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

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

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

In February 2023, the Company acquired the remaining minority interest in its silicon control IC joint venture from Halo Microelectronics for a purchase price of $ 22.4 million in Navitas stock.

See Note 18, Noncontrolling Interest, for more information.

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

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All intercompany transactions and balances have been eliminated in consolidation.

The consolidated financial statements include the accounts of a former Joint Venture, an entity in which the Company has a controlling interest (see Note 19, Noncontrolling Interest).

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 the consolidation.

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

Use of Estimates

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Actual results could differ from those estimates.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

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

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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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

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

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

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

Actual results could differ from those estimates.

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As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient to not assess whether a contract has a significant financing component.

The Company has entered into warrant agreements for preferred and common stock with certain investors who are downstream users of the Company’s products.

The Company considers the warrants, which are subject to the achievement of revenue-based performance incentives, to be a form of consideration payable to customers.

Accordingly, any value attributable to the warrants is accounted for as a reduction of the transaction price.

The Company allocates the transaction price to each distinct performance obligation based on their relative standalone selling price.

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Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment.

Further, in determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer.

When the Company receives orders for products to be delivered over multiple dates that may extend across several reporting periods, the Company invoices for each delivery upon shipment and recognizes revenues for each distinct product

Further, in determining whether control has transferred, the Company

NAVITAS SEMICONDUCTOR CORPORATION

1 unchanged sentence

December 31, 2023 and 2022

considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer.

The Company has also elected the practical expedient to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.

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Revenue received from customers in advance of the Company shipping the related product is considered a contract liability and is included in deferred revenue on the Company’s consolidated balance sheets.

The opening and closing balances of our receivables and contract liabilities from our contracts with customers are as follows (in thousands):

January 1, 2022 December 31, 2022 December 31, 2023

Accounts receivable, net $ 8,263 $ 9,127 $ 25,858

Deferred revenue $ 29 $ 486 $ 10,953

Business Combinations

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As a result, we may record adjustments to the fair values of assets acquired and liabilities assumed within the measurement period (up to one year from the acquisition date) with the corresponding offset to goodwill.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

Transaction costs associated with business combinations are expensed as they are incurred.

4 unchanged sentences

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

Significant judgment is employed in

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

determining these assumptions as of the acquisition date and for each subsequent period.

Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period.

Updates to assumptions could have a significant impact on our results of operations in any given period.

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The Company elected to treat share-based payment awards with graded vesting schedules and time-based service conditions as a single award and recognize compensation expense on a straight-line basis over the requisite service period.

Debt issuance costs and debt discounts

The Company records debt issuance costs and debt discounts, net of accumulated amortization, as direct deductions from the principal balance of its long-term debt to which they relate.

Amortization is reported as a component of interest expense and is computed using the effective interest method.

Current income tax expense is an estimate of current income taxes payable or refundable in the current fiscal year based on reported income before income taxes.

Deferred income taxes reflect the effect of temporary differences and carry-forwards that are recognized for financial reporting and income tax purposes.

NAVITAS SEMICONDUCTOR CORPORATION

1 unchanged sentence

December 31, 2023 and 2022

Current income tax expense is an estimate of current income taxes payable or refundable in the current fiscal year based on reported income before income taxes.

Deferred income taxes reflect the effect of temporary differences and carry-forwards that are recognized for financial reporting and income tax purposes.

The Company recognizes deferred tax assets and liabilities based on the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, utilizing the tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

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In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

Derivative Liabilities

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The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

The 8,433,333 warrants issued in connection with Live Oak’s Initial Public Offering (the “Public Warrants”), the 4,666,667 Private Placement Warrants and the Earnout Shares associated with Vested Shares are recognized as derivative liabilities in accordance with ASC 815.

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Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of significant current assets or require the creation of current liabilities.

There were no outstanding warrants as of December 31, 2022.

There were no outstanding warrants as of December 31, 2023, and December 31, 2022 .

Intangible Assets

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Gains and losses arising from the remeasurement of non-functional currency balances are recorded in selling, general and administrative expenses in the accompanying consolidated statements of operations.

The Company realized a foreign exchange transaction net loss of $ 0.1 million in both 2022 and 2021.

The Company realized a foreign currency transaction net loss of $ 0.4 million and $ 0.1 million in 2023 and 2022, respectively.

The functional currencies of the Company’s non-U.S.

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Dollars at the current exchange rates as of the applicable balance sheet date.

Non-monetary assets and liabilities into U.S.

Dollars at the applicable historical rates.

Revenues and expenses are translated at either the average exchange rate prevailing during the period or historical rates as applicable.

