What changed in this filing

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Item 1. Financial Statements

2024-08-05 compared with 2024-05-15 · 170 added, 130 removed, 461 unchanged (39% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except shares and par value) March 31, 2024 December 31, 2023

(In thousands, except shares and par value) June 30, 2024 December 31, 2023

CURRENT ASSETS:

15 unchanged sentences

Operating lease liabilities, current 1,886 1,892

Customer deposit 8,074 10,953

Customer deposit and deferred revenue 6,204 10,953

Total current liabilities 28,952 48,487

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DEFERRED TAX LIABILITIES 1,040 1,040

ACCRUED ROYALTIES NONCURRENT 1,569 1,897

Total liabilities 50,950 104,929

1 unchanged sentence

STOCKHOLDERS’ EQUITY:

Common stock, $ 0.0001 par value, 750,000,000 shares authorized as of March 31, 2024 and December 31, 2023, and 182,996,785 and 179,196,418 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

Common stock, $ 0.0001 par value, 750,000,000 shares authorized as of June 30, 2024 and December 31, 2023, and 183,502,186 and 179,196,418 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 714,282 680,790

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended

June 30, Six Months Ended

(In thousands, except per share amounts) 2024 2023 2024 2023

8 unchanged sentences

OTHER INCOME (EXPENSE), net:

Interest income 1,682 903

Interest income (expense), net ( 72 ) 347 ( 70 ) 1,250

Dividend income 1,361 459 3,041 459

Gain (loss) from change in fair value of earnout liabilities 7,550 ( 32,224 ) 33,749 ( 59,976 )

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LOSS BEFORE INCOME TAXES ( 22,267 ) ( 58,623 ) ( 25,878 ) ( 120,928 )

INCOME TAX PROVISION 70 61

INCOME TAX PROVISION (BENEFIT) 61 ( 96 ) 131 ( 35 )

NET LOSS ( 22,328 ) ( 58,527 ) ( 26,009 ) ( 120,893 )

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended March 31,

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

(In thousands) 2024 2023 2024 2023

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Stockholders' Equity

THREE MONTHS ENDED MARCH 31, 2024 Common stock Additional

Stockholders' Equity (Deficit)

SIX MONTHS ENDED JUNE 30, 2024 Common stock Additional

capital Accumulated

8 unchanged sentences

BALANCE AT MARCH 31, 2024 182,997 $ 21 $ 701,771 $ ( 303,868 ) $ ( 7 ) $ — $ 397,917

Stockholders' Equity

THREE MONTHS ENDED MARCH 31, 2023 Common stock Additional

Issuance of common stock under employee stock option and stock award plans 505 — 1,123 — — — 1,123

Stock-based compensation expense related to employee and non-employee stock awards — — 11,388 — — — 11,388

Net loss — — — ( 22,328 ) — — ( 22,328 )

BALANCE AT JUNE 30, 2024 183,502 $ 21 $ 714,282 $ ( 326,196 ) $ ( 7 ) $ — $ 388,100

Stockholders' Equity (Deficit)

SIX MONTHS ENDED JUNE 30, 2023 Common stock Additional

capital Accumulated

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

Issuance of common stock under employee stock option and stock award plans 1,207 — 633 — — — $ 633

Shares issued in May 2023 public offering, including underwriter's exercise of option to purchase shares, net of issuance costs 11,500 1 86,458 — — — $ 86,459

Stock-based compensation expense related to employee and non-employee stock awards — — 10,246 — — — $ 10,246

Net loss — — — ( 58,527 ) — — ( 58,527 )

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

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2024 2023

6 unchanged sentences

Stock-based compensation expense 26,639 29,731

Amortization of debt discount and issuance costs — 85

(Gain) loss from change in fair value of earnout liability ( 33,749 ) 59,976

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Operating lease liability ( 1,103 ) ( 527 )

Customer deposit ( 2,879 ) —

Customer deposit and deferred revenue ( 4,749 ) —

Net cash used in operating activities ( 34,908 ) ( 17,198 )

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Proceeds from issuance of common stock in connection stock option exercises 415 854

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

Payment of May 2023 public offering costs — ( 482 )

Proceeds from employee stock purchase plan 1,788 —

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Cash paid for income taxes $ 116 $ —

Cash paid for interest $ — $ 10

Shares issued in connection with buyout agreement $ — $ 22,400

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

The investment is $ 5.0 million and $ 2.5 million as of March 31, 2024 and December 31, 2023, respectively.

