What changed in this filing

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Item 1. Financial Statements

2024-11-05 compared with 2024-08-05 · 182 added, 139 removed, 492 unchanged (39% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

CURRENT ASSETS:

Cash and cash equivalents $ 98,614 $ 152,839

Accounts receivable, net 22,679 25,858

Accounts receivable, net of allowance of $ 211 and $ 0 , respectively

21,091 25,858

Inventories 21,284 22,234

1 unchanged sentence

Total current assets 145,150 207,109

ACCOUNTS RECEIVABLE NONCURRENT, net of allowance of $ 773 and $ 0 , respectively

PROPERTY AND EQUIPMENT, net 13,057 9,154

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STOCKHOLDERS’ EQUITY:

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

Class A common stock, $ 0.0001 par value, 750,000,000 shares authorized as of September 30, 2024 and December 31, 2023, and 186,788,292 and 179,196,418 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Class B common stock, $ 0.0001 par value, 10,000,000 shares authorized as of September 30, 2024 and December 31, 2023, and 0 shares issued and outstanding at both September 30, 2024 and December 31, 2023

Additional paid-in capital 725,739 680,790

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

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Total other income (expense), net 10,368 36,188 47,202 ( 22,048 )

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

INCOME (LOSS) BEFORE INCOME TAXES ( 18,605 ) 7,542 ( 44,483 ) ( 113,386 )

INCOME TAX PROVISION (BENEFIT) 125 23 256 ( 13 )

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

NET INCOME (LOSS) ( 18,730 ) 7,519 ( 44,739 ) ( 113,373 )

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS — — — ( 518 )

NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS $ ( 22,328 ) $ ( 58,527 ) $ ( 26,009 ) $ ( 120,375 )

NET LOSS PER COMMON SHARE:

Basic net loss per share attributable to common stockholders $ ( 0.12 ) $ ( 0.35 ) $ ( 0.14 ) $ ( 0.75 )

Diluted net loss per share attributable to common stockholders $ ( 0.12 ) $ ( 0.35 ) $ ( 0.14 ) $ ( 0.75 )

WEIGHTED AVERAGE COMMON SHARES USED IN NET LOSS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS:

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTERESTS $ ( 18,730 ) $ 7,519 $ ( 44,739 ) $ ( 112,855 )

NET INCOME (LOSS) PER COMMON SHARE:

Basic net income (loss) per share attributable to common stockholders $ ( 0.10 ) $ 0.04 $ ( 0.25 ) $ ( 0.68 )

Diluted net income (loss) per share attributable to common stockholders $ ( 0.10 ) $ 0.04 $ ( 0.25 ) $ ( 0.68 )

WEIGHTED AVERAGE COMMON SHARES USED IN NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS:

Basic common shares 184,672 175,103 182,551 165,719

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NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

(In thousands) 2024 2023 2024 2023

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

NET INCOME (LOSS) $ ( 18,730 ) $ 7,519 $ ( 44,739 ) $ ( 113,373 )

Other comprehensive income

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

COMPREHENSIVE INCOME (LOSS) ( 18,730 ) 7,519 ( 44,739 ) ( 113,373 )

COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST — — — ( 518 )

TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO CONTROLLING INTEREST $ ( 22,328 ) $ ( 58,527 ) $ ( 26,009 ) $ ( 120,375 )

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST $ ( 18,730 ) $ 7,519 $ ( 44,739 ) $ ( 112,855 )

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

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Stockholders' Equity (Deficit)

SIX MONTHS ENDED JUNE 30, 2024 Common stock Additional

Stockholders' Equity

NINE MONTHS ENDED SEPTEMBER 30, 2024 Class A common stock Additional

capital Accumulated

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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

Issuance of common stock under employee stock option and stock award plans 3,337 1 789 — — — 790

Stock-based compensation expense related to employee and non-employee stock awards — — 10,668 — — — 10,668

Net loss — — — ( 18,730 ) — — ( 18,730 )

BALANCE AT SEPTEMBER 30, 2024 186,839 $ 22 $ 725,739 $ ( 344,926 ) $ ( 7 ) $ — $ 380,828

Stockholders' Equity

NINE MONTHS ENDED SEPTEMBER 30, 2023 Class A common stock Additional

capital Accumulated

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

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

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

Net income — — — 7,519 — — 7,519

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

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2024 2023

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Stock-based compensation expense 38,011 41,810

Amortization of debt discount and issuance costs — 85

Allowance for expected credit losses 1,053 —

(Gain) loss from change in fair value of earnout liability ( 42,920 ) 25,503

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Net cash provided by financing activities 3,117 88,213

NET DECREASE IN CASH AND CASH EQUIVALENTS ( 40,844 ) 67,411

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 54,225 ) 66,361

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 152,839 110,337

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Cash paid for income taxes $ 198 $ 64

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 June 30, 2024 and December 31, 2023, respectively.