Advertising costs, which are included in selling, general and administrative expenses, are expensed as incurred and amounted to $ 0.1 million and $ 0.3 million in 2022 and 2021, respectively.

NAVITAS SEMICONDUCTOR CORPORATION

1 unchanged sentence

December 31, 2023 and 2022

Non-monetary assets and liabilities into U.S.

Dollars at the applicable historical rates.

Revenues and expenses are translated at either the average exchange rate prevailing during the period or historical rates as applicable.

Advertising costs, which are included in selling, general and administrative expenses, are expensed as incurred.

They are no t material in 2023 and $ 0.1 million in 2022.

Research and Development

2 unchanged sentences

These expenses include employee compensation, benefits and related costs of sustaining our engineering teams, project material costs, third party fees paid to consultants, prototype development expenses, and other costs incurred in the product and technology design and development processes.

Emerging Growth Company

On April 5, 2012, the JOBS Act was signed into law.

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies.

We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies.

We elected to delay the adoption of new or revised accounting standards and, as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, “Leases” under ASC 842, and also issued subsequent amendments under ASU No.

2019-10 and ASU No.

2020-05 (collectively ASC 842), which supersedes lease accounting and disclosure requirements in ASC 840.

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

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

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

Upon adoption, the Company elected practical expedients to:

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

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

See Note 7 – L eases for additional information and incremental disclosures related to the adoption of this standard.

Recently Issued Accounting Standards

In June 2016, the FASB amended guidance related to impairment of financial instruments as part of ASU No.

2016-13, “ Financial Instruments — Credit Losses” under ASC 326, which replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based on the estimate of expected credit loss.

Credit Losses

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

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

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

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

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

This ASU was effective for the Company beginning in 2023.

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

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

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

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

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

Recently Issued Accounting Standards

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, titled Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

These amendments address investor requests for enhanced transparency regarding income tax information.

Specifically, they improve income tax disclosures related to rate reconciliation and income taxes paid.

ASU 2023-09 becomes effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

While we are currently assessing the impact of this standard, we anticipate it will result in disclosure changes only.

NAVITAS SEMICONDUCTOR CORPORATION

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Leasehold improvements 2,360 2,054

Construction in Progress 1,114 —

Accumulated depreciation ( 4,903 ) ( 2,988 )

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

Cash equivalents classified as Level 1 instruments were no t material for December 31, 2022 and $ 159.6 million as of and December 31, 2021.

Cash equivalents classified as Level 1 instruments was $ 139.0 million for December 31, 2023 and not material for 2022.

NAVITAS SEMICONDUCTOR CORPORATION

7 unchanged sentences

Level 1 Level 2 Level 3 Total

Public warrants $ 52,361 $ 52,361

Private warrants $ 29,027 $ 29,027

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

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The Company did not transfer any investments between level 1 and level 2 of the fair value hierarchy in the years ended December 31, 2023 and 2022.

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

Fair Value Measurements Using Significant Unobservable Inputs

Balance at December 31, 2022 $ 13,064

Fair value adjustment 33,788

Balance at Balance at December 31, 2023 $ 46,852

GOODWILL AND INTANGIBLES

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Balance at December 31, 2022 $ 161,527

Additions to goodwill 161,527

Impairment of goodwill —

Purchase price adjustment 1,688

Balance at December 31, 2023 $ 163,215

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December 31, 2023 and 2022

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

The following table presents the Company’s intangible asset balance by asset class for the fiscal year ended December 31, 2023 (in thousands):

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

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Total $ 117,335 $ ( 26,236 ) $ 91,099

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

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

The following table presents the Company’s intangible asset balance by asset class for the fiscal year ended December 31, 2022 (in thousands):

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

Trade Names $ 900 $ ( 169 ) $ 731 Straight line 2 years

Developed Technology 49,100 ( 4,603 ) 44,497 Straight line 4 years

In-process R&D 1,177 — 1,177 Indefinite N/A

Patents 33,900 ( 848 ) 33,052 Straight line 5 - 15 years

Customer Relationships 24,300 ( 911 ) 23,389 Straight line 10 years

Non-Competition Agreements 1,900 ( 143 ) 1,757 Straight line 5 years

Other 1,842 ( 825 ) 1,017 Straight line 5 years

Total $ 113,119 $ ( 7,499 ) $ 105,620

The following tables presents the changes in the Company’s intangible asset balance for the fiscal year ended December 31, 2023 and December 31, 2022 (in thousands):

Intangible Assets, net

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Balance at December 31, 2022 $ 105,620

The amortization expense was $ 6.9 million for the fiscal years ended December 31, 2022 and was not material the fiscal year ended December 31 2021.