The investment is $ 5.0 million and $ 2.5 million as of June 30, 2024 and December 31, 2023, respectively.

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

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See Note 15, Noncontrolling Interest, for more information.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation

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

Operating results for the three months ended March 31, 2024, are not necessarily indicative of results to be expected for the full year ending December 31, 2024.

Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of results to be expected for the full year ending December 31, 2024.

Certain footnote disclosures normally included in annual consolidated financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America have been condensed or omitted pursuant to SEC rules and regulations relating to interim financial statements.

The accompanying condensed consolidated financial statements should be read in conjunction with consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the fiscal year ended December

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2023, filed with the SEC on March 6, 2024.

Except as further described below, there have been no significant changes in the Company’s accounting policies from those disclosed in its Form 10-K filed with the SEC on March 6, 2024.

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Valuation of Contingent Consideration Resulting from a Business Combination

In connection with certain acquisitions, we may be required to pay future consideration that is contingent upon the achievement of specified milestone events.

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

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

In connection with certain acquisitions, the Company may be required to pay future consideration that is contingent upon the achievement of specified milestone events.

The Company records contingent consideration resulting from a business combination at its fair value on the acquisition date.

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

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

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.

Updates to assumptions could have a significant impact on the Company’s results of operations in any given period.

Actual results may differ from estimates.

Reclassifications

Certain items in the prior period’s condensed consolidated balance sheets and condensed consolidated statements of operations have been reclassified to conform to the presentation for the three and six months ended June 30, 2024.

Dividend income was previously included within interest income (expense), net.

Additionally, for the prior period, the Company reclassed $ 0.9 million from inventories to prepaids and other current assets related to the sales returns inventory.

Lastly, the Company reclassed $ 1.4 million from prepaids and other current assets to other assets and $ 1.9 million from accounts payable and other accrued expenses to its own line for accrued royalties related to an indemnity asset and royalty liability, respectively.

There was no impact to net loss and retained earnings as a result of the reclassifications.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Standards

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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.

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

This Form 10-Q does not include any other newly implemented accounting standards or pronouncements beyond those detailed above.

Such exclusions were made because they either do not apply to our company or are not anticipated to materially impact the condensed consolidated financial statements.

Such exclusions were made because they either do not apply to the Company or are not anticipated to materially impact the condensed consolidated financial statements.

Inventories consist of the following (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Raw materials

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$ 25,159 $ 22,234

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PROPERTY AND EQUIPMENT, NET

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Furniture and fixtures $ 449 $ 244

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Total $ 13,259 $ 9,154

The depreciation expense was $ 0.7 million and $ 0.5 million f or the three months ended March 31, 2024 and 2023 , respectively, and was determined using the straight-line method over the following estimated useful lives:

The depreciation expense was $ 0.7 million and $ 1.4 million f or the three and six months ended June 30, 2024 and $ 0.5 million and $ 1.0 million for three and six months ended June 30, 2023, r espectively, and was determined using the straight-line method over the following estimated useful lives:

Furniture and fixtures

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Leasehold improvements

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

7 unchanged sentences

The short-term nature of the Company’s cash and cash equivalents, accounts receivable 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 $ 113.0 million as of March 31, 2024 and $ 139.0 million for December 31, 2023.

The following table presents the Company’s fair value hierarchy for financial liabilities as of March 31, 2024 (in thousands) :

Cash equivalents classified as Level 1 instruments were $ 96.3 million as of June 30, 2024 and $ 139.0 million for December 31, 2023.