The investment is $ 5.0 million and $ 2.5 million as of September 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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The information contained in the condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which are in the opinion of management, necessary for a fair presentation of such condensed consolidated financial statements.

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

Operating results for the three and nine months ended September 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.

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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.

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Recently Issued Accounting Standards

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

In November 2023, the Financial Accounting Standards Board (FASB) introduced Accounting Standard Update (ASU) 2023-07, titled Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This update mandates that all public entities, including those with a single reportable segment, disclose one or more measures of segment profit or loss that the chief operating decision maker (CODM) uses to allocate resources and assess performance during interim and annual reporting periods.

Furthermore, the standard requires the disclosure of significant segment expenses, other relevant segment items, and additional qualitative information.

The new guidance will be effective for fiscal years starting after December 15, 2023, and for interim periods following December 15, 2024.

The Company is currently assessing how this update will impact its disclosures.

In December 2023, FASB issued ASU 2023-09, titled Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

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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.

ACCOUNTS RECEIVABLE

Accounts receivable trade, net consist of the following (in thousands):

September 30, 2024 December 31, 2023

Accounts receivable, gross $ 26,206 $ 25,411

Unbilled receivables 1,080 447

Allowance for credit losses ( 984 ) —

Accounts receivable (current and noncurrent), net $ 26,302 $ 25,858

Allowance for credit losses activity (in thousands):

Allowance for Credit Losses

Balance at December 31, 2022 $ —

Provision for credit losses ( 314 )

Accounts written-off 314

Balance at December 31, 2023 $ —

Provision for credit losses ( 1,053 )

Accounts written-off 69

Balance at September 31, 2024 $ ( 984 )

Inventories consist of the following (in thousands):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Raw materials

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$ 21,284 $ 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):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Furniture and fixtures $ 450 $ 244

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Total $ 13,057 $ 9,154

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:

The depreciation expense was $ 0.8 million and $ 2.2 million f or the three and nine months ended September 30, 2024 and $ 0.6 million and $ 1.6 million for three and nine months ended September 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 $ 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) :

Cash equivalents classified as Level 1 instruments were $ 85.5 million as of September 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 September 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 ( 42,920 )

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

Balance at September 30, 2024 $ 3,932

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

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 June 30, 2024 (in thousands):

As of the annual measurement date of September 30, 2024, the fair market value of the Company’s stock price remains above carrying value, and no indicators of impairment are present.

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

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

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Total $ 117,335 $ ( 40,479 ) $ 76,856

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 Balance at December 31, 2023 $ 91,099

Balance at December 31, 2023 $ 91,099

Other adjustments 22

Amortization expense ( 14,265 )

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.

Balance at September 30, 2024 $ 76,856

The amortization expense was $ 4.7 million and $ 14.3 million for the three and nine months ended September 30, 2024, an d $ 4.8 million and $ 14.0 million for the three and nine months ended September 30, 2023, respectively.

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

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Total $ 75,679

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

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

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 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.

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

As of September 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 $ 0.6 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.

Rent expense, including short-term lease cost, was $ 0.6 million and $ 2.0 million for the three and nine months ended September 30, 2024, respectively.

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

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 $ 0.1 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.

Total variable expenses were

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$ 0.1 million and $ 0.2 million for the three and nine months ended September 30, 2024 and they were not material for the three and nine months ended September 30, 2023.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid for operating lease liabilities $ 1,716 $ 1,426

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Weight-average discount rate 4.97 % 5.53 %

4.25 % - 8.25 %

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

Remainder of fiscal year 2024 $ 1,109

Fiscal year 2025 2,063

Fiscal year 2026 1,960

Fiscal year 2027 1,841

Fiscal year 2028 1,687

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

Fiscal Year Ending December 31,

2024 (remainder of fiscal 2024) $ 594

Thereafter 458

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Total lease liabilities $ 7,861

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SHARE BASED COMPENSATION:

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Options generally expire no later than ten years after the date of grant, subject to earlier termination upon an optionee’s cessation of employment or service.