There were no impairmen t charges for the fiscal years ended December 31, 2022 or 2021.

Additions to intangible assets 4,299

Amortization expense ( 18,820 )

Balance at December 31, 2023 $ 91,099

The amortization expense was $ 18.8 million for the fiscal year ended December 31, 2023 and was $ 6.9 million for the fiscal year ended December 31, 2022.

Total future amortization expense of intangible assets is estimated to be as follows (in thousands):

Fiscal Year Ending December 31, Total

2024 $ 18,926

Thereafter 28,301

Total $ 89,940

There were no impairment charges during the years ended December 31, 2023 and 2022.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

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

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

As of December 31, 2022, finance leases were not significant and all leases recorded on the Company’s consolidated balance sheets were operating leases.

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

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

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Rent expense, including short-term lease cost, was $ 2.7 million and $ 2.1 million for the fiscal years ended December 31, 2023 and 2022, respectively.

In addition to rent payments, the Company’s leases include real estate taxes, common area

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

maintenance, utilities, and management fees, which are not fixed.

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 $ 0.2 million for the fiscal year ended December 31, 2022.

There were no leases that had not yet commenced as of December 31, 2022, that will create significant additional rights and obligations for the Company.

Total variable expense was $ 0.1 million and $ 0.2 million for the fiscal years ended December 31, 2023 and 2022, respectively.

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

December 31, 2022

December 31, 2023 December 31, 2022

Cash paid for operating lease liabilities $ 1,919 $ 1,166

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Weight-average discount rate 3.5 % - 9.3 %

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

December 31, 2022

Operating lease right-of-use assets 6,381

Operating lease liabilities - current 1,305

Operating lease liabilities - noncurrent 5,263

Total lease liabilities $ 6,568

Maturities of lease liabilities (in thousands) due in 12-month period ending December 31,

4.25 % - 5.5 %

Maturities of lease liabilities (in thousands) due in the 12-month period ending December 31,

Thereafter 419

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December 31, 2023 and 2022

Supplemental information for comparative periods

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

Operating Leases

Total minimum payments

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 December 31, 2022, this loan had been paid in full.

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

Warrant Liability).

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

All warrants were redeemed by December 31, 2022, and amortization of debt discount and issuance costs was not significant for the years ended December 31, 2022 or 2021.

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

Note payable $ — $ 6,933

Current portion — ( 3,200 )

Debt discount and issuance costs — ( 17 )

Note payable, net of current portion $ — $ 3,716

SHARE BASED COMPENSATION

Equity Incentive Plans

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

The 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.

Pursuant to the 2020 Plan, the exercise price for incentive stock options and non-statutory stock options is

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

generally at least 100% of the fair market value of the underlying shares on the date of grant.

The 2020 Equity Incentive Plan (“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.

Pursuant to the 2020 Plan, the exercise price for incentive stock options and non-statutory stock options is generally at least 100% of the fair market value of the underlying shares on the date of grant.

Options generally vest over 48 months measured from the date of grant.

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

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

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

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

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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 Plan Stock Options discussed below.

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(In thousands) 2023

Cost of revenues $ — $ 163

Research and development $ 26,806 $ 19,853

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Expense is recognized beginning in the period in which performance is considered probable.

The Company did not grant any stock options during the fiscal year ended December 31, 2022, except for Long-term Incentive Plan Stock Options discussed below.

The fair value of incentive stock options and non-statutory stock options issued was estimated using the Black-Scholes model with the following weighted-average assumptions used during the year ended December 31, 2021:

December 31, 2021

Risk-free interest rates 0.42 %

Expected volatility rates 44 %

Expected dividend yield — %

Expected term (in years) 6.0

Weighted-average grant date fair value of options $ 0.48

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 years ended December 31, 2023 or 2022, except as discussed below under Long-term Incentive Plan Stock Options.

A summary of stock options outstanding as of December 31, 2023, and activity during the two years then ended, is presented below:

Stock Options

(In thousands) Weighted-

Price Weighted-

Outstanding at December 31, 2019 9,932 $ 0.17 7.9

Granted 4,359 1.06

Exercised ( 205 ) 0.13

Forfeited or expired ( 1,105 ) 0.17

Price Weighted-Average Remaining Contractual Term (In years)

Outstanding at December 31, 2021 11,253 $ 0.51 6.8

Granted 208 1.06

Exercised ( 4,356 ) 0.39

Forfeited or expired ( 122 ) 0.97

Cancelled ( 244 ) 0.72

Outstanding at December 31, 2022 6,775 $ 0.59 6.2

1 unchanged sentence

Forfeited or expired ( 219 ) 1.06

Cancelled — —

Outstanding at December 31, 2023 2,657 $ 0.72 5.7

Vested and exercisable at December 31, 2023 2,314 $ 0.67 5.5

During the years ended both December 31, 2022 and 2021, the Company recognized $ 0.6 million of stock-based compensation expense for the vesting of outstanding stock options, excluding $ 6.0 million and $ 0.1 million, respectively, related to the LTIP Options described below.