The following table presents the Company’s fair value hierarchy for financial liabilities as of June 30, 2024 (in thousands) :

Level 1 Level 2 Level 3 Total

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Level 1 Level 2 Level 3 Total

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Fair value adjustment ( 33,749 )

Balance at March 31, 2024 $ 20,653

The Company did not transfer any investments between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2024.

Balance at June 30, 2024 $ 13,103

The Company did not transfer any investments between Level 1 and Level 2 of the fair value hierarchy during the three months ended June 30, 2024.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GOODWILL AND INTANGIBLES

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

The following table presents the Company’s intangible asset balance by asset class as of March 31, 2024 (in thousands):

The following table presents the Company’s intangible asset balance by asset class as of June 30, 2024 (in thousands):

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

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Total $ 117,335 $ ( 35,772 ) $ 81,563

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Intangible Assets, net

Balance at December 31, 2023 $ 91,099

Additions to intangible assets —

Balance at Balance at December 31, 2023 $ 91,099

Other adjustments 12

Amortization expense ( 9,548 )

Balance at March 31, 2024 $ 86,325

The amortization expense was $ 4.8 million and $ 4.5 million for the thre e months ended March 31, 2024 and 2023, respectively.

Balance at June 30, 2024 $ 81,563

The amortization expense was $ 4.8 million and $ 9.5 million for the three and six months ended June 30, 2024, an d $ 4.8 million and $ 9.3 million for the three and six months ended June 30, 2023, respectively.

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

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Total $ 80,386

There were no impairment charges during the three months ended March 31, 2024 and 2023.

There were no impairment charges during the three and six months ended June 30, 2024 and 2023.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

These leases have remaining terms which range from 0.3 to 5.3 years.

As of March 31, 2024, no operating lease agreements contain economic penalties for the Company to extend th e lease, and it is not reasonably certain the Company will exercise these extension options.

As of June 30, 2024, no operating lease agreements contain economic penalties for the Company to extend th e lease, and it is not reasonably certain the Company will exercise these extension options.

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

As of March 31, 2024, all leases recorded on the Company’s consolidated balance sheets were operating leases.

As of June 30, 2024, all leases recorded on the Company’s consolidated balance sheets were operating leases.

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

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

Rent expense, including short-term lease cost, was $ 0.8 million and $ 0.5 million for the three months ended March 31, 2024 and 2023 , respectively.

Rent expense, including short-term lease cost, was $ 0.6 million and $ 1.4 million for the three and six months ended June 30, 2024, respectively.

Rent expense, including short -term lease cost, was $ 0.5 million and $ 1.0 million for the three and six months ended June 30, 2023, respectively.

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

variable payments and does not include such costs as a lease component.

Total variable expense was $ 0.1 million for the three months ended March 31, 2024 and not material for the three months ended March 31, 2023 .

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

Total variable expense was $ 0.1 million and $ 0.2 million for three and six months ended June 30, 2024 and no t material for the three and six months ended June 30, 2023.

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

Three Months Ended March 31,

Six Months Ended June 30,

Cash paid for operating lease liabilities $ 1,122 $ 933

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Non-cash right-of-use assets obtained in exchange for new operating lease obligations $ 530 $ 560

Weighted-average remaining lease term 4.71 4.96

Weighted-average remaining lease term in years 4.42 4.83

Weight-average discount rate 3.45 % - 9.25 %

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Total lease liabilities $ 8,172

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SHARE BASED COMPENSATION:

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

As of March 31, 2024 the Company has issued 9,750,000 non- statutory stock options under the 2021 Plan.

As of June 30, 2024 the Company has issued 9,750,000 non- statutory stock options under the 2021 Plan.

Stock-Based Compensation

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

The following table summarizes the stock-based compensation expense recognized for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the stock-based compensation expense recognized for the three and six months ended June 30, 2024 and 2023:

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

2024 2023 2024 2023

Cost of goods sold $ 249 $ — $ 249 $ —

Research and development 6,438 6,947 13,808 14,124

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

The Company did not grant any stock option awards during the three months ended March 31, 2024 or 2023.