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.

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

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

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

As of September 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.

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,

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

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

2024 2023 2024 2023

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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 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:

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Stock Options Shares

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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.

Exercised ( 27 ) 0.67 —

Forfeited or expired ( 1 ) 1.06 —

Outstanding at September 30, 2024 2,000 $ 0.74 5.03

Vested and Exercisable at September 30, 2024 1,979 $ 0.74 5.02

During the three and nine months ended September 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 $ 3.8 million, respectively, related to the LTIP Options described below.

During the three and nine months ended September 30, 2023, the Company recognized $ 0.1 million and $ 0.4 million of stock-based compensation expense for the vesting of outstanding stock options, excluding $ 1.8 million and $ 6.1 million related to the LTIP Options.

At September 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 0.2 years.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 $ 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.

In connection with the “2021 LTIP Options”, the Company recognized $ 0.8 million and $ 3.2 million of stock-based compensation expense for the three and nine months ended September 30, 2024, respectively.

The Company recognized $ 1.6 million and $ 5.3 million of stock-based compensation expense for three and nine months ended September 30, 2023, respectively.

The unrecognized compensation expense related to these LTIP Options is $ 3.0 million as of September 30, 2024, and compensation expense will be recognized over 2.7 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.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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Weighted-average grant date fair value of options $ 2.89

In connection with the “2022 LTIP Options”, the Company recognized $ 0.2 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.

In connection with the “2022 LTIP Options”, the Company recognized $ 0.2 million and $ 0.6 million of stock-based compensation expense for the three and nine months ended September 30, 2024, respectively.

The Company recognized $ 0.3 million and $ 0.8 million of stock-based compensation expense for three and nine months ended September 30, 2023, respectively.

The unrecognized compensation expense related to the LTIP Options is $ 1.1 million as of September 30, 2024, and compensation expense will be recognized over 2.7 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.

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

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

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

Restricted Stock Unit Awards Shares

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

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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.

Granted 114 3.68

Vested ( 2,876 ) 4.64

Forfeited ( 115 ) 6.49

Outstanding at September 30, 2024 11,393 $ 6.77

During the three and nine months ended September 30, 2024, the Company recognized $ 9.1 million and $ 27.0 million of stock-based compensation expense for the vesting of RSUs, respectively.

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

As of September 30, 2024, unrecognized compensation cost related to unvested RSU awards totaled $ 62.4 million.

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

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.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Of the Company’s $ 5.2 million bonus plan for the fiscal year 2024 (included in accrued compensation expense liability on the condensed consolidated balance sheets), $ 4.9 million will be distributed as fully vested restricted stock units with a variable share count and is expected to settle in the first quarter of 2025.

Additionally, the Company accrued a $ 0.3 million cash bonus for the President and CEO.

Based on the closing share price of the Company’s Class A common stock of $ 2.45 on September 30, 2024, approximately 1,993,244 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

4 unchanged sentences

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

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 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

For the three and nine months ended September 30, 2024, employees who elected to participate in the ESPP purchased 408,326 and 801,465 shares of common stock under the 2022 ESPP, resulting in cash proceeds to the Company of $ 0.9 million and $ 2.7 million for the three and nine months ended September 30, 2024.

The purchase price was $ 4.55 and $ 2.19 , which was 15 % of the fair market value in March and September 2024, respectively.

As of September 30, 2024, the Company had 1,940,572 remaining authorized shares available for purchase.

During the three and nine months ended September 30, 2024, the Company recognized $ 0.4 million and $ 1.5 million of stock-based compensation expense for the 2022 ESPP, respectively.

During the three and nine months ended September 30, 2023, the Company recognized $ 0.3 million and $ 0.8 million of stock-based compensation expense for the 2022 ESPP, respectively.

Other Share Awards

4 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 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.

The Company recognized $ 0.1 million and $ 0.4 million of stock-based compensation expense related to the vesting of these shares during three and nine months ended September 30, 2024, respectively.

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

Unvested Earnout Shares

2 unchanged sentences

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

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.

The Company recognized $ 0.0 million and $ 0.2 million of stock-based compensation expense related to the vesting of these shares during three and nine months ended September 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 nine months ended September 30, 2023, respectively.

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

Refer to Note 10, Earnout Liability.