At December 31, 2022, unrecognized compensation cost related to unvested

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

awards totaled $ 0.8 million.

During the years ended both December 31, 2023 and 2022, the Company recognized $ 0.5 million of stock-based compensation expense for the vesting of outstanding stock options, excludi ng $ 7.9 million and $ 6.0 million, respectively, related to the LTIP Options described below.

At December 31, 2023, unrecognized compensation cost related to unvested options totaled $ 0.1 million.

T he weighted-average period over which this remaining compensation cost will be recognized i s 0.6 years.

7 unchanged sentences

The valuation model utilized the following assumptions:

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

Risk-free interest rate

3 unchanged sentences

Weighted-average grant date fair value of options

The Company recognized $ 5.7 million and $ 0.1 million of stock-based compensation expense for the years ended December 31, 2022 and 2021, respectively.

The unrecognized compensation expense related to these LTIP options is $ 47.2 million as of December 31, 2022, compensation expense will be recognized over 3.4 years.

In connection with the “2021 LTIP Options”, the Company recognized $ 6.9 million and $ 5.7 million of stock-based compensation expense for the years ended December 31, 2023, and 2022 respectively.

The unrecognized compensation expense related to these 2021 LTIP Options is $ 46.9 million as of December 31, 2023, and compensation expense will be recognized over 2.4 years.

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

3 unchanged sentences

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

The Company utilized the services of a professional valuation firm to finalize these assumptions during the fiscal year ended December 31, 2023 .

The valuation model utilized the following assumptions:

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Weighted-average grant date fair value of options $ 2.89

The Company recognized $ 0.4 million of stock-based compensation expense for the fiscal year ended December 31, 2022.

The unrecognized compensation expense related to these LTIP Options is $ 7.8 million as of December 31, 2022, and compensation expense will be recognized over 4.0 years.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

Restricted Common Stock

In 2020, the Company awarded 531,834 common shares to an investor as consideration for consulting services.

The Company recognized no expense and $ 0.3 million of stock-based compensation expense for vesting during the years ended December 31, 2022 and 2021, respectively, based on grant date fair value per share of $ 1.06 .

As of December 31, 2021, the awards were fully vested.

In connection with 2022 LTIP Options, the Company recognized $ 1.1 million and $ 0.4 million of stock-based compensation expense for the years ended December 31, 2023 and 2022, respectively.

The unrecognized compensation expense related to the 2022 LTIP Options is $ 7.9 million as of December 31, 2023, and compensation expense will be recognized over 3.0 years.

Restricted Stock Units

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

On August 25, 2021, the Company granted an aggregate of 4,135,000 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 2020 Plan.

2 unchanged sentences

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

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

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

As of October 19, 2021, the IPO performance condition had been met.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

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

A summary of RSUs outstanding as of December 31, 2023, and activity during the year then ended, is presented below:

8 unchanged sentences

Outstanding at December 31, 2022 11,606 $ 5.93

Granted 6,184 6.30

Vested ( 4,811 ) 5.76

Forfeited ( 107 ) 7.47

Outstanding at December 31, 2023 12,872 $ 6.70

During the years ended December 31, 2023 and 2022, the Company recognized $ 31.5 million and $ 41.9 million, respectively, of stock-based compensation expense for the vesting of RSUs.

At December 31, 2023, unrecognized compensation cost related to unvested RSU awards totaled $ 71.2 million.

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

The weighted-average period over which this remaining compensation cost is expected to be recognized is 2.4 years.

The Company implemented a yearly stock-based bonus plan in 2021 and plans to settle accrued bonus liabilities of $ 7.9 million related to fiscal year 2023 (included in accrued compensation expense liability on the balance sheet), by issuing a variable number of fully-vested restricted stock units to its employees in 2023.

Based on the closing share price of the Company’s Class A Common Stock of $ 8.07 on December 31, 2023, approximately 976,723 shares would be issued, however the actual number of shares will be based on the share price at the date of settlement.