A summary of stock options outstanding, excluding LTIP Options as of March 31, 2024, and activity during the three months then ended, is presented below:

The Company did not grant any stock option awards during the three and six months ended June 30, 2024 or 2023.

A summary of stock options outstanding, excluding LTIP Options as of June 30, 2024, and activity during the three months then ended, is presented below:

Stock Options Shares

(In thousands) Weighted-

Price Weighted-

Price Weighted-Average

Contractual Term

Outstanding at December 31, 2023 2,657 $ 0.72 5.72

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Outstanding at March 31, 2024 2,220 $ 0.76 5.55

Vested and Exercisable at March 31, 2024 2,050 $ 0.73 5.6

Exercised ( 192 ) 0.93 —

Outstanding at June 30, 2024 2,028 $ 0.74 5.33

Vested and Exercisable at June 30, 2024 1,953 $ 0.73 5.29

During the three and six months ended June 30, 2024, the Company recogni ze d $ 0.0 million and $ 0.1 million o f stock-based compensation expense for the vesting of outstanding stock optio ns, excluding $ 1.0 million and $ 2.9 million, respectively, related to the LTIP Options described below.

During the three and six months ended June 30, 2023, the Company recognized $ 0.1 million and $ 0.2 million of stock-based compensation expense for the vesting of outstanding stock options, excluding $ 1.9 million and $ 4.3 million related to the LTIP Options.

At June 30, 2024, unrecognized compensation cost related to unvested options was immaterial.

The weighted-average period over which this remaining compensation cost will be recognized is 0.3 years.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During both the three months ended March 31, 2024 and 2023, the Company recogni ze d $ 0.1 million o f stock-based compensation expense for the vesting of outstanding stock optio ns, excluding $ 1.9 million and $ 2.5 million, respectively, related to the LTIP Options described below.

At March 31, 2024, unrecognized compensation cost related to unvested options totaled $ 0.1 million .

The weighted-average period over which this remaining compensation cost will be recognized is 0.5 years.

Long-term Incentive Plan Stock Options

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Weighted-average grant date fair value of options $ 9.14

In connection with the “2021 LTIP Options”, the Company recognized $ 1.6 million and $ 2.2 million of stock-based compensation expense for the three months ended March 31, 2024 and 2023, respectively.

The unrecognized compensation expense related to these LTIP Options is $ 4.7 million as of March 31, 2024, and compensation expense will be recognized over 0.8 years.

In connection with the “2021 LTIP Options”, the Company recognized $ 0.8 million and $ 2.4 million of stock-based compensation expense for the three and six months ended June 30, 2024, respectively.

The Company recognized $ 1.6 million and $ 3.7 million of stock-based compensation expense for three and six months ended June 30, 2023, respectively.

The unrecognized compensation expense related to these LTIP Options is $ 3.8 million as of June 30, 2024, and compensation expense will be recognized over 3.0 years.

On a quarterly basis, after evaluating the 2021 LTIP Options based on the probability of achieving certain market and performance conditions, the Company may true up the 2021 LTIP Options expense as needed.

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Weighted-average grant date fair value of options $ 2.89

In connection with the “2022 LTIP Options”, the Company recognized $ 0.3 million of stock-based compensation expense for both the three months ended March 31, 2024 and 2023, respectively.

The unrecognized compensation expense related to the LTIP Options is $ 1.5 million as of March 31, 2024, and compensation expense will be recognized over 1.7 years.

In connection with the “2022 LTIP Options”, the Company recognized $ 0.2 million and $ 0.5 million of stock-based compensation expense for the three and six months ended June 30, 2024, respectively.

The Company recognized $ 0.3 million and $ 0.6 million of stock-based compensation expense for three and six months ended June 30, 2023, respectively.

The unrecognized compensation expense related to the LTIP Options is $ 1.3 million as of June 30, 2024, and compensation expense will be recognized over 3.0 years.

