Navitas Semiconductor Corp current report, 20 November 2021

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Navitas Semiconductor Corporation — Form 8-K Summary

Business Context and Reporting Period

Navitas Semiconductor Corporation filed a Form 8-K dated November 20, 2021, following its October 19, 2021 business combination with Navitas Semiconductor Limited, when former Live Oak Acquisition Corp. II became Navitas Semiconductor Corporation. The filing addresses accounting for redeemable IPO shares in previously issued financial statements for the year ended December 31, 2020 and the three and nine months ended September 30, 2021.

Financial Reporting and Material Changes

  • The Audit Committee concluded that the company’s 2020 financial statements and Q3 2021 financial statements should no longer be relied upon.
  • Previously, a portion of the IPO shares was classified within permanent equity. Management determined that all IPO shares subject to possible redemption should have been classified as temporary equity under ASC 480.
  • The company also concluded that it should have recognized accretion from the IPO shares’ initial book value to redemption value during the periods in which the former charter’s redemption provisions applied.
  • The company plans to amend its 2020 Form 10-K and Q3 2021 Form 10-Q to reflect the reclassification and related accounting changes.
  • The filing does not provide the dollar amount of the reclassification, accretion, or any resulting change to total equity, liabilities, net loss, or cash flow.

Internal Controls, Outlook, and Risks

  • Management identified a material weakness as of September 30, 2021, relating to the interpretation and accounting for complex features of the IPO shares.
  • The issue resulted from provisions in the former charter that could permit redemption following future events outside the company’s control, subject to the applicable net tangible asset limitation.
  • The current charter adopted at the October 19, 2021 closing does not contain these provisions; management does not expect the same temporary-equity presentation for the fourth quarter of 2021 or future periods.
  • The matter was discussed with the company’s independent registered public accounting firm, Withum Smith+Brown, PC.
  • The principal risks are delayed or revised historical financial information, potential changes to reported equity and earnings metrics, and the need to remediate the identified internal-control weakness.

Key Facts for Investors to Verify

  1. Review the amended 2020 Form 10-K and amended Q3 2021 Form 10-Q when filed.
  2. Verify the quantitative impact of reclassifying IPO shares to temporary equity and recording accretion to redemption value.
  3. Assess whether any previously reported balance-sheet, earnings, or per-share amounts change materially.
  4. Monitor management’s remediation of the material weakness and any related auditor disclosures.
  5. Confirm that the current charter eliminates the redemption provisions that caused the historical accounting issue.