Unvested Earnout Shares

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

While the release of these shares require achievement of the Earn-out Milestones, the individuals are required to complete the remaining service period associated with these unvested equity awards to be eligible to receive the earnout shares.

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

2022 Employee Stock Purchase Plan

In August 2022, the Company’s board of directors adopted the Company’s 2022 Employee Stock Purchase Plan (the “2022 ESPP”), subject to stockholder approval.

The 2022 ESPP was approved by stockholders at the Company’s annual stockholders meeting held November 10, 2022.

The Company authorized the issuance of 3,000,000 shares of common stock under the 2022 ESPP.

Under the 2022 ESPP, eligible employees are granted the right to purchase shares of common stock at the lower of 85 % of the fair value at the time of offering or 85 % of the fair value at the time of purchase, generally over a six-month period.

The first offering period under the 2022 ESPP commenced in February 2023 and the second offering in September 2023.

For the year ended December 31, 2023, employees who elected to participate in the ESPP purchased 257,963 shares of common stock under the 2022 ESPP, resulting in cash proceeds to the Company of $ 1.3 million.

The purchase price was $ 4.96 , which was 15 % of the fair market value in August 2023.

As of December 31, 2023 the Company had 2,742,037 remaining authorized shares available for purchase.

As the plan was adopted in 2023, there were no shares issued as of December 31, 2022.

During the year ended December 31, 2023 and 2022, the Company recognized $ 1.2 million and $ 0.0 million of stock-based compensation expense for the ESPP, respectively.

Other Share Awards

In connection with the acquisition of the remaining minority interest of a silicon control IC joint venture, as described in Note 16, 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 year ended December 31, 2023.

NAVITAS SEMICONDUCTOR CORPORATION

1 unchanged sentence

December 31, 2023 and 2022

During the years ended December 31, 2022 and 2021, the Company recognized $ 11.9 million and $ 5.2 million, respectively, of stock-based compensation expense for the vesting of earnout shares.

At December 31, 2022, unrecognized compensation cost related to unvested earnout shares totaled $ 0.3 million.

The weighted-average period over which this remaining compensation cost is expected be recognized is 0.2 years.

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.

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

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

The Company recognized $ 0.9 million and $ 0.1 million of stock-based compensation expense related to the vesting of these shares during the year ended December 31, 2023 and 2022, respectively.

Unvested Earnout Shares

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

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 year ended December 31, 2023, the Company recognized $ 0.3 million 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.

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

During the year ended December 31, 2022, the Company recognized $ 11.9 million of stock-based compensation expense for the vesting of earnout shares.

Refer to Note 10, Earnout Liability.

WARRANT LIABILITY

6 unchanged sentences

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 of the Warrants in the absence of redemption.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

the 10 trading days following notice of redemption (the “Redemption Fair Market Value”) and the time period between the redemption date and the original expiration of the Warrants in the absence of redemption.

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

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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);

an aggregate of 3,333,650 shares of Common Stock were issued upon exercise of the Warrants (including 17,785 shares in respect of

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

cash exercises and 3,315,865 shares in respect of “cashless” exercises).

an aggregate of 3,333,650 shares of Common Stock were issued upon exercise of the Warrants (including 17,785 shares in respect of cash exercises and 3,315,865 shares in respect of “cashless” exercises).

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 fiscal year ended December 31, 2022.

There were no outstanding warrants as of December 31, 2022

There were no outstanding warrants as of December 31, 2022 or December 31, 2023.

EARNOUT LIABILITY

Certain of the Company’s stockholders are entitled to receive up to 10,000,000 Earnout Shares of the Company’s Class A common stock if the Earnout Milestones are met.

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

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

Certain of the Company’s stockholders are entitled to receive an aggregate of up to 10,000,000 Earnout Shares of the Company’s Class A common stock if the Earnout Milestones are met.

The Earnout Milestones represent three independent criteria, each of which entitles the eligible stockholders to an aggregate of up to 3,333,333 Earnout Shares per milestone met.

Each Earnout Milestone is considered met if at any time between March 18, 2022 (150 days following the Business Combination) and October 19, 2026, the volume-weighted average price of the Company’s Class A common stock is greater than or equal to $ 12.50 , $ 17.00 or $ 20.00 for any twenty trading days within any thirty trading day period, respectively.

Further, the Earnout Milestones are also considered to be met if the Company undergoes a Sale.

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These Earnout Shares have been categorized into two components:

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

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

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 8 - Share-based Compensation).

1 unchanged sentence

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

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

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

4 unchanged sentences

Equity volatility rate 70 % 65 %

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 sheet.