On a quarterly basis, after evaluating the 2022 LTIP Options based on the probability of achieving certain market and performance conditions, the Company may true up the 2022 LTIP Options expense as needed.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Units

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

A summary of RSUs outstanding as of March 31, 2024 , and activity during the three months then ended, is presented below:

A summary of RSUs outstanding as of June 30, 2024 , and activity during the six months then ended, is presented below:

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Unit Awards

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Outstanding at March 31, 2024 14,206 $ 6.43

During the three months ended March 31, 2024 and 2023, the Company recognized $ 8.2 million and $ 7.1 million of stock-based compensation expense for the vesting of RSUs, respectively.

As of March 31, 2024, unrecognized compensation cost related to unvested RSU awards totaled $ 79.2 million.

Granted 557 4.27

Vested ( 314 ) 7.80

Forfeited ( 179 ) 4.45

Outstanding at June 30, 2024 14,270 $ 6.37

During the three and six months ended June 30, 2024, the Company recognized $ 9.7 million and $ 17.9 million of stock-based compensation expense for the vesting of RSUs, respectively.

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

As of June 30, 2024, unrecognized compensation cost related to unvested RSU awards totaled $ 71.5 million.

The weighted-average period over which this remaining compensation cost is expected be recognized is 2.3 years.

The Company’s annual bonus plan of $ 2.5 million related to fiscal year 2024 (included in accrued compensation expense liability on the condensed consolidated balance sheets), will be issued with a variable number of fully-vested restricted stock units to its employees and is expected to be settled in the first quarter of 2025.

Based on the closing share price of the Company’s Class A Common Stock of $ 4.77 on March 28, 2024, approximately 518,942 shares would be issued, however the actual number of shares will be based on the share price at the date of settlement.

The Company’s annual bonus plan of $ 4.2 million and related to fiscal year 2024 (included in accrued compensation expense liability on the condensed consolidated balance sheets), will be issued with a variable number of fully-vested restricted stock units to its employees and is expected to be settled in the first quarter of 2025.

Based on the closing share price of the Company’s Class A Common Stock of $ 3.93 on June 28, 2024, approximately 1,063,276 shares would be issued, however the actual number of shares will be based on the share price at the date of settlement.

2022 Employee Stock Purchase Plan

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

For the three months ended March 31, 2024, employees who elected to participate in the ESPP purchased 393,139 shares of common stock under the 2022 ESPP, resulting in cash proceeds to the Company of $ 1.8 million.

For the three and six months ended June 30, 2024, employees who elected to participate in the ESPP purchased 393,139 shares of common stock under the 2022 ESPP, resulting in cash proceeds to the Company of $ 1.8 million.

The purchase price was $ 4.55 , which was 15 % of the fair market value in March 2024.

As of March 31, 2024, the Company had 2,348,898 remaining authorized shares available for purchase.

As the plan was newly adopted in 2023, there were no shares issued or stock-based compensation expense for the 2022 ESPP as of March 31, 2023.

During the three months ended March 31, 2024, the Company recognized $ 0.8 million of stock-based compensation expense for the 2022 ESPP.

As of June 30, 2024, the Company had 2,348,898 remaining authorized shares available for purchase.

During the three and six months ended June 30, 2024, the Company recognized $ 0.3 million and $ 1.1 million of stock-based compensation expense for the 2022 ESPP, respectively.

During the three and six months ended June 30, 2023, the Company recognized $ 0.5 million and $ 0.5 million of stock-based compensation expense for the 2022 ESPP, respectively.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Share Awards

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

recognized $ 0.1 million and $ 0.4 million of stock-based compensation expense related to the vesting of these shares during the three months ended March 31, 2024 and 2023, respectively.

The Company recognized $ 0.2 million and $ 0.3 million of stock-based compensation expense related to the vesting of these shares during three and six months ended June 30, 2024, respectively.

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

Unvested Earnout Shares

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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.

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

At March 31, 2024, there was no remaining compensation cost related to unvested earnout shares.

During the three months ended March 31, 2023, the Company recognized $ 0.3 million of stock-based compensation expense for the vesting of earnout shares.

