Business context and reporting period
Navitas Semiconductor Corporation’s Form 10-Q covers the quarter ended September 30, 2021. At that date, the registrant was still operating as Live Oak Acquisition Corp. II, a blank-check company; the semiconductor business combination closed on October 19, 2021. Accordingly, these financial statements do not report Legacy Navitas’s operating results.
Financial results and liquidity
| Metric | Three months ended September 30, 2021 | Nine months ended September 30, 2021 |
|---|---|---|
| Revenue | None reported | None reported |
| General and administrative expenses | $264,590 | $1,874,765 |
| Gain (loss) on warrant-liability fair value | $4,585,001 | $(4,453,999) |
| Net income (loss) | $4,323,720 | $(6,261,072) |
| Basic and diluted earnings (loss) per share | $0.14 | $(0.20) |
| Net cash used in operating activities | Not provided for the quarter | $(1,854,234) |
The third-quarter profit primarily reflected a non-cash warrant-liability fair-value gain, rather than operating revenue. No operating margins are meaningful because the pre-combination entity had no operating revenue.
At September 30, cash was $13,955 and working capital was $20,590, excluding approximately $82,000 of tax obligations potentially payable from trust investment income. Trust investments were $253.1 million, while $253.0 million of redeemable Class A shares was presented as temporary equity. Total liabilities were $33.3 million, including $24.9 million of warrant liabilities and $8.1 million of deferred underwriting fees. The filing reports no borrowings under working-capital loans and no operating-company debt.
Material changes and subsequent business combination
- For comparison, the income statement presents only the period from inception on August 12, 2020 through September 30, 2020; the prior-period figures are not a like-for-like operating comparison.
- The company revised its presentation of redeemable public shares as temporary equity and revised earnings-per-share allocation. It said the revision did not change total assets, liabilities, or operating results.
- On October 19, 2021, the business combination closed. The company reported approximately $325 million of proceeds, including trust funds remaining after approximately $101.4 million of redemptions and $173 million from a PIPE at $10 per share.
- Immediately after closing, the company reported 117,733,507 common shares outstanding, plus options, RSUs, and warrants. These post-close figures are not part of the September 30 balance sheet.
Outlook, risks, and unusual items
No financial guidance or operating outlook for Navitas’s semiconductor business is provided in this pre-combination 10-Q. Management stated the business combination raised sufficient capital for operations. The filing noted that COVID-19 could negatively affect financial position or results, but the impact was not determinable. Warrant valuations involved estimates and fair-value changes materially affected reported earnings.
Management reported that a previously identified material weakness in internal control was remediated by June 30, 2021 and fully evidenced by September 30; disclosure controls were concluded to be effective. The filing reported no legal proceedings and no off-balance-sheet arrangements as of September 30.
Investor facts to verify
- Review subsequent filings for Navitas’s actual post-combination revenue, cash burn, margins, and liquidity; this 10-Q does not provide those operating results.
- Confirm the final use and availability of business-combination proceeds, including transaction expenses and any restrictions on cash.
- Assess dilution from outstanding options, RSUs, public and private warrants, and up to 10 million potential earnout shares tied to stock-price targets.
- Track warrant-liability accounting and other non-operating fair-value effects when comparing reported earnings across periods.
- Review the post-combination risk factors referenced in the company’s proxy statement/prospectus and monitor whether internal-control remediation remains effective.