As of December 31, 2022 and 2021, the earnout liability had a fair value of $ 12.5 million and $ 134.2 million, respectively, which resulted in a gain in the fair value of the earnout liability of $ 121.7 million during the fiscal year ended December 31, 2022 due to the decrease in the fair value of the earnout liability during fiscal year 2022.

As of December 31, 2023 and December 31, 2022, the earnout liability had a fair value of $ 46.9 million and $ 13.1 million, respectively which resulted in a loss in the fair value of the earnout liability of $ 33.8 million and a gain in the fair value of the earnout liability of $ 121.7 million for the year ended December 31, 2023 and 2022, respectively, due to the fluctuations in the fair value of the earnout liability.

GeneSiC Earnout Liability

In connection with the merger agreement of GeneSiC Semiconductor as discussed in Note 18, the Company will pay additional contingent consideration of up to $ 25.0 million, in the form of cash earnout payments to the Sellers and certain

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

employees of GeneSiC, conditioned on the achievement of substantial revenue and gross profit margin targets for the GeneSiC business over the four fiscal quarters beginning on October 1, 2022 and ending on September 30, 2023.

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

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

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

As of December 31, 2022, the GeneSiC Earnout probability is considered remote, and a liability of $ 0.6 million is recorded in Earnout Liability on the Company’s Consolidated Balance Sheets.

As of December 31, 2023, the GeneSiC Earnout was not achieved, and no liability was recorded in earnout liability on the Company’s Consolidated Balance Sheets.

As of December 31, 2022, a liability of $ 0.6 million was recorded in Earnout Liability on the Company’s Consolidated Balance Sheets related to the GeneSiC Earnout.

SIGNIFICANT CUSTOMERS AND CREDIT CONCENTRATIONS

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The following customers represented 10% or more of the Company’s net revenues (in thousands):

ded December 31,

Year Ended December 31,

Customer 2023 2022

4 unchanged sentences

Distributor E * 12 %

Distributor F * 16 %

Distributor G * 15 %

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

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

Revenues by Geographic Area

1 unchanged sentence

Revenues for the twelve months ended December 31, 2023 and 2022, were attributable to end customers in the following countries:

ded December 31,

Year Ended December 31,

Country 2023 2022

2 unchanged sentences

United States 13 % 24 %

Rest of Asia 5 % 8 %

Asia excluding China 8 % 5 %

All others — % 1 %

Total 100 % 100 %

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

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

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consisted principally of cash, cash equivalents and trade receivables.

The Company maintains its cash and cash equivalents with high-credit quality

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

financial institutions.

The Company maintains its cash and cash equivalents with high-credit quality financial institutions.

At times, such amounts may exceed federally insured limits.

7 unchanged sentences

Distributor C * 19 %

Distributor D * 14 %

Distributor E * 14 %

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

7 unchanged sentences

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

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

NET INCOME (LOSS) PER SHARE:

6 unchanged sentences

The Company has no plans to declare dividends.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021 and 2020

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

ded December 31,

Basic and diluted income (loss) per common share:

Net income (loss) $ 73,913 $ ( 152,685 )

Weighted-average basic common shares 133,668 39,167

Weighted-average diluted common shares 145,743 39,167

Basic net income (loss) per share attributable to common stockholders $ 0.55 $ ( 3.90 )

Diluted net income (loss) per share attributable to common stockholders $ 0.51 $ ( 3.90 )

(1) The Company’s potentially dilutive securities, which include unexercised stock options, unvested shares, preferred shares, earnout shares, and warrants for common and preferred shares, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share for the fiscal year ended December 31, 2021.

Shares excluded from diluted weighted-average shares (in thousands):

ded December 31,

Warrants to purchase common shares — 13,085

Year Ended December 31,

Weighted-average common shares - basic common stock 168,927 133,668

Stock options and other dilutive awards — 12,075

Weighted-average common shares - diluted common stock 168,927 145,743

Shares excluded from diluted weighted-average shares:

Dilutive shares excluded ² 9,809 —

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

Unvested restricted stock units and stock options 376 4,525

Unvested restricted stock units and restricted stock awards 250 376

Stock options potentially exercisable for common shares 9,750 9,750

20,126 45,363

Shares excluded from diluted weighted average shares 29,809 20,126

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 fiscal year ended December 31, 2023.

² We exclude the impact of restricted stock from the calculation of diluted net loss per common share in periods where we have a net loss or when their inclusion would be antidilutive.