The Company recognized $ 0.1 million and $ 0.1 million of stock-based compensation expense related to the vesting of these shares during three and six months ended June 30, 2024, respectively.

The Company recognized $ 0.0 million and $ 0.3 million of stock-based compensation expense related to the vesting of these shares during the three and six months ended June 30, 2023, respectively.

As of June 30, 2024 and there was no remaining compensation cost related to unvested earnout shares, except for forfeitures.

Refer to Note 9, Earnout Liability.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EARNOUT LIABILITY

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The valuation model utilized the following assumptions:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Risk-free interest rate

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80.00 % 70.00 %

As of March 31, 2024 and December 31, 2023, the earnout liability had a fair value of $ 20.7 million and $ 46.9 million, respectively, which resulted in a gain in the fair value of the earnout liability of $ 26.2 million.

The loss in the earnout liability was $ 27.8 million for the three month period ended March 31, 2023.

As of June 30, 2024 and December 31, 2023, the earnout liability had a fair value of $ 13.1 million and $ 46.9 million, respectively, which resulted in a gain in the fair value of the earnout liability of $ 7.6 million and $ 33.7 million for the three and six months ended June 30, 2024, respectively.

As of June 30, 2023, the earnout liability had a fair value of $ 73.0 million, which resulted in a loss in the fair value of the earnout liability of $ 32.6 million and $ 60.0 million for the three and six months ended June 30, 2023, respectively.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SIGNIFICANT CUSTOMERS AND CREDIT CONCENTRATIONS

2 unchanged sentences

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

The following customers represented 10% or more of the Company’s net revenues for the three months ended March 31, 2024 and 2023:

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31,

The following customers represented 10% or more of the Company’s net revenues for the three and six months ended June 30, 2024 and 2023:

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

Customer 2024 2023 2024 2023

Distributor A 55 % 14 % 63 % *

Distributor B * 35 %

Distributor C * 19 %

Distributor D * 17 %

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

1 unchanged sentence

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

Revenues for the three months ended March 31, 2024 and 2023 were attributable to end customers in the following countries or regions:

Three Months Ended March 31,

Revenues for the three and six months ended June 30, 2024 and 2023 were attributable to end customers in the following countries or regions:

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

Country 2024 2023 2024 2023

5 unchanged sentences

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentration of Credit Risk

5 unchanged sentences

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

Customer March 31, 2024 December 31, 2023

Customer June 30, 2024 December 31, 2023

Distributor A 73 % 77 %

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

The Company has a customer deposit from a primary customer of $ 8.1 million and the Company intends to apply a portion of the customer deposit to outstanding accounts receivable from time-to-time.

The Company has a customer deposit from a primary customer of $ 6.1 million and $ 11.0 million, as of June 30, 2024 and December 31, 2023, respectively, and the Company intends to apply a portion of the customer deposit to outstanding accounts receivable from time-to-time.

Concentration of Supplier Risk

1 unchanged sentence

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

Additionally, the Company relies on a limited number of third-party subcontractors and suppliers

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

for testing, packaging and certain other tasks.

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

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

2 unchanged sentences

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

The Company entered into an agreement to purchase raw materials from a supplier from September 29, 2022 through December 31, 2025, and accordingly made a $ 2.0 million refundable deposit.

The Company entered into an agreement to purchase raw materials from a supplier from September 29, 2022 through December 31, 2025, and accordingly made a $ 2.0 million deposit to be received as invoice credits toward future purchases.

The Company is not obligated to purchase from this supplier, however, if the Company does not meet minimum purchase requirements during the term, the Company may forfeit all or a portion of its $ 2.0 million deposit.

9 unchanged sentences

The Company has no plans to declare dividends.

Three Months Ended March 31,

Three Months Ended June 30, Six months ended June 30, 2024

2024 2023 2024 2023

Weighted-average common shares - basic common stock 183,127 165,606 181,493 161,086

7 unchanged sentences

Shares excluded from diluted weighted average shares 23,159 30,929 23,988 30,371

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 both the three months ended March 31, 2024 and 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.