EARNOUT LIABILITY

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EARNOUT LIABILITY

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

5 unchanged sentences

The valuation model utilized the following assumptions:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Risk-free interest rate

2 unchanged sentences

80.00 % 70.00 %

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

As of September 30, 2024 and December 31, 2023, the earnout liability had a fair value of $ 3.9 million and $ 46.9 million, respectively, which resulted in a gain in the fair value of the earnout liability of $ 9.2 million and $ 42.9 million for the three and nine months ended September 30, 2024, respectively.

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

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 and six months ended June 30, 2024 and 2023:

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

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

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

Customer 2024 2023 2024 2023

Distributor A 54 % 53 % 60 % 29 %

Distributor B

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

1 unchanged sentence

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

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

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

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

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Country 2024 2023 2024 2023

China 54 % 61 % 65 % 55 %

Europe* 8 31 9 30

United States 24 13 15 15

Asia excluding China 14 12 11 8

Europe* 8 14 9 22

Total 100 % 100 % 100 % 100 %

*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 June 30, 2024 December 31, 2023

Customer September 30, 2024 December 31, 2023

Distributor A 77 % 77 %

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.

The Company has a customer deposit from a primary customer of $ 2.0 million and $ 11.0 million, as of September 30, 2024 and December 31, 2023, respectively, and the Company intends to apply a portion of the customer deposit to outstanding accounts receivable.

As of September 30, 2024, the Company reassessed the risk pooling of its accounts receivable and determined that certain customer trade receivables associated with a customer have an expected term greater than one year.

These receivables were discounted to present value using a discounted cash flow model based on the Company’s expectation of the timing of future payments over the next two years and are presented as accounts receivable noncurrent within the condensed consolidated balance sheets.

A $ 0.8 million allowance for credit losses was recorded associated with this reassessment.

Concentration of Supplier Risk

8 unchanged sentences

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.

Currently the Company is not projecting to meet the minimum purchase requirements, therefore, the Company does not expect to receive any credits within the next 12 months beginning in the fourth quarter of 2024.

NAVITAS SEMICONDUCTOR CORPORATION

8 unchanged sentences

The Company has no plans to declare dividends.

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

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

2024 2023 2024 2023

8 unchanged sentences

Shares excluded from diluted weighted average shares 22,409 20,013 23,483 30,744

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 and six months ended June 30, 2024 and 2023.

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.

1 unchanged sentence

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

The Company’s effective tax rate for the three and six months ended June 30, 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 Company’s effective tax rate for the three and nine months ended September 30, 2024 was ( 0.7 )% and ( 0.6 )%, respectively.

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

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

NAVITAS SEMICONDUCTOR CORPORATION

2 unchanged sentences

Purchase Obligations

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

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

Indemnification

5 unchanged sentences

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

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

21 unchanged sentences

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 and six months ended June 30, 2024 , the Co mpany paid an immaterial amount in rental payments in relation to this lease.

During the three and nine months ended September 30, 2024, the Co mpany paid an immaterial amount in rental payments.

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

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

There was no rent obligation as of September 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.

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

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

16 unchanged sentences

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.

NAVITAS SEMICONDUCTOR CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUBSEQUENT EVENTS

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.

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

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

On October 25, 2024, the Company entered into a second amended and restated voting agreement (the “Voting Agreement”) with a third party (see Note 1 Investment in Third Party ) that grants the Company the right to appoint a member to the third party’s Board of Directors.

The Company has assessed the impact of the Voting Agreement under ASC 323 Investments - Equity Method and Joint Ventures , and determined that the Company has significant influence and therefore will account for the investment in the third party as an equity method investment during the fourth quarter of 2024.

The Company expects to fair value its investment in the third party on the Company’s balance sheet and then record the Company’s proportionate share of gains/losses in other income (expense) in the Company’s statements of operations.

The Company expects the change in accounting to not have a material impact on its financial statements.

On October 15, 2024, the Company announced a cost-reduction plan to streamline the organization with increased focus on artificial intelligence data center, EV and mobile applications, accelerating the Company’s path to profitability.

The cost-reduction plan includes a 14 % reduction in headcount with a majority of the costs consisting of severances and stock-based compensation, the expense of which the Company is still determining, but amounts are not expected to be significant.

The Company expects to incur the majority of these expenses associated with this cost-reduction plan during the fourth quarter of 2024.

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