PROVISION FOR INCOME TAXES

Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, utilizing the tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

and foreign components of income (loss) before income taxes were (in thousands):

ded December 31,

Year Ended December 31,

operations $ ( 56,198 ) $ 125,500

1 unchanged sentence

Total income (loss) before income taxes $ ( 146,468 ) $ 50,075

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

The components of the provision (benefit) for income taxes are as follows (in thousands):

December 31, 2022

Year Ended December 31,

Current provision (benefit):

8 unchanged sentences

The provision (benefit) for income taxes differs from the amount that would result by applying the applicable federal income tax rate to income before income taxes, as follows:

ded December 31,

Year Ended December 31,

Provision computed at Federal statutory rate 21.0 % 21.0 %

7 unchanged sentences

State tax, net of federal ( 2.7 ) % 3.3 %

Deferred tax asset and liability adjustment — % 0.4 %

Other 0.2 % 0.7 %

11 unchanged sentences

Stock compensation 9,005 6,625

Lease Liabilities 1,602 —

Other 2,315 1,654

2 unchanged sentences

Deferred tax liabilities:

Right of Use Asset ( 1,528 ) —

Depreciation $ ( 178 ) $ ( 231 )

2 unchanged sentences

Net deferred tax balance $ ( 1,040 ) $ ( 1,824 )

During the fiscal years ended December 31, 2022 and 2021, the valuation allowance increased by $ 7.8 million and $ 13.0 million, respectively.

During the fiscal years ended December 31, 2023 and 2022, the valuation allowance increased b y $ 26.5 million and $ 7.8 million, respectively.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

13 unchanged sentences

As of December 31, 2023, the Company continues to maintain a valuation allowance on the remaining deferred tax assets as the Company believes that it is not more likely than not that the deferred tax assets will be fully realized.

The Company also has foreign net operating loss carry forwards of $ 111.9 million and $ 4.8 million as of December 31, 2022 and 2021, respectively.

Of the foreign NOLs, $ 111.7 million are in Ireland and the deferred tax asset has a full valuation allowance as a result of the historical losses in the country.

The Company also has foreign net operating loss carry forwards of $ 199.7 million and $ 111.9 million

NAVITAS SEMICONDUCTOR CORPORATION

1 unchanged sentence

December 31, 2023 and 2022

as of December 31, 2023 and 2022, respectively.

Of the foreign NOLs, $ 198.6 million are in Ireland and the deferred tax asset has a full valuation allowance as a result of the historical losses in the country.

The Company had no unrecognized tax benefits for the years ended December 31, 2023 or December 31, 2022.

1 unchanged sentence

No such interest and penalties were recognized during the years ended December 31, 2023 and 2022.

The Company is treated as a corporation for U.S.

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

COMMITMENTS and CONTINGENCIES

Purchase Obligations

At Decem ber 31, 2022, the Company’s non-cancellable contractual arrangements consisted entirely of a contract to guarantee future production capacity, of which $ 1.6 million remains outstanding as of year end, and lease obligations.

Employment agreements

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

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

At December 31, 2022 and 2021, no terminations have occurred or are expected to occur pursuant to the se arrangements and, accordingly, no termination benefits have been accrued.

At December 31, 2023, the Company had no non-cancellable contractual agreements that were due beyond one year apart from lease obligations.

Indemnification

11 unchanged sentences

The Company is not currently subject to any pending actions or regulatory proceedings that either individually or in the aggregate are expected to have a material impact on its consolidated financial statements.

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2022 and 2021

EMPLOYEE BENEFIT PLAN

1 unchanged sentence

Participants may contribute up to the amount allowable as a deduction for federal income tax purposes.

The Company contributes a certain percentage of employee annual salaries on a discretionary basis, not to exceed an established threshold.

For the fiscal years ended December 31, 2022 and 2021, the Company made $ 0.5 million an d $ 0.3 million, respectively, in matching contributions to the 401(k) plan.

The Company contributes a certain percentage of employee annual salaries on a discretionary basis, not to exceed

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

an established threshold.

For the fiscal years ended December 31, 2023 and 2022, the Company made $ 0.6 million an d $ 0.5 million, resp ectively, in matching contributions to the 401(k) plan.

RELATED PARTY TRANSACTIONS

4 unchanged sentences

The Company did not recognize significant interest income from the notes for the fiscal years ended December 31, 2023 or 2022.

December 31, 2022 December 31, 2021

Notes receivable $ — $ 206

Joint Venture

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

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

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

Total related party revenues recognized by the Company as a result of arrangements with its joint venture were $ 0.7 million and $ 0.4 million for the fiscal years ended De cember 31, 2022 and 2021 , respectively, and are included in Net Revenues in the Consolidated Statements of Operations.