² The Company 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

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

The Company’s effective tax rate for the three months ended March 31, 2024 and 2023 was ( 1.93 )% and ( 0.03 )%, respectively.

The Company’s effective tax rate for the three and six months ended June 30, 2024 was ( 0.27 )% and ( 0.5 )%, respectively.

The Company’s effective tax rate for the three and six months ended June 30, 2023 was 0.2 % and 0.0 %, respectively.

The effective tax rate for 2024 differs from the prior year primarily due to tax expense in foreign as a result of tax expense in foreign jurisdictions not impacted by valuation allowance.

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

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

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

The Company had no unrecognized tax benefits for the three and six months ended June 30, 2024 and 2023.

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

No such interest and penalties were recognized during the three and six months ended June 30, 2024 and 2023.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company had no unrecognized tax benefits for the three months ended March 31, 2024 and 2023.

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

No such interest and penalties were recognized during the three months ended March 31, 2024 and 2023.

COMMITMENTS and CONTINGENCIES

Purchase Obligations

At March 31, 2024, the Com pany had no non-cancelable contractual arrangements that were due beyond one year besides lease obligations.

At June 30, 2024, the Com pany had no non-cancelable contractual arrangements that were due beyond one year besides lease obligations.

Indemnification

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

To date, the Company has not had to reimburse any of its distributors or end customers for any losses related to these indemnifications and no material claims were outstanding as of March 31, 2024.

To date, the Company has not had to reimburse any of its distributors or end customers for any losses related to these indemnifications and no material claims were outstanding as of June 30, 2024.

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

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

Navitas’ initial

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

1 unchanged sentence

See Note 15, Noncontrolling Interest, for more information.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Related Party Leases

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.

During the three months ended March 31, 2024 , the Company paid an immaterial amount in rental payments in relation to this lease.

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

The Company leases certain property from the family member of a senior executive of the Company, which expired in March 2024, and is now a month-to-month lease.

During the three months ended March 31, 2024 , the Co mpany paid an immaterial amount in rental payments in relation to this lease.

During the three and six months ended June 30, 2024 , 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.

There was no rent obligation as of March 31, 2024 .

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There was no rent obligation as of June 30, 2024 .

The Company leases certain property from an entity that it is owned by an executive of the Company, which expired in September 2023, and was on a month-to-month lease through May 2024, and then was terminated.

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

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

NONCONTROLLING INTEREST

16 unchanged sentences

SUBSEQUENT EVENTS

The Company evaluated material subsequent events from the consolidated balance sheet date of March 31, 2024, through May 15, 2024, the date the condensed consolidated financial statements were issued.

There were no material subsequent events as of May 15, 2024.

The Company evaluated material subsequent events from the consolidated balance sheet date of June 30, 2024, through August 5, 2024, the date the condensed consolidated financial statements were issued.

There were no material subsequent events as of August 5, 2024, except as discussed below.

On July 31, 2024, the Company entered into a letter agreement with an executive of the Company in which the executive transitioned from Executive Vice President, GeneSiC Business to Executive Vice President, Corporate Development.

This transition did not change the terms of the executive’s LTIP or RSU compensation.

Other Information, Departure of Directors or Certain Officers;

Compensatory Arrangements of Certain Officers, included in this Form 10-Q for more information.

In connection with the Company’s acquisition of GeneSiC in August 2022, the Company recorded non-competition agreements with a fair value of $ 1.9 million and a useful life of five years in connection with this executive, along with other employees.

As of June 30, 2024, the non-competition agreements have a net book value of $ 1.2 million and is included in Intangible Assets, net on the Company’s condensed consolidated balance sheets.

There is no change to the net book value of the non-competition agreements as of June 30, 2024, and the Company is evaluating the impact of the letter agreement on the non-competition agreements recorded intangible assets after the Q2 2024 Form 10-Q consolidated balance sheet date.

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

What changed 10-Q

Item 1. Financial Statements