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

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

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

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

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

Total related party revenues recognized by the Company as a result of arrangements with its joint venture were $ 0.0 million f or year ended December 31, 2023 , and $ 0.7 million and for the year ended December 31, 2022, respectively, and are included in Net Revenues in the Condensed Consolidated Statements of Operations.

See Note 18, Noncontrolling Interest, for more information.

3 unchanged sentences

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

There was no license fee revenue during the fiscal year ended December 31, 2023.

Related Party Investment

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

Such investment is included in Other Assets in the consolidated balance sheet as of December 31, 2022 and is accounted for as an equity investment under ASC 321 “Investments - Equity Securities” .

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

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

The Related Party Investment was $ 2.5 million and $ 1.5 million as of December 31, 2023 and December 31, 2022, respectively, and is included in Other Assets in the Condensed Consolidated Balance Sheets.

The Related Party Investment 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.

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

Related Party Advance

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.

There was no outstanding amount as of December 31, 2023.

NAVITAS SEMICONDUCTOR CORPORATION

1 unchanged sentence

December 31, 2023 and 2022

Related Party Advance

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 of $ 0.5 million is included in Prepaid Expenses and Other Current Assets as of December 31, 2022.

Related Party Lease

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 year 2022, the Company paid an immaterial amount in rental payments in relation to this lease.

The Company leases certain property from an entity that it is owned by an executive of the Company, which expired in September 2023 and is now a month to month lease.

Rental payments in relation to this lease was $ 0.1 million and $ 36 thousand for the years ended December 31, 2023 and December 31, 2022, respectively.

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

The total rent obligation as of December 31, 2022 was $ 0.1 million through September 30, 2023.

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

During the year 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 December 31, 2023 was $ 11 thousand through M arch 31, 2024.

BUSINESS COMBINATIONS

5 unchanged sentences

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

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

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

The excess of the purchase price over the fair value of tangible assets and liabilities of $ 1.2 million was recorded as goodwill as of June 30, 2022.

1 unchanged sentence

During the third quarter of fiscal year 2022 the Company reclassed t he goodwill to an intangible asset.

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

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.

3 unchanged sentences

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

The acquisition was

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

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

NAVITAS SEMICONDUCTOR CORPORATION

1 unchanged sentence

December 31, 2023 and 2022

accounted for as a business combination in accordance with ASC 805, “Business Combinations” .

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

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

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

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

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

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

Merger Consideration Fair Value ( in thousands)

3 unchanged sentences

Total $ 244,030

Preliminary estimate of purchase price allocation

Purchase price allocation

Cash and cash equivalents $ 951

12 unchanged sentences

Estimated fair value of net assets acquired $ 244,030

During the Company’s second quarter of 2023, the Company received information regarding products shipped by GeneSiC to a distributor prior to the Company’s acquisition of GeneSiC.

GeneSiC had the option, but not the obligation, to accept returns sold to the distributor.

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.

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.

1 unchanged sentence

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

The Company’s cumulative purchase price allocation adjustment through December 31, 2023 was $ 1.6 million, primarily due to sales returns discussed above, inventory reserve, working capital adjustment and employee bonuses.

NAVITAS SEMICONDUCTOR CORPORATION

1 unchanged sentence

December 31, 2023 and 2022

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

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

Intangible Asset Fair Value Amortization Method Useful Life

28 unchanged sentences

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

ded December 31,

Year Ended December 31,

Revenue $ 48,615

7 unchanged sentences

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

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

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

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

The preliminary fair value of the joint venture was determined based on a multiple of future annual revenues with a discount rate of 30 %.

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

The fair value of the joint venture was determined based on a multiple of future annual revenues with a discount rate of 30 %.

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

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

On January 19, 2023, the Company completed the acquisition of 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.

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

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

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022

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

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

The carrying value of the non-controlling interest as of December 31 , 2022 (in thousands):

2 unchanged sentences

SUBSEQUENT EVENTS

On January 19, 2023, the Company announced an agreement to acquire the remaining minority interest in its silicon control IC joint venture from Halo Microelectronics for a purchase price of $ 20 million in Navitas stock (see Note 19,

NAVITAS SEMICONDUCTOR CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021 and 2020

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

Noncontrolling Interest) .

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, 20 23.

On January 3, 2024, the Company made an additional investment of $ 2.5 million in preferred interests of an entity under common control with the Company’s partner in the joint venture as discussed in Note 16, Related Party Transactions.

The Company’s new ownership percentage increased to 15.48 %.

There were no other material subsequent events as of March 6, 2024.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosures.

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-K

Item 8. Financial Statements and Supplementary Data